MEPD, I-4000, Determining Uncompensated Value

Revision 12-2; Effective June 1, 2012

 

The transfer of assets policy applies to the transfer of assets for less than fair market.

  • Current market value — The amount of money an item would bring if sold in the current local market.
  • Fair market value — The current market value of a resource at the time of its sale or transfer.
  • Equity value — The value of a resource based on its fair market value or current market value minus all money owed on the resources and, if sold, any costs usually associated with the sale.
  • Uncompensated value — The uncompensated value is the fair market value of a resource at the time of transfer minus the amount of compensation received by the person in exchange for the asset.

When a person gives away or sells an asset for less than fair market value for the purpose of establishing Medicaid, transfer of assets penalty will be evaluated based on the uncompensated value of the transfer asset(s).

 

I-4100 Compensation

Revision 09-4; Effective December 1, 2009

 

The uncompensated value may be reduced by compensation received by the person. To reduce the uncompensated value the compensation must meet several requirements.

 

 

I-4110 Legal Binding Agreement on or Before the Date of Transfer

Revision 09-4; Effective December 1, 2009

 

Compensation for a transferred asset must be provided according to terms of an agreement established on or before the date of transfer. This agreement must have been established exclusively for purposes other than obtaining or retaining eligibility for Medicaid services.

Review the written agreement and the circumstances of the agreement to determine if institutional placement or waiver services were a consideration at the time the asset was transferred. If the agreement was oral, obtain a written statement from the person and the person receiving the asset.

The written statements must specify the date and terms of the agreement.

 

I-4120 Forms of Compensation

Revision 09-4; Effective December 1, 2009

 

The compensation for an asset can include:

  • money,
  • real or personal property,
  • food,
  • shelter, or
  • services received by the person.

Compensation also includes all money, real or personal property, food, shelter or services received before the actual transfer if they were provided pursuant to a binding (legally enforceable) agreement whereby the eligible individual would transfer the resource or otherwise pay for such items.

 

I-4130 Future Compensation

Revision 09-4; Effective December 1, 2009

 

Compensation must actually have been provided to the person. Future compensation does not satisfy the compensation requirement.

Exception if provided according to terms of an agreement established on or before the date of transfer:

  • Future compensation from annuities that are actuarially sound can be considered compensation.
  • Consider as compensation the payment or assumption of a legal debt owed by the person who made the transfer in exchange for the asset.

 

I-4140 Compensation from Services

Revision 09-4; Effective December 1, 2009

 

Services can be a form of compensation if provided according to terms of an agreement established on or before the date of transfer. Valid receipts for financial expenditures or written statements from the people who were paid to provide the services are needed to validate the receipt of services.

Compensation is not allowed for services that would normally be provided by a family member (such as house painting or repairs, mowing lawns, grocery shopping, cleaning, laundry, preparing meals, transportation to medical care).

 

I-4150 Cash Compensation

Revision 09-4; Effective December 1, 2009

 

If the person receives additional cash compensation that was not a part of the transfer agreement from the party who received the transferred asset, reduce the uncompensated value of the transferred asset by the amount of the additional compensation and as of the date the compensation is received. Cash compensation includes direct payments to a third party to meet the person's food, shelter or medical expenses, including nursing facility bills, incurred after the date of the transfer.

 

I-4160 Examples of Compensation

Revision 12-2; Effective June 1, 2012

 

Situation: Ms. Walden, a nursing facility applicant, transferred a $10,000 money market account to her daughter, Josephine, the same day Ms. Walden was admitted to a nursing facility and within six months of application. Josephine is not disabled. Ms. Walden authorized the transfer because Josephine had quit her job to take care of her mother for six months before Ms. Walden was institutionalized. Josephine was earning $1,000 gross per month before quitting her job to care for her mother. Ms. Walden said she had told Josephine in December that she would give her the CD as reimbursement for lost wages if Josephine would quit her job to take care of Ms. Walden.

Action: Because Josephine actually quit her job to care for her mother, compensation for Josephine's lost gross wages is acceptable. Verify that Josephine indeed earned $1,000 per month ($1,000 x 6 months = $6,000). The uncompensated amount is $4,000. Divide the uncompensated value by the average daily rate for a private-pay patient and round down to determine the number of days of the penalty period.

Situation: Mr. Dasher, a nursing facility applicant, transferred a $10,000 CD to his son, James, within 60 months of application. Mr. Dasher agreed to this transfer and provided a written statement, specifying the terms of the agreement, because James had paid Mrs. Long $250 each week for seven months to provide in-home care for his father. Mr. Dasher's medical condition had resulted in the need for in-home care and he had insufficient income to pay Mrs. Long and meet his other living expenses. James furnished a written statement from Mrs. Long substantiating that she had been paid $250 each week to take care of Mr. Dasher. In addition, James furnished receipts showing he had paid Mr. Carpenter to do some improvements to Mr. Dasher's home so that Mr. Dasher could more easily maneuver his wheelchair. The receipt for the materials and Mr. Carpenter's services totaled $3,000.

Action: The payments made for Mrs. Long's and Mr. Carpenter's services and the home improvement materials are acceptable compensation. Mrs. Long's services totaled $250 x 4.33 = $1,082.50 x 7 = $7,577.50. The total compensation received was $10,577.50; therefore, there is no uncompensated value.

Situation: Mr. Anderson, a nursing facility applicant, transferred his homestead to his grandson, Joe, within 60 months of application. The fair market value of the property is $40,000. Mr. Anderson had agreed to transfer the home to Joe, who in exchange had assisted Mr. Anderson in maintaining the home. Joe had painted the house last summer and had done the yard work every other week for the past two years. Joe spent $200 for supplies (paint, for example) to paint the house.

Action: The uncompensated value must be developed. The term of the agreement was the house in exchange for home maintenance assistance. Because painting and yard work are services that a family member would normally perform, the value of those services is not an allowable compensation. The cost of the supplies Joe purchased to paint the house is allowable, if Joe can furnish receipts to substantiate the cost. Assuming that Joe did furnish the verification, the uncompensated value is $39,800. Divide the uncompensated value by the average daily rate for a private-pay patient and round down to determine the number of days for the penalty period. The penalty start date is the first day of the month of the Medical Effective Date (MED), if the individual meets all other eligibility criteria.

Situation: In November, Nina Gonzales' nephew gave her $5,000 to assist in paying her mortgage and taxes. There was no agreement that the nephew would be repaid. The following January, Ms. Gonzales entered a nursing facility and applied for Medicaid. That same month (January), Ms. Gonzales' home was sold and she gave her nephew $5,000 of the proceeds.

Action: Because there was no agreement (entered into exclusively for reasons other than obtaining/retaining Medicaid services) that the nephew would be repaid when the home was sold, Ms. Gonzales transferred $5,000 without compensation. If the average daily rate for a private-pay patient is $117.08, Ms. Gonzales is ineligible for facility vendor payments for all of January and through Feb. 11.

 

I-4200 Rebuttal Procedures

Revision 09-4; Effective December 1, 2009

 

 

I-4210 Notification of Opportunity for Rebuttal

Revision 09-4; Effective December 1, 2009

 

If any amount of uncompensated value exists, HHSC informs the person or authorized representative of the amount of uncompensated value and the length of the penalty period. The penalty period applies unless the person provides convincing evidence that the disposal was solely for some purpose other than to obtain Medicaid services. If, within the periods specified in this paragraph, the person or authorized representative makes no effort to rebut the presumption that the transfer was solely to obtain Medicaid services, HHSC will assume that the presumption is valid. The rebuttal period is 10 workdays after written notification.

Notify the person or authorized representative in person or by telephone about the presumption, the amount of uncompensated value and the length of the penalty period. If personal contact cannot be made within three workdays of determination, immediately mail Form H1226, Transfer of Assets/Undue Hardship Notification, to the person or authorized representative.

Note: If the person or authorized representative is contacted in person or by telephone, immediately follow up with a written notice using Form H1226. If a rebuttal is not received within the specified period, determine the impact of the transferred asset on the person's Medicaid.

See Appendix XVI, Documentation and Verification Guide.

 

I-4220 Rebuttal of the Presumption

Revision 09-4; Effective December 1, 2009

 

Transfer of assets statutes presume that all transfers for less than fair market value are to obtain Medicaid services. The person or authorized representative is responsible for providing convincing evidence that the transaction in question was exclusively for some other purpose. To rebut the presumption, the person or authorized representative must provide a written statement and any relevant documentation to substantiate the statement. The statement, oral or written, must include at least the following:

  • purpose for transferring the asset;
  • attempts to dispose of the asset at fair market value;
  • reason for accepting less than fair market value for the asset;
  • means of or plan for self-support after the transfer; and
  • relationship to the person to whom the asset was transferred.

Consider all statements and documentation provided by the person. The person can successfully rebut the presumption that the asset was transferred to obtain Medicaid services only if the person convincingly demonstrates that the asset was transferred exclusively for some other purpose. If the person had some other purpose for transferring the asset but obtaining Medicaid services seems to have also been a factor in the decision to transfer, the presumption is not successfully rebutted.

If a person does not rebut the presumption that the asset was transferred to obtain Medicaid services or if his rebuttal is unsuccessful, consider the uncompensated value of the transferred asset to determine the length of the penalty period for institutional and home/community-based waiver services.

If a person is determined to have successfully rebutted the presumption that the asset was transferred to obtain Medicaid services, the supervisor must review and concur with the decision. Record this concurrence in the case record.

 

I-4221 Exclusively for Some Purpose Other than to Qualify

Revision 09-4; Effective December 1, 2009

 

The presence of one or more of the following factors, while not conclusive, may indicate that the asset was transferred exclusively for some purpose other than to qualify for assistance. This list does not include every possible factor.

  • After transfer of the asset, one of the following occurs:
    • unanticipated drastic change in the person's health, resulting in a greatly increased need for medical care;
    • unexpected loss of other resources that would have precluded eligibility; and
    • unexpected loss of income that would have precluded eligibility without an income-diversion trust.
  • Total resources would have remained below the resource limits since the transfer occurred if the resource was retained.
  • The transfer was made as a result of a court order or other legal commitment, such as a judgment or debt owed.

 

I-4300 Undue Hardship

Revision 09-4; Effective December 1, 2009

 

A person may claim undue hardship when imposition of a transfer penalty would result in discharge to the community and/or inability to obtain necessary medical services so that the person's life is endangered. Undue hardship also exists when imposition of a transfer penalty would deprive the person of food, clothing, shelter or other necessities of life. Undue hardship relates to hardship to the person, not the relatives or responsible parties of the person. Undue hardship does not exist when imposition of the transfer penalty merely causes the person inconvenience or when imposition might restrict lifestyle, but would not cause risk of serious deprivation.

Undue hardship may exist when any one of the following conditions exists:

  • location of the receiver of the asset is unknown to the person, other family members or other interested parties, and the person has no place to return in the community and/or receive the care required to meet the person's needs;
  • person can show that physical harm may come as a result of pursuing the return of the asset, and the person has no place to return in the community and/or receive the care required to meet the person's needs; or
  • receiver of the asset is unwilling to cooperate (such as an Adult Protective Services exploitation or potential fraud case) with the person and HHSC, and the person has no place to return in the community and/or receive the care required to meet the person's needs.

If a person claims undue hardship, HHSC must make a decision on the situation as soon as possible, but within 30 days of receipt of the request for a waiver of the penalty. The person has the right to appeal an adverse decision on undue hardship.

HHSC must permit the institution in which the individual is residing to file for an undue hardship waiver on behalf of an individual who would be subject to a penalty period resulting from a transfer of assets. Before filing for an undue hardship waiver, the institution must have the consent of the individual or the individual's authorized representative. In addition to requesting an undue hardship waiver, the institution may present information on behalf of the individual and may, with the specific written consent of the individual or the individual's authorized representative, represent the individual in an appeal of an undue hardship denial decision.

At a minimum, a written statement explaining the person's reasons for the transfer, who received the asset, how that person can be located, why the person's needs cannot be met and why there is undue hardship for the person must be included in the documentation.

The supervisor must sign off on all undue hardship cases.

 

I-4310 Undue Hardship Example

Revision 09-4; Effective December 1, 2009

 

Situation: Mr. Nelson Stiles, a nursing facility applicant, provided his bank statements as resource verification. The statements indicated that $1,000 was withdrawn from his account for the previous six consecutive months. He stated that he allowed his niece, who knew his personal identification number on his Pulse Card, to take the money. He thinks she took the money to pay off her debts and has now left the state. He does not know where she is and does not know if he will see her again. He said he has no other living relatives. He does not own a home or know anyone he could live with who could help to take care of him.

Action: This is an acceptable case of undue hardship. Document the case thoroughly and obtain the necessary approval signatures.