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Revision 09-4; Effective December 1, 2009
Under both pre-DRA and post-DRA transfer of assets policies, the situations above are the only situations in which an uncompensated transfer does not result in a penalty. Under the transfer provisions of OBRA 1993, the home is not an excluded resource for institutional persons. Therefore, if the home of an institutionalized person is transferred, unless the transfer meets one of the above criteria, the transfer could affect payment for the person's institutional care.
Situation: Within six months of application, Miss Lucy Katz, a nursing facility applicant, transferred her interest in a family homestead to her sister, Ms. Dulcey Katz, who also owns an interest in the homestead. The Katz sisters lived in the homestead for five years before Lucy's admission to a nursing facility on July 6 of this year.
Action: No penalty for the transfer exists because the applicant's sister also owned an interest in the family homestead, and Dulcey lived in the home for at least one year before Lucy was institutionalized. The eligibility specialist should verify the transfer of the applicant's interest.
Note: If Dulcey had not remained in the home after Lucy left, there would still be no transfer penalty. The one-year residency requirement is at least one year before a person's institutionalization.
Situation: Mr. Roberts, a nursing facility applicant, transferred $50,000 to his son, Ned, within six months of application to meet the needs of Mr. Roberts' disabled adult daughter, Nancy.
Action: No penalty for the transfer of the funds exists because the funds are to be used for the sole benefit of the applicant's disabled daughter. Verify the transfer of the funds, that Nancy is receiving disability benefits and that Ned is using the funds solely for Nancy's benefit according to the transfer instrument. To ensure the funds are used only for Nancy, expenditures for Nancy should be verified at each annual review until the transfer penalty would have expired.
Situation: Mrs. Smith purchased an annuity that is irrevocably assigned to a funeral expense trust agreement. According to the documents, upon the death of the "annuitant" ("insured"), the trustee of the funeral expense trust must pay burial expenses for that deceased person to the providers of goods and/or services, usually the funeral home. These arrangements are essentially burial contracts, although the arrangements are irrevocable. Because the contracts are burial funds and irrevocable, the purchase of the burial contract for Mrs. Smith is not considered a transfer of assets. At the same time, Mrs. Smith also purchased the same kind of burial contract for her son and daughter-in-law. Based on Section F-4227, Burial Funds, the burial contracts for her son and daughter-in-law do not meet the exclusion criteria. The exclusion is only for:
- person,
- person's spouse, or
- minor child applicant/person with parents whose resources are deemed to the minor child applicant/person.
The purchase of the burial contracts should be considered a transfer of assets, and if appropriate, a penalty assessed.