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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.