Revision 14-4; Effective December 1, 2014

 

I-3100 Transfer of Home

Revision 12-1; Effective March 1, 2012

 

Transfer of the person's home does not result in a penalty when the title is transferred to the person's:

  • spouse who lives in the home (the transfer penalty applies when the community-based spouse transfers the home without full compensation);
  • minor child under age 21 or child who is disabled. Disability must meet Social Security Administration (SSA) disability criteria. Additionally, there is no age limit for the person's child who is determined disabled under the SSA criteria;
  • sibling who has equity interest in the home and has lived there for at least one year before the person's institutionalization;
  • son or daughter (other than a disabled or minor child) who lived in the home for at least two years before the person's institutionalization and provided care that prevented institutionalization. To substantiate this claim, there must be a written statement from the person's attending physician or a professional social worker familiar with the case documenting the care provided by the son or daughter. If the person is or has been receiving services through a home and community-based waiver program, a statement from the DADS case manager or a professional social worker familiar with the case is required if the person transfers the home to a son or daughter who lives in the home, thereby preventing institutionalization. Since the services of the waiver are to prevent institutionalization, justification is required to show that additional care provided by the son or daughter is necessary to prevent institutionalization; or
  • children, siblings, etc., if the deed is an enhanced life estate and has been approved by the regional attorney. The person must sign a statement that he intends to return to the home.

 

I-3200 Transfer of Other Assets and the Home

Revision 14-4; Effective December 1, 2014

 

Under both pre-DRA and post-DRA transfer of assets policies, assets — including the person's home — may be transferred without resulting in a penalty when:

  • Transferred to the person's spouse or to another for the sole benefit of that spouse, or from the person's spouse to another for the sole benefit of that spouse.
  • Transferred to the person's child who has a disability. Disability must meet SSA disability criteria. Additionally, there is no age limit for the person's child who is determined to have a disability under SSA criteria.
  • Transferred to a trust (including an exception trust) established solely for the benefit of the person's child. The child must meet SSA disability criteria. There is no age limit for a child with a disability for transfer of assets purposes.
  • Transferred to a trust, including a trust established for the sole benefit of an individual under age 65 who has a disability as defined under SSA disability criteria.
  • Satisfactory evidence exists that the person intended to dispose of the resource at fair market value.
  • Satisfactory evidence exists that the transfer was exclusively for some purpose other than to qualify for Medicaid.
  • Imposition of a penalty would cause undue hardship.
  • A person changes a joint bank account to establish separate accounts to reflect correct ownership of and access to funds.
  • A person purchases an irrevocable funeral arrangement or assigns ownership of an irrevocable funeral arrangement to a third party, and the funeral arrangement is for the person or the person's spouse.

Note: If the transfer is made to a child who is claiming a disability, but there is no record that the child meets SSA disability criteria, request medical records for the Disability Determination Unit (DDU) to make a disability determination. Submit these records to Austin for imaging.

 

I-3300 "For the Sole Benefit" Requirements

Revision 09-4; Effective December 1, 2009

 

Under both pre-DRA and post-DRA transfer of assets policies in determining whether an asset was transferred for the sole benefit of a spouse, child or disabled individual, there must be a written instrument of transfer, such as a trust document, that legally binds the parties to a specified course of action and clearly sets out the conditions under which the transfer was made, as well as who can benefit from the transfer. The instrument or document must provide for the spending of the funds for the benefit of the individual on a basis that is actuarially sound based on the life expectancy of the individual. When the instrument or document does not so provide, there can be no exemption from the penalty.

Note: Trusts created under exception trusts policy are exempt from the actuarially sound distribution provisions of this requirement.

 

I-3400 Examples of Transfer of the Home

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.

 

I-3500 Spousal Impoverishment Transfer Exceptions

Revision 09-4; Effective December 1, 2009

 

There are no restrictions on transfers between spouses, which occur from the date of institutionalization to the date of the application. The combined countable resources of the couple are considered in determining eligibility during the period from the date of institutionalization to the date of the Medicaid application. For the same reason, transfers between spouses are also permitted before institutionalization.

Based on policy in Chapter J, Spousal Impoverishment, to remain eligible at the end of the initial eligibility period, the institutionalized spouse must reduce resources to which he has access at least to the resource limit. If the institutionalized spouse chooses, he may, during the initial eligibility period, transfer resources from his name to the community spouse's name with no penalty applied to the transfer.

 

I-3510 Spousal Impoverishment Transfer

Revision 09-4; Effective December 1, 2009

 

The transfer of assets policy applies only to transfer of assets for less than fair market value to individuals other than the community spouse, if not for the sole benefit of that spouse.

Transfer penalties apply when the community spouse transfers his separate property:

  • before institutionalization, or
  • after institutionalization but before the Medicaid certification.

Transfer penalties apply when the community spouse transfers community property both before and after institutionalization, if not for the sole benefit of the spouse. Note: A penalty can result when the community spouse transfers assets to a third party, not for the sole benefit of either spouse.

 

I-3520 Spousal Impoverishment Transfer Examples

Revision 12-1; Effective March 1, 2012

 

  • When the institutionalized spouse enters a nursing facility, the couple's combined countable resources are $100,000, and the resources are all in the institutionalized spouse's name. The spousal protected resource amount (SPRA) is $50,000.

    Before application, the institutionalized spouse transfers the entire $100,000 to the community spouse. No transfer of assets penalty applies when eligibility is established.
  • When the institutionalized spouse enters a nursing facility, the couple's combined countable resources are $100,000, all in the institutionalized spouse's name. The SPRA is $50,000. The institutionalized spouse transfers all resources to the community spouse without penalty.

    A Medicaid application is filed two and one-half years later. The couple's combined countable resources are $30,000 as of 12:01 a.m. on the first day of the month of application, and the resources are all in the community spouse's name.
     
    • $30,000 – Combined countable resources
    • – $50,000 – SPRA
    • = $0 – Compared to appropriate resource standard for an individual
  • If the institutionalized spouse inherits $20,000 after Medicaid certification, the institutionalized spouse may transfer the entire amount of that inheritance to the community spouse without penalty during the initial eligibility period. However, this $20,000 is treated as income for the month of receipt, and restitution of the full vendor payment for that month is requested. This brings the community spouse's resources to $50,000, the full protected amount.
  • If more than $22,000 is inherited, the institutionalized spouse would be ineligible based on resources ($22,001 + $30,000 = $52,001 combined resources).
     
    • $52,001 – Combined resources
    • – $50,000 – SPRA
    • = $2,001 – > $2,000 and ineligible
  • When the institutionalized spouse enters the nursing facility, the couple's combined countable resources are $100,000 ($90,000 in institutionalized spouse's name and $10,000 in the community spouse's name). The protected resource amount is $50,000.

    A Medicaid application is filed eight months later. Before application, the institutionalized spouse transferred $80,000 to the community spouse and spent $10,000 on nursing facility bills. The community spouse then transferred $50,000 to her daughter before the Medicaid application was filed. The couple's combined countable resources are now $40,000 as of 12:01 a.m. on the first day of the month of application, and the resources are all in the community spouse's name.
     
    • $40,000 – Combined countable resources
    • – $50,000 – SPRA
    • = $0 – Compared to appropriate resource standard for an individual
  • The institutionalized spouse is eligible for Medicaid but does not receive nursing facility services. The penalty period for vendor payment is imposed based on the $50,000 uncompensated value of the transfer to the daughter.

    Note: If the institutionalized spouse has a level of care or medical necessity determination and meets all eligibility criteria except for the transfer of assets provisions, the institutionalized spouse may be eligible to a Your Texas Benefits Medicaid card but not vendor payments. Follow procedures in Appendix XXIII, Procedure for Designated Vendor Number to Withhold Vendor Payment, to put the vendor payment on hold.
  • When the institutionalized spouse entered the nursing facility (June 17), the couple's combined countable resources were $30,000. The institutionalized spouse had transferred $10,000 in April, with no compensation, to a son. The uncompensated value is not included when calculating the protected resource amount, and the SPRA is $15,000.

    Under pre-DRA transfer of assets policy, a penalty is imposed should a Medicaid application be filed before the 85-day penalty (based on $117.08) has expired. Under post-DRA transfer of assets policy, a penalty is imposed should a Medicaid application be filed and the transfer is within the look-back period, but the penalty would not start until the medical effective date.

 

I-3600 Administrative Procedures of Transfers of Nominal Amounts

Revision 10-4; Effective December 1, 2010

 

Do not develop a penalty period for transfers when the total amount of all transfers per month is $200 or less. For example, if an individual gives a donation of $150 to a charitable organization in the month of December and there are no other transfer transactions in December, no penalty period is developed for the $150 donation. See Section F-4120, Bank Accounts, and Appendix XVI, Documentation and Verification Guide.