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Effective: October 1, 2007 |
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19.40.20ar2 - Transfer Penalty Exceptions (Archive) |
Archived: November 1, 2008 |
Some uncompensated transfers meet an exception, which means there is no penalty even though the transfers were uncompensated. This policy is applied differently for different programs.
Sole benefit means that no one but the spouse or disabled person can benefit now or in the future from the asset, unless it will revert to the state to repay MA.
l A trust instrument must provide for the funds to be spent for the benefit of the spouse or the disabled person based on that person’s estimated life expectancy.
l A trust may provide for reasonable and necessary administrative costs associated with managing the trust.
There are no transfer provisions for MinnesotaCare or GHO.
All uncompensated transfers within the lookback period result in penalties. There are no exceptions.
The following transfers are exempt from penalty:
l Uncompensated transfers made by both the client and the client’s spouse with a combined total for a given month that is less than or equal to:
n $200 on or after July 1, 2002 if either of the following are met:
m The client requested payment of LTC services before September 12, 2006, and the transfer was made before that date.
m The client requested payment of LTC services on or after September 12, 2006, and the transfer was made before February 8, 2006.
Note: Transfers made on or after February 8, 2006, by clients requesting payment of LTC services on or after September 12, 2006, must be evaluated for a possible transfer penalty regardless of the amount. There is no penalty if the client provides convincing evidence that the transfer was made exclusively for a purpose other than to establish or maintain eligibility for LTC services. See Transfers Made for Purposes Other Than to Qualify for MA.
Example:
Gorette applies for MA, including payment of LTC services, on September 24, 2006. She reports two transfers for which she did not receive adequate compensation: $150 in January 2006 and $175 in March 2006.
Action:
The January transfer meets the $200 transfer exception because the transfer date was before February 8, 2006. The March transfer must be evaluated for a transfer penalty because the transfer date is after February 8, 2006, and Gorette applied after September 12, 2006.
n $500 before July 1, 2002.
Note: If the client is in a transfer penalty period when the transfer is made, this rule does not apply and a penalty must be calculated.
l Excluded assets other than a homestead.
l Non-excluded assets if there is convincing evidence of intent to receive fair market value.
l Non-excluded assets if there is convincing evidence to show the purpose of the transfer was not exclusively to obtain or maintain MA for the client. See Transfers Made for Purposes Other Than to Qualify for MA.
l Transfer of assets to a representative of the spouse, provided the transferred assets are to be used for the sole benefit of the client's spouse.
l Non excluded assets to a child of any age of the client or the client's spouse if the child is blind or permanently and totally disabled. The child must have a verified blindness or disability determination.
In addition the following may be exempt from penalty if the transfer is made on or after August 11, 1993:
l Transfer of assets into a trust established for the sole benefit of a child (of any age) of a client or the client’s spouse, if the child has a blindness or disability determination from SSA or SMRT.
l Transfer of assets into a trust established for the sole benefit of any disabled person under age 65, who is disabled according to SSA or SMRT criteria.
l Transfer of assets into an irrevocable trust created on or after July 1, 2005 if the client is requesting payment of MA LTC services. All irrevocable trusts created on or after July 1, 2005 become revocable when the client is applying for payment of MA LTC/EW services. See Trusts Established On or After August 11, 1993.
Transfer of a homestead is exempt from penalty when the transfer is made to:
l A spouse.
l A child under age 21 of the client or the client's spouse.
l A child (of any age) of the client or the client's spouse if the child is blind or permanently and totally disabled. The child must have a verified blindness or disability determination.
l A child (of any age) of the client or the client's spouse, when both of the following occur:
n The child lived in the home for at least two years before the client entered the LTCF.
n Provided verifiable care that allowed the client to remain at home rather than enter a facility. A physician's statement of needed care is required.
l A sibling of the client or the client's spouse, when that sibling meets both of the following:
n Has equity interest in the home.
n Lived in the home at least one year immediately before the client entered the LTCF.
When the transfer of a homestead is exempt from penalty, it may be transferred while occupied or while vacant. It does not have to be the primary residence of the person receiving the transferred homestead. See Homestead Real Property for policy on when a homestead can be excluded as an asset.
Example:
Mordecai has resided in a LTCF for 12 months. He has no community spouse and his home is vacant. His daughter Lydia provides a physician’s certification that she lived with Mordecai and provided care to enable him to remain at home for three years before he entered the LTCF.
Action:
The property cannot be excluded as homestead real property for Mordecai or Lydia as neither is living there. However, Mordecai may transfer the home to Lydia without penalty.