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Effective: December 1, 2006 |
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19.40.20ar1 - Transfer Exceptions (Archive) |
Archived: October 1, 2007 |
Some transfers meet an exception which means the transfers are not considered improper and are exempt from penalty. 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 transfers without adequate compensation are considered improper. There are no exceptions.
The following transfers are exceptions to transfer provisions, are not considered improper and 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 July 1, 2006.
m The client requested payment of LTC services on or after July 1, 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 July 1 must, regardless of the amount, be evaluated for a possible transfer penalty.
Example:
Gorette applies for payment of LTC services on July 24, 2006. She reports, at the time of application, 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 July 1, 2006.
Example:
Alice is currently receiving MA benefits. Today Alice gives her neighbor, who is short on cash, $100. This is the first time she has given anything away and she does not want to be paid back.
Action:
This is a transfer of assets. Alice is giving away money and is not being adequately compensated. Because the amount is less than $200, the transfer is exempt and no penalty will be calculated.
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.
Example:
Doris and Robert are married. In January 2002, Robert gave his grandson his car valued at $300. In the same month Doris gave the same grandson $200 for college. In January of last year Robert gave the same grandson $4500 for college.
Action:
In January 2002 Doris and Robert transferred a total value of $500 to their grandson. Because it is prior to July 1, 2002, the transfer meets an exception. The transfer of $4500 made last year, however, does not meet an exception because it is over $200. The entire $4500 transfer will be used to determine the penalty.
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.
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 applying for 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.
Transfer of a homestead is an exception, not considered improper and exempt from penalty:
l If there is convincing evidence:
n Of intent to receive fair market value.
n To show the purpose of the transfer was not exclusively to obtain or maintain MA for the client.
l When the transfer is made to:
n A spouse.
n A child under age 21 of the client or the client's spouse.
n 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.
n A child (of any age) of the client or the client's spouse, when both of the following occur:
m The child lived in the home for at least two years before the client entered the LTCF.
m 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.
n A sibling of the client or the client's spouse, when that sibling meets both of the following:
m Has equity interest in the home.
m 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 exempted as a homestead for Mordecai or Lydia as neither is living there. However, Mordecai may transfer the home to Lydia without penalty.
The following transfers to a spouse are not considered improper and are exempt from penalty:
l Assets of clients receiving CAC, CADI, MR/RC, and TBI waiver services.
l Transfer of assets to client’s spouse or to another for the sole benefit of the client’s spouse.
n Although this type of transfer does not result in penalty, the transferred amount (including the corpus of a trust for the sole benefit of the spouse) is counted in the asset assessment and considered available at application in the division of assets. See also Transferring Income-Producing Assets.
l Applicants residing in an LTCF before October 1, 1989, may make a one-time only transfer of assets to their spouses if all the following conditions apply:
n The spouse is not an MA enrollee.
n The amount transferred, when added to the community spouse's verified non-excluded assets, totals $10,000 or less at the time of transfer.
n The transfer must be made between the first of the month before the month of application and 15 days after the date the local agency notifies the applicant of the need to reduce assets or the date of the local agency's action on the application, whichever is later.
Example:
Bertha has resided in an LTCF as a private pay client since 1987. Her husband Frank remains in the community and has private health insurance. Frank applies for MA for Bertha on June 1, because they have exhausted most of their resources. Bertha transferred $1,000 of her own assets to Frank on May 15th. Together they have $9,000 in joint accounts.
Action:
On June 15, the worker determines that Bertha has excess assets for MA. The worker issues a notice stating Bertha is over assets but that she can reduce her assets by transferring them to Frank.
Bertha’s transfer meets a transfer exception and is not improper. Bertha may also transfer her share of the jointly held funds to Frank because the total of all the funds to be transferred is $10,000. The transfer must be completed by June 30.