|
Effective: October 1, 2007 |
|
|
19.40.25ar3 - Determining Uncompensated Value (Archive) |
Archived: July 1, 2010 |
The previous section, Purchases as Transfers provided instructions to determine the uncompensated value when clients purchase promissory notes, loans, mortgages or life estates. This section describes the steps to determine if a client has received adequate compensation for other transfers of income or assets. Transfers without adequate compensation may be subject to transfer penalties. The value used to determine the penalty is the uncompensated value.
Determine the uncompensated value of all transfers made during the appropriate lookback period or while the client is receiving MA payment for long-term care services or GAMC.
There are no transfer provisions for MinnesotaCare or GHO.
To determine the uncompensated value of:
l An annuity, see Annuity Transfers.
l A life estate, see Life Estates - Transfers or Purchases as Transfers.
l A trust, see Trusts - Transfer into a Trust.
l The purchase of a promissory note, loan or mortgage, see Purchases as Transfers.
To determine the uncompensated value of all other transfers follow these steps:
1. Determine the value of the following on the transfer date:
n The fair market value (FMV) of an asset.
n The amount of income transferred. Include the full value of all future income the person making the transfer would have received if the transfer results from an irrevocable waiver of income.
2. Subtract all encumbrances (money owed) on the asset or income at the time of transfer.
3. Subtract any compensation received by the client.
n Count services provided to the client as compensation if:
m The care or services directly benefited the person.
m The amount of compensation was reasonable, meaning it is consistent with a charge for a similar service performed in the community.
n If a relative provided the care, require a notarized written agreement signed and dated by the parties involved on or before the start date of the care/service. The agreement must include all of the following:
m An itemized list of services provided.
m The time allocated for each service.
m The period of time the agreement covers.
Exception: Do not require a notarized statement if the payment for the care or service to the relative is made within 60 days after the care/service was provided.
n A notarized statement is not required if a non-relative provided the care.
4. If the value of the services equals or exceeds the net value of the transferred income or asset, the client received adequate compensation. If the value of the services is less than the value of the transferred asset or income, the difference is the uncompensated amount.
Example:
Norman entered an LTCF in June 2007. He applies for MA for payment of LTC services the following April because his assets are now within the limit. He reports giving his daughter Rhiannon $10,000 in March and states it was to repay her for providing home care services to him before he entered the facility.
Action:
The worker requests a notarized written agreement. Norman submits a statement signed and dated by him and Rhiannon on the same day he transferred the money. The transfer is uncompensated because the agreement was not signed before the care was provided and payment was made more than 60 days after the care ended when Norman entered the LTCF.
Example:
Marietta enters an LTCF and applies for MA for payment of LTC services that month. She reports giving her neighbor, Ron, $5,000 on the day before she entered the LTCF to compensate him for helping her around the house for the past few years. The services Ron provided included changing the oil on Marietta’s car several times, routine lawn care, leaf and snow removal, and repainting the back porch and trim last summer.
Action:
No notarized agreement is required because Marietta and Ron are not related. The worker contacts area businesses and determines that a painter would have charged $1,500 for the back porch and trim. A local mechanic would have charged $300 total for the oil changes. The lawn care, leaf removal, and snow removal would have cost $1,000 over the period of time Ron performed these services. Marietta received compensation in the form of services for $2,800 of the transferred amount. The remaining $2,200 is uncompensated.