19.40.35 Imposing a Transfer Penalty

*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***

Imposing a Transfer Penalty

This section describes the policy for imposing a transfer penalty and what actions to take after the transfer penalty ends.

The transfer penalty for an uncompensated transfer is applied to persons requesting or receiving MA payment of LTC services who are otherwise eligible for MA payment of LTC services. Follow the policy below when one or both spouses of a married couple receive MA payment of LTC services.

n If both spouses are receiving LTC services but only one spouse is requesting or receiving MA payment of LTC services, apply the entire transfer penalty to the MA-LTC spouse regardless of which spouse transferred the asset.

n If one spouse is currently an MA enrollee with a transfer penalty and the other spouse subsequently requests MA payment of LTC services, divide any transfer penalty based on an uncompensated transfer made by one or both spouses equally between both spouses. If one spouse is subject to an existing transfer penalty period at the time the other spouse requests MA payment of LTC services, divide any remaining transfer penalty evenly between the spouses.

m both spouses are receiving LTC services, divide any transfer penalty between them equally even if they began receiving LTC services on different dates.

m the transfer penalty is not exhausted when one spouse’s LTC services end, apply the remaining balance to the remaining spouse receiving LTC services.

m one spouse is receiving LTC services, apply the entire transfer penalty to the spouse who is receiving LTC services regardless of which spouse made the uncompensated transfer.

n If both spouses are MA enrollees with a transfer penalty split between the two of them and one spouse stops receiving LTC service, apply the total remainder of transfer penalty to the spouse receiving the LTC services.

l When the client first applied for or requested MA payment of long-term care services.

l Whether the client was receiving LTC services at the time the transfer was reported or discovered.

Begin the transfer penalty period with the first month for which the client is requesting and is otherwise eligible for MA payment of LTC services when the transfer was made within the lookback period.

Juan resides in an LTCF and requests MA payment of LTC services on July 15, 2009. He reported a transfer of $11,260 made on March 15. The penalty period is 2.25 months. Juan meets all other eligibility requirements for MA payment of LTC services in July.

Begin the transfer penalty in July 2009. Juan is ineligible for MA payment of LTC services for July and August, with a partial penalty amount for September. Add the partial amount to his LTC spenddown for September when eligibility for MA payment of LTC services is being re-determined.

Rita entered an LTCF on October 2, 2009. She applies for MA on December 15, 2009, requesting retroactive eligibility back to September. Rita meets all eligibility criteria. Rita reported a transfer of $11,260 made on February 10, 2006. The penalty period is 2.25 months.

Rita is MA eligible as of September 1. She is ineligible for MA payment of LTC services beginning in October (the month of admission to the LTCF) through November. She is responsible for the partial penalty amount in December 2009. Add the partial amount to her LTC spenddown for December when eligibility for MA payment of LTC services is being re-determined.

Tony applies for MA on April 1, 2010. He is requesting retroactive coverage back to March 1, the month he entered an LTCF. He made a transfer on January 25, 2006.

The reported transfer was not made within the lookback period. Tony is eligible for MA payment of LTC services beginning March 1, 2010.

When determining the begin date of a transfer penalty for people applying for one of the home and community-based waivers:

n If the person is otherwise eligible for MA payment of LTC services, except for the transfer penalty, apply the transfer penalty beginning the first month the client is otherwise eligible.

Note: Once the transfer penalty has been established, determine if the person is eligible for basic MA using the appropriate method of budgeting and household size.

m For the disability waivers CAC, CADI, BI and DD, deem the income and assets of a spouse living with the applicant when determining eligibility.

m For EW, if the applicant is living with a spouse, include the spouse in the household size and deem income and assets. If the applicant is not living with the spouse do not include the spouse in the eligibility determination.

Julia, age 35, lives with her husband Joe. She applies for MA payment of LTC services on March 10, 2010. She is not requesting retroactive coverage. An LTCC is completed the same day. The case manager sends the Lead Agency Case Manager/Worker Communication form (DHS-5181) indicating Julia requires an institutional level of care and she is anticipated to receive these services for 30 consecutive days in her home through the CADI waiver. Julia reports on the application that she transferred assets to her brother in the amount of $12,000 on December 12, 2008. Julia receives RSDI in the amount of $650 and Joe has earned income of $300 every other Friday. They jointly own a savings account with a verified balance of $2,500, Joe has a checking account with a balance of $895 and a CD valued at $3,000.

Using a household of one and not deeming Joe’s income or assets, Julia is otherwise eligible for MA payment of LTC services on March 1, 2010, following the eligibility criteria for the CADI waiver. Apply the transfer penalty beginning March 1.

Now determine if Julia is eligible for basic MA. Use a household of two and deem Joe’s income and assets. In order for Julia to be eligible for basic MA she would need to meet a $339 monthly spenddown and reduce their assets by $395.

Track the transfer penalty in MAXIS case notes (and on the STAT/TRAN panel) if the applicant is not eligible for basic MA. In addition to case notes and STAT/TRAN, enter the transfer penalty in MMIS on RLVA if the applicant is eligible for basic MA.

Shirley, age 72, lives with her husband Fred. She applies for MA payment of LTC services on March 12, 2010. She is not requesting retroactive coverage. An LTCC was completed March 12. The case manager sends the Lead Agency Case Manager/Worker Communication form (DHS-5181) indicating Shirley requires an institutional level of care and she is anticipated to receive the services for 30 consecutive days through EW. Shirley reports transferring $25,000 to her son on August 28, 2007. Shirley receives $950 RSDI and Fred receives $1,150 RSDI. The results of the Asset Assessment indicate Fred’s asset allowance is the minimum amount of $31,094. Their combined assets total $33,900.

Use an LTC income calculation to determine if Shirley is otherwise eligible because her income is below the SIS-EW limit. Shirley is asset eligible because the couples’ total counted assets are below the $3,000 asset limit and the $31,094 community spouse asset allowance. Shirley is otherwise eligible for MA payment of LTC services except for the transfer penalty. Begin the transfer penalty March 1, 2010.

Now determine if Shirley is eligible for basic MA using a community income calculation. Include Fred and deem his income and assets in the determination. Subtract the 75% FPG standard for a household of two ($911) from the combined income ($2,100); Shirley’s medical spenddown is $1,189. The combined assets total $33,900 which is above the $6,000 asset limit for a household of two. Shirley and Fred would need to reduce their assets and provide verification of medical expenses that meet her spenddown in order to be eligible for basic MA.

Do not include Fred when determining basic MA eligibility if Shirley is living in a housing with services establishment and Fred is living separately in the community.

Track the transfer penalty in MAXIS case notes (and on STAT/TRAN) if the applicant is not eligible for basic MA. In addition to case notes and STAT/TRAN, enter the transfer penalty in MMIS on RLVA if the applicant is eligible for basic MA.

Victor, age 68, applies for MA payment of LTC services on March 11, 2010. He did not request retroactive coverage. An LTCC was completed the same day. The case manager sends the Lead Agency Case Manager/Worker Communication form (DHS-5181) indicating Victor requires an institutional level of care and he is anticipated to receive the services for 30 consecutive days in his home through EW. Victor reports transferring $25,000 to his daughter on February 5, 2008. Victor receives RSDI of $1,150 and a pension of $1,000. He has Medicare Part B premium of $110.50 and other health insurance of $150. Victor submitted $750 in old unpaid medical bills and the case manager estimates that the LTC services he would receive under the waiver would total $1,250 a month.

Victor does not have a community spouse and his income is above $2,022, the SIS-EW limit. Use a community income calculation for Victor. He will need to be able to meet a medical spenddown in order to be considered otherwise eligible. Victor’s monthly medical spenddown is $1,212. ($2,150 - $110.50 - $150 - $750). Since he is not currently receiving any services, do not include the case manager’s estimated cost of LTC services when determining if Victor can meet a medical spenddown. Victor does not meet his monthly medical spenddown with the submitted bills. The transfer penalty cannot begin because he is not otherwise eligible. Record this finding in Case Notes.

Begin the transfer penalty period for the first month for which you can give 10-day notice when an enrollee who is currently receiving MA payment of LTC services makes an uncompensated transfer.

The enrollee is ineligible for MA payment of LTC services for the entire calculated penalty period.

Exception: To impose the full penalty period, the agency must send 10-day notice so that the penalty period will begin no later than the month following three full calendar months from the date the transfer was reported to or otherwise discovered by the county agency. If the agency does not send a 10-day notice within the three calendar months, send a 10-day notice as soon as possible to impose any remaining months of the penalty period.

Burke is receiving MA payment of LTC services. On October 5, 2009, he reports he refused an inheritance on June 15, 2009. The transfer penalty is 15.80 months.

Provide 10-day notice to begin the penalty period on November 1, 2009. Burke will be ineligible for MA payment of LTC services through January 2011, with a partial penalty for February 2011. He remains eligible for basic MA. However, add the partial amount to his LTC spenddown, waiver obligation or medical spenddown (if EW) for February when eligibility for MA payment of LTC services is being re-determined.

Matsui receives MA payment of LTC services. He reported making a transfer on November 10, 2009. The agency received all information needed to calculate the transfer penalty period on November 17, 2009, but did not act on the information until March 10, 2010. The penalty period is 5.80 months and must begin no later than March 1, 2010 (three full calendar months after the transfer was discovered).

Because the agency did not act in time to impose the full transfer penalty period, send 10-day notice to impose the remaining 4.80 months of the transfer penalty period effective April 1. Matsui is ineligible for MA payment of LTC services through July 2010, with a partial penalty for August. He remains eligible for basic MA. However, add the partial amount to his LTC spenddown, waiver obligation or medical spenddown (if EW) for August when eligibility for MA payment of LTC services is being re-determined.

Enrollees must submit a new request for MA payment of LTC services (DHS-3543) when the transfer penalty ends in order to determine if the enrollee can receive MA payment of LTC services. The DHS-3543 must be completed even when the client remains eligible for basic MA.

If the client remains eligible for basic MA while the transfer penalty is in place, send the client a Request for Payment of LTC Services form (DHS-3543) the month before the last full month of the transfer penalty. Create a TIKL to track the end of the transfer penalty to send the DHS-3543 to the client.

When a transfer penalty is recorded in MMIS on RLVA the ineligibility span is coded with an ”I” with the begin and end dates of the full months of the transfer penalty. Add another open-ended ineligibility span with an ”U” code (pending receipt of DHS-3543) for the first month after the transfer penalty ends. This span will ensure that there will be no payment of LTC services after the transfer penalty until the DHS-3543 has been received and a new determination of eligibility for MA payment of LTC services has been made.

Marvin entered an LTCF on April 5 and requested MA payment of LTC services to begin in April. He reported an uncompensated transfer that resulted in a transfer penalty of 5.67 months. He is otherwise eligible for MA payment of LTC services and he is eligible for basic MA effective April 1. The transfer penalty begins in April and goes through August with a partial amount in September.

Approve basic MA eligibility and set TIKL as a reminder to send Marvin the DHS-3543 in August. Code RLVA in MMIS with an ”I” for April through August and an ”U” for September and ongoing. Marvin will need to submit the DHS-3543 to have his eligibility for MA payment of LTC services re-determined for September and ongoing.

l The person who received the transfer actively solicited the transfer with the intent to assist the person to qualify for or retain MA eligibility.

l The person who received the transfer knew or should have known that the transfer was being made to assist the client to qualify for or maintain MA eligibility.

n MA was approved and LTC services were paid by the MA program during a transfer period.

n The person who received the transfer knew or should have known that the transfer was being made by a resident of an LTCF or an enrollee receiving waiver services at the time of the transfer.

m For the applicant: the applicant, or the applicant’s representative, failed to report a transfer at the time of application

m For the enrollee: the enrollee, or the enrollee’s representative, failed to report a transfer within 10 days of the transfer.

n The transfer was made on or after July 1, 2005, it was reported timely, and the county was unable to send a 10-day notice for the first month of the transfer penalty.

Ricky has been an MA enrollee for five years and is currently receiving MA payment of LTC services. He reported on May 21 that he made a transfer on May 1. His worker determines the transfer penalty period is 1.27 months.

The transfer penalty begins in June. Ricky will be ineligible for payment of LTC services as of June 1. July is Ricky’s partial month penalty. He will be responsible to pay the partial amount of LTC services, after which MA will begin paying LTC services. Refer the case to the county attorney’s office to determine if a cause of action will be filed, since Ricky received payment of LTC services (June) during a transfer penalty.

Mr. Smith lives in an LTCF and was approved as an MA enrollee on May 1. On August 25, Mr. Smith reports that he received a $10,000 inheritance from the estate of his deceased brother on August 17. He also reported that he immediately gave the money to his son.

m Mr. Smith made an improper transfer because he did not receive adequate compensation for the $10,000 he gave to his son.

m Mr. Smith reported the transfer timely because he reported it within 10 days of receiving the inheritance.

m Mr. Smith’s transfer penalty cannot be applied for September because a 10-day notice of termination of LTC services payment cannot be given.

m Mr. Smith’s transfer penalty is applied for October 1 with the partial penalty amount applied for November.

m A cause of action must be filed for the lesser amount of the uncompensated value of the transfer or the amount of LTC services paid by MA for the month of September.

Refer to Liens and Estate Recovery for more circumstances when a cause of action may be filed against a person who received assets for less than fair market value from an MA LTC client who died before the transfer was reported or a transfer penalty could be imposed.

For MA cases only, refer cases to the county attorney to determine if a cause of action against the person who received the transfer is needed.

The maximum amount that can be collected under a cause of action is whichever amount is less of the following:

Chapter 19 - Assets	Effective: January 1, 2012
19.40.35 - Imposing a Transfer Penalty	Archived: June 1, 2016 (Previous Versions)