Adult Medicaid Manual MA-2240 TRANSFER OF ASSETS

XiI. TRANSFER Sanction

A. Determine the Uncompensated Value of Transfer(s)

1. List each non-allowable transfer occurring on or after the lookback date through the current date.

2. Determine the date of transfer. Calculation for sanction periods vary depending on the date of the transfer(s). Refer to XII.B. below and XII.C. below to determine the sanction period based on the transfer(s) date. Refer to XI. above for dates of transfer in special situations.

3. Determine the value of each transferred asset based on policy in MA-2230, Financial Resources. For transfers of tenancy-in-common interest in real property, see IX.E. above.

a. For the transferred asset, establish the market value (tax value) at the time of the transfer.

NOTE: The value of certain transferred assets can be rebutted. If an asset's value has already been successfully rebutted as part of the application process, use the established rebutted value.

b. Subtract any encumbrances at the time of transfer to establish the equity of the asset. The remainder is the equity.

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(XII.A.3.)

c. Subtract the amount or value received, if any, from the equity. This is the uncompensated value.

d. See IX.A, IX.B, and IX.C above for exceptions to the rule when evaluating annuities, promissory notes, loans, mortgages, or other property agreements, and life estates.

B. Determine the Sanction Period for Transfers Occurring prior to November 1, 2007

The length of the sanction period is based on the uncompensated value of the transfer, and for transfers prior to November 1, 2007 it begins with the month of transfer. Only determine countable assets for transfers during this period with the exceptions noted in VII.B. above.

1. Total the uncompensated value of transfers in the lookback period that took place prior to November 1, 2007. If the total uncompensated value of transfers is less than the current average private NF rate of $6,300, there is no sanction. This private NF rate is subject to change. DMA will issue changes in the rate.

2. Divide the total uncompensated value for all transfers by $6,300.

3. Round this number down to the lowest whole number.

4. The result is the number of months of sanction.

EXAMPLE: Mr. Smithy has never applied for Medicaid. He entered a nursing facility in May 2012 and applied for Medicaid on June 15. The lookback period begins November 1, 2007. He made one transfer in the lookback period. He transferred real property with an equity value of $196,560 on August 20, 2009, receiving no compensation.

$196,560 / $6,300=31.2. This is a 31 month sanction beginning June 2012.

5. Begin the sanction period with the month the total transfer(s) equals $6,300.

EXAMPLE: Mr. Johnson has never applied for Medicaid. He entered a nursing facility on May 31, 2012, and applied for Medicaid on July 5. The lookback period begins November 1, 2007. He made the following transfers during the lookback period: $2,600 on January 20, 2010, $2,000 on September 6, 2011, and $2,000 on November 5, 2012.

On November 5, 2012, the total value of assets transferred in the lookback period is $6,600. That results in a one-month sanction ($6,600 / $6,300=1.05) that begins and ends in November 2012.

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(XII.B.)

6. For other transfers that occur during the sanction period, add the uncompensated value of those transfers to the total and divide the total by the average private NF rate.

a. Round down each total. This is the number of months in the sanction period so far.

b. Stop adding and end the sanction period with the first month in which:

(1) No transfer occurred, and

(2) No sanction applies to that month from an earlier transfer.

7. Begin a new sanction period with the month the total transfer(s) equals $6,300.

8. Never begin a new sanction period until the previous period has expired, and no transfer was made in the month following the last month of the expired sanction period.

EXAMPLE: Mr. Wentzl entered a nursing facility on May 10, 2012. He applied for Medicaid on May 14. His lookback period begins November 1, 2007. He made a transfer of $10,500 in June 2009, another transfer of $10,000 in July 2009, and another transfer of $10,500 in August 2009. Alone each of these is a one-month sanction. However, because a subsequent transfer occurs in the month following the month the sanction period ends, it is added to the previous transfer. In this case the total transfer is $31,500 for a 5-month sanction beginning with the first transfer in June. ($31,500 / $6,300 = 5)

9. When both spouses are institutionalized, requesting CAP, or receiving in-home health services and supplies, divide the sanction period between the spouses. The total sanction imposed on both spouses cannot exceed the number of months of the sanction period.

EXAMPLE: If the sanction period is 10 months, each spouse has a 5-month sanction period. If the sanction period is 11 months, assign one spouse a 5-month sanction period and one spouse a 6-month sanction period.

10. For a transfer made prior to November 1, 2007, if a community spouse is institutionalized after the ISP, requests CAP or receives in-home health services and supplies, and a sanction period is still in effect for the institutionalized spouse:

a. Divide the remaining sanction period equally between the spouses.

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(XII.B.10.a.)

EXAMPLE: A 10-month sanction period has been assigned to the institutionalized spouse. After 6 months have passed, the community spouse enters a facility, applies for CAP, or requests in-home health services and supplies. Divide the remaining 4 months of the sanction period equally between the two. If only 3 months remain, assign one spouse a 2 month sanction period and the other spouse a one month sanction period.

b. Do not establish a new lookback period for the former CUSP. The lookback date is the same for financially responsible spouses. Refer to V.B. above.

c. Evaluate for additional transfer of assets by the former CUSP on or after the lookback date. A non-allowable transfer by the CUSP after Medicaid eligibility is established for the ISP is not a sanctionable transfer for the ISP. Add any additional sanction months to the CUSP’s portion of the shared sanction. Refer to V.B. above.

11. If a community spouse is institutionalized on or after November 1, 2007, the ISP was institutionalized prior to November 1, 2007, and the CUSP now requests CAP or PACE services, or receives in-home health services and supplies, and a sanction period is still in effect for the institutionalized spouse:

a. Determine the CUSP’s lookback period. Refer to V. above.

b. Evaluate all transfers that are in the CUSP’s lookback period.

c. Determine if the transfer that resulted in the ISP’s sanction period occurred within the CUSP’s lookback period.

(1) Divide the remaining sanction period between the spouses. If the amount is not equal, the larger amount can be given to either spouse. Determine what is best for both spouses. The total sanction imposed on both spouses cannot exceed the number of months of the sanction period.

(2) Determine any additional sanction periods to be imposed on the CUSP.

(3) Add additional sanction periods to the end of existing sanction period.

d. Evaluate for additional transfer of assets by the former CUSP on or after the lookback date. A non-allowable transfer by the CUSP after Medicaid eligibility is established for the ISP is not a sanctionable transfer for the ISP.

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(XII.B.11.d.)

EXAMPLE 1: A 10-month sanction period has been assigned to the institutionalized spouse. After 5 months have passed, the community spouse enters a nursing facility. Divide the remaining 5 months of the sanction period equally between the two. In this case, assign one spouse (e.g. the ISP) a 2 month sanction period and the other spouse (e.g. the CUSP) a 3 month sanction period.

It is further determined that the CUSP has a 4-month sanction period for additional transfers. The CUSP now has a 7 month sanction period and the ISP a 2 month sanction period.

EXAMPLE 2: An 80 month sanction period has been assigned to the institutionalized spouse. After 65 months have passed, the community spouse enters a nursing facility. The transfer occurred more than 60 months prior to the former CUSP’s institutionalization and application for Medicaid. The remaining sanction period can not be divided between spouses. The ISP must serve the remaining sanction period.

12. Once a sanction period is imposed, key the sanction end date in the special review field on the DSS-8125.

13. Key the entire sanction period on the transfer of assets tracking screen. Refer to EIS-3900, Assets Transfer Tracking Screen, for data entry instructions.

C. Determine the Sanction Period for Transfers Occurring on or after November 1, 2007

The length of the sanction period is based on the uncompensated value of the transfer. For transfers on or after November 1, 2007, it begins on the date specified in XII.C.1. Use DMA-5181, Calculating Penalty Period, as a tool to assist in calculating the penalty period.

1. The date the sanction period begins depends upon when the transfer occurred. The sanction period for transfers that occur prior to November 1, 2007, should be determined based on policy in effect at that time. Note: This date may occur on any day of the month.

a. When the transfer occurs prior to the individual becoming eligible for Medicaid for institutional services, the sanction period begins on the date when he meets all other eligibility criteria and

(1) For nursing facility cases the first day he is in a nursing facility with an approved FL-2, or

(2) For CAP cases the day he has an approved plan of care and an FL2 and is authorized for Medicaid. If he had to meet a deductible it is the date the deductible is met.

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(XII.C.1.a.)

(3) For PACE cases the day he would have been authorized by Medicaid to receive PACE services and he is still enrolled in PACE.

EXAMPLE: (Institutionalized applicant not otherwise eligible) An applicant is determined to have made a non-allowable transfer after November 1, 2007, and is also determined to have excess assets for the month nursing home coverage is requested. The sanction period for the transfer of assets would not be applied since the individual is not otherwise eligible due to excess assets.

b. An a/r who has a deductible does not meet all other eligibility criteria and is not otherwise eligible until the day the deductible is met. The sanction period begins on the day the deductible is met.

(1) If a deductible is met during the month of entry into a nursing facility, the sanction period begins the day the deductible is met.

(2) If the deductible is not met during the month of entry into the nursing facility, the sanction period begins the first day of the next month, the first day of long term care budgeting.

Example: An individual applies in January, enters a nursing facility in February, and transferred an asset in December, resulting in a sanction period of five months. In determining whether he is “otherwise eligible” for institutional services, and therefore when to begin the sanction period, you must consider his PLA deductible for the months in the CP through his month of entry. That is, you are budgeting as though he was going to be eligible for cost of care, only for the purpose of determining when the sanction begins. Calculate a PLA deductible for two months, January and February (through the month of entry.) Determine whether this deductible can be met. If the deductible can be met in January, the sanction begins on February 1^st. If the deductible is met in February, the month of entry, then the sanction begins on the date the deductible is met. If the deductible is not met by the end of February, apply the sanction beginning on March 1^st.

c. When the transfer occurs after an individual becomes eligible for Medicaid for payment of institutional services, the sanction period begins the first day of the month following the notice of the sanction period. Implement the sanction period as quickly as possible after the notice period expires.

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(XII.C.1.)

d. For a sanction that cannot begin prior to the first day of the month that follows three full calendar months from the date of the report or discovery of a transfer:

(1) The beginning date of the sanction period is the first day of the month following three full calendar months from the date of the report or discovery of a transfer (month 4).

(2) If the sanction cannot be keyed until after month 4 due to notification requirements, the period beginning with month 4 until the month the action is effective must be referred to the local dss Program Integrity Section for recoupment.

(3) Key the remaining sanction period in the AT screen.

If the entire sanction period ends prior to the month the sanction can be imposed due to notice requirements, refer the entire sanction to the local dss Program Integrity Section and do not key a sanction period.

EXAMPLE:

An on-going LTC recipient has a January – June certification period.

An unallowed transfer was made in January.

The county learned of the transfer in February.

The sanction period is determined to be 17 ½ months.

The sanction begin date is no later than June 1^st (month 4). However, the sanction cannot be made effective until July 1^st due to notification requirements.

Refer the overpayment for June to Program Integrity.

Key the remaining 16 ½ months as the sanction period.

e. The sanction period cannot begin until after any existing sanction period has expired.

NOTE: A sanction period cannot be triggered by receipt of in-home health services and supplies. In-home health services can only be sanctioned if they are received in a sanction period that began due to receipt of institutional services.

2. Calculate the sanction period.

a. Total the uncompensated value of all transfers in the look back period. Transfers prior to November 1, 2007, should not be totaled with transfers that occur on or after November 1, 2007. Determine a sanction period on any and all transfers regardless of whether the amount transferred is over or under the private NF rate.

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(XII.C.2.)

b. Divide the total uncompensated value for all transfers by the private NF rate, $6,300.

The result is the length of the sanction period. Do not round down to the nearest whole month. Round the amount to 2 decimals.

EXAMPLE: The a/r had a total of $57,291 uncompensated transfers in the lookback period. 57,291 ÷ 6,300 = 9.0938095 months, rounded to 9.09 months for the sanction period.

c. Multiply the remaining fractional amount by 31.

(1) The result is the additional number of days to be added to the sanction period.

(2) Drop any fractional portion of a day.

EXAMPLE CONTINUED: 0.09 × 31 = 2.79 days. Drop the portion of the day and 2 days will be added to the 9-month sanction period.

d. Calculate the sanction period, beginning on the date specified in XII.C.1. above.

(1) Determine the sanction period for the whole months calculated in XII.C.2.b. above.

EXAMPLE CONTINUED: The sanction begin date is August 5 and the a/r is sanctioned for 9.09 months (9 months and 2 days). The 9 month sanction August 5 through September 4 is the first month. The 9-month sanction runs from August 5 – May 4.

(2) Add the fractional days to the sanction determined in 2.d.(1) above.

EXAMPLE CONTINUED: Add the 2 days fractional sanction. The sanction period now runs from August 5 through May 6.

(3) Authorize CAP cases the day after the last day of the sanction.

(a) Enter the CAP effective date in EIS.

(b) When the individual becomes eligible for CAP, re-calculate the deductible for the certification period according to instructions in MA-2280, Community Alternatives Program (CAP), Medicaid Eligibility, II.A.9.d. and III.F.

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(XII.C.2.d.)

(4) For cases with PML, convert the number of days in the sanction-ending month to a dollar amount.

(a) Multiply the number of days in the month (if less than the full calendar month) by $210 (average private daily rate).

(b) Add this to the first month’s PML amount regardless of whether the person has a zero PML. Do not deduct any amount for UMN or income protected for spouse or dependents at home.

EXAMPLE CONTINUED: The sanction period ends May 6. Multiply 6x$210 = 1260. $1260 is added to the first month’s PML.

(c) If the full sanction period (including the fractional days) ends on the last day of the sanction-ending month, do not convert to a dollar amount. The a/r is ineligible for that entire month.

EXAMPLE CONTINUED: The whole months of the sanction period end on May 4. Instead of 2 days the fractional days are calculated as 27. The full sanction now ends on May 31. Do not multiply by the private rate ($210). The a/r is ineligible for the entire month of May. Eligibility begins on June 1. Calculate the PML for June following LTC budgeting procedures in MA-2270, Long Term Care Need and Budgeting.

3. Once a sanction period is imposed, key the sanction end date in the special review field on the DSS-8125.

4. Key the entire sanction period on the transfer of assets tracking screen. Refer to EIS-3900, Assets Transfer Tracking Screen, for data entry instructions.

D. Sanction Period When an Individual Leaves the Institution, CAP, or PACE

A sanction period runs continuously from the first date of the sanction period through the end of the sanction, regardless of whether the individual remains in or leaves the institution or continues to need CAP, PACE, or in-home health services and supplies.

E. Lifting or Reducing the Sanction Period

1. When all transferred assets are returned to the a/r, evaluate if the sanction should be lifted or modified.

2. Assets are considered returned when:

a. The actual asset is transferred back to the a/r, or

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(XII.E.2.)

b. The a/r receives fair market value as compensation for the asset after the transfer. Value may be received in cash or money spent on the client's behalf. Examples of money spent on the client's behalf are: children pay for private LTC, buy a burial plot for their parents, or pay old bills for their parents. The cash or money spent on the client’s behalf does not have to come from the person to whom the asset was originally transferred.

c. Verify any money spent on the client's behalf is, in fact, paid. For example, the nursing facility verifies the outstanding bill has been paid.

3. If a sanction period has already been assigned and nursing home cost of care denied, when all the transferred assets are returned, the entire sanction period is "erased". However, the returned assets are countable to the a/r in determining eligibility for the entire period they were previously not in the a/r’s name.

a. Determine eligibility for nursing home cost of care based on the date of application.

b. Reverify assets considering the returned assets as if a/r owned them throughout the sanction period.

c. Erase the sanction period beginning with the first month of the sanction period.

4. When only a portion of the transferred asset is returned to the a/r, you must count this portion as a countable asset to the a/r at the point the sanction period began. If this makes the a/r ineligible, then the sanction period begin date must change to the point at which the a/r is institutionalized and otherwise eligible for Medicaid.

a. Determine eligibility for nursing home cost of care based on the date of application.

b. Reverify assets considering the returned assets as if a/r owned them throughout the sanction period.

c. Modify the sanction period.

The sanction period begins when the assets are reduced to the resource limit since the sanction cannot begin until the individual becomes otherwise eligible for Medicaid.

EXAMPLE: A transfer of $63,000 results in a 10 month sanction period, January 2010 through October 2010. The family returns $31,500 in May 2010. The sanction period should be reduced by 5 months. The sanction should be lifted for January 2010 through May 2010. The a/r would continue to be sanctioned from June through October. When the sanction period was modified by 5 months, the a/r was not otherwise eligible for Medicaid during the January 2010 through May 2010 period because of excess assets. Therefore, the sanction period does not begin until the a/r becomes otherwise eligible for Medicaid, June 2010 through October 2010.

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(XII.)

F. Budgeting During Sanction Period

1. If an individual is sanctioned for payment of nursing home cost of care, CAP or in-home health services and supplies due to transfer of assets, continue to determine eligibility for other Medicaid services.

2. If an individual is sanctioned for payment of PACE services due to transfer of assets and does not disenroll from the PACE Program, he is ineligible for Medicaid in any aid program/category during the sanction period. (Refer to MA-2275, Program of All-Inclusive Care for the Elderly.)

3. Budget as PLA. Refer to MA-2260, Financial Eligibility Regulations-PLA and MA-2270, Long Term Care Need and Budgeting. If it is determined that an individual must meet a deductible, see XII.C.1.b. above.

4. Continue to allow the community spouse resource protection when the spouse in LTC is budgeted PLA because of a transfer of assets sanction. (However, the community spouse income allowance does not apply in pla budgeting.)

G. Applicant/Recipient Fails to Provide Information to Establish Transfer or Sanction Period

If the a/r fails to provide the necessary information to determine if a non-allowable transfer has occurred or the length of the sanction period, deny the application for failure to provide necessary information. Approve as PLA if eligible and enter a sanction on the AT screen with an end date of 11/30/10. Follow policy for requesting information in MA-2303, Verification Requirements for Applications, for applicants and in MA-2320, Redetermination of Eligibility, for recipients.

If unable to determine if a non-allowable transfer has occurred or the length of the sanction period, use the DMA-5097/5097S, Request For Information, to request the necessary information from the a/r.