Revision 09-4; Effective December 1, 2009

The following rules are taken from Subchapter C, Financial Requirements, Division 4, Transfer of Assets, Transfer of Assets on or after Feb. 8, 2006.

§358.401. Transfer of Assets on or after February 8, 2006

(a) This section applies to a person in an institutional setting whose date of application or program transfer request date is on or after October 1, 2006, and who takes an action defined by this section to be a transfer of assets on or after February 8, 2006.

(b) The Texas Health and Human Services Commission (HHSC) uses the definitions under the provisions of §1917(e) of the Social Security Act (42 U.S.C. §1396p(h)).

(1) Assets include all income and resources of a person and of the person's spouse, including any income or resources that the person or the person's spouse is entitled to but does not receive because of action:

(A) by the person or the person's spouse;

(B) by an individual, including a court or administrative body, with legal authority to act in place of or on behalf of the person or the person's spouse; or

(C) by any individual, including any court or administrative body, acting at the direction or upon the request of the person or the person's spouse.

(2) The term "income" has the meaning given such term in §1612 of the Social Security Act (42 U.S.C. §1382a).

(3) The term "resources" has the meaning given such term in §1613 of the Social Security Act (42 U.S.C. §1382b), without regard (in the case of a person in an institutional setting) to the exclusion of the home.

(c) In this section, "person" includes the applicant or recipient as well as:

(1) the person's spouse;

(2) an individual, including a court or administrative body, with legal authority to act in place of or on behalf of the person or person's spouse; and

(3) any individual, including a court or administrative body, acting at the direction or upon the request of the person or the person's spouse.

(d) HHSC applies the penalty for transfers of assets under the provisions of §1917(c)(1) of the Social Security Act (42 U.S.C. §1396p(c)(1)). The provisions of §358.402 of this division (relating to Transfer of Assets before February 8, 2006) continue in effect for transfers on or after February 8, 2006, except to the extent that they are inconsistent with this section.

(1) This paragraph establishes HHSC's treatment of transfers made on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005.

(A) Disposing of assets. If a person in an institutional setting or the spouse of such a person disposes of assets for less than fair market value on or after the look-back date specified in subparagraph (B) of this paragraph, the person is ineligible for medical assistance for services described in subparagraph (C) of this paragraph during the period beginning on the date specified in subparagraph (D) of this paragraph and equal to the number of months specified in subparagraph (E) of this paragraph.

(B) Look-back period.

(i) The look-back date specified in this subparagraph is a date that is 36 months (or, in the case of payments involving a trust or portions of a trust that are treated as assets disposed of by the person pursuant to §358.402(e)(2) of this division or in the case of any other disposal of assets made on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, 60 months) before the date specified in clause (ii) of this subparagraph.

(ii) The date specified in this clause, with respect to:

(I) a person in an institutional setting, except a person receiving services under a §1915(c) waiver program, is the first date as of which the person both is in an institutional setting and has applied for medical assistance under the Texas State Plan for Medical Assistance; or

(II) a person receiving services under a §1915(c) waiver program, is the date on which the person applies for medical assistance under the Texas State Plan for Medical Assistance or, if later, the date on which the person disposes of assets for less than fair market value.

(C) Ineligible for medical assistance for services. A person in an institutional setting who disposes of assets as described in subparagraph (A) of this paragraph is ineligible for the following services:

(i) nursing facility services;

(ii) a level of care in any institution equivalent to that of nursing facility services; and

(iii) §1915(c) waiver program services.

(D) Beginning date of penalty.

(i) In the case of a transfer of asset made before February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, the beginning date of penalty, specified in this subparagraph, is the first day of the first month during or after which assets have been transferred for less than fair market value and which does not occur in any other periods of ineligibility under this subsection.

(ii) In the case of a transfer of asset made on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, the beginning date of penalty, specified in this subparagraph, is the first day of a month during or after which assets have been transferred for less than fair market value, or the date on which the person is eligible for medical assistance under the Texas State Plan for Medical Assistance and would otherwise be receiving institutional level of care described in subparagraph (C) of this paragraph based on an approved application for such care but for the application of the penalty period, whichever is later, and which does not occur during any other period of ineligibility under this subsection.

(E) Length of ineligibility period.

(i) With respect to a person in an institutional setting, except a person receiving services under a §1915(c) waiver program, the number of months of ineligibility under this subparagraph for such person is equal to the total, cumulative uncompensated value of all assets transferred by the person (or person's spouse) on or after the look-back date specified in subparagraph (B)(i) of this paragraph, divided by the average monthly cost to a private patient of nursing facility services in the state at the time of application.

(ii) With respect to a person receiving services under a §1915(c) waiver program, the number of months of ineligibility under this subparagraph for such person must not be greater than a number equal to the total, cumulative uncompensated value of all assets transferred by the person (or person's spouse) on or after the look-back date specified in subparagraph (B)(i) of this paragraph, divided by the average monthly cost to a private patient of nursing facility services in the state at the time of application.

(iii) The number of months of ineligibility otherwise determined under clause (i) of this subparagraph with respect to the disposal of an asset shall be reduced:

(I) in the case of periods of ineligibility determined under clause (i) of this subparagraph, by the number of months of ineligibility applicable to the person under clause (ii) of this subparagraph has a result of such disposal; and

(II) in the case of periods of ineligibility determined under clause (ii) of this subparagraph, by the number of months of ineligibility applicable to the person under clause (i) of this subparagraph as a result of such disposal.

(iv) HHSC does not round down, or otherwise disregard any fractional period of ineligibility determined under clause (i) or (ii) of this subparagraph with respect to the disposal of assets.

(F) Annuity. The purchase of an annuity made on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, is treated as the disposal of an asset for less than fair market value unless:

(i) the State is named as the remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the annuitant under this title; or

(ii) the State is named as such a beneficiary in the second position after the community spouse or minor or disabled child and is named in the first position if such spouse or a representative of such child disposes of any such remainder for less than fair market value.

(G) Annuity exceptions. With respect to a transfer of assets, the term "assets" includes an annuity purchased on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, by or on behalf of an annuitant who has applied for medical assistance with respect to services in an institutional setting unless:

(i) the annuity is:

(I) an annuity described in subsection (b) or (q) of section 408 of the Internal Revenue Code of 1986; or

(II) purchased with proceeds from:

(-a-) an account or trust described in subsection (a), (c), or (p) of section 408 of such Code;

(-b-) a simplified employee pension (within the meaning of section 408(k) of such Code); or

(-c-) a Roth IRA described in section 408A of such Code; or

(ii) the annuity:

(I) is irrevocable and nonassignable;

(II) is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the United States Department of Health and Human Services); and

(III) provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made.

(H) Promissory note, loan, or mortgage. In the case of a promissory note, loan, or mortgage that does not satisfy the requirements of clauses (i) through (iii) of this subparagraph, the value of such note, loan, or mortgage is the outstanding balance due as of the date of the person's application for medical assistance for services described in subparagraph (C) of this paragraph and this amount would be used to determine the length of ineligibility. For purposes of this paragraph with respect to a transfer of assets, the term "assets" includes funds used to purchase, on or after April 1, 2006, a promissory note, loan, or mortgage unless such note, loan, or mortgage:

(i) has a repayment term that is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the Social Security Administration);

(ii) provides for payments to be made in equal amounts during the term of the loan, with no deferral and no balloon payments made; and

(iii) prohibits the cancellation of the balance upon the death of the lender.

(I) Life estate. For purposes of this paragraph with respect to a transfer of assets, the term "assets" includes the purchase of a life estate interest in another individual's home made on or after April 1, 2006, unless the purchaser resides in the home for a period of at least one year after the date of the purchase.

(2) HHSC allows exceptions to transfers of assets under the provisions of §1917(c)(2) of the Social Security Act (42 U.S.C. §1396p(c)(2), if:

(A) the assets transferred were a home, and title to the home was transferred to:

(i) the spouse of such person;

(ii) a child of such person who:

(I) is under 21 years of age; or

(II) is blind or disabled as defined in §1614 of the Social Security Act (42 U.S.C. §1382c);

(iii) a sibling of such person who has an equity interest in such home and who was residing in such person's home for at least one year immediately before the date the person transferred to an institutional setting; or

(iv) a son or daughter of such person (other than a child described in clause (ii) of this subparagraph) who was residing in such person's home for a period of at least two years immediately before the date the person transferred to an institutional setting and who, as determined by the State, provided care to such person which permitted such person to reside at home rather than in such an institution or facility;

(B) the assets:

(i) were transferred to the person's spouse or to another for the sole benefit of the person's spouse;

(ii) were transferred from the person's spouse to another for the sole benefit of the person's spouse;

(iii) were transferred to a trust (including a trust described in §358.402(e)(2) of this division) established solely for the benefit of the person's child described in subparagraph (A)(ii)(II) of this paragraph; or

(iv) were transferred to a trust (including a trust described in §358.402(e)(2) of this division) established solely for the benefit of a person under 65 years of age who is disabled as defined in §1614(a)(3) of the Social Security Act (42 U.S.C. §1382c(a)(3));

(C) a satisfactory showing is made to the State that:

(i) the person intended to dispose of the assets either at fair market value, or for other valuable consideration;

(ii) the assets were transferred exclusively for a purpose other than to qualify for medical assistance; or

(iii) all assets transferred for less than fair market value have been returned to the person; or

(D) HHSC:

(i) determines that the denial of eligibility would work an undue hardship when application of the transfer of assets provision would deprive the person:

(I) of medical care such that the person's health or life would be endangered; or

(II) of food, clothing, shelter, or other necessities of life; and

(ii) provides for:

(I) notice to recipients that an undue hardship exception exists;

(II) a timely process for determining whether an undue hardship waiver will be granted; and

(III) a process under which an adverse determination can be appealed.

(3) Under paragraph (2)(D) of this subsection, a facility in which the person in an institutional setting is residing may file an undue hardship waiver application on behalf of the person with the consent of the person or the person's authorized representative.

(4) For purposes of this subsection effective on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, in the case of an asset held by a person in common with another individual or individuals in a joint tenancy, tenancy in common, or similar arrangement, the asset (or the affected portion of such asset) is considered to be transferred by such person when any action is taken, either by such person or by any other individual, that reduces or eliminates such person's ownership or control of such asset.

(5) HHSC does not provide for any period of ineligibility for a person due to transfer of resources for less than fair market value except in accordance with this subsection. In the case of a transfer by the spouse of a person which results in a period of ineligibility for medical assistance for such person, HHSC apportions such period of ineligibility (or any portion of such period) among the person and the person's spouse if the spouse otherwise becomes eligible for medical assistance.

(6) In this subsection, the term "resources" has the meaning given such term in §1613 of the Social Security Act (42 U.S.C. §1382b), without regard (in the case of a person in an institutional setting) to the exclusion of the home.

(e) Impact on spousal protected resource amount. In spousal situations, if assets are transferred to a third party before institutionalization or by the community spouse, HHSC does not include the uncompensated amount of the transfer in calculating the spousal protected resource amount or countable resources upon application for Medicaid.

(f) Transfer of income.

(1) A person may incur a transfer penalty by transferring income. Transfers of income include:

(A) waiving the right to receive an inheritance even in the month of receipt;

(B) giving away a lump sum payment even in the month of receipt; or

(C) irrevocably waiving all or part of federal, state, or private pensions or annuities.

(2) The date of transfer is the date of the actual change in income. Interspousal transfers of income are permitted (for example, obtaining a court order to have community property pension income paid to a community spouse).

(3) Because revocable waivers of pension benefits can be revoked and the benefits reinstated, no uncompensated value is developed, and no transfer-of-assets penalty is incurred. Such waivers are subject to the utilization-of-benefits policy, and the person must apply for reinstatement of the full pension amount or the person is ineligible for all Medicaid benefits.

(g) Disclosure and treatment of annuities. HHSC, under the provisions of §1902(a)(18) of the Social Security Act (42 U.S.C. §1396a(18)), requires the following as a condition for the provision of medical assistance for services described in subsection (d)(1)(C) of this section:

(1) An application for assistance (including any recertification of eligibility for such assistance) must disclose a description of any interest the person or community spouse has in an annuity (or similar financial instrument as directed by the United States Department of Health and Human Services), regardless of whether the annuity is irrevocable or is treated as an asset. Such application or recertification form must include a statement that under paragraph (2) of this subsection the State becomes a remainder beneficiary under such an annuity or similar financial instrument by virtue of the provision of such medical assistance.

(2) In the case of disclosure concerning an annuity under subsection (d)(1)(F) of this section, HHSC notifies the issuer of the annuity of the right of the State under such subsection as a preferred remainder beneficiary in the annuity for medical assistance furnished to the person. Nothing in this paragraph shall be construed as preventing such an issuer from notifying persons with any other remainder interest of the State's remainder interest under such subsection.

(3) HHSC establishes categories of transactions that may be treated as a transfer of asset for less than fair market value as the United States Department of Health and Human Services provides guidance.

(4) Nothing in this subsection shall be construed as preventing HHSC from denying eligibility for medical assistance for a person based on the income or resources derived from an annuity described in paragraph (1) of this subsection.

Revision 18-1; Effective March 1, 2018

Transfer of assets policy applies when assets are transferred by a person who resides in an institutional setting (for example, a Medicaid certified long-term care facility) or is receiving home and community-based waiver services through a Home and Community-Based Services waiver, or by the person’s spouse or someone else acting on the person’s behalf.

Transfer of assets policy does not apply to the mandatory groups of MEPD programs such as Pickle. See Section A-1000, General Information, and Section A-2000, Mandatory Coverage Groups, for information. Transfer of assets policy also does not apply to the Medicare Savings programs such as QMB, SLMB, etc.

There is a "look-back" period to find transfers of assets prior to the date the person is institutionalized or, if later, the date the person applies for Medicaid.

If a transfer of assets for less than fair market value is found, Medicaid must withhold payment for nursing facility care (and certain other long-term care services) for a period of time referred to as the penalty period.

The length of the penalty period is determined by dividing the value of the transferred asset by the average private-pay rate for nursing facility care in Texas. There is no limit to the length of the penalty period.

For certain types of transfers, no penalty is applied. The principal exceptions to the transfer of asset penalty are transfers:

• to a spouse or to a third party for the sole benefit of the spouse;
• by a spouse to a third party for the sole benefit of the spouse;
• to certain disabled individuals or to trusts established for those individuals;
• for a purpose other than to qualify for Medicaid; and
• for which imposing a penalty would cause undue hardship.

Example: Assets transferred to an Achieving a Better Life Experience (ABLE) account for the benefit of a disabled child are not subject to a penalty period. (See Section I-3300 “For the Sole Benefit” Requirements.)

 

I-1210 Transfer of Assets Terms

Revision 09-4; Effective December 1, 2009

The term assets, with respect to person, includes all income and resources of the person and of the person's spouse, including any income or resources that the person or such person's spouse is entitled to but does not receive because of action by:

• the person or such individual's spouse;
• a person, including a court or administrative body, with legal authority to act in place of or on behalf of the person or such individual's spouse; or
• any person, including any court or administrative body, acting at the direction or upon the request of the person or such individual's spouse.

Examples of actions that would cause income or resources not to be received are:

• irrevocably waiving pension income;
• waiving the right to receive an inheritance;
• not accepting or accessing injury settlements; and
• tort settlements that are diverted by the defendant into a trust or similar device to be held for the benefit of the plaintiff.

Revision 09-4; Effective December 1, 2009

As part of Public Law 109-171, Deficit Reduction Act (DRA) of 2005, policy regarding transfer of assets changed when the DRA was signed into law on Feb. 8, 2006. The implementation of the DRA in Texas was effective Oct. 1, 2006.

Transfer of assets policy in Texas before the DRA, based on the Omnibus Budget Reconciliation Act (OBRA) of 1993 (Public Law 103-66), continues with these areas as exceptions found in the DRA transfer of assets rules:

• look-back period;
• penalty start date;
• purchase of life estates;
• purchase of promissory notes, loans or mortgages; and
• undue hardship.

As part of the DRA, there was a major change to the value of a home and eligibility for Medicaid. See Section F-3600, Substantial Home Equity, and Section F-3700, Continuing Care Retirement Communities.

The transfer of assets rules after the DRA are found in Section I-1100, Texas Administrative Code Rules. The transfer of assets policy in Texas before the DRA, based on OBRA 1993 (Public Law 103-66) are found in Section I-9000, Pre-DRA Rules.

 

I-1310 Persons Impacted by Transfer of Assets

Revision 09-4; Effective December 1, 2009

Transfer of assets policy applies when assets are transferred by a person who resides in an institutional setting (for example, a Medicaid certified long-term care facility) or is receiving home and community-based waiver services through a Home and Community-Based Services waiver, or by the person’s spouse or someone else acting on the person’s behalf.

Transfer of assets policy does not apply to the mandatory groups of MEPD programs such as Pickle. See Section A-1000, General Information, and Section A-2000, Mandatory Coverage Groups, for information. Transfer of assets policy also does not apply to the Medicare Savings programs such as QMB, SLMB, etc.

Under transfer of assets policy, recipients residing in a Medicaid long-term care facility remain eligible for all other Medicaid benefits and continue to receive Medicaid benefits other than vendor payment for the length of the penalty period. However, a person residing in a state supported living center is denied Medicaid for any penalty period resulting from an uncompensated transfer of assets. This is because the only benefit provided under a MEPD program for a person in a state supported living center is vendor payments.

If a person applying for a Home and Community-Based Services waiver requires receipt of waiver services to be eligible for Medicaid, then the person is ineligible for all Medicaid benefits. Based on pre-DRA transfer of assets policy, the Home and Community-Based Services waiver person is ineligible for the length of the penalty period. Based on post-DRA, the Home and Community-Based Services waiver person is ineligible until the transfer does not appear during the look-back period.

Denial of a Home and Community-Based Services waiver based on an uncompensated transfer does not disqualify the person for pure Qualified Medicare Beneficiary (QMB) or Specified Low-Income Medicare Beneficiary (SLMB) benefits. If all eligibility criteria for QMB or SLMB are met, HHSC staff can certify the person for QMB or SLMB, as appropriate.

In spousal situations, if assets are transferred to a third party before institutionalization or by the community spouse, HHSC does not include the uncompensated amount of the transfer in calculating the spousal protected resource amount or countable resources upon application for Medicaid.

 

I-1320 Applications and Other Actions on or After Oct. 1, 2006

Revision 09-4; Effective December 1, 2009

Post-DRA transfer of assets policy impacts any person who applies for Medicaid in an institutional setting on or after Oct. 1, 2006. Post-DRA transfer of assets policy also impacts any person who is Medicaid eligible in the community and requests a program transfer for Medicaid in an institutional setting on or after Oct. 1, 2006. This includes:

Applicants — For applications filed on or after Oct. 1, 2006, consider both pre-DRA and post-DRA policy for an institutional program or waiver services.

Program transfer requests — For program transfer requests from any Medicaid program to an institutional program or waiver services on or after Oct.1, 2006, consider both pre-DRA and post-DRA policy.

Redeterminations — For redeterminations of institutional or waiver services worked on or after Oct.1, 2006, consider both pre-DRA and post-DRA policy.

Reported changes — For reported changes worked on or after Oct.1, 2006, consider both pre-DRA and post-DRA policy for institutional or waiver services.

Note: Pre-DRA or post-DRA transfer of assets policies regarding penalty do not apply to an individual who has had continuous Medicaid coverage before March 1, 1981. This includes any person who is Medicaid eligible in the community and requests a program transfer to an institutional program or waiver services and who has had continuous Medicaid coverage before March 1, 1981.

 

I-1330 Transfer Transaction Date

Revision 09-4; Effective December 1, 2009

If the transfer transaction date is:

• before Feb. 8, 2006, use pre-DRA policy in determining eligibility for vendor payment and waiver services, regardless of the application file date/program transfer or the date of the case manager action for an existing case; or
• on or after Feb. 8, 2006, use pre-DRA and post-DRA policy in determining eligibility for vendor payment and waiver services based on application file date/program transfer or the date of the case manager action for an existing case.

Revision 09-4; Effective December 1, 2009

A person may incur a transfer penalty by transferring income. Transfers of income include:

• waiving the right to receive an inheritance even in the month of receipt;
• giving away a lump sum payment even in the month of receipt; or
• irrevocably waiving all or part of federal, state or private pensions or annuities.

The date of transfer is the date of the actual change in income, if within the look-back period or during an ongoing month.

Interspousal transfers of income are permitted (for example, obtaining a court order to have community property pension income paid to a community spouse).

Because revocable waivers of pension benefits can be revoked and the benefits reinstated, no uncompensated value is developed, and no transfer of assets penalty is incurred.

Such pension waivers are subject to nonfinancial requirements and the person must apply for reinstatement of the full pension amount or the person is ineligible for all Medicaid benefits.

Example: In August of this year, a person authorized a revocable reduction of $100 per month in her Civil Service Annuity (CSA) benefit, which was effective Sept. 1 of this year. Because gross income is within the special income limit, and all eligibility criteria are met, the person may be certified for Medicaid. The person is sent written notice that she must apply for reinstatement of the full CSA amount within 30 days. If she does so, her eligibility is re-evaluated based upon receipt of the full benefit. If she fails to do so, denial action is initiated.

Revision 09-4; Effective December 1, 2009

Any action by the person's co-owner(s) to eliminate the person's ownership interest or control of a joint asset, with or without the person's consent, is a transfer of assets. Placing another person's name on an account or other asset that results in limiting the person's control of an asset (right to dispose) is a transfer of assets.

Joint bank account procedures are consistent with this policy.

 

I-1510 Participation Examples

Revision 13-2; Effective June 1, 2013

• The person and her brother jointly own (one-half interest each) non-homestead real property. Both of their names appear on the warranty deed. The person's brother, without the person's knowledge or consent, filed another warranty deed that shows him as the sole owner. This action by the person's co-owner constitutes a transfer.
• Joe Davis is a co-signer on a joint bank account, along with his son and daughter. Mr. Davis' children deleted his name from both the styling and signature card. Form H1299, Request for Joint Bank Account Information, shows that all of the funds belonged to Mr. Davis and that the children's names were added so they could access the funds in an emergency. Mr. Davis said he did not know that his name had been deleted, nor did he authorize this action. This must be developed as an uncompensated transfer. Depending upon the circumstances, the undue hardship provisions of Section I-4300, Undue Hardship, may apply.
• The person has a bank account styled solely in his name. His daughter adds her name to the account styling and control as an "and," thereby restricting the person's use of the account without the daughter's approval. This must be developed as an uncompensated transfer.
• When someone uses an applicant’s money to purchase a vehicle, and the title is placed in both the applicant’s name and the other person’s name, consider the entire purchase price of the vehicle as a transfer, because when the applicant’s money was used to purchase a vehicle with the applicant and the other person as owners, the applicant’s ownership or control of the asset was reduced or limited.

Examples

• A vehicle was purchased for $15,000 on June 30, 2012. All of the money was the applicant’s; however, the title was put in the applicant’s and her son’s name because he would be driving her around in the car. The entire $15,000 is considered the transferred amount.
• A vehicle was purchased June 30, 2012, for $10,761.57. $8,100 of the applicant’s money was used, and her son paid the remaining $2,661.57. The title of the car is in both names. The $8,100, which the applicant provided for the purchase, is considered the transferred amount.

Revision 09-4; Effective December 1, 2009

A partial transfer of real property occurs when a person transfers only a portion of real property. A person may engage in partial transfers of real property repeatedly, once per month over a period of months, with the apparent purpose of gifting away the entirety of the real property while at the same time shortening or avoiding a transfer of assets penalty. This is sometimes referred to as aggressive transferring.

Since the estate planning community incorporates many different approaches in partial transfers of real property, a transaction-by-transaction analysis by agency legal staff is critical for a correct determination of any resulting penalty period. Accordingly, eligibility staff who encounter partial transfers of real property must promptly refer each transaction to their regional attorney for a case-by-case legal opinion.

Revision 13-4; Effective December 1, 2013

Note: Examples in this section may not reflect the most recent amount of the average private-pay cost per day.

Investigation of transfers is part of the application or program transfer process. Activity during the month of application or program transfer and forward is investigated. Activity in the past is also investigated.

The look-back period is established under federal law. The date on which the look-back period is established is based on the application file date or the institutional entry date, whichever is later.

Under pre-DRA transfer of assets policy, the look-back period is 36 months (or 60 months) from the later of the date of:

• institutionalization, or
• Medicaid application.

Under post-DRA transfer of assets policy, the look-back period is 60 months from the later of the date of:

• institutionalization, or
• Medicaid application.

Under both pre-DRA and post-DRA transfer of assets policies:

• When a person is already a Medicaid recipient before entering a nursing facility (NF), intermediate care facility for individuals with an intellectual disability or related conditions (ICF/IID), state supported living center, or institution for mental diseases (IMD), the look-back period begins with institutional entry.
• Penalties may be assessed for transfers occurring on or after the look-back date. Penalties cannot be assessed for time frames before the look-back period.

Example: If the application was received during the month of August and the individual entered the nursing facility in August, August sets the look-back period. August is considered month "0." The look-back period begins with July and continues for 36 or 60 months, as appropriate.

For any transfer transaction made on or after Feb. 8, 2006, the look-back period is 60 months from the application file date or program transfer request date. During the implementation phase of the post-DRA transfer of assets policy change, the 36-month look-back period for non-trust transfer transactions will remain in effect until Feb. 28, 2009. The 60-month look-back period will be phased in, and by February 2011, any transfer transactions will require a 60-month look-back period.

• For applications received through February 2009, the look-back period is 36 months. February is the last file month for which the look-back period is 36 months.
• Beginning with applications received in March 2009, add one month to the look-back period until the full 60-month look-back period is fully implemented in February 2011.

Examples:

• Individual enters facility in January 2009. Application for Medicaid is made in March 2009. The look-back period is a total of 37 months (36-month look-back plus a phase-in of one month).
• Individual enters facility in January 2009. Application for Medicaid is made in August 2009. The look-back period is a total of 42 months (36-month look-back plus a phase-in of six months).

 

I-2110 February 2011 and the 60-Month Look-Back Period

Revision 17-1; Effective March 1, 2017

By February 2011, any transfer transactions will require a 60-month look-back period.

Examples:

• Individual enters facility in January 2011. Application for Medicaid is made in February 2011. Look-back period is 60 months.
• Individual enters facility in January 2011. Application for Medicaid is made in August 2011. Look-back period is 60 months.

This does not negate the pre-DRA policy.

Under pre-DRA transfer of assets policy, there is a 36-month look-back period for most uncompensated transfers. However, there is a 60-month look-back period for certain transfers involving trusts. The look-back periods for trusts and distributions from trusts follow in Section I-2120.

 

I-2120 Revocable Trusts Under Pre- and Post-DRA

Revision 09-4; Effective December 1, 2009

1. Payments from a revocable trust to or for the benefit of someone other than the person have a 60-month look-back period.
   
   Examples:

   The following samples are for demonstration purposes only. They may not reflect the current average monthly cost of private-pay care. Examples are based on the amount of the average private-pay cost per day, effective Nov. 1, 2005 ($117.08).

   • John Doe entered a nursing facility and applied for Medicaid in January. January sets the look-back period. January is considered month "0." He created a revocable trust six years ago. In January four years ago, the trustee made a $50,000 cash distribution to Mr. Doe's nephew. This is a transfer of assets with a 60-month look-back period.
     
     The look-back period begins in December (last month) and ends January five years ago. The distribution in January four years ago falls within the look-back period, and the penalty period is calculated as follows: $50,000 divided by $117.08 (average daily rate for private-pay nursing facility (NF) resident) = 427 days.
     
     Under pre-DRA transfer of assets policy, the penalty period, which began January four years ago and ended March 3 three years ago, has expired.
     
     Under post-DRA transfer of assets policy, the penalty period start date is the first day of the month of the medical effective date (MED), if the individual meets all other eligibility criteria.
   • Same situation as above, except that the $50,000 distribution to Mr. Doe's nephew was made in December six years ago.
     
     The look-back period begins in December and ends January five years ago. The distribution in December six years ago falls outside the look-back period and is not subject to penalty.
2. Making a revocable trust irrevocable with payments from corpus/income unavailable to the person is a transfer of assets and has a 60-month look-back period.
   
   Examples:
   • Joe Bridges entered a nursing facility and applied for Medicaid in January. January sets the looks back period. January is considered month "0." He created a revocable trust six years ago during the first quarter, which became irrevocable on his 75th birthday (January four years ago). The corpus and undistributed income in January four years ago was valued at $100,000. As of January four years ago, there are no conditions under which the trustee may make payments to or for the benefit of Mr. Bridges. This is a transfer of assets with a 60-month look-back period.
     
     The look-back period begins in December and ends January five years ago. The transfer in January four years ago falls within the look-back period, and the penalty period is calculated as follows: $100,000 divided by $117.08 (average daily rate for private-pay NF resident) = 854 days.
     
     Under pre-DRA transfer of assets policy, the penalty period, which began January four years ago and ended May 4 two years ago, has expired.
     
     Under post-DRA transfer of assets policy, the penalty period start date is the first day of the month of the MED, if the individual meets all other eligibility criteria.
   • Same situation as above, except that Mr. Bridges' 75th birthday was in December six years ago.
     
     The look-back period begins in December and ends January five years ago. The transfer in December six years ago occurred outside the look-back period and is not subject to penalty.

 

I-2130 Irrevocable Trusts

Revision 09-4; Effective December 1, 2009

1. Payments from an irrevocable trust (where trustee distributions are not available to the person) that are made to (or for the benefit of) someone other than the person have a 36-month look-back period under pre-DRA policy.
   
   Payments from an irrevocable trust (where trustee distributions are not available to the person) that are made to (or for the benefit of) someone other than the person have a 60-month look-back period under post-DRA policy.
   
   Example:
   
   Mary Smith entered the nursing facility (NF) and applied for Medicaid in January. January sets the look-back period. January is considered month "0." Six years ago, she created an irrevocable trust. The trustee has discretion to make distributions to Ms. Smith or for her benefit. The trustee does not make payments to or for the benefit of Ms. Smith, but in January three years ago she made a $75,000 cash distribution to her niece. Under pre-DRA transfer of assets policy, this payment was a transfer of assets with a 36-month look-back period. The look-back period begins in December (last month) and ends January three years ago. The transfer in January three years ago occurred during the look-back period.
   
   Under post-DRA transfer of assets policy, all transfer of assets will eventually have a 60-month look-back period. During the implementation phase of the post-DRA transfer of assets policy change, use the 36-month look-back period for this type of transfer transaction through Feb. 28, 2009. The 60-month look-back period will be phased in and by February 2011, any transfer transactions will require a 60-month look-back period.
   
   The penalty period is calculated as follows: $75,000 divided by $117.08 (average daily rate for private-pay NF resident) = 640 days.
   
   Under pre-DRA transfer of assets policy, the penalty period, which began January three years ago and ended Oct. 2 two years ago, has expired. The portion of the current corpus and undistributed income that the trustee could pay to Ms. Smith or for her benefit is a countable resource.
   
   Under post-DRA transfer of assets policy, the penalty period start date is the first day of the month of the medical effective date, if the individual meets all other eligibility criteria. The portion of the current corpus and undistributed income that the trustee could pay to Ms. Smith or for her benefit is a countable resource.
2. Creating an irrevocable trust where trustee payments are unavailable to the person is a transfer of assets with a 60-month look-back period.
   
   Examples:
   • Rob Jones entered a nursing facility and applied for Medicaid in January. January sets the look-back period. January is considered month "0." In December six years ago, he created an irrevocable trust with a corpus of $100,000. There are no circumstances under which the trustee may make payments to or for the benefit of Mr. Jones. Creation of this trust is a transfer of assets with a 60-month look-back period.
     
     Under both pre-DRA and post-DRA, the look-back period begins in December (last month) and ends January five years ago. The transfer in December six years ago falls outside the look-back period and is not subject to penalty.
   • Same situation as above, except that Mr. Jones created the trust in January five years ago.
     
     Under both pre-DRA and post-DRA transfer of assets policies, the look-back period begins in December and ends January five years ago. The transfer in January five years ago falls within the look-back period.
     
     The penalty period is calculated as follows: $100,000 divided by $117.08 (average daily rate for private-pay NF resident) = 854 days.
     
     Under pre-DRA transfer of assets policy, the penalty period, which began January five years ago and ended May 4 three years ago, has expired.
     
     Under post-DRA transfer of assets policy, the penalty period start date is the first day of the month of the medical effective date, if the individual meets all other eligibility criteria. The portion of the current corpus and undistributed income that the trustee could pay to Ms. Smith or for her benefit is a countable resource.
3. Under both pre-DRA and post-DRA, creating an irrevocable trust where the trustee initially has discretion to make payments to the person (or for his benefit), but where payments are unavailable to the person at a later date, is a transfer of assets as of the date payments are unavailable to the person. The look-back period is 60 months.
   
   Examples:
   • Sue Johnson entered the nursing facility and applied for Medicaid in January. January sets the look-back period. January is considered month "0." She created an irrevocable trust six years ago during the first quarter of the year. Beneficiaries are Ms. Johnson and her niece. The trustee has discretion to make payments to Ms. Johnson or for her benefit until the niece attains age 21. After that date, payments may only be made to the niece. The niece attained age 21 on Jan.1 two years ago. At that time, the corpus and undistributed income was valued at $100,000. This is a transfer of assets with a 60-month look-back period.
     
     The look-back period begins this past December and ends January five years ago. The transfer in January two years ago falls within the look-back period.
     
     The penalty period is calculated as follows: $100,000 divided by $117.08 (average daily rate for private-pay NF resident) = 854 days.
     
     Under pre-DRA transfer of assets policy, the penalty period began January two years ago and ends May 4 of this year.
     
     Under post-DRA transfer of assets policy, the penalty period start date is the first day of the month of the medical effective date, if the individual meets all other eligibility criteria. The portion of the current corpus and undistributed income that the trustee could pay to Ms. Smith or for her benefit is a countable resource.
   • Same situation as above, except that Ms. Johnson's niece attained age 21 in December six years ago.
     
     The look-back period begins this past December and ends January five years ago. The transfer in December six years ago falls outside the look-back period and is not subject to penalty.

Historical Note: Under pre-DRA transfer of assets policy, because the look-back period is for transfers on or after Aug. 11, 1993, the full 60-month look-back period did not become effective until Aug. 11, 1998.

Revision 09-4; Effective December 1, 2009

• When a person applies and is certified for Medicaid more than once because of multiple institutional stays or periods of ineligibility, the look-back date is based on the later of the earliest application for Medicaid or the initial entry into the facility.

Check automated systems, if possible, for the earliest application date on record.

• When an individual applies for a Home and Community-Based Services waiver program, the look-back period is based on the later of the date:
  • of application for the Home and Community-Based Services waiver program (completed, signed application form is received); or
  • after application that the person transfers assets.
• When a person applies for institutional care or a Home and Community-Based Services waiver program but is not certified and then reapplies, a new look-back period is based on the latest application.
• When a person applies and is certified for a Home and Community-Based Services waiver program, subsequently is denied, and reapplies for waiver services, the initial look-back period is still in effect.
• When a look-back period is established, the person is certified in an institutional setting, and then moves to a Home and Community-Based Services waiver program or vice versa, the initial look-back period is still in effect. This is true even when there is a gap in eligibility periods.
• Any additional transfers of assets that occur after the person is certified for Medicaid may be assessed a penalty.

Revision 20-4; Effective December 1, 2020

Transfer of the person's home does not result in a penalty when the title is transferred to the person's:

• spouse who lives in the home (the transfer penalty applies when the community-based spouse transfers the home without full compensation);
• minor child under age 21 or child who is disabled. Disability must meet Social Security Administration (SSA) disability criteria. Additionally, there is no age limit for the person's child who is determined disabled under the SSA criteria;
• sibling who has equity interest in the home and has lived there for at least one year before the person's institutionalization;
• son or daughter (other than a disabled or minor child) who lived in the home for at least two years before the person's institutionalization and provided care that prevented institutionalization (obtain a written statement from the institutionalized person’s attending physician documenting that the person was able to remain in their home because of the care provided by the son or daughter); or
• children, siblings, etc., if the deed is an enhanced life estate or Transfer on Death deed and has been approved by the regional attorney, and the person signs a statement that they intend to return to the home.

Related Policy

Home, F-3000
Overview of Transfer of Assets, I-1200

Revision 14-4; Effective December 1, 2014

Under both pre-DRA and post-DRA transfer of assets policies, assets — including the person's home — may be transferred without resulting in a penalty when:

• Transferred to the person's spouse or to another for the sole benefit of that spouse, or from the person's spouse to another for the sole benefit of that spouse.
• Transferred to the person's child who has a disability. Disability must meet SSA disability criteria. Additionally, there is no age limit for the person's child who is determined to have a disability under SSA criteria.
• Transferred to a trust (including an exception trust) established solely for the benefit of the person's child. The child must meet SSA disability criteria. There is no age limit for a child with a disability for transfer of assets purposes.
• Transferred to a trust, including a trust established for the sole benefit of an individual under age 65 who has a disability as defined under SSA disability criteria.
• Satisfactory evidence exists that the person intended to dispose of the resource at fair market value.
• Satisfactory evidence exists that the transfer was exclusively for some purpose other than to qualify for Medicaid.
• Imposition of a penalty would cause undue hardship.
• A person changes a joint bank account to establish separate accounts to reflect correct ownership of and access to funds.
• A person purchases an irrevocable funeral arrangement or assigns ownership of an irrevocable funeral arrangement to a third party, and the funeral arrangement is for the person or the person's spouse.

Note: If the transfer is made to a child who is claiming a disability, but there is no record that the child meets SSA disability criteria, request medical records for the Disability Determination Unit (DDU) to make a disability determination. Submit these records to Austin for imaging.

Revision 09-4; Effective December 1, 2009

Under both pre-DRA and post-DRA transfer of assets policies in determining whether an asset was transferred for the sole benefit of a spouse, child or disabled individual, there must be a written instrument of transfer, such as a trust document, that legally binds the parties to a specified course of action and clearly sets out the conditions under which the transfer was made, as well as who can benefit from the transfer. The instrument or document must provide for the spending of the funds for the benefit of the individual on a basis that is actuarially sound based on the life expectancy of the individual. When the instrument or document does not so provide, there can be no exemption from the penalty.

Note: Trusts created under exception trusts policy are exempt from the actuarially sound distribution provisions of this requirement.

Revision 09-4; Effective December 1, 2009

Under both pre-DRA and post-DRA transfer of assets policies, the situations above are the only situations in which an uncompensated transfer does not result in a penalty. Under the transfer provisions of OBRA 1993, the home is not an excluded resource for institutional persons. Therefore, if the home of an institutionalized person is transferred, unless the transfer meets one of the above criteria, the transfer could affect payment for the person's institutional care.

Situation: Within six months of application, Miss Lucy Katz, a nursing facility applicant, transferred her interest in a family homestead to her sister, Ms. Dulcey Katz, who also owns an interest in the homestead. The Katz sisters lived in the homestead for five years before Lucy's admission to a nursing facility on July 6 of this year.

Action: No penalty for the transfer exists because the applicant's sister also owned an interest in the family homestead, and Dulcey lived in the home for at least one year before Lucy was institutionalized. The eligibility specialist should verify the transfer of the applicant's interest.

Note: If Dulcey had not remained in the home after Lucy left, there would still be no transfer penalty. The one-year residency requirement is at least one year before a person's institutionalization.

Situation: Mr. Roberts, a nursing facility applicant, transferred $50,000 to his son, Ned, within six months of application to meet the needs of Mr. Roberts' disabled adult daughter, Nancy.

Action: No penalty for the transfer of the funds exists because the funds are to be used for the sole benefit of the applicant's disabled daughter. Verify the transfer of the funds, that Nancy is receiving disability benefits and that Ned is using the funds solely for Nancy's benefit according to the transfer instrument. To ensure the funds are used only for Nancy, expenditures for Nancy should be verified at each annual review until the transfer penalty would have expired.

Situation: Mrs. Smith purchased an annuity that is irrevocably assigned to a funeral expense trust agreement. According to the documents, upon the death of the "annuitant" ("insured"), the trustee of the funeral expense trust must pay burial expenses for that deceased person to the providers of goods and/or services, usually the funeral home. These arrangements are essentially burial contracts, although the arrangements are irrevocable. Because the contracts are burial funds and irrevocable, the purchase of the burial contract for Mrs. Smith is not considered a transfer of assets. At the same time, Mrs. Smith also purchased the same kind of burial contract for her son and daughter-in-law. Based on Section F-4227, Burial Funds, the burial contracts for her son and daughter-in-law do not meet the exclusion criteria. The exclusion is only for:

• person,
• person's spouse, or
• minor child applicant/person with parents whose resources are deemed to the minor child applicant/person.

The purchase of the burial contracts should be considered a transfer of assets, and if appropriate, a penalty assessed.

Revision 09-4; Effective December 1, 2009

There are no restrictions on transfers between spouses, which occur from the date of institutionalization to the date of the application. The combined countable resources of the couple are considered in determining eligibility during the period from the date of institutionalization to the date of the Medicaid application. For the same reason, transfers between spouses are also permitted before institutionalization.

Based on policy in Chapter J, Spousal Impoverishment, to remain eligible at the end of the initial eligibility period, the institutionalized spouse must reduce resources to which he has access at least to the resource limit. If the institutionalized spouse chooses, he may, during the initial eligibility period, transfer resources from his name to the community spouse's name with no penalty applied to the transfer.

 

I-3510 Spousal Impoverishment Transfer

Revision 09-4; Effective December 1, 2009

The transfer of assets policy applies only to transfer of assets for less than fair market value to individuals other than the community spouse, if not for the sole benefit of that spouse.

Transfer penalties apply when the community spouse transfers his separate property:

• before institutionalization, or
• after institutionalization but before the Medicaid certification.

Transfer penalties apply when the community spouse transfers community property both before and after institutionalization, if not for the sole benefit of the spouse. Note: A penalty can result when the community spouse transfers assets to a third party, not for the sole benefit of either spouse.

 

I-3520 Spousal Impoverishment Transfer Examples

Revision 12-1; Effective March 1, 2012

• When the institutionalized spouse enters a nursing facility, the couple's combined countable resources are $100,000, and the resources are all in the institutionalized spouse's name. The spousal protected resource amount (SPRA) is $50,000.
  
  Before application, the institutionalized spouse transfers the entire $100,000 to the community spouse. No transfer of assets penalty applies when eligibility is established.
• When the institutionalized spouse enters a nursing facility, the couple's combined countable resources are $100,000, all in the institutionalized spouse's name. The SPRA is $50,000. The institutionalized spouse transfers all resources to the community spouse without penalty.
  
  A Medicaid application is filed two and one-half years later. The couple's combined countable resources are $30,000 as of 12:01 a.m. on the first day of the month of application, and the resources are all in the community spouse's name.
   
  • $30,000 – Combined countable resources
  • – $50,000 – SPRA
  • = $0 – Compared to appropriate resource standard for an individual
• If the institutionalized spouse inherits $20,000 after Medicaid certification, the institutionalized spouse may transfer the entire amount of that inheritance to the community spouse without penalty during the initial eligibility period. However, this $20,000 is treated as income for the month of receipt, and restitution of the full vendor payment for that month is requested. This brings the community spouse's resources to $50,000, the full protected amount.
• If more than $22,000 is inherited, the institutionalized spouse would be ineligible based on resources ($22,001 + $30,000 = $52,001 combined resources).
   
  • $52,001 – Combined resources
  • – $50,000 – SPRA
  • = $2,001 – > $2,000 and ineligible
• When the institutionalized spouse enters the nursing facility, the couple's combined countable resources are $100,000 ($90,000 in institutionalized spouse's name and $10,000 in the community spouse's name). The protected resource amount is $50,000.
  
  A Medicaid application is filed eight months later. Before application, the institutionalized spouse transferred $80,000 to the community spouse and spent $10,000 on nursing facility bills. The community spouse then transferred $50,000 to her daughter before the Medicaid application was filed. The couple's combined countable resources are now $40,000 as of 12:01 a.m. on the first day of the month of application, and the resources are all in the community spouse's name.
   
  • $40,000 – Combined countable resources
  • – $50,000 – SPRA
  • = $0 – Compared to appropriate resource standard for an individual
• The institutionalized spouse is eligible for Medicaid but does not receive nursing facility services. The penalty period for vendor payment is imposed based on the $50,000 uncompensated value of the transfer to the daughter.
  
  Note: If the institutionalized spouse has a level of care or medical necessity determination and meets all eligibility criteria except for the transfer of assets provisions, the institutionalized spouse may be eligible to a Your Texas Benefits Medicaid card but not vendor payments. Follow procedures in Appendix XXIII, Procedure for Designated Vendor Number to Withhold Vendor Payment, to put the vendor payment on hold.
• When the institutionalized spouse entered the nursing facility (June 17), the couple's combined countable resources were $30,000. The institutionalized spouse had transferred $10,000 in April, with no compensation, to a son. The uncompensated value is not included when calculating the protected resource amount, and the SPRA is $15,000.
  
  Under pre-DRA transfer of assets policy, a penalty is imposed should a Medicaid application be filed before the 85-day penalty (based on $117.08) has expired. Under post-DRA transfer of assets policy, a penalty is imposed should a Medicaid application be filed and the transfer is within the look-back period, but the penalty would not start until the medical effective date.

Revision 10-4; Effective December 1, 2010

Do not develop a penalty period for transfers when the total amount of all transfers per month is $200 or less. For example, if an individual gives a donation of $150 to a charitable organization in the month of December and there are no other transfer transactions in December, no penalty period is developed for the $150 donation. See Section F-4120, Bank Accounts, and Appendix XVI, Documentation and Verification Guide.

Revision 09-4; Effective December 1, 2009

The uncompensated value may be reduced by compensation received by the person. To reduce the uncompensated value the compensation must meet several requirements.

 

I-4110 Legal Binding Agreement on or Before the Date of Transfer

Revision 09-4; Effective December 1, 2009

Compensation for a transferred asset must be provided according to terms of an agreement established on or before the date of transfer. This agreement must have been established exclusively for purposes other than obtaining or retaining eligibility for Medicaid services.

Review the written agreement and the circumstances of the agreement to determine if institutional placement or waiver services were a consideration at the time the asset was transferred. If the agreement was oral, obtain a written statement from the person and the person receiving the asset.

The written statements must specify the date and terms of the agreement.

 

I-4120 Forms of Compensation

Revision 09-4; Effective December 1, 2009

The compensation for an asset can include:

• money,
• real or personal property,
• food,
• shelter, or
• services received by the person.

Compensation also includes all money, real or personal property, food, shelter or services received before the actual transfer if they were provided pursuant to a binding (legally enforceable) agreement whereby the eligible individual would transfer the resource or otherwise pay for such items.

 

I-4130 Future Compensation

Revision 09-4; Effective December 1, 2009

Compensation must actually have been provided to the person. Future compensation does not satisfy the compensation requirement.

Exception if provided according to terms of an agreement established on or before the date of transfer:

• Future compensation from annuities that are actuarially sound can be considered compensation.
• Consider as compensation the payment or assumption of a legal debt owed by the person who made the transfer in exchange for the asset.

 

I-4140 Compensation from Services

Revision 09-4; Effective December 1, 2009

Services can be a form of compensation if provided according to terms of an agreement established on or before the date of transfer. Valid receipts for financial expenditures or written statements from the people who were paid to provide the services are needed to validate the receipt of services.

Compensation is not allowed for services that would normally be provided by a family member (such as house painting or repairs, mowing lawns, grocery shopping, cleaning, laundry, preparing meals, transportation to medical care).

 

I-4150 Cash Compensation

Revision 09-4; Effective December 1, 2009

If the person receives additional cash compensation that was not a part of the transfer agreement from the party who received the transferred asset, reduce the uncompensated value of the transferred asset by the amount of the additional compensation and as of the date the compensation is received. Cash compensation includes direct payments to a third party to meet the person's food, shelter or medical expenses, including nursing facility bills, incurred after the date of the transfer.

 

I-4160 Examples of Compensation

Revision 12-2; Effective June 1, 2012

Situation: Ms. Walden, a nursing facility applicant, transferred a $10,000 money market account to her daughter, Josephine, the same day Ms. Walden was admitted to a nursing facility and within six months of application. Josephine is not disabled. Ms. Walden authorized the transfer because Josephine had quit her job to take care of her mother for six months before Ms. Walden was institutionalized. Josephine was earning $1,000 gross per month before quitting her job to care for her mother. Ms. Walden said she had told Josephine in December that she would give her the CD as reimbursement for lost wages if Josephine would quit her job to take care of Ms. Walden.

Action: Because Josephine actually quit her job to care for her mother, compensation for Josephine's lost gross wages is acceptable. Verify that Josephine indeed earned $1,000 per month ($1,000 x 6 months = $6,000). The uncompensated amount is $4,000. Divide the uncompensated value by the average daily rate for a private-pay patient and round down to determine the number of days of the penalty period.

Situation: Mr. Dasher, a nursing facility applicant, transferred a $10,000 CD to his son, James, within 60 months of application. Mr. Dasher agreed to this transfer and provided a written statement, specifying the terms of the agreement, because James had paid Mrs. Long $250 each week for seven months to provide in-home care for his father. Mr. Dasher's medical condition had resulted in the need for in-home care and he had insufficient income to pay Mrs. Long and meet his other living expenses. James furnished a written statement from Mrs. Long substantiating that she had been paid $250 each week to take care of Mr. Dasher. In addition, James furnished receipts showing he had paid Mr. Carpenter to do some improvements to Mr. Dasher's home so that Mr. Dasher could more easily maneuver his wheelchair. The receipt for the materials and Mr. Carpenter's services totaled $3,000.

Action: The payments made for Mrs. Long's and Mr. Carpenter's services and the home improvement materials are acceptable compensation. Mrs. Long's services totaled $250 x 4.33 = $1,082.50 x 7 = $7,577.50. The total compensation received was $10,577.50; therefore, there is no uncompensated value.

Situation: Mr. Anderson, a nursing facility applicant, transferred his homestead to his grandson, Joe, within 60 months of application. The fair market value of the property is $40,000. Mr. Anderson had agreed to transfer the home to Joe, who in exchange had assisted Mr. Anderson in maintaining the home. Joe had painted the house last summer and had done the yard work every other week for the past two years. Joe spent $200 for supplies (paint, for example) to paint the house.

Action: The uncompensated value must be developed. The term of the agreement was the house in exchange for home maintenance assistance. Because painting and yard work are services that a family member would normally perform, the value of those services is not an allowable compensation. The cost of the supplies Joe purchased to paint the house is allowable, if Joe can furnish receipts to substantiate the cost. Assuming that Joe did furnish the verification, the uncompensated value is $39,800. Divide the uncompensated value by the average daily rate for a private-pay patient and round down to determine the number of days for the penalty period. The penalty start date is the first day of the month of the Medical Effective Date (MED), if the individual meets all other eligibility criteria.

Situation: In November, Nina Gonzales' nephew gave her $5,000 to assist in paying her mortgage and taxes. There was no agreement that the nephew would be repaid. The following January, Ms. Gonzales entered a nursing facility and applied for Medicaid. That same month (January), Ms. Gonzales' home was sold and she gave her nephew $5,000 of the proceeds.

Action: Because there was no agreement (entered into exclusively for reasons other than obtaining/retaining Medicaid services) that the nephew would be repaid when the home was sold, Ms. Gonzales transferred $5,000 without compensation. If the average daily rate for a private-pay patient is $117.08, Ms. Gonzales is ineligible for facility vendor payments for all of January and through Feb. 11.

I-4210 Notification of Opportunity for Rebuttal

Revision 09-4; Effective December 1, 2009

If any amount of uncompensated value exists, HHSC informs the person or authorized representative of the amount of uncompensated value and the length of the penalty period. The penalty period applies unless the person provides convincing evidence that the disposal was solely for some purpose other than to obtain Medicaid services. If, within the periods specified in this paragraph, the person or authorized representative makes no effort to rebut the presumption that the transfer was solely to obtain Medicaid services, HHSC will assume that the presumption is valid. The rebuttal period is 10 workdays after written notification.

Notify the person or authorized representative in person or by telephone about the presumption, the amount of uncompensated value and the length of the penalty period. If personal contact cannot be made within three workdays of determination, immediately mail Form H1226, Transfer of Assets/Undue Hardship Notification, to the person or authorized representative.

Note: If the person or authorized representative is contacted in person or by telephone, immediately follow up with a written notice using Form H1226. If a rebuttal is not received within the specified period, determine the impact of the transferred asset on the person's Medicaid.

See Appendix XVI, Documentation and Verification Guide.

 

I-4220 Rebuttal of the Presumption

Revision 09-4; Effective December 1, 2009

Transfer of assets statutes presume that all transfers for less than fair market value are to obtain Medicaid services. The person or authorized representative is responsible for providing convincing evidence that the transaction in question was exclusively for some other purpose. To rebut the presumption, the person or authorized representative must provide a written statement and any relevant documentation to substantiate the statement. The statement, oral or written, must include at least the following:

• purpose for transferring the asset;
• attempts to dispose of the asset at fair market value;
• reason for accepting less than fair market value for the asset;
• means of or plan for self-support after the transfer; and
• relationship to the person to whom the asset was transferred.

Consider all statements and documentation provided by the person. The person can successfully rebut the presumption that the asset was transferred to obtain Medicaid services only if the person convincingly demonstrates that the asset was transferred exclusively for some other purpose. If the person had some other purpose for transferring the asset but obtaining Medicaid services seems to have also been a factor in the decision to transfer, the presumption is not successfully rebutted.

If a person does not rebut the presumption that the asset was transferred to obtain Medicaid services or if his rebuttal is unsuccessful, consider the uncompensated value of the transferred asset to determine the length of the penalty period for institutional and home/community-based waiver services.

If a person is determined to have successfully rebutted the presumption that the asset was transferred to obtain Medicaid services, the supervisor must review and concur with the decision. Record this concurrence in the case record.

 

I-4221 Exclusively for Some Purpose Other than to Qualify

Revision 09-4; Effective December 1, 2009

The presence of one or more of the following factors, while not conclusive, may indicate that the asset was transferred exclusively for some purpose other than to qualify for assistance. This list does not include every possible factor.

• After transfer of the asset, one of the following occurs:
  • unanticipated drastic change in the person's health, resulting in a greatly increased need for medical care;
  • unexpected loss of other resources that would have precluded eligibility; and
  • unexpected loss of income that would have precluded eligibility without an income-diversion trust.
• Total resources would have remained below the resource limits since the transfer occurred if the resource was retained.
• The transfer was made as a result of a court order or other legal commitment, such as a judgment or debt owed.

Revision 09-4; Effective December 1, 2009

A person may claim undue hardship when imposition of a transfer penalty would result in discharge to the community and/or inability to obtain necessary medical services so that the person's life is endangered. Undue hardship also exists when imposition of a transfer penalty would deprive the person of food, clothing, shelter or other necessities of life. Undue hardship relates to hardship to the person, not the relatives or responsible parties of the person. Undue hardship does not exist when imposition of the transfer penalty merely causes the person inconvenience or when imposition might restrict lifestyle, but would not cause risk of serious deprivation.

Undue hardship may exist when any one of the following conditions exists:

• location of the receiver of the asset is unknown to the person, other family members or other interested parties, and the person has no place to return in the community and/or receive the care required to meet the person's needs;
• person can show that physical harm may come as a result of pursuing the return of the asset, and the person has no place to return in the community and/or receive the care required to meet the person's needs; or
• receiver of the asset is unwilling to cooperate (such as an Adult Protective Services exploitation or potential fraud case) with the person and HHSC, and the person has no place to return in the community and/or receive the care required to meet the person's needs.

If a person claims undue hardship, HHSC must make a decision on the situation as soon as possible, but within 30 days of receipt of the request for a waiver of the penalty. The person has the right to appeal an adverse decision on undue hardship.

HHSC must permit the institution in which the individual is residing to file for an undue hardship waiver on behalf of an individual who would be subject to a penalty period resulting from a transfer of assets. Before filing for an undue hardship waiver, the institution must have the consent of the individual or the individual's authorized representative. In addition to requesting an undue hardship waiver, the institution may present information on behalf of the individual and may, with the specific written consent of the individual or the individual's authorized representative, represent the individual in an appeal of an undue hardship denial decision.

At a minimum, a written statement explaining the person's reasons for the transfer, who received the asset, how that person can be located, why the person's needs cannot be met and why there is undue hardship for the person must be included in the documentation.

The supervisor must sign off on all undue hardship cases.

 

I-4310 Undue Hardship Example

Revision 09-4; Effective December 1, 2009

Situation: Mr. Nelson Stiles, a nursing facility applicant, provided his bank statements as resource verification. The statements indicated that $1,000 was withdrawn from his account for the previous six consecutive months. He stated that he allowed his niece, who knew his personal identification number on his Pulse Card, to take the money. He thinks she took the money to pay off her debts and has now left the state. He does not know where she is and does not know if he will see her again. He said he has no other living relatives. He does not own a home or know anyone he could live with who could help to take care of him.

Action: This is an acceptable case of undue hardship. Document the case thoroughly and obtain the necessary approval signatures.

Revision 23-3; Effective Sept. 1, 2023

Effective Date	Transfer of Assets Divisor
Sept. 1, 2023	$242.13
Sept. 1, 2021	$237.93
Sept. 1, 2019	$213.71
Sept. 1, 2017	$172.65
Sept. 1, 2015	$162.41
Sept. 1, 2013	$156.34
Sept. 1, 2011	$142.92
Sept. 1, 2009	$130.88
Sept. 1, 2007	$122.50
Nov. 1, 2005	$117.08

Effective Sept. 1, 2023, the daily rate is $242.13. Use $242.13 to determine the penalty period for case actions disposed on or after Sept. 1, 2023. Partial amounts should be rounded down to the whole number of days. The result will be the number of days of the penalty period.

Related Policy

Calculation of Penalty Period, I-5000

Revision 09-4; Effective December 1, 2009

Historical Notes:

• For applications or program transfer requests received before Oct. 1, 2006, regardless of when the transfer occurred, the penalty start date was the first day of the transfer transaction month.
• For applications or program transfer requests received on or after Oct.1, 2006, with a transfer before Feb. 8, 2006, the penalty start date was the first day of the transfer transaction month. The penalty period count for both of these began with the first day of the month in which the transfer occurred, even if the transfer occurred late in the month. (Example: If the transfer occurs on Nov. 20 and the penalty period is 45 days, begin the count on Nov. 1.)
• For applications or program transfer requests received on or after Oct. 1, 2006, with a transfer on or after Feb. 8, 2006, the penalty start date is the first day of the month of the medical effective date, if the individual meets all other eligibility criteria.

I-5210 Examples of the Penalty Start Date

Revision 09-4; Effective December 1, 2009

Example 1

Date	Detail
File Date	08/24/2006
Look-Back Period	36 months, 07/2006 through 08/2003
Date of Transfer	03/17/2006
Value of Transfer	$20,000
Medical Effective Date	09/01/2006 (over resource limit 08/01/2006)
Penalty Start Date	03/01/2006 – The application file date is before 10/01/2006 and the transfer was after 02/08/2006. Use pre-DRA transfer of assets policy. The penalty would start 03/01/2006 – first day of the transfer transaction month.

Example 2

Date	Detail
File Date	10/24/2006
Look-Back Period	36 months, 09/2006 through 10/2003
Date of Transfer	02/01/2006
Value of Transfer	$20,000
Medical Effective Date	11/01/2006 (over resource limit 10/01/2006)
Penalty Start Date	02/01/2006 – The application was filed on or after 10/01/2006 and the transfer was before 02/08/2006. Use pre-DRA transfer of assets policy. The penalty would start 02/01/2006 – first day of the transfer transaction month.

Example 3

Date	Detail
File Date	10/24/2006
Look-Back Period	36 months, 09/2006 through 10/2003
Date of Transfer	05/01/2006
Value of Transfer	$20,000
Medical Effective Date	11/01/2006 (over resource limit 10/01/2006)
Penalty Start Date	11/01/2006 – The application was filed on or after 10/01/2006 and the transfer was on or after 02/08/2006. Use post-DRA transfer of assets policy. The penalty would start 11/01/2006 – first day of the month of the medical effective date, if the individual meets all other eligibility criteria.

I-5220 Multiple Transfers

Revision 09-4; Effective December 1, 2009

When multiple transfers occur during the look-back period in such a way that the penalty period for each transfer overlaps, treat the transfers as a single event. The uncompensated values are lumped together and divided by the average daily rate for a private-pay individual in a nursing facility. Start the penalty period with the first day of the month of medical effective date (MED), if the individual meets all other eligibility criteria.

Under post-DRA transfer of assets policy, the issue of "overlapping" penalties on applications will not occur since all transfers during the look-back period are lumped together and started with the first day of the month of MED, if the individual meets all other eligibility criteria.

I-5221 Multiple Transfers Example

Revision 13-4; Effective December 1, 2013

Date	Detail
File Date	Jan. 2, 2013
Look-Back Period	60 months, December 2012 through January 2008
Date of Transfer	1) Nov. 1, 2008 and 2) Dec. 10, 2008
Value of Transfer	1) $5,000 and 2) $8,000
Medical effective date	Jan. 1, 2013
Penalty Start Date	Jan. 1, 2013

When multiple transfers occur during the look-back period in such a way that the penalty period for each transfer overlaps, treat the transfers as a single event. The uncompensated values are lumped together and divided by the average daily rate for a private-pay individual in a nursing institution. Total of $13,000 ÷ $156.34 = 83 days. Penalty period begins Jan. 1, 2013, and runs through March 24, 2013.

I-5230 Reported Changes and Redeterminations

Revision 09-4; Effective December 1, 2009

Reported Changes

If a penalty period ends and a subsequent transfer occurs, a new penalty period is established effective the month of the subsequent transfer. This means there may be a gap between penalty periods. Follow procedures below for notice, restitution and closing vendor payments.

Redeterminations

When a current Medicaid recipient transfers an asset, the penalty start date begins on the first day of the transfer month, if the transfer occurs later than the date of application. As a result, there may be a gap between penalty periods.

Example: A 365-day penalty begins Jan. 1 and ends Dec. 31. The following April another transfer is made, resulting in a 306-day penalty that begins April 1 and ends Jan. 31 of the following year.

When a transfer is reported, do not retroactively impose the penalty. If a penalty period is imposed on an individual who is already eligible for Medicaid, provide the adverse action notice and inform the recipient about the undue hardship exception. Request restitution for retroactive months, unless potential fraud, abuse or exploitation are involved. Follow Section H-8300, Restitution, and Section C-6000, Fraud and Fair Hearings, for fraud referrals. Follow procedures as outlined in Appendix XXIII, Procedure for Designated Vendor Number to Withhold Vendor Payment.

I-5231 Changes and Redetermination Examples

Revision 09-4; Effective December 1, 2009

• Institutionalized individual inherits $20,000 in April.
  • Transfers $20,000 on May 1 and reports it May 1.
  • $20,000/$117.08 = 170.82 days, round down to 170 days.
  • Notice of adverse action provided on May 1.
  • Adverse action expires May 12.
  • Restitute for April and May, since the inheritance is considered income in April and a countable asset as of May 1.
  • Mason Manor effective June 1 (month following notice of adverse action).
  • Total penalty period is 170 days - 31 (days from May restitution) = 139 days remaining in penalty period. The transfer penalty actually begins May 1, but the individual is ineligible for May due to excess resource.
  • Mason Manor begins June 1– Oct. 17.
• Institutionalized individual inherits $20,000 in February.
  • Transfers the $20,000 on May 1 and reports it May 1.
  • $20,000/$117.08 = 170.82 days, round down to 170 days.
  • Notice of adverse action provided on May 1.
  • Adverse action expires May 12.
  • Restitute for February, March, April and May. The inheritance is considered income in February and an asset for March, April and May, as the transfer did not occur until May.
  • Mason Manor effective June 1 (month following notice of adverse action).
  • Total penalty period is 170 days - 31 (days from May restitution ) = 139 days remaining in penalty period.
  • Mason Manor begins June 1 – Oct. 17.
• Institutionalized individual inherits $7,150 in November.
  • $7,150 transfer on Nov. 1 and reported on May 1.
  • $7,150/$117.08 = 61.06 days, round down to 61 days.
  • Notice of adverse action provided on May 1.
  • Adverse action expires May 12.
  • Restitute for November and December. The individual is ineligible due to income received in November and the transfer penalty begins Nov. 1 and ends Dec. 31.
  • Mason Manor is not applicable, as penalty period has expired.

I-5240 Multiple Transfers – Historical

Revision 09-4; Effective December 1, 2009

Historically, when multiple transfers occurred during the look-back period in such a way that the penalty periods for each overlapped, the transfers were treated as a single event. The uncompensated values were lumped together and divided by the average daily rate for a private-pay individual in a nursing facility. If multiple transfers occurred in such a way that the penalty periods did not overlap, then the transfers were treated as separate events and the penalty periods were calculated separately.

A new penalty period cannot be imposed while a previous penalty period is still in effect. Therefore, the penalty periods assessed under pre-DRA transfer of assets (OBRA 1993 rules) and under post-DRA transfer of assets (DRA 2005 rules) for multiple transfers that overlap run separately but consecutively.

Under OBRA 1993 rules transfer of assets policy, the penalty period began the month of transfer.

If the penalty period of the OBRA 1993 rules transfer goes past the medical effective date, then the penalty start date of the DRA 2005 rules transfer will begin immediately after the first penalty period ends.

I-5241 Example Multiple Transfers – Historical

Revision 09-4; Effective December 1, 2009

Date	Detail
File Date	01/02/2007
Look-Back Period	36 months, 12/2006 through 01/2004
Date of Transfer	1) 02/01/2006 and 2) 11/10/2006
Value of Transfer	1) $45,000 and 2) $8,000
Medical effective date	01/01/2007
Penalty Start Date	First transfer – $45,000 ÷ 117.08 = 384 days. Using pre-DRA transfer of assets policy, penalty start date is 02/01/2006, which runs through 02/19/2007.  Second transfer – $8,000 ÷ 117.08 = 68 days. Using post-DRA transfer of assets policy, penalty start date is 01/01/2007 (medical effective date). Because the penalty start date of the second transfer is before the end date of the first penalty period, begin the penalty for the second transfer immediately after the first penalty period ends.

Transfer penalty of the second transfer for 68 days begins 02/20/2007 and runs through 04/28/2007. Total transfer penalty period is 02/01/2006 through 04/28/2007 (384 days + 68 days = 452-day penalty).

If subsequent transfers of asset occur that do not meet the transfer of assets exceptions after the penalty period begins, add the new penalty to the end of the existing penalty period.

See Section I-1000, Transfer of Assets, for information on the exceptions to transfer of assets penalties.

I-5310 Post-DRA Transfer of Assets Policy

Revision 09-4; Effective December 1, 2009

For applications or program transfer requests filed on or after Oct. 1, 2006, with a transfer on or after Feb. 8, 2006, post-DRA transfer of assets policy is used. Under post-DRA transfer of assets policy, the penalty start date is the first day of the month of MED, if the individual meets all other eligibility criteria. However, an individual must receive waiver services or state supported living center services to be eligible for a waiver program. An individual with a current transfer penalty cannot be certified for a waiver program or state center services. Therefore, an individual who has transferred assets under post-DRA transfer of assets policy would remain ineligible for 60 months forward from each transfer transaction. To be eligible for waiver services or state center services, the 60-month look-back period would need to have expired for each transfer. Follow current denial procedures for state center services or the applicable waiver program.

Example: An individual transferred $5,000 on Oct. 3, 2006, and applies for waivers (or state center services). There is a 36-month look-back period and the individual is not eligible for waiver services (or state center services).

The same individual applies March 2009; the look-back period would be 36 plus one month. The look-back period would span February 2006 - February 2009, which would include the October 2006 transfer transaction date, and the individual would not be eligible for waiver services (or state center services).

The same individual applies April 2009; the look-back period would be 36 plus two months.

As the months advance, so does the look-back period, starting with March 2009.

The same individual applies November 2011; the look-back period would span November 2006 - October 2011. The $5,000 transfer transaction that occurred on Oct. 3, 2006, would not be included in the look-back period.

Exception: If the individual enters an institution and meets all other eligibility criteria, the penalty period would start and continue for the appropriate period of time. If the individual leaves the institution and reapplies for waiver services, eligibility for waiver services can only begin after the penalty period has expired.

Example: An individual enters an institution and applies for Medicaid on May 5, 2007. The individual reports a transfer of $7,150 in April 2007. The penalty period is 61 days ($7,150/117.08 = 61.06 days, round down to 61). The individual meets all other eligibility criteria as of May 1, 2007. The penalty period begins May 1 and ends June 30. The client returns to his home from the institution on May 20 and requests waiver services. Since the individual has an active penalty, waiver services may not begin.

 

I-5320 Pre-DRA Transfer of Assets Policy

Revision 09-4; Effective December 1, 2009

Pre-DRA transfer of assets policy related to waivers and state supported living center services requires that the same penalty period calculation be used for individuals who apply for home/community-based waiver programs or state supported living center services. Penalty periods continue to run if a client moves from an institutional program to a home/community-based waiver program or vice versa. For pre-DRA transfer of assets policy, the penalty period begins the month of transfer. However, a new penalty period cannot be imposed while a previous penalty period is still in effect. Therefore, the penalty periods assessed under pre-DRA transfer of assets (OBRA 1993 rules) for multiple transfers that overlap run separately but consecutively.

Examples:

• A 365-day penalty period begins in June of this year while the client is in a nursing facility. In October of this year the client is discharged from the nursing facility and elects to receive a home/community-based waiver program. The client is ineligible for waiver services until June of next year.
• A penalty period is 457 days, beginning with the date of transfer on Oct. 15 of last year and ending Dec. 31 of this year. (When determining the penalty period, begin with the first day of the month of the transfer.) Another transfer made in April of this year results in a 395-day penalty, which begins January of next year (after the previous penalty period ends) and ends Jan. 30 of the following year. Thus, the penalty periods run separately but consecutively.

Pre-DRA transfer of assets policy related to waivers and state supported living center services requires that when multiple transfers occur during the look-back period in such a way that the penalty periods for each overlap, the transfers are treated as a single event. The uncompensated values are lumped together and divided by the average daily rate for a private-pay individual in a nursing facility. If multiple transfers occur in such a way that the penalty periods do not overlap, then the transfers are treated as separate events and the penalty periods are calculated separately.

Examples:

• The person made the following transfers during the look-back period: $10,000 in January and $10,000 in July. If the average daily rate for a private-pay patient is $117.08, the penalty period for each transfer is 85 days ($10,000 divided by $117.08 = 85 days). Because the penalty periods for these transfers do not overlap, they are treated as separate events. The penalty period for the first transfer begins 01/01/YY and ends 03/26/YY. The penalty period for the second transfer begins 07/01/YY and ends 09/23/YY.
• The person made the following transfers during the look-back period: $20,000 in January and $20,000 in April. If the average daily rate for a private-pay patient is $117.08, the penalty period for each transfer is 170 days ($20,000 divided by $117.08 = 170 days). The penalty period for the January transfer begins 01/01/YY and ends 06/19/YY. The penalty period for the April transfer begins 04/01/YY and ends 09/17/YY. Because these periods overlap, the transfers are treated as a single event. The penalty period is calculated as follows: $40,000 divided by $117.08 = 341-day penalty. This penalty period begins the month in which the first transfer occurred (01/01/YY) and ends 12/7/YY.

Use pre-DRA transfer of assets policy for applications or program transfer requests filed before Oct. 1, 2006, regardless of when the transfer occurred. The penalty start date is the first day of the transfer transaction month.

Revision 09-4; Effective December 1, 2009

The persons in institutions for mental diseases (IMDs) who are assessed transfer penalties remain eligible for all other Medicaid benefits, but Medicaid does not make IMD vendor payments during the penalty period. Send a letter to the hospital reimbursement manager stating that the client is not eligible for IMD vendor payment because of a transfer of assets. Include the beginning and ending dates of the penalty period.

Revision 09-4; Effective December 1, 2009

Under pre-DRA transfer of assets policy, when a spouse transfers an asset that results in a penalty for the client, the penalty period must, in certain instances, be apportioned between the spouses. Both spouses must be eligible for Medicaid institutional services or home/community-based waiver services during the same time period for apportionment to occur. Apportionment occurs when:

• the spouse is institutionalized and is Medicaid eligible; or
• the spouse would be eligible for home/community-based waiver services; and
• some portion of the penalty against the client remains at the time the above conditions are met.

Under post-DRA transfer of assets policy, when a spouse transfers an asset that results in a penalty for the client, the penalty period must, in certain instances, be apportioned between the spouses. Both spouses must be eligible for Medicaid institutional services during the same time period for apportionment to occur. Apportionment occurs when:

• the spouse is institutionalized and is Medicaid eligible; and
• some portion of the penalty against the client remains at the time the above conditions are met.

Note: If a penalty period apportionment results in an odd day, the extra penalty day is assessed to one member (male) of the couple. Do not split the day. Penalty periods are assessed in whole days for both pre-DRA and post-DRA transfer of assets policy.

Example: Mr. Able enters a nursing facility and applies for Medicaid. Mrs. Able transfers an asset that results in a 1,095-day penalty against Mr. Able. Three hundred and sixty five days into the penalty period, Mrs. Able enters a nursing facility and applies for Medicaid. The penalty period against Mr. Able still has 730 days to run. Because Mrs. Able is now in a nursing facility and a portion of the original penalty period remains, the remaining 730 days of penalty must be apportioned between Mr. and Mrs. Able. Therefore, Mr. and Mrs. Able each have a 365-day penalty period.

Under pre-DRA transfer of assets policy, when one spouse is no longer subject to a penalty (for example, the spouse no longer receives institutional or home/community-based waiver services, or the spouse dies), the remaining penalty period applicable to both spouses must be served by the remaining spouse.

Under post-DRA transfer of assets policy, when one spouse is no longer subject to a penalty (for example, the spouse no longer receives institutional services or the spouse dies), the remaining penalty period applicable to both spouses must be served by the remaining spouse.

Example: In the above example, the 730-day penalty period was apportioned equally between Mr. and Mrs. Able, making each have 365 days. After 181 days, Mr. Able leaves the nursing facility, but Mrs. Able remains. Because Mr. Able is no longer subject to the penalty, the remaining total penalty (368 days) must be imposed on Mrs. Able. If Mr. Able returns to the nursing facility before the end of the 368-day period, the remaining penalty would again be apportioned between the two spouses.

Revision 09-4; Effective December 1, 2009

If the transferred asset is subsequently returned to the individual, the transfer is nullified and the penalty period is erased retroactive to the initial month of penalty. The asset is treated as though never transferred, and is excluded or counted, as appropriate, in determining the client's eligibility for those months in which the asset was in someone else's possession.

In spousal cases, if the individual and or spouse transferred an asset before the individual entered the nursing facility and the asset is returned after institutionalization, the spousal protected resource amount must also be recalculated.

Examples:

• If an excluded asset such as a homestead was transferred and subsequently returned, the transfer is nullified and the penalty period is erased retroactive to the initial month of penalty. Because the asset is excluded, it has no effect on countable assets when determining eligibility for those months in which the resource was in someone else's possession. If the client is in Mason Manor, submit Form H3618-A, Resident Transaction Notice for Designated Vendor Numbers, to report him discharged from Vendor No. 5997 and admitted to the nursing facility, with vendor payments reinstated, retroactive to the date the penalty period began.
• If a countable asset such as a certificate of deposit was transferred and subsequently returned, its value is added to the value of other countable assets when determining current eligibility, as well as eligibility for those months in which the asset was in someone else's possession. If the client is in Mason Manor and would have been resource ineligible for those months in which the asset was in someone else's possession, do not retroactively discharge the client from Mason Manor.

For a penalty period to be nullified or erased retroactively, all of the asset in question or its equity value must be returned to the client. When only part of an asset or its equivalent value is returned, the penalty period is not nullified or erased retroactive but is recalculated based on the remaining amount of uncompensated transfer and the penalty period will be for a shorter length of time.

• If the partial returned asset is excluded, it has no effect on countable assets when determining eligibility for those months in which the asset was in someone else's possession. If the client is in Mason Manor and the penalty recalculation results in an end to the penalty, enter the day after the last day of the penalty period. Submit Form H3618-A to report the client discharged from Vendor No. 5997 and admitted to the nursing facility, with vendor payments reinstated.
• If the partial returned asset is countable, such as a certificate of deposit, the returned value is added to the value of other countable assets when determining current eligibility, as well as eligibility for those months in which the asset was in someone else's possession. If the client is in Mason Manor and would have been resource ineligible for those months in which the asset was in someone else's possession, do not retroactively discharge the client from Mason Manor.

Payment on the principal of a note is the return of a transferred asset and reduces the penalty accordingly.

I-6110 Policy Implementation Dates

Revision 09-4; Effective December 1, 2009

For applications or program transfer requests filed before Oct. 1, 2006, or for case actions before Oct. 1, 2006, regardless of the date of purchase of a life estate, follow pre-DRA policy for life estates and remainder interests. Do not consider the purchase of a life estate as a transfer of assets, unless the purchase price of the life estate exceeds the fair market value (FMV) of the life estate.

For applications or program transfer requests filed on or after Oct. 1, 2006, or for case actions on or after Oct. 1, 2006, with a purchase of a life estate before April 1, 2006, follow pre-DRA policy as outlined in Section F-4212, Life Estates and Remainder Interests. Do not consider the purchase of a life estate as a transfer of assets, unless the purchase price of the life estate exceeds the FMV of the life estate.

For applications or program transfer requests filed on or after Oct. 1, 2006, or for case actions on or after Oct. 1, 2006, with a purchase of a life estate on or after April 1, 2006, consider the purchase of a life estate on or after April 1, 2006, as a potential transfer of assets and follow post-DRA policy. 

I-6120 Post-DRA Transfer of Assets Policy

Revision 09-4; Effective December 1, 2009

Note: The post-DRA changes pertaining to a life estate do not apply to the retention or reservation of a life estate by an individual transferring real property.

When an individual purchases a life estate on or after April 1, 2006, the potential for a transfer of assets occurs. A purchase of a life estate on or after April 1, 2006, is a transfer unless both of the following conditions are met:

• The individual purchasing a life estate in another individual's home actually resides in the home.
• The individual continues to reside in the home for a period of at least one year after the date of purchase. 

I-6121 One-Year Residency Requirement

Revision 09-4; Effective December 1, 2009

The months of residence for the one-year period must be consecutive. Less than one year of occupancy after the date of purchase results in treatment as a transfer of assets for less than fair market value (FMV). When evaluating the facts of the purchase of a life estate, determine whether the individual lived in the home by considering factors, such as whether the individual's mail was delivered there or whether the individual paid the property taxes or utilities.

If the purchaser of the life estate moves out of the home before the end of the one-year period, the date of the purchase of the life estate is the date of transfer and the full amount paid for the life estate is the countable amount of the transfer.

The purchase amount of the life estate should not be reduced or prorated to reflect an individual's residency for a period of time less than a year.

Continue to consider Medicaid resource eligibility and transfer of assets rules, even in a case where an individual purchasing a life estate in the home of another individual does live there for at least one year. Unless the property in which the individual has purchased the life estate qualifies as the individual's excluded home, the value of the life estate is counted as a resource in determining Medicaid eligibility.

In determining the value of life estates, continue to follow policy as life estates and remainder interests and the use of the life estate tables in Appendix X, Life Estate and Remainder Interest Tables. The life estate can be excluded as a homestead.

Under pre-DRA and post-DRA policy, consider as a transfer of assets the purchase for a life estate when the payment for the life estate exceeds the FMV of the life estate.

Use Appendix X to determine the FMV. Calculate the difference between the purchase price paid and the FMV.

If an individual makes a gift or transfer of a life estate interest, the value of the life estate, as calculated under Appendix X, is treated as a transfer of assets.

Example 1

Asset	Detail
Date of Life Estate Purchase	11/15/2005
Amount of Life Estate Purchase	$7,500 – FMV was paid for the life estate interest.
File Date	01/25/2006
Institution Entry	01/15/2006
Living Arrangement	Individual resided in the home until date of entry to institution, which is less than one year after date of purchase.
MED	01/01/2006
Penalty Start Date	Use pre-DRA policy. No transfer of assets.  Application for Medicaid was before 10/01/2006 and life estate interest was purchased before 04/01/2006.  Use policy in Section F-4212, Life Estates and Remainder Interests.

Example 2

Asset	Detail
Date of Life Estate Purchase	05/11/2006
Amount of Life Estate Purchase	$5,000 – FMV
File Date	10/15/2006
Institution Entry	08/15/2006
Living Arrangement	The individual resided in the home until entry to the institution, which is less than one year after the date of purchase.
MED	10/01/2006
Penalty Start Date	Use post-DRA policy. Start penalty with the medical effective date month — 10/01/2006. A transfer penalty applies to this situation since the individual did not reside in the home with the purchased life estate for one year after date of purchase.  Purchase amount is $5,000 ÷ 117.08 = 42 days. Penalty start date is 10/01/2006 through 11/11/2006.

Example 3

Asset	Detail
Date of Life Estate Purchase	05/15/2006
Amount of Life Estate Purchase	$6,000 – FMV
File Date	12/11/2007
Institution Entry	12/11/2007
Living Arrangement	The individual resided in the home until date of entry to institution, which is greater than one year.
Medical Effective Date	12/01/2007
Penalty Start Date	Use post-DRA policy. No transfer penalty applies to this situation since the individual resided in the home for more than one year after date of purchase.  Use policy in Section F-4212, Life Estates and Remainder Interests, for resource treatment of the life estate.

Example 4

Asset	Detail
Date of Life Estate Purchase	05/11/2006
Amount of Life Estate Purchase	$3,500 – FMV is $2,000.
File Date	06/06/2007
Institution Entry	06/06/2007
Living Arrangement	The individual resided in the home until date of entry to the institution, which is greater than one year.
Medical Effective Date	06/01/2007
Penalty Start Date	Using post-DRA policy, no transfer penalty applies to the purchase of the life estate since the individual resided in the home for more than one year after date of purchase, except that the individual paid more than FMV for the purchase of the life estate.  Difference between FMV of $2,000 and amount paid is $1,500 ÷ 117.08 = 12 days.  Penalty start date policy — Use post-DRA since the transfer was after 02/08/2006 and application was after 10/01/2006.  Penalty starts the medical effective date month of 06/01/2007. Penalty would be from 06/01/2007 through 06/12/2007.

I-6210 Policy Implementation Dates

Revision 09-4; Effective December 1, 2009

For applications or program transfer requests filed before Oct. 1, 2006, or for case actions before Oct. 1, 2006, regardless of the date of purchase of a promissory note, loan or mortgage, follow policy for promissory notes, loans and property agreements.

Do not consider the purchase of a promissory note, loan or mortgage as a transfer of assets, unless the transaction of the promissory note, loan or mortgage is considered a transfer of assets for less than fair market value (FMV).

For applications or program transfer requests filed on or after Oct. 1, 2006, or for case actions on or after Oct. 1, 2006, with a purchase of a promissory note, loan or mortgage before April 1, 2006, follow policy outlined in Section F-4150, Promissory Notes, Loans and Property Agreements. Do not consider the purchase of a promissory note, loan or mortgage as a transfer of assets, unless the transaction of the promissory note, loan or mortgage is considered a transfer of assets for less than FMV.

For applications or program transfer requests filed on or after Oct. 1, 2006, or for case actions on or after Oct. 1, 2006, with a purchase of a promissory note, loan or mortgage on or after April 1, 2006, consider the purchase of these on or after April 1, 2006, as a potential transfer of assets.

 

I-6220 Post-DRA Transfer of Assets Policy

Revision 09-4; Effective December 1, 2009

When an individual purchases a promissory note, loan or mortgage on or after April 1, 2006, the potential for a transfer of assets occurs. A purchase of a promissory note, loan or mortgage on or after April 1, 2006, is a transfer unless all of the following conditions are met:

• The repayment term must be actuarially sound.
• Payments must be made in equal amounts during the term of the loan with no deferral of payments and no balloon payments.
• The promissory note, loan or mortgage must prohibit the cancellation of the balance upon the death of the lender.

If a promissory note, loan or mortgage does not satisfy these three requirements, the countable value considered for transfer of assets is the outstanding balance due as of the date of the individual's application for Medicaid or, for an existing Medicaid recipient, the program transfer request date.

To determine if actuarially sound, use life expectancy tables by accessing the online actuarial publication from the Social Security Administration’s Period Life Table.

If a promissory note, loan or mortgage is not a transfer, consider Medicaid resource eligibility and transfer of assets policy for persons purchasing a promissory note, loan or mortgage. Section F-4150, Promissory Notes, Loans and Property Agreements, also indicates that if the purchase of the promissory note, loan or mortgage was for less than the FMV, a transfer of assets transaction occurs.

Revision 09-4; Effective December 1, 2009

The following rules are taken from Subchapter C, Financial Requirements, Division 4, Transfer of Assets.

§358.402. Transfer of Assets before February 8, 2006

(a) Introduction.

(1) The Omnibus Budget Reconciliation Act of 1993 (OBRA 1993) (P.L. 103-66) revised policy for transfers of assets that occur on or after August 11, 1993, when an uncompensated value remains.

(2) The penalty for transfers of assets affects payments for institutional facility services (nursing facility (NF) care, intermediate care facility for persons with mental retardation or related conditions (ICF/MR) provider services, care in state supported living centers and state centers, and care in institutions for mental diseases (IMD)) and eligibility for §1915(c) waiver program services. Both the recipient and the service provider are notified of the penalty period.

(3) Except for residents of state supported living centers and state centers, persons in an institutional setting remain eligible for all other Medicaid benefits and continue to receive monthly identification forms for the length of the penalty period. For residents of state supported living centers and state centers, Medicaid eligibility is denied for any penalty period resulting from an uncompensated transfer of assets. This is because the only Medicaid benefit a resident of a state supported living center or state center receives is provider payments.

(4) If the Medicaid eligibility of a person receiving services under a §1915(c) waiver program requires receipt of waiver services, then the person is ineligible for all Medicaid benefits for the length of the penalty period. Denial of §1915(c) waiver program services based on an uncompensated transfer of assets does not disqualify the person for pure Qualified Medicare Beneficiary (QMB) or Specified Low-Income Medicare Beneficiary (SLMB) benefits, as described in Chapter 359 of this title (relating to Medicare Savings Program).

(5) A person in a noninstitutional setting who is eligible for Medicaid may transfer assets without penalty, provided the person does not become institutionalized or apply for §1915(c) waiver program services. A transfer of assets does not affect eligibility for QMB or SLMB benefits.

(6) In spousal situations, if assets are transferred to a third party before institutionalization or by the community spouse, the Texas Health and Human Services Commission (HHSC) does not include the uncompensated amount of the transfer in calculating the spousal protected resource amount or countable resources upon application for Medicaid.

(b) Definitions. The following words and terms, when used in this section, have the following meanings unless the context clearly indicates otherwise.

(1) Person—"Person" includes the applicant or recipient, as well as:

(A) the person's spouse;

(B) an individual, including a court or administrative body, with legal authority to act in place of or on behalf of the person or person's spouse; and

(C) any individual, including a court or administrative body, acting at the direction or upon the request of the person or the person's spouse.

(2) Assets —

(A) Assets include all income and resources of a person and of the person's spouse, including any income or resources that the person or the person's spouse is entitled to but does not receive because of action:

(i) by the person or the person's spouse;

(ii) by an individual, including a court or administrative body, with legal authority to act in place of or on behalf of the person or the person's spouse; or

(iii) by any individual, including a court or administrative body, acting at the direction or upon the request of the person or the person's spouse.

(B) Actions that would cause income or resources not to be received include:

(i) irrevocably waiving pension income;

(ii) waiving the right to receive an inheritance;

(iii) not accepting or accessing injury settlements; and

(iv) a defendant diverting tort settlements into a trust or similar device to be held for the benefit of the plaintiff.

(c) Transfer of income.

(1) A person may incur a transfer penalty by transferring income on or after August 11, 1993. Transfers of income include:

(A) waiving the right to receive an inheritance even in the month of receipt;

(B) giving away a lump sum payment even in the month of receipt; or

(C) irrevocably waiving all or part of federal, state, or private pensions or annuities.

(2) The date of transfer is the date of the actual change in income, if on or after August 11, 1993. Interspousal transfers of income are permitted (for example, obtaining a court order to have community property pension income paid to a community spouse).

(3) Because revocable waivers of pension benefits can be revoked and the benefits reinstated, no uncompensated value is developed, and no transfer-of-assets penalty is incurred. Such waivers are subject to the utilization-of-benefits policy, and the person must apply for reinstatement of the full pension amount or the person is ineligible for all Medicaid benefits.

(d) Exceptions to transfers of assets.

(1) Transfer of the person's home does not result in a penalty when the title is transferred to the person's:

(A) spouse, who lives in the home (the transfer penalty applies when the community spouse transfers the home without full compensation);

(B) minor or disabled child (a disabled child must meet Social Security Administration disability criteria; there is no age limit for a disabled child for transfer of assets purposes);

(C) sibling who has equity interest in the home and has lived there for at least one year before the person transferred to an institutional setting; or

(D) son or daughter (other than a disabled or minor child) who lived in the home for at least two years before the person transferred to an institutional setting and provided care that prevented institutionalization. To substantiate this claim, there must be a written statement from the person's attending physician or a professional social worker familiar with the case documenting the care provided by the son or daughter.

(2) Assets, including the person's home, may be transferred without resulting in a penalty when:

(A) transferred to the person's spouse or to another for the sole benefit of that spouse, or from the person's spouse to another for the sole benefit of that spouse;

(B) transferred to the person's child or to a trust, including an exception trust described in §1917(d)(4) of the Social Security Act (42 U.S.C. §1396p(d)(4)), established solely for the benefit of the person's child. The child must meet Social Security Administration disability criteria. There is no age limit for a disabled child for transfer of assets purposes;

(C) transferred to a trust, including an exception trust as specified in §1917(d)(4) of the Social Security Act (42 U.S.C. §1396p(d)(4)), established for the sole benefit of a person under 65 years of age who meets Social Security Administration disability criteria;

(D) satisfactory evidence exists that the person intended to dispose of the resource at fair market value;

(E) satisfactory evidence exists that the transfer was exclusively for some purpose other than to qualify for Medicaid;

(F) imposition of a penalty would cause undue hardship;

(G) a person changes a joint bank account to establish separate accounts to reflect correct ownership of and access to funds; or

(H) a person purchases an irrevocable funeral arrangement or assigns ownership of an irrevocable funeral arrangement to a third party.

(3) In determining whether an asset was transferred for the sole benefit of a spouse, child, or person with a disability, there must be a written instrument of transfer, such as a trust document, which legally binds the parties to a specified course of action and which clearly sets out the conditions under which the transfer was made, as well as who can benefit from the transfer. The instrument or document must provide for the spending of the funds involved for the benefit of the person on a basis that is actuarially sound based on the life expectancy of the person involved. When the instrument or document does not so provide, there can be no exemption from the penalty. Exception trusts created under §1917(d)(4) of the Social Security Act (42 U.S.C. §1396p(d)(4)) are exempt from the actuarially sound distribution provisions of this section.

(4) The situations in paragraphs (1) - (3) of this subsection are the only situations in which an uncompensated transfer does not result in a penalty for care in an institutional setting. Under the transfer provisions of OBRA 1993, the home is not an excluded resource for a person in an institutional setting. Therefore, if the home of a person in an institutional setting is transferred, unless the transfer meets one of the criteria in paragraphs (1) - (3) of this subsection, it could affect payment for the person's care in an institutional setting.

(e) Look-back period.

(1) Penalties may be assessed for transfers occurring on or after the look-back date. Penalties cannot be assessed for time frames prior to the look-back period.

(2) The law prescribes a 36-month look-back period for most uncompensated transfers. However, there is a 60-month look-back period for certain transfers involving trusts. The look-back periods for trusts and distributions from trusts are defined in subparagraphs (A) and (B) of this paragraph.

(A) Revocable trusts.

(i) Payments from a revocable trust to or for the benefit of someone other than an applicant or recipient have a 60-month look-back period.

(ii) Making a revocable trust irrevocable with payments from corpus/income foreclosed to the applicant or recipient is a transfer of assets and has a 60-month look-back period.

(B) Irrevocable trusts.

(i) Payments from an irrevocable trust (where trustee distributions are not foreclosed to the applicant or recipient) which are made to (or for the benefit of) someone other than the applicant or recipient have a 36-month look-back period.

(ii) Creating an irrevocable trust where trustee payments are foreclosed to the applicant or recipient is a transfer of assets with a 60-month look-back period.

(iii) Creating an irrevocable trust where the trustee initially has discretion to make payments to the applicant or recipient (or for the applicant's or recipient's benefit), but where payments are foreclosed to the applicant or recipient at a later date is a transfer of assets as of the date payments are foreclosed to the applicant or recipient. The look-back period is 60 months.

(3) The look-back period is 36 months (or 60 months) from the later of the date of:

(A) institutionalization; or

(B) Medicaid application.

(4) When a person is already a Medicaid recipient before entering an NF, an ICF/MR, a state supported living center, a state center, or an IMD, the look-back period begins with institutional entry.

(5) When a person applies and is certified for Medicaid more than once because of multiple institutional stays or periods of ineligibility, the look-back date is based on the later of the earliest application for Medicaid or the initial entry into the facility.

(6) When a person applies for a §1915(c) waiver program, the look-back period is 36 months or 60 months from the later of the date:

(A) of application for waiver services (completed, signed application form is received in HHSC office); or

(B) after application that the person transfers assets.

(7) When a person applies for services in an institutional setting but is not certified and then reapplies, a new look-back period is based on the latest application.

(8) When a person applies and is certified for a §1915(c) waiver program, subsequently is denied, and reapplies for waiver services, the initial look-back period is still in effect.

(9) When a look-back period is established, the person is certified, and then moves from a Medicaid-certified long-term care facility to a §1915(c) waiver program or vice versa, the initial look-back period is still in effect. This is true even when there is a gap in eligibility periods.

(10) Any additional transfers of assets that occur after the person is certified for Medicaid may be assessed a penalty.

(f) Calculation of penalty period.

(1) There is no limit to the penalty period under OBRA 1993. The penalty period is determined by dividing the uncompensated value of all assets transferred by the average monthly cost of nursing facility care for a private-pay patient.

(2) The penalty period calculation applies to the transfer of both income and resources.

(3) The same penalty period calculation is used for a person who applies for a §1915(c) waiver program. Penalty periods continue to run if a person moves from a Medicaid-certified long-term care facility to a §1915(c) waiver program or vice versa.

(4) The penalty period begins the month of transfer. However, a new penalty period cannot be imposed while a previous penalty period is still in effect. Therefore, the penalty periods assessed under OBRA 1993 rules for multiple transfers that overlap run separately but consecutively. (5) If a penalty period ends and a subsequent transfer occurs, a new penalty period is established effective the month of the subsequent transfer. This means there may be a gap between penalty periods.

(6) When multiple transfers occur during the look-back period in such a way that the penalty periods for each overlap, the transfers are treated as a single event. The uncompensated values are lumped together and divided by the average monthly rate for a private-pay patient in a nursing facility. If multiple transfers occur in such a way that the penalty periods do not overlap, then the transfers are treated as separate events and the penalty periods are calculated separately.

(g) Apportioning penalty periods between spouses.

(1) When a person's spouse transfers an asset that results in a penalty for the person, the penalty period must, in certain instances, be apportioned between the spouses. Both spouses must be eligible for Medicaid in an institutional setting during the same time period for apportionment to occur. Apportionment occurs when:

(A) the spouse:

(i) is institutionalized and is Medicaid eligible; or

(ii) would be eligible for a §1915(c) waiver program; and

(B) some portion of the penalty against the person remains at the time the conditions in this paragraph are met.

(2) When one spouse is no longer subject to a penalty (for example, the spouse is no longer in an institutional setting, or the spouse dies), the remaining penalty period applicable to both spouses must be served by the remaining spouse.

(h) Return of transferred asset.

(1) For transfers occurring on or after August 11, 1993, if the transferred asset is subsequently returned to the person, the transfer is nullified and the penalty period is erased retroactive to the month of transfer. The asset is treated as though never transferred, and is excluded or counted, as appropriate, in determining the person's eligibility for those months in which the asset was in someone else's possession. In spousal cases, if the person or the person's spouse transferred an asset before the person entered the nursing facility and the asset is returned after institutionalization, the spousal protected resource amount must also be recalculated.

(2) For a penalty period to be nullified, all of the asset in question or its fair market value must be returned to the person. When only part of an asset or its equivalent value is returned, the penalty period can be reduced but not eliminated. For example, if only half the value of the asset is returned, the penalty period can be reduced by one-half. Payment on the principal of a note is the return of a transferred asset and reduces the penalty accordingly.

(i) Spouse-to-spouse transfers under spousal impoverishment provisions.

(1) There are no restrictions on interspousal transfers occurring from the date of institutionalization to the date of application; the reason is that at application and throughout the initial eligibility period (12 full months following the medical effective date), the combined countable resources of the couple are considered in determining eligibility. For the same reason, interspousal transfers are also permitted before institutionalization. A penalty can result when the community spouse transfers assets to a third party, not for the sole benefit of either spouse.

(2) To remain eligible at the end of the initial eligibility period, the person in an institutional setting must reduce resources to which the person has access at least to the resource limit. If the person chooses, the person may, during the initial eligibility period, transfer resources from his or her name to the community spouse's name with no penalty applied to the transfer. The transfer-of-assets policy applies only to transfer of assets for less than fair market value to someone other than the community spouse if not for the sole benefit of that spouse.

(3) Transfer penalties apply when the community spouse transfers his or her separate property before institutionalization, or after institutionalization but before certification. Transfer penalties apply when the community spouse transfers community property both before and after institutionalization, if not for the sole benefit of the spouse.

(j) Compensation. Compensation, in the form of funds, real property, or services, must actually have been provided to a person. Future compensation does not satisfy the compensation requirement except for annuities which are actuarially sound. Compensation, however, may be in the form of payment or assumption of a legal debt owed by the individual making the transfer. Compensation is not allowed for services that would be normally provided by a family member (such as house painting or repairs, mowing lawns, grocery shopping, cleaning, laundry, preparing meals, transportation to medical care). The person must provide valid receipts for financial expenditures or written statements from the individuals who were paid to provide the services. If the person receives additional cash compensation that was not a part of the transfer agreement from the party who received the transferred asset, the uncompensated value of the transferred asset must be reduced by the amount of the additional compensation and as of the date the compensation is received. Cash compensation includes direct payments to a third party to meet the person's food, shelter, or medical expenses, including nursing facility bills, incurred after the date of the transfer. Compensation for a transferred asset must be provided according to terms of an agreement established on or before the date of transfer. This agreement must have been established exclusively for purposes other than obtaining or retaining eligibility for Medicaid services.

(k) Participation in transfers. Any action by a person's co-owner(s) to eliminate the person's ownership interest or control of a joint asset, with or without the person's consent, is a transfer of assets. Placing another person's name on an account or other asset that results in limiting the person's control of an asset (right to dispose) is a transfer of assets.

(l) Rebuttal procedures.

(1) Notification of opportunity for rebuttal. If any amount of uncompensated value exists, HHSC advises the person or authorized representative of the amount of uncompensated value and the length of the penalty period. The penalty period applies unless the person provides convincing evidence that the disposal was solely for some purpose other than to obtain Medicaid services. If, within the periods specified in this paragraph, the person or authorized representative makes no effort to rebut the presumption that the transfer was solely to obtain Medicaid services, HHSC assumes that the presumption is valid. The rebuttal period is five working days after oral notification (by HHSC to the person) and seven working days after written notification.

(2) Rebuttal of the presumption. Transfer-of-assets statutes presume that all transfers for less than fair market value are to obtain Medicaid services. The person or authorized representative is responsible for providing convincing evidence that the transaction in question was exclusively for some other purpose. To rebut the presumption, the person or authorized representative must provide a written statement and any relevant documentation to substantiate his or her statement. The statement, oral or written, must include at least the following:

(A) purpose for transferring the asset;

(B) attempts to dispose of the asset at fair market value;

(C) reason for accepting less than fair market value for the asset;

(D) means of or plan for self-support after the transfer; and

(E) relationship to the person to whom the asset was transferred.

(m) Undue hardship.

(1) A person may claim undue hardship when imposition of a transfer penalty would result in discharge to the community and/or inability to obtain necessary medical services so that the person's life is endangered. Undue hardship also exists when imposition of a transfer penalty would deprive the person of food, clothing, shelter, or other necessities of life. Undue hardship relates to hardship to the person, not the relatives or responsible parties of the person. Undue hardship does not exist when imposition of the transfer penalty merely causes the person inconvenience or when imposition might restrict his lifestyle but would not put him at risk of serious deprivation.

(2) Undue hardship may exist when any one of the following conditions specified in subparagraphs (A) - (C) of this paragraph exists:

(A) location of the receiver of the asset is unknown to the person, or other family members, or other interested parties, and the person has no place to return in the community and/or receive the care required to meet his or her needs;

(B) the person can show that physical harm may come as a result of pursuing the return of the asset, and the person has no place to return in the community and/or receive the care required to meet his or her needs; or

(C) receiver of the asset is unwilling to cooperate with the person and HHSC, and the person has no place to return in the community and/or receive the care required to meet his or her needs.

(3) If a person claims undue hardship, HHSC makes a decision on the situation as soon as possible but within 30 days after receipt of the request for a waiver of the penalty. The person has the right to appeal an adverse decision on undue hardship.