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.