An official State of Texas website.
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.