Sec. 10.09.24.08-1. Disposal of Assets for Less Than Fair Market Value

A. Definitions. In this regulation, the following terms have the meanings indicated:

(1) "Assets" means all income and resources of an individual and of an individual's spouse, including any income or resources which the individual or the individual's spouse is entitled to but does not receive because of action by:

(a) The individual;

(b) The individual's spouse;

(c) A person, including a court or administrative body:

(i) With legal authority to act in place of or on behalf of the individual or the individual's spouse, or

(ii) Acting at the direction or upon the request of the individual or the individual's spouse.

(2) "Trust" means a legal instrument, which is either revocable or irrevocable, created, other than by will, by a grantor for the benefit of designated beneficiaries under the laws of the State and subject to the management of a trustee or trustees who have a fiduciary responsibility to manage the trust's resources and income for the benefit of the beneficiaries.

B. Disposal of Assets.

(1) In determining eligibility for Medical Assistance for any period under consideration beginning on or after October 1, 1993, in the case of assets disposed of after August 10, 1993, a penalty period shall be established during which an individual is determined ineligible for nursing facility services, for a level of care in a medical institution equivalent to that of nursing facility services, and for home and community-based waiver services provided for under the authority of §1915(c) and (d) of the Social Security Act if the individual or the individual's spouse disposes of an asset for less than fair market value at any time during or after the time periods specified under §B(2) of this regulation.

(2) Time Periods for Evaluating Disposals.

(a) For assets other than trusts, the time period for evaluating disposals is the following:

(i) For disposals earlier than February 6, 2006, the 36-month period immediately before the date as of which the individual both is an institutionalized individual and has applied for Medical Assistance.

(ii) For disposals on or after February 6, 2006, the 60-month period immediately before the date as of which the individual both is an institutionalized individual and has applied for Medical Assistance.

(b) In the case of payments from a trust or portions of a trust that are treated as a disposal of assets under Regulation .08-2B(4)(c), (5)(a)(ii), or (5)(b) of this chapter, the time period for evaluating disposals is the 60-month period immediately before the date as of which the individual both is an institutionalized individual and has applied for Medical Assistance.

(3) The penalty period begins:

(a) For a transfer before February 6, 2006, with the later of:

(i) The first day of the month in which the asset was transferred; or

(ii) The date on which the individual is eligible for Medical Assistance and, but for the transfer, would be receiving institutional level of care; and

(b) For a transfer on or after February 6, 2006, with the later of:

(i) The first day of the month in which the individual is eligible for Medicaid and would be receiving Medicaid nursing facility services but for the application of this penalty; or

(ii) The month during or after which assets have been transferred for less than fair market value.

(4) If the transfer occurs while the individual is in a penalty period for an earlier disposal, the penalty period begins on the first day of the first month following the end of the earlier penalty period.

(5) The number of months in the penalty period are equal to the total, cumulative, uncompensated value of all assets transferred, divided by the average monthly cost, to a private patient at the time of application for Medical Assistance, of nursing facility services in the State.

(6) Asset Transfers For Less Than Average Monthly Cost of Care.

(a) If the amount of a transfer is less than the average monthly cost of nursing facility services in the State, the length of the penalty period is calculated based on the proportion of the average monthly cost of nursing facility services that was transferred.

(b) If a series of transfers is made, each of which is less than the average monthly cost of nursing facility services, the penalty period is calculated based on the total, cumulative, uncompensated value of all assets transferred.

(7) Transfers Not Equally Divisible. If the amount of a single transfer or the amount of the total, cumulative, uncompensated value of all assets transferred is not equally divisible by the average monthly cost of nursing facility services in the State, the length of the penalty period is calculated based on the proportion of the average monthly cost of nursing facility services that was transferred.

(8) An institutionalized individual may not be determined ineligible for Medical Assistance under §B(1) of this regulation if the asset transferred was a home, and title to the home was transferred to:

(a) The spouse of the individual;

(b) The individual’s child as defined under Regulation .02B of this chapter or who is blind or disabled as determined under Regulation .05-4 of this chapter;

(c) A sibling of the individual who has an equity interest in the home and who was residing in the home for a period of at least 1 year immediately before the date the individual became an institutionalized individual; or

(d) A son or daughter of the individual other than the individual’s child described under §B(8)(b) of this regulation, who:

(i) Is lawfully residing in the home,

(ii) Was residing in the home for a period of at least 2 years immediately before the date the individual became an institutionalized individual, and

(iii) Can establish, to the Department's satisfaction, that the son or daughter provided the care that permitted the individual to reside at home rather than in an institution.

(9) An individual may not be determined ineligible for Medical Assistance by reason of the transfer of any asset, excluded or countable, if the asset was transferred under one of the following conditions:

(a) The asset was transferred to the individual's spouse or to another for the sole benefit of the individual's spouse;

(b) The asset was transferred from the individual's spouse to another for the sole benefit of the individual's spouse;

(c) The asset was transferred to, or to a trust established for the sole benefit of, the individual’s son or daughter who is blind or disabled as defined under Regulation .05-4 of this chapter;

(d) The asset was transferred to a trust established for the sole benefit of a disabled individual, as defined under Regulation .05-4B of this chapter, younger than 65 years old;

(e) The individual furnishes convincing evidence, consisting of testimony or other corroborative evidence, that the individual intended to dispose of the asset at fair market value or for other valuable consideration;

(f) The individual furnishes convincing evidence that the asset was transferred exclusively for a purpose other than to qualify for Medical Assistance; or

(g) The full value of the asset transferred by an individual for less than fair market value has been returned to the individual.

(10) In the case of an asset held by an individual in common with another individual or individuals in a joint tenancy, tenancy in common, or similar arrangement, the asset, or the affected portion of the asset, shall be considered a transfer when any action is taken, either by the individual or by any other individual, that reduces or eliminates the individual's ownership or control of the asset.