TN 10 (06-96)
SI 01730.046 Transfer of Assets for Medicaid Purposes
Section 1917(c) of the Social Security Act
Social Security Act as Amended by the Omnibus Budget Reconciliation Act of 1993
Sections 1613(c) and 1634(a) of the Social Security Act
Regulation 20 CFR 416.2145
The Social Security Act (SSACT)has been amended several times to limit the ability of an individual to dispose of (transfer) possessions in order to qualify for either SSI or Medicaid.
Income for transfer purposes has the same meaning as it does in the SSI program. (See SI 00810.005 for the definition of income for SSI purposes.)
Resources, as used by the State Medicaid agencies for transfer and Medicaid trust purposes, mean not only countable resources for SSI purposes, but in the case of institutionalized individuals, also the home and contiguous property that may be excluded for SSI.
Assets include not only income and resources of an individual and spouse described above, but also any income or resources to which the individual or spouse is entitled but does not receive because of action by the individual, spouse or some other person or entity acting on behalf of or at the request of the individual or spouse. (For example, an individual may arrange to have an annuity to which he/she is due paid to a third party to artificially reduce apparent assets.)
Transfers are also referred to as disposal; resources that are transferred may be referred to as disposed resources or disposal of resources.
4. Nursing Facility Level Services
In this section, “nursing facility level services” refers to the level of care received in a nursing facility or the level of care in an institution equivalent to that of nursing facility services or home or community based services furnished under a waiver under sections 1915(c) or (d) of the SSACT.
C. Policy — Effect on SSI
From March 1, 1981 through June 30, 1988, a transfer (i.e., giving away or selling) of nonexcluded resources for less than fair market value(FMV) resulted in the individual being charged with the difference between the FMV of the resource and the amount of the compensation received (i.e., the uncompensated value) for a period of 24 months from the date of the transfer. Loss of SSI eligibility because of such a transfer could also cause a loss of Medicaid eligibility in those States in which Medicaid eligibility results from SSI eligibility. From April 1, 1988 through June 30, 1988, the penalty for transfers could be waived because of undue hardship. The 1981 - 1988 transfer rules are explained in SI 01150.100; the exception to those rules, rebutting the presumption of the reason for the transfer, is explained in SI 01150.120 — SI 01150.127.
Starting July 1, 1988, transfers of resources only affected eligibility for certain Medicaid services, not for SSI. (See
SI 01150.110 for a description of the provision that went into effect on July 1, 1988.)
The Medicaid transfer rules have been broadened and clarified effective October 1, 1993. However, they only have a direct effect on Medicaid, not SSI eligibility.
D. Policy — Effect on Medicaid
1. March 1981 -June 1988
SSI ineligibility for up to 24 months based on counting the uncompensated value of the transferred resource would result in ineligibility for Medicaid if eligibility for Medicaid was based on SSI eligibility. Application of this rule was subject to a rebuttable presumption, and beginning in April 1988, a potential waiver for undue hardship. Medicaid also had its own transfer penalty that was optional for States.
2. July 1988 - September 1993
Disposal of resources at less than FMV could affect eligibility for certain Medicaid services for up to 30 months from the date of transfer. Transferred resources reviewed under this provision would not be countable for SSI purposes.
b. FO Development
When FOs discovered that resources were disposed of for less than FMV, they developed the transfer and informed the State as described in SI 01150.110E. The State then determined whether a transfer should be counted or excepted under one of the exceptions listed in the SSACT such as undue hardship. In section 1634 States, FOs still developed assignment of rights (see SI 01730.040) and third party liability (see SI 01730.045) after discovering a transfer, as the State"s finding that disposal of resources at less than FMV would at worst result in a loss of eligibility for nursing facility level services, not complete Medicaid ineligibility. Also, the transfer could fall within an exception under the SSACT, and thus not result in a penalty.
c. Effect of Transfer
A transfer could result in a State Medicaid agency deciding that an individual was not eligible for nursing facility level services for a period of time. However, the Medicaid agency could not impose a penalty if the transfer qualified for an exception listed in the statute, e.g., if the penalty would work an “undue hardship.” The State agency determined the period of ineligibility by dividing the amount of the uncompensated value of the transfer by the average monthly nursing home cost in the State or locality. The period of ineligibility for nursing facility level services could not exceed a cap of 30 months. This rule remains in effect for transfers which occurred before August 11, 1993.
3. October 1993 On
Effective October 1, 1993, for transfers of assets on or after August 11, 1993, ineligibility for nursing facility level services (and at the State"s option, ineligibility for certain other services for noninstitutionalized individuals) will occur for a number of months (see b. below, Effect of Transfer)if there has been a:
transfer or disposal of an asset for less than its FMV on or after a "look back" date which is 36 months before the first date the individual is both institutionalized and has applied for Medicaid, (or for the noninstitutionalized, the look back date is the date on which the individual applies for Medicaid, or if later, the date of the transfer for less than FMV), or
trust established by the individual (other than by will) on or after a look back date which is 60 months before the dates specified above for institutionalized and noninstitutionalized individuals. This penalty applies when payments are made from:
a revocable trust to (or for the benefit of) someone other than the individual, or
in the case of an irrevocable trust, no payment could under any circumstances be made to the individual from the trust. In the case of this type of irrevocable trust, only those portions of the trust from which no payments could be made to the individual are considered as transferred, or
irrevocable trust established by the individual (see
SI 01730.048B.2.) other than by will on or after a look back date which is 60 months before the dates specified above for institutionalized and noninstitutionalized individuals, if payments are made from the trust to someone other than the individual.
The 1993 legislation contains several specific exceptions for certain transfers, some of which involve trusts. It also requires CMS and each State to establish and use specific rules for waiving the transfer of assets provision because of undue hardship.
b. Effect of Transfer
The number of months of ineligibility resulting from a transfer is equal to the total cumulative uncompensated value of all assets transferred on or after the look back date divided by the average monthly nursing home cost to a private patient in the State or locality. Effective October 1993 for transfers occurring on or after August 11, 1993, there is no “cap” on the resulting number of months of ineligibility for these services.
EXAMPLE: An individual transfers $300,000 in a locality where private nursing home costs average $3,000 a month. The State divides the amount of the countable transfer by the locality"s average private nursing home cost. The individual is not eligible for Medicaid coverage of nursing facility level services for 8 years and 4 months (i.e., 100 months).
An individual"s SSI eligibility is unaffected by such a transfer. However, the FBR for an SSI beneficiary who transfers assets on or after August 11, 1993, as described above and who resides in a Medicaid institution is $30 plus applicable federally-administered optional State supplement (see SI 00520.011).
E. Policy — New Transfer of Assets Trust Exceptions
As described above, the revised transfer of assets provision also applies to certain trusts. However, the new linkage between transfer of assets and trusts also contains new specific trust exceptions which could be a benefit for recipients of large retroactive SSI payments. (See SI 01730.048 for more information.)
F. Procedure — Informing Applicants and Recipients
NOTE: Under the terms of section 1613(c) of the Social Security Act, SSA must inform SSI applicants and recipients about the transfer of assets provision in allStates.
Effective immediately, destroy all office copies of SSA Publication No. 05-11041 showing a form date before 1996 and hand out reproductions of the language in SI 01730.047 at application interviews instead. For redeterminations, line through page 2 of Form SSA-3073, “Important Messages from Your Social Security Office” and provide reproductions of the language in SI 01730.047 instead.
G. Procedure — Developing and Documenting
If an individual alleges a transfer of assets or the existence of a trust which does not affect SSI eligibility but might affect Medicaid eligibility, it must be documented. Obtain an allegation of a transfer on a signed SSA-795 whenever possible (and on a Report of Contact when the individual will not sign). Copy any trust information provided. Follow the guidelines in SI 01150.110 and regional and local procedures.
H. Procedure — Section 1634 States
NOTE: Transfers of assets do not affect SSI eligibility and do not necessarily cause Medicaid ineligibility.
In section 1634 States (see list in SI 01715.020), complete the assignment of rights item on the application or form SSA-169 when appropriate regardless of the individual"s transfer allegation. Similarly, complete third party liability development (see
SI 01730.045) and form SSA-8019-U2 when appropriate for these individuals.
Do not advise an individual as to whether a particular alleged transfer or a trust will affect the individual"s Medicaid coverage.
I. Procedure — Restricted Payments
For institutionalized individuals whose Medicaid eligibility is affected by a transfer of assets, the State will inform the FO when to apply the $30 (plus any federally-administered optional State supplement) payment limit after a transfer has occurred as described in SI 00520.012.