Clarifying Information

What is a transfer?

A transfer occurs anytime ownership of an asset changes from one person to another, regardless of whether compensation is received.

Why do transfers matter?

Transfers matter because if a client or their spouse transfers an asset away and does not receive adequate compensation in return, it may result in a penalty period during which the client cannot receive Medicaid-funded long-term care (LTC) services. The length of the penalty is based on the "uncompensated value" that was transferred away. The idea is that the client should have used the asset to provide for their LTC, rather than transferring it away and Medicaid would not pay for LTC for the time the transferred assets could have paid.

When do transfer rules and penalties apply?

Transfer rules and penalties apply to applicants for or recipients of:

• Institutional Medicaid services (for people physically in a medical institution), except those on the hospice program or the program for all-inclusive care for the elderly (PACE).
• Home and community-based (HCB) waiver services through home and community services (HCS) or the developmental disability administration (DDA).

Transfer rules and penalties don't apply to applicants for or recipients of:

• Medicaid with no LTSS
• Noninstitutional LTSS (i.e., receiving LTSS under a noninstitutional Medicaid categorically needy or alternative benefits plan (ABP) program):
  • Medicaid Personal Care (MPC)
  • Community First Choice (CFC)
• Specifically exempted LTSS:
  • Hospice
  • PACE
  • Roads to Community Living (RCL)
  • Medicaid Alternative Care/Tailored Supports for Older Adults (MAC/TSOA)

Does it matter when the transfer occurred?

The date of a transfer is the date the ownership of the asset changed. The WAC specifies what the date of transfer is depending on whether the asset is real or personal property. The agency reviews all transfers in the “look-back” period to determine whether adequate compensation was received for the transferred asset. The look-back period:

• The agency reviews transfers made within the 60-month period before the month the client attained institutional status and applied for LTC.
• The agency also reviews all transfers made on or after the date a client applied and began receiving LTC.

Any transfers made outside of the look-back period don't affect LTC Medicaid eligibility.

Transfers made by someone other than the client or their spouse

Uncompensated transfers made by the client or their spouse affect eligibility for LTC Medicaid. Many authorized representatives are attorneys-in-fact (AIF) for clients. AIFs are granted powers under a power of attorney (POA) or durable power of attorney (DPOA) document. However, not all AIFs have authority to transfer a client's assets. In order for an AIF to transfer a client's assets, the POA document must specifically state the AIF has the authority to make transfers on behalf of the client. If the POA document does not contain language that gives the representative specific authority to transfer assets, then the case may need to be referred to Adult Protective Services (APS) to review for potential financial exploitation.

Transfers made by a guardian (so long as the guardian is given the power by the court) are treated as if the client transferred the asset themselves. Guardians who have this power are generally referred to “guardians of the estate.”

Transfers made by others, by the direction of or on the behalf of the client, are also treated as if the client transferred the asset.

What is an asset?

An asset is:

• A resource that the client or spouse owns
• A source of income not generated by a resource, that the client or spouse owns.
• Either a resource or source of income that the client or spouse does not own, but is entitled to. For example:
  • Waived pension income;
  • Waived right to receive an inheritance;
  • Not accepting or accessing injury settlements;
  • Diverting tort or other court payments; or
  • Refusing to take legal action to obtain court ordered payments.

What if the client transfers a stream of income to their spouse?

When a client transfers a resource to their spouse the income that is generated by that transferred resource becomes the separate income of the spouse - it is no longer the client's income.

If the client transfers a stream of income to his or her spouse, but there is no resource generating that income, then the income is still considered the client's, even if it was transferred to the spouse or into a trust for the spouse. See WAC 182-513-1330(7).

Evaluate court orders that transfer a stream of income to a spouse on a case-by-case basis. You may need to obtain a legal opinion.

Referrals to APS

If you have a reasonable belief that a vulnerable adult (the client) has been financially exploited because of an asset transfer, make a referral to APS.

Exceptions to Transfer Penalties

All assets transferred for less than fair market value (FMV) were returned to the client or the client’s spouse

Once a penalty is established, all assets must be returned in order to reconsider the penalty. This includes multiple assets transferred to one person, or multiple assets transferred to multiple people. If all assets are not returned, the penalty remains using all uncompensated value, including assets that were originally transferred but returned.

Likewise, if an application is made after some assets are returned a penalty is calculated for the "net" uncompensated value, based on the total assets transferred less any assets returned (or compensation received).

Uncompensated value in a month does not exceed the daily private nursing facility rate in that month

As long as the uncompensated value of all transfers in one month does not exceed the daily private nursing facility rate for that month, there is no penalty in that month.

If multiple transfers spanning several months are involved, then each month must be individually evaluated against this exception.

There was an intent to transfer the asset at full monetary value (FMV)

To meet this exception criteria the client has the burden to prove, by convincing evidence that there was an intent to transfer the asset at FMV and that the asset was transferred for less than FMV.

The transfer was not made to qualify for Medicaid, continue to qualify for Medicaid, or avoid estate recovery

The presumption is that the client or the spouse transferred the asset to qualify for Medicaid, continue to qualify, or avoid estate recovery. The client must rebut that presumption by providing convincing evidence.

In order to rebut the presumption, the client must present convincing evidence of what the specific purpose of the transfer was. Transferring for gifts, inheritance, avoiding probate, or preservation of an estate does not rebut the presumption that the transfer was to qualify for Medicaid or avoid estate recovery. Further, it is the purpose of the transfer to the recipient, not what the recipient will be using the transferred assets for.

If there is an uncompensated transfer and the effect of the transfer does not qualify the client for Medicaid, continue to qualify the client for Medicaid, or avoid estate recovery, then this exception is satisfied.

The asset was transferred to the client's disabled child

The child must meet Social Security disability criteria, the child can be any age. You may have to complete a disability determination referral in some cases. The child must be disabled on the date of the transfer.

The asset transferred was an excluded resource (except for the home)

Any resource excluded under chapter 182-513 WAC or chapter 182-515 WAC can be transferred without penalty.

This exception does not apply to unavailable resources (as described in WAC 182-512-0250), only excluded resources.

The home

• The home was transferred to the client’s spouse.
• The home was transferred to the client’s child who was under the age of 21 at the time of the transfer.

• The home was transferred to the client’s child who had lived in the home and provided care. All elements of this exception must be met:
  • The child lived in the client's home for at least two years.

• The child provided two years of verifiable care while living in the client's home.​

• The period of care was immediately before the client’s current period of institutional status.

• The care was not paid for by Medicaid

• The care enabled the client to remain at home; and
• The client provided physician's documentation that the in-home care was necessary to prevent the client's current period of institutional status.

• The home was transferred to the client’s sibling or the clients spouse’s sibling who had an equity interest in the home. The sibling must have had an equity interest in the home for at least one year before the client attained institutional status.

The transfer was to the family for providing care

Some transfers are made in consideration of care provided to a client by a family member. Sometimes family members have entered into some sort of contract with the client for this compensation. Frequently these contracts are called “lifetime care contracts.” However, not all transfers in exchange for care will have been made through a lifetime care contract.

Only transfers to family in consideration of care that meet certain requirements will not incur a penalty. All elements of the exceptions must be met, and if not, all transfers to family in consideration of care will be determined to be uncompensated. The elements of the exception are:

• The transfer is in exchange for care services the family member provided to the client.
• The client had a documented need for the care services provided by the family member. The following list contains some acceptable means of verifying the need:
  • Doctor's statement; a statement from some other medical care provider;
  • A comprehensive assessment completed by DSHS or AAA staff; however, this must have been completed at the time the care contract was completed; or
  • Any other credible means of verifying the need for services.
• The care services provided by the family member are allowed under the Medicaid state plan or the department's HCB waiver services. Certain services are not covered by Medicaid in an at-home setting, like 24 hours / 7 day-a-week personal care.
• The care services provided by the family member don't duplicate those that another party is being paid to provide.
• The FMV of the asset transferred is comparable to the FMV of the care services provided.
• The time for which care services are claimed is reasonable based on the kind of services provided.
• The assets were transferred as the care services were performed, or with no more time delay than one calendar month between the provision of the service and the transfer.

The transfer was to another party or a trust for the sole benefit of the spouse, disabled child, or other disable person under 65

Sole benefit of the spouse: although the transfer may be excluded from being penalized, this does not mean that the assets are no longer resources of the client or their spouse. See manual material regarding Trusts.

The penalty period

Length of the penalty

The length of the penalty depends on when the transfer occurred, because it is based on the statewide average daily private cost for nursing facilities (“private rate”). This income standard typically changes every year in October.

Use the private rate as of the date of the transfer or the date of application, whichever is later.

For single transfers, or multiple transfers where the same private rate is used, add together the total uncompensated value and divide by the private rate. The length of the penalty is rounded down to the nearest whole day.

For multiple transfers that span multiple private rate standards, add together total uncompensated value and divide by the time of application or the date of transfer, whichever is later. The length of the penalty is rounded down to the nearest whole day.

Penalty start date

Applicants – an applicant’s penalty period would begin on the date the client would be otherwise eligible for LTC services, but for the transfer, based on an approved application for LTC services or the first day after any previous period of ineligibility has ended.

Recipients – a recipient’s penalty period begins the first of the month following ten-day advance notice of the period of ineligibility.

Other topics

Transferring a stream of income not generated by a resource

Total uncompensated value for a transferred income stream is calculated by determining a reasonable expected amount the income stream would have paid to the client and reducing that by any consideration given for the income stream.

Use Social Security’s actuarial life expectancy table to calculate, or the total number of payments (if paid out before life expectancy), to determine a reasonably anticipated payment total.

Splitting a penalty period between spouses

A penalty period can be split evenly between spouses if both spouses would have been approved, but for the transfer, for LTC.

If one spouse is no longer subject to a penalty (in an unfortunate example – one spouse passes away), any remaining penalty is applied to the other spouse.

Civil penalties

There are potential civil penalties for a person who receives a client's assets without adequate consideration. See RCW 74.39A.160.

Hardship

A client may be able to prove hardship after LTC is denied for a transfer penalty. Transfer denial/termination letters include information about how to apply for a hardship waiver. See WAC 182-513-1367.