| TO: | ALL COUNTY OFFICES |
| FROM: | JANEL R. LUCK, DIRECTOR |
| SUBJECT: | DETERMINING FAIR AND VALUABLE CONSIDERATION WHEN ASSETS ARE TRANSFERRED IN EXCHANGE FOR A PERSONAL CARE CONTRACT; MANUAL REVISION #35 SECTION 1040.020.30 |
DISCUSSION:
Senate Bill 577, passed by the Missouri 94th General Assembly in May 2007, created Section 208.213 RSMo, which defines receiving fair and valuable consideration when a personal care contract is given in exchange for personal property, real property, or cash and securities. Manual Section 1040.020.30 is revised to include this policy. Apply these provisions to any transfers occurring on or after August 28, 2007, involving a transfer of assets in exchange for a personal care contract when determining eligibility for vendor or HCB services.
A personal care contract received in exchange for personal property, real property, or cash and securities meets fair and valuable consideration only if:
(1) There is a written agreement between the individual or individuals providing services and the individual receiving care that specifies the type, frequency, and duration of the services to be provided. It must be signed and dated on or before the date the services began;
(2) The services do not duplicate those which another party is being paid to provide;
(3) The individual receiving the services has a documented need for the personal care services provided;
(4) The services are essential to avoid institutionalization of the individual receiving benefit of the services;
(5) Compensation for the services shall be made at the time services are performed or within two months of the provision of the services; and
(6) The fair market value of the services provided prior to the month of institutionalization is equal to the fair market value of the assets exchanged for the services.
NOTE: The fair market value for services provided shall be based on the current rate paid to providers of such services in the county of residence.
A personal care contract not meeting the conditions stated above is considered to be a transfer of assets without receiving fair and valuable consideration and is subject to penalty. If there is any question of whether or not fair and valuable consideration for the assets was received in exchange for the personal care contract, a summary of the situation must be sent to State Office Program and Policy Unit using normal supervisory channels for a determination. Use the IM-14 form and provide specific case details along with a copy of documentation of the asset transfer and personal care contract.
EXAMPLE #1: Ellen Red enters a nursing facility on July 25, 2007. On September 01, 2007, Mrs. Red's daughter, Sara, enters into a Personal Care Contract with Mrs. Red. The contract states that Sara will prepare nutritious meals, clean Mrs. Red's house and do her laundry; assist with grooming, bathing, dressing and personal shopping. Sara will also arrange for social outings for Mrs. Red and visit her weekly. Duties also include monitoring Mrs. Red's physical and mental condition and carrying out the instructions and directives of her attending physicians. Sara has the responsibility of interacting with any healthcare provider, long-term care facility administrator, social services, insurance companies and government workers in order to protect Mrs. Red's rights, benefits and assets.
On December 6, 2007, Sara, the Care Provider, filed the contract as well as a petition for expenses with Probate Court. The same day the court awarded a payment of $12,000.00 to Sara as the conservator under the contract. Sara came to the local Family Support Office and applied for Medical Assistance Vendor Benefits for Mrs. Red on December 16, 2007. An application was submitted along with a copy of the check for $12,000.00 dated December 14, 2007, and a copy of the Personal Care Contract.
In this situation, the transfer of funds does not meet the conditions of fair and valuable consideration. Services rendered must be essential to avoid institutionalization of the individual receiving benefit of the services. Sara's services began September 01, 2007; this is after Mrs. Red's admission date of July 25, 2007. In addition, compensation for services must be made at the time services are performed or within two months of the provision of services. Sara did not petition the court until December 2007 for the payment of services. Sara received payment for services provided on December 14, 2007. Payment of Sara's services does not fall in the time frame of when services were rendered or within two months following. Therefore, the entire $12,000.00 is considered a transfer of property without receiving fair and valuable consideration.
EXAMPLE #2: Mr. Archie and his daughter, Millie, sign a Personal Care Agreement on September 1, 2007, and $20,000.00 is transferred to Millie on November 1, 2007, for services rendered to Mr. Archie beginning September 1, 2007. In the written agreement Millie's duties and type of services are listed along with the frequency and duration of those services. There is a statement provided from Mr. Archie's physician verifying his need for the services. Mr. Archie entered a nursing facility on October 14, 2007, and applied for Medical Assistance Vendor Benefits on November 2, 2007.
A Personal Care Agreement is to render services to help keep individuals from becoming institutionalized. Therefore, when considering whether fair and valuable consideration was received in exchange for the assets transferred the eligibility specialist must look at the value of the services provided to Mr. Archie prior to the date he entered the nursing care facility to determine how much of the $20,000.00 will be considered fair and valuable consideration and how much will be considered a transfer of assets. In order to make this decision the eligibility specialist must determine if the services provided to Mr. Archie prior to entering the nursing facility are equal to the fair market value of the assets exchanged for the services. In Mr. Archie's county, the current rate paid to providers for such care is $75.00 per day. Millie took care of Mr. Archie from September 1st through October 13, 2007, which is 43 days. 43 days of care x $75.00 (current rate paid to providers of such services in Mr. Archie's county of residence) = $3225.00 fair and valuable consideration to Millie. The total value of the assets transferred to Millie was $20,000.00. Therefore, $16,775.00 ($20,000- $3,225.00) is considered as a transfer of assets without fair and valuable consideration.
NECESSARY ACTION:
- Review this memorandum with appropriate staff.
- Apply these provisions to any transfers occurring on or after August 28, 2007, involving a transfer of assets in exchange for a personal care contract when determining eligibility for vendor or HCB services.
- Send questions about whether or not fair and valuable consideration for the assets was received in exchange for the personal care contract to State Office Program and Policy following normal channels.