IM-42 06/23/94 TRANSFER OF PROPERTY IN VENDOR AND HCB CASES
|TRANSFER OF PROPERTY IN VENDOR AND HCB CASES|
|The Omnibus Budget Reconciliation Act
of 1993 (OBRA '93) mandated changes in the way we must treat transfers
of property in nursing home vendor and HCB cases. This memorandum
addresses these changes:
The manner in which you determine whether a transfer is without fair and valuable consideration has not changed.
Throughout this memorandum, all references to vendor benefits or institutionalization apply both to nursing facility and to HCB services.
OBRA '93 took effect on August 11, 1993. All references in this memorandum to "pre-OBRA" mean events before that date. All references to "post-OBRA" mean events that occurred on or after that date.
Defining and determining the look-back date and the look-back period:
The "look-back date" is the earliest date a transfer could have been made and still be considered in determining eligibility. The "look-back period" is the entire period between the look-back date and the application.
Prior to OBRA '93, the look-back date was 30 months prior to application for vendor or HCB services. Prior to OBRA '93, the look-back period was the 30 months between the look-back date and the application.
Opal Johnson, a resident of a nursing facility, applied for vendor benefits July 14, 1993. Her look-back date at the time of application was January 14, 1991. The look-back period ran from January 14, 1991, to July 14, 1993.If a claimant had different periods of institutionalization, the claimant would also have different look-back dates and look-back periods.
Alvin Toffman, a resident of a nursing facility, applied for vendor benefits September 28, 1992. His look-back date for that application was March 28, 1990. In January, 1993, he inherited money from a sister and was ineligible. He re-applied for vendor benefits April 7, 1993. His new look-back date was November 7, 1990.After OBRA '93, each person who applies for Medicaid and is institutionalized has exactly one "look-back date" which never changes. However, because OBRA '93 does not apply to transfers occurring before August 11, 1993, each person can actually have a pre-OBRA look-back date and a post-OBRA look-back date. The post-OBRA look-back date is generally 36 months prior to the date the claimant is first institutionalized and has applied for or is receiving Medicaid. (But see below under "Transfers accomplished through trusts or annuities" for when the look-back date may be different.) However, the post-OBRA look-back date may be no earlier than August 11, 1993. The post-OBRA look-back date for all vendor or HCB recipients who were active on August 11, 1993, will always be August 11, 1993. If a claimant has more than one period of institutionalization, the post-OBRA look-back date does not change. Therefore, any transfer which takes place at any time on or after the post-OBRA look-back date must be examined under the policy required by OBRA '93. Any transfer which takes place before August 11, 1993, is not affected by OBRA '93 and must be treated according to the policy as currently stated in Chapter XI, Section IX, part II.
Charles Allen, a resident of a nursing facility, applied for vendor benefits June 10, 1994. For pre-OBRA transfers, his pre-OBRA look-back date is December 10, 1991 (30 months prior to application). For post-OBRA transfers, his post-OBRA look-back date is August 11, 1993 (the earliest possible date).No application dated on or after February 11, 1996, will involve a pre-OBRA look-back date.
Using the look-back date:
For any application taken on or after August 11, 1993, first determine whether the transfer was accomplished through the mechanism of a trust or similar legal device. The look-back date depends on the mechanism of the transfer:
Transfers accomplished through trusts or annuities: If an applicant reports being the creator (also called "grantor" or "settlor") or beneficiary of a trust, the look-back date may be 60 months prior to application. Submit all trusts to IM Program and Policy via IM-14 for determination. The response will include a decision on the availability of the trust's assets to the applicant and, where appropriate, a decision on which transfer policy applies. Until further notice, submit all annuities to IM Program and Policy via IM-14 for determination.
Removing the 30-month maximum on the length of the period of ineligibility:
Any transfer which falls within a look-back period and which occurred on or after August 11, 1993, must be treated according to the following statements:
Periods of ineligibility resulting from transfers which occurred on or after August 11, 1993, may not overlap any other period of ineligibility due to transfers. Determine the length of each period independently. If all the transfers occurred on or after August 11, 1993, the period of ineligibility for the first transfer begins in the month that transfer occurred. The period of ineligibility for the next transfer begins in the month following the month in which the first penalty period ended, or the month of the next transfer, whichever is later.
Policy has not changed for multiple transfers which occurred before August 11, 1993. Determine the length of each period independently. The period of ineligibility for each transfer begins in the month of the transfer. Therefore, the periods may overlap.
In some situations of multiple transfers, some transfers will have occurred before August 11, 1993, and some on or after August 11, 1993. Assess penalty periods for the transfers occurring before August 11, 1993, allowing overlapping periods. Determine the lengths of periods for those transfers occurring on or after August 11, 1993. Begin the period of ineligibility for the first post-OBRA transfer in the first month in which no pre-OBRA transfer penalty remains or the month of transfer, whichever is later.
Re-examine Mr. Anderson's situation. The transfer of $80,000 to Mark occurred in March 1992. The transfer to Ryan, also $80,000, occurred in May 1993. The transfer of $80,000 to Beth occurred in January 1994. The period of ineligibility for the transfer to Mark is the pre-OBRA maximum of 30 months. Ineligibility begins March 1992, and runs through August 1994. The period of ineligibility for the transfer to Ryan is also the pre-OBRA maximum of 30 months. Because the second transfer occurred before August 11, 1993, the period of ineligibility begins in the month of transfer and runs concurrently with the first period of ineligibility. Thus, the second period of ineligibility begins May 1993, and runs through October 1995. The period of ineligibility for the transfer to Beth is 46 months (because there is no limit on the penalty period for post-OBRA transfers).
The notice to Mr. Anderson should tell him that due to his transfers to his grandchildren, he is ineligible for vendor coverage from march 1992 through September 1999. The legal reference should be 208.010 RSMo.Proportioning periods of ineligibility when both spouses are institutionalized:
Whenever a penalty period is assessed to either member of a couple, the period applies to whichever one of the couple becomes institutionalized. If only one member of the couple is institutionalized, the period is calculated and applied in the same manner as thought he institutionalized person were single. However, if at any time during the penalty period both members of the couple should become institutionalized, the remaining penalty period must be proportioned between them. Divide the remaining penalty period by two. If the remaining penalty period before dividing is an even number of months in their respective penalty periods. If the remaining penalty period before dividing is an odd number of months, arbitrarily assign the extra month to one or the other spouses.
If a penalty period applies while both spouses are institutionalized but one spouse then leaves the facility or dies, the remaining penalty period must be applied in its entirety to the remaining institutionalized spouse.
If neither spouse is institutionalized, the penalty period runs in the same manner as though applied to a single institutionalized person.
Emile and Carlotta Guitterez are married. Carlotta transfers property to her niece in June 1994, incurring a penalty period of 38 months, ending in July 1997. Emile becomes institutionalized in October 1994. Because of Carlotta's transfer, Emile is ineligible for vendor benefits. The notice to Emile should include the months for which he is ineligible, a statement that any transfers made by either spouse on or after August 11, 1993, may affect applications by either spouse, and that this or other penalty periods may change if Carlotta should require nursing care or HCB services. The legal citation remains 208.010 RSMo.TRUSTS
OBRA '93 also greatly expanded the language on trusts. The term "Medicaid Qualifying Trust" does not apply to any trust created on or after August 11, 1993. Because of the complexity of the new law, it becomes even more important that all trusts, regardless of the date of creation, be submitted to IM Program and Policy on IM-14's, even when it appears no transfer has been made. Do not submit trusts directly to Legal Services for opinion.