This worker guide is not policy. This worker guide provides case scenarios and calculation examples showing how to determine whether a transfer of assets is disqualifying. Transfers of assets must be evaluated on a case-by-case basis, and the decision about whether a disqualification results will depend on the unique facts surrounding each case. The policy for asset transfers begins in section E.12 of this manual. This WG also explains the decision process and time frames for determining whether a hardship waiver should be granted when an individual or the individual’s spouse has transferred assets for less than fair market value.
Individuals in standard living arrangements are not disqualified for transfers of assets. However, if a disqualifying transfer is within the look-back period when the individual later applies for services, the individual must be disqualified at that time even if the asset was transferred before there was a service need.
Also note that an individual receiving SSI or deemed to be eligible for SSI in a nonstandard living arrangement who would otherwise be ineligible for OSIPM due to a disqualifying transfer of assets, is not eligible for long-term care services. The individual can continue to receive OSIPM, but is disqualified from receiving long-term care services until the disqualification period has been served. This policy is not retroactive. It only applies to disqualifying transfers that occur on or after July 1, 2007.
The form Information on the Transfer of Assets Penalty (SDS 543), provides general information to individuals about disqualifying transfers. The form is optional. Consider using the form when:
The 7210 also provides individuals with information regarding the transfer of assets on page 40. The information should be reviewed with applicants during intake.
For more information on the treatment of annuities, please see SPD WG E.1.
Clara lives in a home that she owns, and she has been receiving Medicaid and in-home services for 6 months. She decides to transfer her home to her daughter Debra for zero compensation. Clara states that the reason for the transfer was that she has always intended to leave the home to Debra. Debra works full-time, lives in an apartment and does not provide care to Clara.
This transfer of assets is disqualifying, because even though Clara does not say that maintaining eligibility for Medicaid benefits was a factor in the decision to transfer the home, it was. If Clara had transferred the home for compensation equal to its value, she would most likely have become ineligible for Medicaid (unless she was going to invest the proceeds into another home). Therefore, the decision to transfer the home for zero compensation was made to maintain eligibility and is a disqualifying transfer.
Ben is in good health and gives his son George $40,000 for a down payment on George’s first house. Two months later, Ben suffers a debilitating stroke and is in need of medical benefits and long term care.
This transfer is not disqualifying, because it was done exclusively for a purpose other than to become eligible for medical benefits. The purpose was to help George buy his first house. At the time of the transfer, Ben did not anticipate a need for medical benefits. Therefore, the transfer was made without the asset limit for Medicaid as a consideration.
Sadie is in an assisted living facility and gives her son Joe $40,000 for a down payment on Joe’s first house. Two months later, Sadie can no longer afford her care situation, so she applies for medical benefits. Sadie’s assets are now under $2000 and her income has not changed.
This transfer is disqualifying, because although it was made for a purpose other than to become eligible for medical benefits (to help her son buy his first house), at the time of the transfer Sadie could anticipate a need for Medicaid to pay for her cost of care. Sadie would not have gifted the $40,000 if she did not expect to become eligible for medical benefits when her assets dipped below the $2000 Medicaid limit.
Raymond has $150,000 assets and is paying privately for care in an adult foster home. He gives his grandchild Leonard $50,000 when Leonard successfully completes medical school. With Raymond’s monthly income, he expects the remaining $100,000 will be sufficient to pay for his care for the rest of his life. However, 2 months later, Raymond’s dog bites another resident’s visiting granddaughter. The family sues Raymond and the court awards $100,000 in damages to the victim. Raymond cannot now afford his living situation and applies for medical benefits.
The $50,000 gift is not a disqualifying transfer, because it was made exclusively for purposes other than to become eligible for medical benefits. Raymond did not anticipate a need for medical assistance at the time that he made the $50,000 gift. Therefore, the transfer was made without the asset limit for Medicaid as a consideration. In addition, Raymond did not anticipate and had no choice in paying the $100,000 damages awarded by the court.
Sam and Ruth apply for medical benefits because Sam is in need of long-term care. In the resource assessment process, it is determined that Ruth can keep $110,000 in assets; Sam is determined eligible. Within the next 6 months, Ruth gifts $30,000 to each of their 3 children for future grandchildren college funds.
The $90,000 was part of Ruth’s community spouse resource allowance per 461-160-0580(2). As long as Ruth does not need long-term-care services, assets she transfers will not be evaluated as possibly disqualifying.
Tom and Dorothy apply for medical benefits because Dorothy is in need of long-term care. In the resource assessment process, it is determined that Tom can keep the family home and $175,000 in assets; Dorothy is determined eligible. Within the next 6 months, Tom’s health also deteriorates and he is placed in a nursing facility. He gifts $50,000 to each of their 3 children for future grandchildren college funds. He gifts the family home to their 4th child. He spends down the remaining $25,000 paying privately for care, and then applies for medical benefits.
These transfers are disqualifying, because although the assets were Tom’s as a community spouse, when Tom becomes an applicant for medical benefits, the transfers must be evaluated. Tom was aware of his need for long-term care and could anticipate his need for medical benefits when he transferred assets to his children. Although Tom had other purposes for making gifts to his children, Medicaid eligibility was a consideration. Tom would not have transferred these assets if he did not expect to become eligible for medical benefits.
Charles and Penelope apply for medical benefits because Charles is in an assisted living facility. In the resource assessment process, it is determined that Penelope, who receives care and resides in the same assisted living facility, can keep $50,000 in assets; Charles is determined eligible. Within the next 4 months, Penelope’s favorite sister passes away and wills Penelope $100,000. Penelope gifts the $100,000 to their daughter Amber to begin a restaurant business. Penelope spends down the remaining $50,000 paying privately for care, and then applies for medical benefits within 7 months.
This transfer is disqualifying. Although 461-140-0242 allows the community spouse to transfer their assets as determined in the resource assessment, a transfer of these assets could be disqualifying if the community spouse later needs long-term care services. Also, while not relevant to the decision that this transfer is disqualifying, the $100,000 was not part of Penelope’s community spouse resource allowance. She received this asset subsequent to the resource assessment. Penelope was aware of her need for long-term care and could anticipate the need for medical benefits when she transferred this gift to Amber. Although Penelope had another purpose for making the gift, Medicaid eligibility was a consideration. Penelope would not have transferred this asset if she did not expect to become eligible for medical benefits.
Mabel, who is paying privately for a residential care facility, decides to give $50,000 to her grandchild to help with college expenses in March 2006. She had more than $2000 resources at the time. Mabel applies for Medicaid in August 2006. This gift is determined to be a disqualifying transfer of assets, because Mabel knew at the time that the gift was made that services were needed, and she would not have taken the action if Medicaid was not expected to be available. $50,000 ÷ $4700 (Initial month is August 2006. See 461-140-0296) = 10.64 months. Because this transfer happened prior to July 1, 2006, drop the partial month (.64). This transfer causes a 10-month disqualification beginning in March, and Mabel is not eligible until January 2007.
Violet, who is paying privately for a residential care facility, decides to give $100,000 to her grandchild to help with college expenses in August 2006. She had more than $2000 resources at the time. Violet’s date of request for Medicaid is November 10, 2006. This gift is determined to be a disqualifying transfer of assets, because Violet knew at the time that the gift was made that services were needed, and she would not have taken the action if Medicaid was not expected to be available. Mabel is otherwise eligible. $100,000 ÷ $5,360 (from 461-140-0296) = 18.65 months. Because this transfer happened after to July 1, 2006, it causes a 18-month disqualification beginning on November 10, 2006 through May 9, 2008. The .65 is converted to additional days by multiplying it by 31 (the number of days in the last full month, May). Therefore, 31 X .65 =20.15 days. The partial day (.15) is dropped, and Violet is disqualified through May 29 (May 9 plus 20 days).
At redetermination in September 2007, Doris reports that she won $130 on a lottery scratch-it ticket last month, and decided to give it to her son for his birthday. Doris had $2000 resources at the time of the transfer. $130 ÷ $5,360 = .02 month. Because this transfer happened after July 1, 2006, convert the disqualification to days. August is a 31-day month, so 31 X .02 = .62 days. The partial day (.62) is dropped, resulting in no disqualification.
Even though gifting the money was a disqualifying transfer, the amount was so small that there is no resulting penalty to serve.
Joseph decides to give $100,000 to his great grandchild to study abroad in August 2006. He had more than $2000 in resources at the time. His date of request for Medicaid is November 10, 2006. This gift is determined to be a disqualifying transfer of assets and Joseph is disqualified through May 29, 2008. The great grandchild does not spend the entire amount during her study abroad and returns $50,000 in March. The disqualification period must be recalculated. $50,000 ÷ $5,360 (from 461-140-0296) = 9.33 months. The new disqualification period is November 10, 2006 through August 19, 2007.
Individuals in non-standard living arrangements who make a disqualifying transfer assets for less than fair market value, have their disqualification period begin the LATER of:
A CMS case descriptor and resource code must be used when an individual has applied and must serve a DQ before eligibility will begin. Both codes are “ADQ” (Asset Disqualification). The resource code will require an end date. Use the codes on any case that must serve a disqualification due to a transfer of assets that was made on July 1, 2006 or after. Include the codes on the CLOSE or DENY action.
The end date to use with the ADQ resource code is the month that the disqualification will end. For example, if the disqualification will end May 31, 2007, the end date is 05/07. If the disqualification will end May 23, 2007, the end date is also 05/07. When an individual reapplies for Medicaid during the month of the end date, the worker will need to check the disqualification notice (SDS 540T) and Oregon ACCESS narrative to determine on what day in that last month (if it was a partial month disqualification) the individual may be potentially eligible for Medicaid.
Example: An individual applying for services in November 2006 made a disqualifying transfer in August 2006. Consequently, the worker sent an SDS 540T to disqualify the individual until April 13, 2007. When the worker coded the denial he or she used the ADQ case descriptor and the ADQ resource code with an end date of 04/07. The individual reapplies for benefits on April 10, 2007. The worker must check the SDS 540T and/or the Oregon ACCESS narrative to determine that the individual was disqualified through April 13, 2007, so the first date that the individual could be eligible is April 14, 2007 if all eligibility factors are met on that date.
When an individual or the individual’s spouse transfers assets within the look-back period of 461-140-0210 and for less than fair market value for the purpose of maintaining or becoming eligible for Medicaid, a disqualification period is calculated per 461-140-0296.
Pertinent facts that may affect the decision include, but are not limited to, the following:
461-140-0242 specifies that when a transfer of assets for less than fair market value occurs, it is presumed that the purpose was to establish or maintain eligibility for medical benefits. It is the individual’s responsibility to provide evidence to overcome this presumption. Under this rule, even when the individual had some other purpose for making the transfer, if eligibility for medical benefits was even a partial factor, the disqualification still applies.
What the notice must contain. The individual is notified of the disqualification, as required by 461-175-0310. If the individual is an applicant, benefits are denied and a basic decision notice is sent. If the individual is a recipient, a timely continuing benefit decision notice for closure or reduction of benefits is sent (SDS 0540T). The notice must include the action that led to the disqualification including the uncompensated value used to calculate the disqualification, the length of the resulting disqualification period, and information to explain that a waiver of the disqualification can be requested if the disqualification will cause an undue hardship. The individual, their representative or the facility in which the individual resides (on behalf of the individual) can apply for the waiver (use the Application for Hardship Waiver - SDS 0544).
What if the individual wants to request a hearing? A request for a hearing is a separate matter. If the individual does not allege a hardship and requests a hearing, there is no change in procedure.
If the individual alleges a hardship, the decision about a hardship waiver will be made, and a new notice will be sent if the waiver is denied. The individual will have hearing rights on this decision. If the individual is a recipient and a hearing is requested within 10 days of the notice date or by the effective date of the notice (whichever is later), benefits can continue until the hearing decision and while the hardship waiver decision is pending, if the individual requests continuing benefits.
Application for a hardship waiver. To apply for a hardship waiver, the request must be made on the SDS 0544. The request must explain what basic need will not be met due to the disqualification. To be eligible for the waiver, the individual would need to be deprived of at least one of the following basic needs:
If the individual is in a facility receiving care but the facility is not being paid, the Department will consider them deprived of medical care, because the facility could take action to evict them due to non-payment. An eviction notice is not required to prove this hardship. The request also must explain what legal action has been taken to try to recover the asset that was transferred for less than fair market value. To be eligible for a waiver of the disqualification, the individual must have taken all legal actions the Department determines are reasonable to recover the asset, including consultation with an attorney. They also must agree to cooperate with the Department in taking action to recover the asset.
Processing of the request and timelines. Email the individual’s Application for a Hardship Waiver (SDS 0544) and a copy of the disqualification notice to Bill Brautigam at firstname.lastname@example.org. The Department will make a decision on whether to grant the waiver within 45 days. If the waiver is granted, the individual can receive benefits without serving the disqualification. If the waiver is denied, an applicant’s case remains denied and a recipient’s case remains reduced or closed (unless the individual requested a hearing and continuing benefits within the required timeframe).