TRANSFERS OF ASSETS; TREATMENT OF CERTAIN TRUSTS.

SEC. 13611. TRANSFERS OF ASSETS; TREATMENT OF CERTAIN TRUSTS. (a) Periods of Ineligibility for Transfers of Assets.— (1) In general.— Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)) is amended to read as follows: “(1) (A) In order to meet the requirements of this subsection for purposes of section 1902(a)(18), the State plan must provide that if an institutionalized individual or the spouse of such an individual (or, at the option of a State, a noninstitutionalized individual or the spouse of such an individual) disposes of assets for less than fair market value on or after the look-back date specified in subparagraph (B)(i), the individual is ineligible for medical assistance for services described in subparagraph (C)(i) (or, in the case of a noninstitutionalized individual, for the services described in subparagraph (C)(ii)) during the period beginning on the date specified in subparagraph (D) and equal to the number of months specified in subparagraph (E). “(B) (i) The look-back date specified in this subparagraph is a date that is 36 months (or, in the case of payments from a trust or portions of a trust that are treated as assets disposed of by the individual pursuant to paragraph (3)(A)(iii) or (3)(B)(ii) of subsection (d), 60 months) before the date specified in clause (ii). “(ii) The date specified in this clause, with respect to— “(I) an institutionalized individual is the first date as of which the individual both is an institutionalized individual and has applied for medical assistance under the State plan, or “(II) a noninstitutionalized individual is the date on which the individual applies for medical assistance under the State plan or, if later, the date on which the individual disposes of assets for less than fair market value. “(C) (i) The services described in this subparagraph with respect to an institutionalized individual are the following: “(I) Nursing facility services. “(II) A level of care in any institution equivalent to that of nursing facility services. “(III) Home or community-based services furnished under a waiver granted under subsection (c) or (d) of section 1915. “(ii) The services described in this subparagraph with respect to a noninstitutionalized individual are services (not including any services described in clause (i)) that are described in paragraph (7), (22), or (24) of section 1905(a), and, at the option of a State, other long-term care services for which medical assistance is otherwise available under the State plan to individuals requiring long-term care. “(D) The date specified in this subparagraph is the first day of the first month during or after which assets have been transferred for less than fair market value and which does not occur in any other periods of ineligibility under this subsection. “(E) (i) With respect to an institutionalized individual, the number of months of ineligibility under this subparagraph for an individual shall be equal to— “(I) the total, cumulative uncompensated value of all assets transferred by the individual (or individual’s spouse) on or 107 STAT. 623after the look-back date specified in subparagraph (B)(i), divided by “(II) the average monthly cost to a private patient of nursing facility services in the State (or, at the option of the State, in the community in which the individual is institutionalized) at the time of application. “(ii) With respect to a noninstitutionalized individual, the number of months of ineligibility under this subparagraph for an individual shall not be greater than a number equal to— “(I) the total, cumulative uncompensated value of all assets transferred by the individual (or individual’s spouse) on or after the look-back date specified in subparagraph (B)(i), divided by “(II) the average monthly cost to a private patient of nursing facility services in the State (or, at the option of the State, in the community in which the individual is institutionalized) at the time of application. “(iii) The number of months of ineligibility otherwise determined under clause (i) or (ii) with respect to the disposal of an asset shall be reduced— “(I) in the case of periods of ineligibility determined under clause (i), by the number of months of ineligibility applicable to the individual under clause (ii) as a result of such disposal, and “(II) in the case of periods of ineligibility determined under clause (ii), by the number of months of ineligibility applicable to the individual under clause (i) as a result of such disposal. (2) Exceptions.— Section 1917(c) is amended— (A) in paragraph (2)(A), by striking “resources” and inserting “assets”; (B) by amending paragraph (2)(B) to read as follows: “(B) the assets— “(i) were transferred to the individual’s spouse or to another for the sole benefit of the individual’s spouse, “(ii) were transferred from the individual’s spouse to another for the sole benefit of the individual’s spouse, “(iii) were transferred to, or to a trust (including a trust described in subsection (d)(4)) established solely for the benefit of, the individual’s child described in subparagraph (A)(ii)(II), or “(iv) were transferred to a trust (including a trust described in subsection (d)(4)) established solely for the benefit of an individual under 65 years of age who is disabled (as defined in section 1614(a)(3));”; (C) in paragraph (2)(C)— (i) by striking “resources” each place it appears and inserting “assets”, (ii) by striking “any”, (iii) by striking “or (ii)” and inserting “(ii)”, and (iv) by striking “; or” and inserting “, or (iii) all assets transferred for less than fair market value have been returned to the individual; or”; (D) by amending paragraph (2)(D) to read as follows: “(D) the State determines, under procedures established by the State (in accordance with standards specified by the Secretary), that the denial of eligibility would work an undue 107 STAT. 624hardship as determined on the basis of criteria established by the Secretary;”; (E) by striking paragraph (3) and inserting the following: “(3) For purposes of this subsection, in the case of an asset held by an individual in common with another person or persons in a joint tenancy, tenancy in common, or similar arrangement, the asset (or the affected portion of such asset) shall be considered to be transferred by such individual when any action is taken, either by such individual or by any other person, that reduces or eliminates such individual’s ownership or control of such asset.”; and (F) by adding at the end of paragraph (4) the following: “In the case of a transfer by the spouse of an individual which results in a period of ineligibility for medical assistance under a State plan for such individual, a State shall, using a reasonable methodology (as specified by the Secretary), apportion such period of ineligibility (or any portion of such period) among the individual and the individual’s spouse if the spouse otherwise becomes eligible for medical assistance under the State plan.”. (b) Treatment of Trust Amounts.— Section 1917 (42 U.S.C. 1396p) is amended by adding at the end the following: “(d) (1) For purposes of determining an individual’s eligibility for, or amount of, benefits under a State plan under this title, subject to paragraph (4), the rules specified in paragraph (3) shall apply to a trust established by such individual. “(2) (A) For purposes of this subsection, an individual shall be considered to have established a trust if assets of the individual were used to form all or part of the corpus of the trust and if any of the following individuals established such trust other than by will: “(i) The individual. “(ii) The individual’s spouse. “(iii) A person, including a court or administrative body, with legal authority to act in place of or on behalf of the individual or the individual’s spouse. “(iv) A person, including any court or administrative body, acting at the direction or upon the request of the individual or the individual’s spouse. “(B) In the case of a trust the corpus of which includes assets of an individual (as determined under subparagraph (A)) and assets of any other person or persons, the provisions of this subsection shall apply to the portion of the trust attributable to the assets of the individual. “(C) Subject to paragraph (4), this subsection shall apply without regard to— “(i) the purposes for which a trust is established, “(ii) whether the trustees have or exercise any discretion under the trust, “(iii) any restrictions on when or whether distributions may be made from the trust, or “(iv) any restrictions on the use of distributions from the trust. “(3) (A) In the case of a revocable trust— “(i) the corpus of the trust shall be considered resources available to the individual, 107 STAT. 625 “(ii) payments from the trust to or for the benefit of the individual shall be considered income of the individual, and “(iii) any other payments from the trust shall be considered assets disposed of by the individual for purposes of subsection (c). “(B) In the case of an irrevocable trust— “(i) if there are any circumstances under which payment from the trust could be made to or for the benefit of the individual, the portion of the corpus from which, or the income on the corpus from which, payment to the individual could be made shall be considered resources available to the individual, and payments from that portion of the corpus or income— “(I) to or for the benefit of the individual, shall be considered income of the individual, and “(II) for any other purpose, shall be considered a transfer of assets by the individual subject to subsection (c); and “(ii) any portion of the trust from which, or any income on the corpus from which, no payment could under any circumstances be made to the individual shall be considered, as of the date of establishment of the trust (or, if later, the date on which payment to the individual was foreclosed) to be assets disposed by the individual for purposes of subsection (c), and the value of the trust shall be determined for purposes of such subsection by including the amount of any payments made from such portion of the trust after such date. “(4) This subsection shall not apply to any of the following trusts: “(A) A trust containing the assets of an individual under age 65 who is disabled (as defined in section 1614(a)(3)) and which is established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court if the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this title. “(B) A trust established in a State for the benefit of an individual if— “(i) the trust is composed only of pension, Social Security, and other income to the individual (and accumulated income in the trust), “(ii) the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this title, and “(iii) the State makes medical assistance available to individuals described in section 1902(a)(10)(A)(ii)(V), but does not make such assistance available to individuals for nursing facility services under section 1902(a)(10)(C). “(C) A trust containing the assets of an individual who is disabled (as defined in section 1614(a)(3)) that meets the following conditions: “(i) The trust is established and managed by a non-profit association. “(ii) A separate account is maintained for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts. 107 STAT. 626 “(iii) Accounts in the trust are established solely for the benefit of individuals who are disabled (as defined in section 1614(a)(3)) by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court. “(iv) To the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary are not retained by the trust, the trust pays to the State from such remaining amounts in the account an amount equal to the total amount of medical assistance paid on behalf of the beneficiary under the State plan under this title. “(5) The State agency shall establish procedures (in accordance with standards specified by the Secretary) under which the agency waives the application of this subsection with respect to an individual if the individual establishes that such application would work an undue hardship on the individual as determined on the basis of criteria established by the Secretary.”. “(6) The term ‘trust’ includes any legal instrument or device that is similar to a trust but includes an annuity only to such extent and in such manner as the Secretary specifies. . (c) Definitions.— Section 1917 (42 U.S.C. 1396p), as amended by subsection (b), is further amended by adding at the end the following new subsection: “(e) In this section, the following definitions shall apply: “(1) The term ‘assets’, with respect to an individual, includes all income and resources of the individual and of the individual’s spouse, including any income or resources which the individual or such individual’s spouse is entitled to but does not receive because of action— “(A) by the individual or such individual’s spouse, “(B) by a person, including a court or administrative body, with legal authority to act in place of or on behalf of the individual or such individual’s spouse, or “(C) by any person, including any court or administrative body, acting at the direction or upon the request of the individual or such individual’s spouse. “(2) The term ‘income’ has the meaning given such term in section 1612. “(3) The term ‘institutionalized individual’ means an individual who is an inpatient in a nursing facility, who is an inpatient in a medical institution and with respect to whom payment is made based on a level of care provided in a nursing facility, or who is described in section 1902(a)(10)(A)(ii)(VI). “(4) The term ‘noninstitutionalized individual’ means an individual receiving any of the services specified in subsection (c)(1)(C)(ii). “(5) The term ‘resources’ has the meaning given such term in section 1613, without regard (in the case of an institutionalized individual) to the exclusion described in subsection (a)(1) of such section.”. (d) Conforming Amendments.— (1) Section 1902 (42 U.S.C. 1396a) is amended— (A) in subsection (a)(18), by striking “and transfers of assets” and inserting “, transfers of assets, and treatment of certain trusts”; (B) in subsection (a)(51)— 107 STAT. 627 (i) by striking “(A)”; and (ii) by striking “, and (B)” and all that follows and inserting a semicolon; and (C) by striking subsection (k). (2) Section 1924(b)(2)(B)(i) (42 U.S.C. 1396r–5(b)(2)(B)(i)) is amended by striking “1902(k)” and inserting “1917(d)”. (e) Effective Dates.— (1) The amendments made by this section shall apply, except as provided in this subsection, to payments under title XIX of the Social Security Act for calendar quarters beginning on or after October 1, 1993, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date. (2) The amendments made by this section shall not apply— (A) to medical assistance provided for services furnished before October 1, 1993, (B) with respect to assets disposed of on or before the date of the enactment of this Act, or (C) with respect to trusts established on or before the date of the enactment of this Act. (3) In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the additional requirements imposed by the amendment made by subsection (b), the State plan shall not be regarded as failing to comply with the requirements imposed by such amendment solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. For purposes of the preceding sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature.