OBRA-93 and DRA Transfer Policy Principles

OBRA-93 and DRA Transfer Policy Principles A. General. 1. Section 13611 of the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66), herein referred to as OBRA-93, amended Section 1917(c)(1) of the Social Security Act to revise transfer of assets policy previously described in the Medicare Catastrophic Coverage Act (MCCA) of 1988 (P.L. 100-360). Assets disposed of on or before the enactment of OBRA-93, which was August 10, 1993, will be evaluated under MCCA policy discussed in Miss. Admin. Code Part 103, Chapter 11. Assets disposed of on or after August 11, 1993, will be evaluated under policy mandated by OBRA-93 and revised by the Deficit Reduction Act of 2005, effective February 8, 2006. B. Definitions Applicable to OBRA and DRA Transfers and Trusts. 1. OBRA-93 added and amended the following definitions of terms used in conjunction with transfer and trust policy: a) Individual. 1) As used in this instruction, the term “individual” includes the individual himself or herself, as well as: (a) The individual’s spouse, where the spouse is acting in the place or on behalf of the individual; (b) 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, and (c) Any person, including a court or administrative body, acting at the direction or upon the request of the individual or the individual’s spouse. b) Spouses. 1) This is a person who is considered legally married to an individual under the laws of Mississippi. c) Assets. 1) For purposes of this section, assets include all income and resources of the individual and of the individual’s spouse. This includes income or resources which the individual or the individual’s spouse is entitled to but does not receive because of any action taken to direct the assets elsewhere by: (a) The individual or the individual’s spouse; (b) A person, including a court or administrative body, with legal authority to act in place or on behalf of the individual or the individual’s spouse, or (c) Any person, including a court or administrative body, acting at the direction or upon the request of the individual or the individual’s spouse. d) For purposes of this section, the term “assets an individual or spouse is entitled to” includes assets to which the individual is entitled or would be entitled if action had not been taken to avoid receiving the assets. The following are examples of actions which would cause income or resources not be received: 1) Irrevocably waiving pension income; 2) Waiving the right to receive an inheritance; 3) Not accepting or accessing injury settlements; 4) Tort settlements which are diverted by the defendant into a trust or similar device to be held for the benefit of an individual who is plaintiff; and 5) Refusal to take legal action to obtain a court ordered payment that is not being paid, such as child support or alimony. (a) The above actions could result in an uncompensated transfer of assets. However, the specific circumstances of each case must be examined in order to determine if a transfer has occurred. e) Resources. 1) For purposes of this section, the definition of resources is the same definition used by the Supplemental Security Income (SSI) program, except that home property loses its exclusion if home property is transferred or ownership interest is reduced for institutionalized individuals, as addressed in transfer of assets rules. 2) In determining whether a transfer of assets or a trust involves an SSI-countable resource, use those resource exclusions and disregards used by the SSI program, except for the exclusion of the home for institutionalized individuals. Income, for purposes of this section, is the same definition used by the SSI program. In determining whether a transfer of assets involves SSI- countable income, take into account those income exclusions and disregards used by the SSI program. This is discussed in more detail in the chapter on income. f) For the Sole Benefit of. 1) A transfer is considered to be for the sole benefit of a spouse, blind or disabled child or a disabled individual if the transfer is arranged in such a way that no individual or entity except the spouse, blind or disabled child or disabled individual can benefit from the assets transferred in anyway, whether at the time of the transfer or at any time in the future. g) For the Sole Benefit Of. 1) Similarly, a trust is considered to be established for the sole benefit of a spouse, blind or disabled child, or disabled individual if the trust benefits no one but that individual, whether at the time the trust is established or any time in the future. However, the trust may provide for reasonable compensation for a trustee or trustees to manage the trust, as well as for reasonable cost associated with investing or otherwise managing the funds or property in the trust. (a) A transfer, transfer instrument, or trust that provides for funds or property to pass to a beneficiary who is not the spouse, blind or disabled child or disabled individual is not considered to be established for the sole benefit of one of these individuals (b) In order for a transfer or trust to be considered to be for the sole benefit of one of these individuals, the instrument or document must provide for the spending of the funds involved for the benefit of the individual on a basis that is actuarially sound based on the life expectancy of the individual involved. (c) When the instrument or document does not so provide, any potential exemption from penalty consideration for eligibility purposes is void. (d) An exception to this requirement exists for trusts discussed in “Exemptions to Treatment of Trusts.” Under these exceptions, the trust instrument must provide that any funds remaining in the trust upon the death of the individual must go to the Division of Medicaid, up to the amount of Medicaid benefits paid on the individual’s behalf. When these exceptions require that the trust be for the sole benefit of an individual, the restriction discussed in the previous paragraph does not apply when the trust instrument designates the Division of Medicaid as the recipient of funds from the trust. (e) Also, the trust may provide for disbursal of funds to other beneficiaries, provided the trust does not permit such disbursals until the State’s claim is satisfied. C. Transfer Penalty Definitions. 1. General. a) Under the transfer of assets provisions in Section 1917(c) of the Act, as amended by OBRA 1993, coverage of certain Medicaid services to otherwise eligible institutionalized individuals who transfer (or whose spouses transfer) assets for less than fair market value must be denied. This same transfer prohibition is applicable to Home and Community Based Services (HCBS) individuals and their spouses. 2. Definitions. a) The following definitions apply to transfers of assets. 1) Fair Market Value. (a) Fair market value is an estimate of the value of an asset, if sold at the prevailing price at the time it was actually transferred. Value is based on criteria used in appraising the value of assets for the purpose of determining Medicaid eligibility. (b) For an asset to be considered transferred for fair market value or to be considered to be transferred for valuable consideration, the compensation received for the asset must be in a tangible form with intrinsic value. (c) A transfer for love and consideration, for example, is not considered a transfer for fair market value. Also, while relatives and family members legitimately can be paid for care they provide to the individual under an acceptable personal services contract, Medicaid presumes that services provided for free at the time were intended to be provided without compensation. Refer to the full discussion of personal services contracts. Thus, a transfer to a relative for care provided for free in the past is a transfer of assets for less than fair market value. However, an individual can rebut this presumption with tangible evidence that is acceptable, such as a written repayment schedule agreed to at the time services were provided. 2) Valuable Consideration. (a) Valuable consideration means that an individual receives in exchange for his or her right or interest in an asset some act, object, service or other benefit which has a tangible and/or intrinsic value to the individual that is roughly equivalent to or greater than the value of the transferred asset. 3) Uncompensated Value. (a) The uncompensated value is the difference between the fair market at the time of transfer (less any outstanding loans, mortgages, or other encumbrances on the asset) and the amount received for the asset. 4) Institutionalized Individual. (a) An institutionalized individual is an individual who is an inpatient in: (1) Aa nursing facility; (2) Aa medical institution for who payment is based on a level of care provided in a nursing facility; or (3) Anan Intermediate Care Facility for Individuals with Intellectual Disabilities (ICF/IID) facility. 5) HCBS Individual. (a) A participant in a long-term care alternative program. Although not institutionalized, this individual is considered to be receiving long-term care services. The eligibility criteria for the HCBS individual are the same as those for the institutionalized person, including application of transfer policy. D. Transfer of Asset Rules. 1. Transfer of asset rules apply to the following: a) Resources. 1) Any real or personal property, annuity, liquid resource, or funds owned by the individual and his spouse that is given away, sold for less than fair market value, or used to purchase a promissory note, loan, mortgage, or life estate, waiving the right to receive any potential future resource that the individual might be entitled. b) Income. 1) Any earned or unearned income (including lump sum) of the individual and his or her spouse that is transferred to another individual in the month of receipt, waiving the right to receive any potential future income that the individual might be entitled. E. Effective Date of OBRA-93 Transfer Policy. 1. All transfers made on or after August 11, 1993, are treated under OBRA-93 rules with DRA amendments effective February 8, 2006. 2. Transfers made before August 11, 1993, are treated under policy in effect prior to OBRA- 93. 3. While this section applies to transfers made on or after August 11, 1993, penalties for transfers for less than fair market value under OBRA-93 cannot be applied to services provided before October 1, 1993. 4. Apply pre-OBRA-1993 rules regarding transfers of assets to transfers made on or after August 11, 1993, and before October 1, 1993. 5. As indicated above, the effective date of all DRA changes is February 8, 2006. Assets disposed of on or after February 8, 2006, will be evaluated under OBRA-93 and any changes mandated by the DRA. The DRA changes are noted. F. Individuals to Whom Transfer of Assets Applies. 1. Apply these provisions when an institutionalized individual, HCBS waiver individual or the individual’s spouse disposes of assets for less than fair market value on or after the look-back date explained below. 2. For purposes of this section, assets transferred by a parent, guardian, court or administrative body, or anyone acting in place of or on behalf of or at the request or direction of the individual or spouse are considered to be transferred by the individual or spouse. G. Verification and Documentation. 1. In addition to the initial application, look for a transfer of assets at the time of review, when a transfer is reported, or when there is a request for a change to institutional or HCBS coverage. When there has been a transfer of assets during the look-back period, the following documentation must be obtained: a) A description of the asset transferred (the home, other real property, life estate, cash, lump sum, car, stocks, bank account, certificate of deposit, etc.). b) The name of the person who transferred the asset (client, spouse, legal representative.) c) The name of the person(s) to whom the asset was transferred. d) The client’s relationship to the individual to whom the asset was transferred. e) The countable value of the asset at the time of the transfer and the compensation (money or other benefit) received or expected to be received from the transferred asset. f) The date the asset was transferred. g) Whether the applicant was the sole owner of the asset at the time of the transfer if not the name of any co-owners. h) If applicable, documentary evidence that the individual intended to dispose of an asset at fair market value or information from knowledgeable sources to support the value (if any) at which the asset was disposed. H. Look Back Period. 1. The Deficit Reduction Act of 2005 changed the look back period to five (5) years sixty (60) months effective for institutional applications filed on or after February 8, 2006. 2. The sixty (60) month rule applies to any type of asset transferred including assets placed in a trust. Transfers that took place during the five (5) year look back period, but prior to February 8, 2006, will be evaluated using previous transfer of assets policy and the penalty period is calculated under the rules in effect at the time of the transfer. 3. Application of the DRA transfer rules is being phased in over the sixty (60) month period starting February 8, 2006. Because the DRA implementation date will not change, the length of the look back period to evaluate transfers under DRA rules will increase each month by one month until it reaches sixty (60) months in February 2011. 4. Under OBRA-93, the look-back period for transfers other than transfers to a trust is a date that is thirty-six (36) months from the date the individual both is an institutionalized individual and has applied for Medicaid. I. Applying the Transfer Penalty. 1. Denial of coverage or services because assets were transferred for less than Fair Market Value is known as a transfer penalty. 2. Under the DRA, the penalty period for an institutionalized applicant or HCBS begins when the individual is receiving an institutional level of care or would otherwise be receiving HCBS waiver coverage for which he/she would be eligible if not for imposition of the transfer penalty. If the individual is otherwise eligible for Medicaid, he/she may receive Medicaid for all services except: a) Nursing facility services, or b) Nursing facility services provided in an institution that is equivalent to that of nursing facility services. 3. If an individual or his/her spouse has a penalty as the result of a transfer, the penalty is imposed as follows: a) Nursing Home Assistance: 1) Vendor payment (room and board) is denied or terminated for the duration of the penalty period; and 2) Medicaid is approved for all other services. b) Home and Community Based Services: 1) If Medicaid eligibility is dependent on participating in the waiver, the application is denied or the case is closed for the duration of the calculated penalty period in a HCBS waiver program. 2) The individual can be approved in a Medicare Savings Program (QMB, SLMB, QI) if all other criteria are met. J. Multiple Periods of Institutionalization and Multiple Applications. 1. When an individual has multiple periods of institutionalization or has made multiple applications for Medicaid (unless the application was withdrawn), the look-back date is based on a baseline date that is the first date upon which the individual has both applied for Medicaid and is institutionalized. a) Each individual has only one look-back date, regardless of the number of periods of institutionalization, applications for Medicaid (the exception is a withdrawn application), or periods of eligibility or transfers of assets. K. Calculation and Imposition of the Transfer Penalty 1. The date of the penalty will begin with the later of the first day of a month during which assets have been transferred for less than fair market value; or 2. The date on which the individual is eligible for medical assistance based on all factors of eligibility being met and is receiving institutional level of care services (based on an approved application for such services) that, were it not for the imposition of the penalty period would be covered by Medicaid. 3. Recipients are prohibited from transferring resources after approval. a) For transfers discovered after approval, the penalty is imposed beginning with the month following the advance notice and rebuttal period. 4. An improper payment report will be prepared for any ineligible months before the penalty is imposed. If the penalty period has ended, the improper payment would cover all months of the penalty period. 5. For applications on or after February 8, 2006, handled under DRA rules, the penalty will begin the month that Long Term Care services are requested if the individual is otherwise eligible for Medicaid. 6. For application prior to February 8, 2006, transfers are considered under the provisions of OBRA-93. The date of the penalty period 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 policy. 7. The number of months of ineligibility for an institutionalized individual shall be equal to: a) The total, cumulative uncompensated value (UV) of all assets transferred by the individual (or individual’s spouse) on or after the look back period divided by: b) The average monthly cost to a private pay patient for nursing facility services in Mississippi at the time of application for new applicants. For active recipients, the average cost to a private pay patient at the time the penalty is being calculated is used. c) The average monthly cost referenced in b) above shall be calculated annually based on the average daily per diem rate from the Division of Medicaid cost reports for the previous year. Each annual calculation shall be made and distributed to Division of Medicaid staff by July 1 of each year. 8. Under the DRA, when the amount of the transfer is less than the average monthly cost of nursing facility care, a penalty is imposed for less than a full month. This is called a partial month penalty. 9. Rounding down or otherwise disregarding any fractional part of an ineligibility period when determining the penalty period is not allowed. 10. The average daily per diem applicable to the transfer is used in determining the partial month penalty period. The average daily per diem is calculated using the average daily cost to a private pay patient as described in Miss. Admin. Code, Part 103, Rule 7.1, K, 7 for the procedures used to determine the average monthly cost. L. Determining the Penalty When Penalty Periods Overlap. 1. All countable transfers occurring during the look-back period are totaled and the penalty period determined by dividing the total UV by the average private pay rate. a) The first month of the transfer penalty period is the month in which the first countable transfer occurred. 2. Transfers that occur after a penalty period is in effect are added in full to the end of the penalty period currently in effect. 3. There is no limit on the number of months a transfer penalty can be imposed. 4. The penalty period is always determined by the total UV calculated during the look back period. M. Determining the Penalty When Penalty Periods Do Not Overlap 1. When multiple transfers are made so that the penalty periods for each do not overlap, treat each transfer as a separate event with its own penalty period. 2. An exception is consecutive transfers that occur on a regular basis must be calculated together. N. Types of Transfer of Assets 1. Transfer of Income. a) Income, in addition to resources, is considered to be an asset for transfer (and trust) purposes. 1) When an individual’s income is given or assigned in some manner to another person, such a gift or assignment can be considered a transfer of assets for less than fair market value. 2) There must be a determination as to whether amounts of regularly scheduled income or lump sum payments, which the individual received or would otherwise have received, have been transferred. 3) When a single lump sum payment is transferred, the penalty period is calculated on the basis of the value of the lump sum payment. 4) When a stream of income, (i.e., income received in a regular basis, such as a pension) is transferred over multiple months, calculate the penalty period by adding the income payments together and begin the penalty period on the earliest date that would otherwise apply if the transfer had been made in a single lump sum. 5) When the transfer involves a right to income (such as when a private pension is placed in a trust) determine of the total amount of income expected to be transferred during the individual’s life, based on an actuarial projection of the individual’s life expectancy, and calculate the penalty on the basis of the projected total income. 2. Conveyance for Less than Fair Market Value. a) Giving away or conveying an asset for less than fair market value within the look back period for an institutionalized or HCBS individual may be considered a transfer of assets. 3. Waiving an Inheritance or Other Entitled Benefit. a) Refusal to accept an inheritance or refusal to take legal action to obtain benefits an individual is entitled to receive may be considered a transfer of assets. 4. Annuities When Expected Returns Are less than Cost of Annuity. a) Establishing or purchasing annuities in which anticipated payments based on life expectancy of the individual are less than the cost of the annuity. The policy on annuities is explained in detail in Miss. Admin. Code Part 103, Chapter 6. 5. Irrevocable Burial Contracts Under Certain Circumstances. a) An irrevocable burial contract or similar device established by the funeral home/director is considered a transfer of assets if the cost to the individual or spouse exceeds the value of the merchandise and/or services. b) An itemized statement must be obtained to assist in determining whether the costs are commensurate with the value of the merchandise and/or services. 6. Transfers by a Spouse. Transfers made by the Community Spouse (CS) will create a penalty for the Institutionalized Spouse (IS). a) Transfers by the CS after the IS has been determined eligible will also create a penalty for the IS. b) If the CS becomes institutionalized and applies for Medicaid during the penalty period, the penalty must be apportioned between both spouses. c) If the IS has already served the penalty in full, it will not be applied a second time. d) If one member of the couple should leave the facility or die, the remaining portion of the penalty must be served by the remaining institutionalized spouse. 7. Transfers of Jointly-Held Assets a) 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. b) If placing another person’s name on the account or asset actually limits the individual’s right to sell or otherwise dispose of the assist (e.g., the addition of another person’s name requires that the person agree to the sale or disposal of the asset where no such agreement was necessary before), such placement constitutes a transfer of assets. c) Regular Medicaid rules are used to determine what portion of a jointly held asset is presumed to belong to an applicant or recipient. This portion is subject to a transfer penalty if it is withdrawn by a joint owner. 8. Personal Service Contracts. a) A personal service contract should be a written contract between the recipient/applicant and the personal services provider. b) The contract should be executed prior to the date any payments have been made to the provider. c) If payments have been made prior to the date of the contract these payments should be considered as transfers. d) Once an individual begins receipt of Medicaid Long Term Care (LTC) services, the individual’s personal and medical needs are considered to be met by the LTC provider. e) Payments to other individuals for services received after the individual enters LTC are considered an uncompensated transfer for Medicaid purposes. f) The contract should be very specific as to services to be provided and the payment to be paid for the services. g) Each service/duty should be listed with the number of hours for each service with the amount charged for each service. h) If the contract calls for a payment of a specific amount per hour, this amount should be reasonable. 1) Example: Nursing charges will not be allowed for non-nurses and CPA charges will not be allowed for persons who are not CPA’s. Documentation of the services performed and the number of hours for each service should be submitted. 2) All charges will be evaluated based on usual and customary charges for services in the community. 3) The contract must not provide for payment of compensation for future services. All payments should be made only as the services are actually rendered. 4) Any payments made for future service should be considered as transfers Contracts indicating a prior date but no payments have ever been made should be questioned as to why the payments for services were not made when the services were performed. 5) This type of arrangement indicates services were provided for free. Services provided for free are not under obligation to be paid at a future unknown date. 9. Purchase of a Life Estate in Another Individual’s Home The purchase of a life estate interest in another individual’s home is considered a transfer of assets unless the purchaser resides in the home for a period of at least one (1) year after the date of purchase. 10. Promissory Notes, Loans or Mortgages The term “assets” includes funds used to purchase a promissory note, loan or mortgage unless such note, loan or mortgage is determined to be actuarially sound, provides for payments to be made in equal amounts during the term of the loan, with no deferral or balloon payments, and prohibits the cancellation of the balance upon the death of the lender. A note, loan or mortgage not meeting these requirements is a transfer of assets in the amount of the outstanding balance due as of the date of the individual’s application. O. Exceptions 1. Home Property a) The transfer penalty will not apply to the transfer of home property by an institutionalized individual to the following family members of such individual: 1) The individual’s spouse or child under age twenty-one (21) or a disabled or blind adult child (Disability must be established and age verified); or 2) A sibling who is part owner of the home who lived in the home for one (1) year prior to the individual entering a nursing facility; or 3) A child who lived in the home for two (2) years before the individual entered a nursing facility and provided care to the individual which permitted the individual to remain at home. (a) Sufficient documentary information must be provided to make a determination that: (1) The child resided in the home for the required length of time. (This may include statements from knowledgeable individuals when other verification is not available.) (2) Whether the child provided care which enabled the parent to remain at home. (3) If the child was employed outside the home, the arrangements for care while the child was away must be determined. 2. Non-Home Property a) The transfer penalty will not apply to the transfer of any type of non-home asset in the following situations: 1) Assets transferred to the individual’s spouse or to another for the sole benefit of the individual’s spouse. 2) Assets transferred from the individual’s spouse to another for the sole benefit of the individual’s spouse; 3) Assets transferred to the individual’s child under age twenty-one (21) or a disabled adult child or the individual’s spouse; or blind adult child. If the disabled adult child is not receiving a social security disability payment, a disability determination is required; 4) Assets transferred to a Special Needs Trust established solely for the benefit of a disabled applicant less than sixty-five (65) years of age. 5) The resource was excluded under ongoing policy at the time of transfer. b) In determining whether an asset was transferred for the sole benefit of a spouse, child, or disabled individual, ensure that the transfer was accomplished via a written instrument of transfer (e.g., a trust document) which legally binds the parties to a specified course of action and which clearly sets out the conditions under which the transfer was made, as well as who can benefit from the transfer. 1) A transfer without such a document cannot be said to have been made for the sole benefit of the spouse, child, or disabled individual, since there is no way to establish, without a document, that only the specified individuals will benefit from the transfer. 3. An individual shall not be ineligible for medical assistance if an acceptable rebuttal is submitted and a satisfactory showing is made to the Division of Medicaid that: a) The individual intended to dispose of the assets either at fair market value or for other valuable consideration; b) The assets were transferred exclusively for a purpose other than to qualify for medical assistance; c) All assets transferred for less than fair market value have been returned to the individual; or d) The Division of Medicaid determines that denial of eligibility would work an undue hardship on the individual. 1) The transfer penalty will not apply if undue hardship exists. Undue hardship exists when: (a) Application of the transfer penalty would deprive the individual of medical care such that his/her health or his/her life would be endangered. (b) Application of the transfer penalty would deprive the individual of food, clothing shelter, or other necessities of life and cause severe deprivation. (c) The applicant or spouse or representative has exhausted all legal action to have the transferred assets that caused the penalty returned. e) Undue hardship does not exist when: 1) Application of the application of the transfer of assets provision merely causes the individual inconvenience or when such application might restrict his or her lifestyle but would not put him her at risk of serious deprivation. 2) The assets were transferred to community spouse and the community spouse refuses to cooperate in making the resource available to the institutional spouse. 3) The resource was transferred to a person (spouse, child, or other person who was handling the financial affairs of the client or to the spouse or children of a person handling the financial affairs of the client unless it is established that the transferred funds cannot be recovered even through exhaustive legal measures. f) Each case situation must be reviewed individually to determine if Undue Hardship exists. Generally, this provision is limited to financially and medically needy individuals with no possible means of recovering the transferred assets. g) A hardship waiver may be requested by a facility. Effective February 8, 2006, an undue hardship waiver may be requested by the facility in which the person resides on behalf of the individual if the facility has the individual’s consent, or their person representative’s consent. 1) The hardship waiver is for the recipient, not the hardship of the facility. 2) The agency provides that, while an application for an undue hardship waiver is pending in the case of an individual, who is a resident of a nursing facility, payments to the nursing facility to hold the bed for the individual will be made for a period not to exceed thirty (30) days. 4. Exception for Transfers to Community Spouse or Third Party. a) Section 1924 of the Act sets forth the requirements for treatment of income and resources where there is an individual in a medical institution with a spouse still living in the community. b) This section of the Act provides for apportioning income and resources between the institutional spouse and the community spouse so that the community spouse does not become impoverished because the individual is in a medical institution. c) The exceptions to the transfer of assets penalties regarding inter-spousal transfers and transfers to a third party for the sole benefit of a spouse apply even under the spousal impoverishment provisions. d) The institutional spouse can transfer unlimited assets to the community when transfers between spouses are involved. e) The unlimited transfer exception should have little effect on the eligibility determination, primarily because resources belonging to both spouses are combined in determining eligibility for the institutionalized spouse. f) Resources transferred to a community spouse are still considered available to the institutionalized spouse for eligibility purposes. g) The exception for transfers to a third party for the sole benefit of the spouse may have greater impact on eligibility because resources may potentially be placed beyond the reach of either spouse and thus cannot be counted for eligibility purposes. h) For the exception to be applicable, the definition of what is for the sole benefit of the spouse must be fully met. i) This definition is fairly restrictive, in that it requires that any transferred funds spent for the benefit of the spouse within a time-frame actuarially commensurate with the spouse’s life expectancy. j) If this requirement is not met, this exemption is void, and a transfer to a third party may then be subject to a transfer penalty. P. Transfer of Assets Notification 1. The applicant/client will be notified regarding countable transfers and the penalty period. 2. The transfer and the penalty must be clearly indicated. 3. The notice should allow the client or representative time to present evidence to show that the transfer should not count. a) Evidence should include a written rebuttal plus any pertinent documentary evidence. b) If no rebuttal is offered, the penalty will be applied and the appropriate adverse action notice. 4. Individuals in nursing homes remain eligible for all other Medicaid services if the transfer penalty is the only factor of ineligibility; therefore, payment of nursing home services only will be denied or terminated. 5. If the individual is ineligible on other factors as well as the transfer, the application or case must be denied or terminated. 6. If Medicaid eligibility is dependent on participating in the HCBS waiver program, the application is denied or the case is closed until the transfer penalty period expires ; a) These individuals can be approved in a Medicare Savings Program (QMB, SLMB, QI) if all other criteria are met. Q. Rebuttal Process 1. Written rebuttals require State Office review and approval of the action to be taken. R. Return of a Transferred Resource 1. If a transferred resource is returned to, or if compensation is received by, the institutionalized individual, the UV is no longer an issue or is reduced as of the date of the return. 2. The resource or compensation is evaluated according to normal resource rules in the month of return. Any portion of a transferred resource that is not returned continues to count as UV which means the penalty period must be re-evaluated. S. Recalculation of a Penalty Period 1. A penalty period must be recalculated from the month a portion of the resource is returned or additional compensation is received. If the resource is returned, normal resource rules apply in determining Medicaid eligibility. T. Transfer Penalty Involving SSI Months 1. The transfer penalty can be imposed during months that an individual receives SSI or is SSI eligible in a nursing home. 2. Notices for SSI eligibles must not be sent verifying eligibility for nursing facility services until the possibility of any transfers have been developed.