016.20.04 Ark. Code R. § 002 - MS 3334.3 and 3336.10 Transfer of Resources - Updating Divisor for Determining Uncompensated Value and Period of Ineligibility

3334.3 Determination of Uncompensated Value and Period of Consideration

The uncompensated value from an asset transfer is the difference between the fair market value of the asset at the time of transfer (Re. MS 3331-3331.5 for real property and MS 3332-3332.3 for personal property) and the value of compensation received for the asset (Re. MS 3334.4).

The period of time that the uncompensated value from a resource transfer is considered is determined by dividing the uncompensated value by the amount specified for the period of time in which the individual applied. The result will be the number of months that an individual will be ineligible for Medicaid. Please refer to MS 3336.10 for further explanation of determining period of ineligibility.

The period of ineligibility due to the uncompensated value of an income transfer is determined according to MS 3336.11. Amounts of uncompensated value and their periods of consideration may be affected by the receipt of compensation at a later time. Refer to MS 3334.8 for treatment.

3336.10 Determination of Uncompensated Value and Period of Ineligibility for Resource Transfers

The number of months of ineligibility for facility/Waiver services will be determined by dividing the uncompensated value of all resources transferred by the individual or spouse on or after the look back date by the current divisor (see Appendix R).

The Division of Medical Services will determine the amount of the divisor. The divisor is defined as the weighted average per diem Medicaid rate multiplied by 30.42 and rounded to the nearest dollar to obtain a monthly amount, calculated from cost reports submitted for the cost reporting period from July to June, and then applied to the following calendar year. The weighted average rate is calculated annually. Medicaid LTC resident days reported on each facility's cost report will be multiplied by each facility's per diem rate. The sum of the calculated amounts will be divided by the total resident days to get the weighted average rate. The divisor will be redetermined yearly with any resulting changes taking effect on April 1^st. The divisor for the current year is indicated on Appendix R.

The divisor will be redetermined each year and any changes in the divisor will be effective on April 1^st. When there is a change in the divisor, the penalty period will be reassessed at the next reevaluation, or earlier if requested, or at reapplication.

If the client is currently eligible in a LTC Medicaid case, but not receiving a vendor payment due to penalty, the client will be reassessed at reevaluation or earlier if requested. If the client is now eligible for facility services, facility services will be approved beginning the month of reassessment.

If the client is not currently receiving LTC or Home and Community Based Waiver Medicaid, but reapplies and is under a previously imposed penalty, the penalty period will be reassessed using the current divisor. If eligible, the case will be approved with coverage not granted before April 1^st or before the three-month retro period based on the recent application, whichever is later.

There is no cap on the total number of months of ineligibility. Any fraction remaining after dividing the total uncompensated value by the divisor will be dropped. The period of ineligibility will begin on the first day of the first month during which assets were transferred.

Example # 1: An applicant transferred $250,000 to his children 6 months before entering a nursing facility. As 6 months is within the 36-month look back period, there will be a penalty for non-compensated transfer. The divisor at the time of his admission was $3416. $250,000 divided by 3416 equals 73.18 months of ineligibility. The fraction remaining after dividing the total uncompensated value by 3416 will be dropped. The applicant will be ineligible for facility vendor payments for 73 months. If the divisor changes in April, the penalty will be reassessed using the current divisor at the next reevaluation, or earlier if requested.

Example # 2: An applicant for ElderChoices transferred $250,000 to his children 6 months before application. $250,000 divided by 3416 equals 73.18 months. The applicant will be ineligible for ElderChoices for 73 months. If the applicant reapplies, the penalty will be reassessed using the current divisor.

Example # 3: An applicant transferred $250,000 to his children 5 years before entering a nursing facility. No penalty will be assessed as the transfer occurred before the 36-month look back period.

Multiple Transfers Made That Do Not Result in Overlapping Penalties - If an individual has made multiple transfers that do not result in overlapping penalty periods, a separate penalty period will be assigned to each transfer. For example, a penalty period for a $6832 transfer made in December will expire at the end of January. A second transfer of $7000 made in February results in a penalty period that expires at the end of March. A $10,000 transfer in June results in a 2 month penalty period which ends in July. If the individual making these transfers applies in June, he will not be eligible until August 1st. The first two penalty periods will have expired, but the $10,000 transfer penalty will still be in effect.

Multiple Transfers Made That Do Result in Overlapping Penalties - The sum total of all transfers made will be divided by the current divisor to determine the period of ineligibility.

For example, an individual gives away $8000 in May, $10,000 in June, $12,000 in July, and $4000 in August. He applies for assistance in August 2004. The total value of uncompensated transfers ($34,000) will be divided by 3416, resulting in a penalty of 9 months.

Notes

016.20.04 Ark. Code R. § 002

7/27/2004