Iowa Admin. Code r. 441-75.23 - Disposal of assets for less than fair market value after August 10, 1993
In determining Medicaid eligibility for persons described in
441-Chapters 75 and 83, a
(1)
Ineligibility for
services. When an individual or spouse has transferred or disposed of
assets for less than fair market value as defined in 75.23(11) on or after the
look-back date specified in 75.23(2), the individual shall be ineligible for
medical assistance as provided in this subrule.
a.
Institutionalized
individual. When an institutionalized individual or the spouse of the
individual disposed of assets for less than fair market value on or after the
look-back date, the institutionalized individual is ineligible for medical
assistance payment for nursing facility services , a level of care in any
institution equivalent to that of nursing facility services , and home- and
community-based waiver services. The period of ineligibility is equal to the
number of months specified in 75.23(3). The department shall determine the
beginning of the period of ineligibility as follows:
(1) Transfer before February 8, 2006. When
the transfer of assets was made before February 8, 2006, the period of
ineligibility shall begin on the first day of the first month during which the
assets were transferred, except as provided in subparagraph (3).
(2) Transfer on or after February 8, 2006.
Within the limits of subparagraph (3), when the transfer of assets was made on
or after February 8, 2006, the period of ineligibility shall begin on the later
of:
1. The first day of the first month
during which the assets were transferred; or
2. The date on which the individual is
eligible for medical assistance under this chapter and would be receiving
nursing facility services , a level of care in any institution equivalent to
that of nursing facility services , or home- and community-based waiver
services, based on an approved application for such care, but for the
application of this rule.
(3) Exclusive period. The period of
ineligibility due to the transfer shall not begin during any other period of
ineligibility under this rule.
b.
Noninstitutionalized
individual. When a noninstitutionalized individual or the spouse of
the individual disposed of assets for less than fair market value on or after
the look-back date, the individual is ineligible for medical assistance payment
for home health care services, home and community care for functionally
disabled elderly individuals, personal care services, and other long-term care
services. The period of ineligibility is equal to the number of months
specified in 75.23(3). The department shall determine the beginning of the
period of ineligibility as follows:
(1)
Transfer before February 8, 2006. When the transfer of assets was made before
February 8, 2006, the period of ineligibility shall begin on the first day of
the first month during which the assets were transferred, except as provided in
subparagraph (3).
(2) Transfer on
or after February 8, 2006. Within the limits of subparagraph (3), when the
transfer of assets was made on or after February 8, 2006, the period of
ineligibility shall begin on the later of:
1.
The first day of the first month during which the assets were transferred;
or
2. The date on which the
individual is eligible for medical assistance under this chapter and would be
receiving home health care services, home and community care for functionally
disabled elderly individuals, personal care services, or other long-term care
services, based on an approved application for such care, but for the
application of this rule.
(3) Exclusive period. The period of
ineligibility due to the transfer shall not begin during any other period of
ineligibility under this rule.
c.
Client participation after period
of ineligibility. Expenses incurred for long-term care services during
a transfer of assets penalty period may not be deducted as medical expenses in
determining client participation pursuant to subrule 75.16(2).
(2)
look-back
date.
a.
Transfer before
February 8, 2006. For transfers made before February 8, 2006, the
look-back date is the date that is 36 months (or, in the case of payments from
a trust or portion of a trust that are treated as assets disposed of by the
individual, 60 months) before:
(1) The date
an institutionalized individual is both an institutionalized individual and has
applied for medical assistance; or
(2) The date a noninstitutionalized
individual applies for medical assistance.
b.Transfer on or after February 8,
2006. For transfers made on or after February 8, 2006, the look-back
date is the date that is 60 months before:
(1) The date an institutionalized individual
is both an institutionalized individual and has applied for medical assistance;
or
(2) The date a
noninstitutionalized individual applies for medical assistance.
(3)
Period of
ineligibility. The number of months of ineligibility shall be equal to
the total cumulative uncompensated value of all assets transferred by the
individual (or the individual's spouse) on or after the look-back date
specified in subrule 75.23(2), divided by the statewide average private-pay
rate for nursing facility services at the time of application. The department
shall determine the average statewide cost to a private-pay resident for
nursing facilities and update the cost annually. Current average statewide
costs shall be published on the department 's website.
(4)
Reduction of period of
ineligibility. The number of months of ineligibility otherwise
determined with respect to the disposal of an asset shall be reduced by the
months of ineligibility applicable to the individual prior to a change in
institutional status.
(5)Exceptions. An individual
shall not be ineligible for medical assistance, under this rule, to the extent
that:
a. The assets transferred were a home
and title to the home was transferred to either:
(1) A spouse of the individual.
(2) A child of the individual who is under
the age of 21 or is blind or permanently and totally disabled as defined in
42
U.S.C. Section 1382c.
(3) A sibling of the individual who has an
equity interest in the home and who was residing in the individual's home for a
period of at least one year immediately before the individual became
institutionalized.
(4) A son or
daughter of the individual who was residing in the individual's home for a
period of at least two years immediately before the date of
institutionalization and who provided care to the individual which permitted
the individual to reside at home rather than in an institution or
facility.
b. The assets
were transferred:
(1) To the individual's
spouse or to another for the sole benefit of the individual's spouse.
(2) From the individual's spouse to another
for the sole benefit of the individual's spouse.
(3) To a child of the individual who is blind
or permanently and totally disabled as defined in
42
U.S.C. Section 1382c or to a trust
established solely for the benefit of such a child.
(4) To a trust established solely for the
benefit of an individual under 65 years of age who is disabled as defined in
42
U.S.C. Section 1382c.
c. A satisfactory showing is made that one of
the following is true:
(1) The individual
intended to dispose of the assets either at fair market value, or for other
valuable consideration.
(2) The
assets were transferred exclusively for a purpose other than to qualify for
medical assistance.
(3) All assets
transferred for less than fair market value have been returned to the
individual.
d. The
denial of eligibility would work an undue hardship. Undue hardship shall exist
only when all of the following conditions are met:
(1) Application of the transfer of asset
penalty would deprive the individual of medical care such that the individual's
health or life would be endangered or of food, clothing, shelter, or other
necessities of life.
(2) The person
who transferred the resource or the person's spouse has exhausted all means
including legal remedies and consultation with an attorney to recover the
resource.
(3) The person's
remaining available resources (after the attribution for the community spouse )
are less than the monthly statewide average cost of nursing facility services
to a private pay resident, counting the value of all resources except for:
1. The home if occupied by a dependent
relative or if a licensed physician verifies that the person is expected to
return home.
2. Household
goods.
3. A vehicle required by the
client for transportation.
4. Funds
for burial of $4,000 or less.
Hardship will not be found if the resource was transferred to
a person who was handling the financial affairs of the
(6)
Assets held in common.
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 the asset, shall be considered to be
transferred by the individual when any action is taken, either by the
individual or by any other person, that reduces or eliminates the individual's
ownership or control of the asset.
(7)
Transfer by spouse. In
the case of a transfer by a spouse of an individual which results in a period
of ineligibility for medical assistance under the state plan for the
individual, the period of ineligibility shall be apportioned between the
individual and the individual's spouse if the spouse otherwise becomes eligible
for medical assistance under the state plan. The remaining penalty period shall
be evenly divided on a monthly basis, with any remaining month of penalty
(prorated as a half month to each spouse) applied to the spouse who initiated
the transfer action.
If a spouse subsequently dies prior to the end of the penalty period, the remaining penalty period shall be applied to the surviving spouse's period of ineligibility.
(8)
Definitions. In this
rule the following definitions apply:
"Assets" shall include all income and resources of the individual and the individual's spouse, including any income or resources which the individual or the individual's spouse is entitled to but does not receive because of action by:
1. The individual or the individual's
spouse.
2. 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.
3. Any person, including any court or
administrative body, acting at the direction or upon the request of the
individual or the individual's spouse.
"Income" shall be defined by 42 U.S.C. Section 1382a.
"Institutionalizedindividual" shall mean an
individual who is an inpatient in a nursing facility, who is an inpatient in a
"Resources" shall be defined by 42 U.S.C. Section 1382b without regard (in the case of an institutionalized individual) to the exclusion of the home and land appertaining thereto.
"Transfer or disposal of assets" means any transfer or assignment of any legal or equitable interest in any asset as defined above, including:
1. Giving
away or selling an interest in an asset;
2. Placing an interest in an asset in a trust
that is not available to the grantor (see
75.24(2)"b"(2));
3. Removing or eliminating an interest in a
jointly owned asset in favor of other owners;
4. Disclaiming an inheritance of any
property, interest, or right pursuant to Iowa Code section 633.704 on or after
July 1, 2000 (see Iowa Code section
249A.3(11)
"c");
5. Failure
to take a share of an estate as a surviving spouse (also known as "taking
against a will") on or after July 1, 2000, to the extent that the value
received by taking against the will would have exceeded the value of the
inheritance received under the will (see Iowa Code section
249A.3(11)
"d"); or
6.
Transferring or disclaiming the right to income not yet
received.
(9)
Purchase of annuities. Funds used to purchase an annuity for
more than its fair market value shall be treated as assets transferred for less
than fair market value regardless of when the annuity was purchased or whether
the conditions described in this subrule were met.
a. The entire amount used to purchase an
annuity on or after February 8, 2006, with a Medicaid applicant or member as
the annuitant shall be treated as assets transferred for less than fair market
value unless the annuity meets one of the conditions described in paragraph
75.23(9)"b" and also meets the condition described in
paragraph 75.23(9)"c."
b. To be exempted from treatment as an asset
transferred at less than fair market value, an annuity described in paragraph
75.23(9)"a" must meet one of the following conditions:
(1) The annuity is an annuity described in
Subsection (b) or (q) of Section 408 of the United States Internal Revenue Code
of 1986.
(2) The annuity is
purchased with proceeds from:
1. An account or
trust described in Subsection (a), (c), or (p) of Section 408 of the United
States Internal Revenue Code of 1986;
2. A simplified employee pension (within the
meaning of Section 40 8 (k) of the United States Internal Revenue Code of
1986); or
3. A Roth IRA described
in Section 408A of the United States Internal Revenue Code of 1986.
(3) The annuity:
1. Is irrevocable and
nonassignable;
2. Is actuarially
sound (as determined in accordance with actuarial publications of the Office of
the Chief Actuary of the United States Social Security Administration);
and
3. Provides for payments in
equal amounts during the term of the annuity, with no deferral and no balloon
payments made.
c. To be exempted from treatment as an asset
transferred at less than fair market value, an annuity described in paragraph
75.23(9)"a" must have Iowa named as the remainder beneficiary
for at least the total amount of medical assistance paid on behalf of the
annuitant or the annuitant's spouse, if either is institutionalized. Iowa may
be named either:
(1) In the first position;
or
(2) In the second position after
the spouse or minor or disabled child and in the first position if the spouse
or a representative of the child disposes of any of the remainder for less than
fair market value.
d.
The entire amount used to purchase an annuity on or after February 8, 2006,
with the spouse of a Medicaid applicant or member as the annuitant shall be
treated as assets transferred for less than fair market value unless Iowa is
named as the remainder beneficiary for at least the total amount of medical
assistance paid on behalf of the annuitant or the annuitant's spouse, if either
is institutionalized. Iowa may be named either:
(1) In the first position; or
(2) In the second position after the spouse
or minor or disabled child and in the first position if the spouse or a
representative of the child disposes of any of the remainder for less than fair
market value.
(10)
Purchase of promissory notes,
loans, or mortgages.
a. Funds used
to purchase a promissory note, loan, or mortgage after February 8, 2006, shall
be treated as assets transferred for less than fair market value in the amount
of the outstanding balance due on the note, loan, or mortgage as of the date of
the individual's application for medical assistance for services described in
75.23(1), unless the note, loan, or mortgage meets all of the following
conditions:
(1) The note, loan, or mortgage
has a repayment term that is actuarially sound (as determined in accordance
with actuarial publications of the Office of the Chief Actuary of the United
States Social Security Administration).
(2) The note, loan, or mortgage provides for
payments to be made in equal amounts during the term of the loan, with no
deferral and no balloon payments made.
(3) The note, loan, or mortgage prohibits the
cancellation of the balance upon the death of the lender.
b. Funds used to purchase a promissory note,
loan, or mortgage for less than its fair market value shall be treated as
assets transferred for less than fair market value regardless of whether:
(1) The note, loan, or mortgage was purchased
before February 8, 2006; or
(2) The
note, loan, or mortgage was purchased on or after February 8, 2006, and the
conditions described in 75.23(9) "a" were met.
(11)
Purchase
of life estates.
a. The entire
amount used to purchase a life estate in another individual's home after
February 8, 2006, shall be treated as assets transferred for less than fair
market value, unless the purchaser resides in the home for at least one year
after the date of the purchase.
b.
Funds used to purchase a life estate in another individual's home for more than
its fair market value shall be treated as assets transferred for less than fair
market value regardless of whether:
(1) The
life estate was purchased before February 8, 2006; or
(2) The life estate was purchased on or after
February 8, 2006, and the purchaser resided in the home for one year after the
date of purchase.
This rule is intended to implement Iowa Code sections 249A.3 and 249A.4.
Notes
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