Ohio Admin. Code 5160:1-6-06.4 - Medicaid: transfers involving promissory notes, property agreements, and loans
(A) This rule
describes how to treat transfers involving promissory notes, property
agreements, and loans held by an institutionalized individuals
individual, or his or her spouse, when the
institutionalized individual is requesting medicaid payment for long-term care
(LTC) services.
(B) Assets used to
purchase or obtain a promissory note, property agreement, or loan are
considered to be improperly transferred unless the the purchase of the note,
agreement or loan was for fair market value and the terms of the promissory
note, property agreement, or loan:
(1) Have a
repayment term that is actuarially sound as determined in accordance with
actuarial publications of the office of the chief actuary in
26 C.F.R.
20.2031-7 (as in effect on October 1,
2016
2024);
(2)
Provide for payments to be made in equal amounts during the term of the
promissory note, property agreement, or loan, with no deferral and no balloon
payments made; and
(3) Prohibit cancellation of the balance upon
the lender's death; and
(4) Allow
for the transfer or sale of the note, agreement, or loan.
(C)
If
When the promissory
note, property agreement, or loan does not satisfy the requirements in
paragraph (B) of this rule, the value of such note, agreement, or loan shall be
its outstanding balance as of the date the institutionalized individual
request
requests medicaid payment for LTC services and must be
considered improperly transferred in accordance with rule
5160:1-6-06 of the
Administrative Code.
(1) Any resulting
restricted medicaid coverage period (RMCP) shall not be reduced based upon
anticipated, estimated, or projected future payments made under the note,
agreement, or loan.
(2) For any
resulting RMCP to be reduced because of a repayment, the promissory note,
property agreement, or loan must be repaid in full.
(D)
If
When an
institutionalized individual transfers or sells a promissory note, property
agreement, or loan for an amount less than the outstanding balance of such
note, agreement, or loan, the difference will be considered improperly
transferred as of the note, agreement, or loan's sale date.
(E) The institutionalized individual may
rebut the finding that the purchase or transfer of a promissory note, property
agreement, or loan is improper by providing at
least one of the following:
(1) Credible
evidence from a knowledgeable source establishing that the
fair market value was less than its outstanding
principal balance. The knowledgeable source must:
(a) Be clearly identified; and limited to the
following:
(i)
In the case of real property, entities who have experience
in the sale or valuation of the type of real property in question: county
auditors, real estate brokers, real estate agents, real estate appraisers,
United States department of agriculture (USDA) rural development service center
offices, USDA farm service agency service center offices, banks, savings and
loan associations, mortgage companies and similar lending institutions, and the
county extension service offices.
(ii)
In the case of
personal property, any professional, business owner or operator, or expert who
has experience in the sale, trade, restoration, or valuation of the type of
personal property in question.
(b) Provide a written explanation regarding
its opinion of the fair market value;
and
(c) Affirmatively indicate the
decreased fair market value was not caused in
whole or part by the terms of the note or agreement and the decrease in
fair market value was entirely outside the
control of the institutionalized individual or the institutionalized
individual's representative(s).; or
(2) Documentation clearly showing the
institutionalized individual received payments under the terms of the note or
agreement prior to the sale, and such payments equal or exceed the difference
between the sale price and the fair market value
of assets originally given in exchange for the note or agreement; or
(3) Documentation clearly showing that the
lower price of the note or agreement was accepted by the institutionalized
individual as payment of a debt owed by the institutionalized individual to the
purchaser.
Notes
Promulgated Under: 111.15
Statutory Authority: 5160.02, 5163.02
Rule Amplifies: 5160.02, 5163.02
Prior Effective Dates: 09/03/1977, 02/01/1979, 10/01/1979, 01/03/1980, 12/01/1984 (Emer.), 02/10/1985, 05/03/1985 (Emer.), 08/01/1985, 09/01/1985 (Emer.), 11/25/1985, 08/01/1986 (Emer.), 10/03/1986, 11/01/1986 (Emer.), 12/22/1986, 10/01/1991, 07/01/1994, 09/01/1994, 05/01/1997, 11/07/2002, 10/01/2006, 10/02/2014, 01/01/2016, 09/12/2016, 09/01/2017
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
(A) This rule describes how to treat transfers involving promissory notes, property agreements, and loans held by an institutionalized individuals, or his or her spouse, when the institutionalized individual is requesting medicaid payment for long-term care (LTC) services .
(B) Assets used to purchase or obtain a promissory note, property agreement, or loan are considered to be improperly transferred unless the the purchase of the note, agreement or loan was for fair market value and the terms of the promissory note, property agreement, or loan:
(1) Have a repayment term that is actuarially sound as determined in accordance with actuarial publications of the office of the chief actuary in 26 C.F.R. 20.2031-7 (as in effect on October 1, 2016);
(2) Provide for payments to be made in equal amounts during the term of the promissory note, property agreement, or loan, with no deferral and no balloon payments made; and
(3) Prohibit cancellation of the balance upon the lender's death; and
(4) Allow for the transfer or sale of the note, agreement, or loan.
(C) If the promissory note, property agreement, or loan does not satisfy the requirements in paragraph (B) of this rule, the value of such note, agreement, or loan shall be its outstanding balance as of the date the institutionalized individual request medicaid payment for LTC services and must be considered improperly transferred in accordance with rule 5160:1-6-06 of the Administrative Code.
(1) Any resulting restricted medicaid coverage period (RMCP) shall not be reduced based upon anticipated, estimated, or projected future payments made under the note, agreement, or loan.
(2) For any resulting RMCP to be reduced because of a repayment, the promissory note, property agreement, or loan must be repaid in full.
(D) If an institutionalized individual transfers or sells a promissory note, property agreement, or loan for an amount less than the outstanding balance of such note, agreement, or loan, the difference will be considered improperly transferred as of the note, agreement, or loan's sale date.
(E) The institutionalized individual may rebut the finding that the purchase or transfer of a promissory note, property agreement or loan is improper by providing at least one of the following:
(1) Credible evidence from a knowledgeable source establishing that the market value was less than its outstanding principal balance. The knowledgeable source must:
(a) Be clearly identified; and
(b) Provide a written explanation regarding its opinion of the market value; and
(c) Affirmatively indicate the decreased market value was not caused in whole or part by the terms of the note or agreement and the decrease in value was entirely outside the control of the institutionalized individual or the institutionalized individual 's representative(s); or
(2) Documentation clearly showing the institutionalized individual received payments under the terms of the note or agreement prior to the sale, and such payments equal or exceed the difference between the sale price and the value of assets originally given in exchange for the note or agreement; or
(3) Documentation clearly showing that the lower price of the note or agreement was accepted by the institutionalized individual as payment of a debt owed by the institutionalized individual to the purchaser.
Replaces: 5160:1-3- 05.5
Notes
Promulgated Under: 111.15
Statutory Authority: 5163.02, 5160.02
Rule Amplifies: 5160.02, 5163.02
Prior Effective Dates: 9/3/77, 2/1/79, 10/1/79, 1/3/80, 12/1/84 (Emer.), 2/10/85, 5/3/85 (Emer.), 8/1/85, 9/1/85 (Emer.), 11/25/85, 8/1/86 (Emer.), 10/3/86, 11/1/86 (Emer.), 12/22/86, 10/1/91, 7/1/94, 9/1/94, 5/1/97, 11/7/02, 10/1/06, 10/2/14, 1/1/16, 9/12/16