905 Transfer Penalty Period

Policy

For transfers that are not exempt under MA903 and the compensation received is less than the equity value of the transferred resource, the difference is the “uncompensated value”. When a transfer results in uncompensated value, a transfer penalty period is calculated. During a transfer penalty period, the customer cannot get long-term care services.

NOTE     There is no limit on the length of a transfer penalty period.

See Example - Length of the Transfer Penalty Period.

1) Transfer Penalty Calculation

The penalty period is calculated by dividing the uncompensated value by the Private Pay Rate (PPR) for the geographic area in which the customer lived as of the month the customer was first approved for ALTCS. Because the PPR varies by year and geographic area, the penalty period assessed for the same amount may vary by customer.

When the division does not result in an even number, the fraction of a month is not dropped. The fraction results in a partial penalty month. However, when calculating the partial penalty month, any fraction of a day is dropped.

The Transfer Penalty Period calculation steps are shown in the following table:

NOTE     When the customer has a partial penalty month, the share of cost for that month prorated based on the number of days in that month the customer is eligible for full ALTCS benefits.

See How to Calculate the Prorated Share of Cost for details.

See Examples – Transfer Penalty Period Calculations

2) Transfer Penalty Period Begin Date

As a general rule, a transfer penalty period begins the month the uncompensated transfer occurs, or the first month the customer is approved for ALTCS, whichever is later.

Exceptions:

• When a transfer was made before the application is approved, the penalty period begins the first month the customer qualifies for full ALTCS services.

• When the customer already has a transfer penalty period that has not ended, the new penalty period does not begin until the current penalty period ends.

NOTE     Different transfer penalty periods are not applied to the same months and do not overlap.

See Examples - Transfer Penalty Period Begin Date.

3) Multiple Transfers Made in Different Months

All uncompensated transfers made during a month are added up to determine if they total more than $1,500. If the total uncompensated value of transfers in a month is not more than $1,500, they are viewed as not made to qualify for ALTCS, and do not result in a penalty period (MA906). When the uncompensated value is more than $1,500 in a month, a penalty period must be determined. 

The following table describes how to determine penalty periods when there are multiple months with total uncompensated transfers of more than $1,500:

4) Division of the Penalty Period Between Spouses

With one exception, when both spouses qualify for ALTCS the penalty period is equally divided between the two spouses as follows:

See Example Dividing the Penalty Period Between Spouses 

Exception:

Transfers by the community spouse after ALTCS approval. After the initial rules period, the transfer of resources owned solely by the community spouse does not affect the customer’s eligibility (see MA707.7).

5) Duration of the Penalty Period

Once the length of a transfer penalty period is established, it does not change unless the full amount of the transferred income or resources are returned to the customer. The penalty period continues to run even when the customer loses ALTCS eligibility during the penalty period. 

See Changes in the Penalty Period Examples.

6) Private Pay Rates

The Private Pay Rates vary according to the county in which the customer resides. Private Pay Rates are updated once per year in October but may be updated more frequently.

See Prior Private Pay Rates for rates from 10/1/1988 to present.

Definitions

Proof

When a countable income or resource has been transferred, documents need to be provided to prove:

• The date of the transfer. For transfers of real property, the date of transfer is the date the transfer document is signed and notarized, not the date the document is recorded;

• The person who owned the item both before and after the transfer;

• The Current Market Value (CMV) of the transferred item or the actual future cash value of income at the time of the transfer; and

• Any and all legal encumbrances such as debts and liens against the transferred item at the time of the transfer.

Legal Authority