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Chapter: 1600 Assets Program: MSSI, SFP 49

1. no individual or entity except the spouse, the individual’s disabled child, or the disabled individual under age 65 can benefit from the assets or income transferred in any way either at the time of the transfer or at any time in the future; and

2. the spending of the funds involved for the benefit of the individual is actuarially sound based on the life expectancy of the individual involved; that is, the individual must be able to receive fair compensation or return of the benefit of the transferred asset during his lifetime. (Follow instructions in 1640.0609.02 and use life expectancy tables in Appendix A-14 to determine if the person will receive fair compensation in his lifetime.)

If the transfer instrument or document does not meet these requirements, it cannot be considered a transfer for the sole benefit of the spouse, the blind or disabled child, or disabled individual and any potential exemption from penalty or consideration for eligibility purposes is void. In this case, you need to compute the uncompensated value of the transferred funds, notify the individual and give him the opportunity to rebut the presumption that the transfer was done to become Medicaid eligible.

Note: There are two issues to consider. An individual who transfers assets to someone else for the sole benefit may not incur a transfer penalty if the transfer meets the above two criteria. For the individual who receives the transferred asset, the asset may or may not count. Assets transferred to a third party in the form of a trust for the sole benefit of the spouse must be evaluated under trust policies. To qualify as being for the sole benefit of the spouse, the assets must be able to be paid to or for the benefit of the spouse over the spouse’s lifetime. Assets transferred to a trust for the sole benefit of the spouse count as an available asset to the spouse and must be included in the couple’s countable assets. 1640.0609.08 Promissory Notes Signed On or After 11/1/07 (MSSI, SFP) Promissory notes, loans and mortgages signed on or after November 1, 2007 will be considered transfers of assets without fair market compensation to become Medicaid eligible unless the promissory notes, loans, or mortgages meet all of the following criteria:

1. the repayment term is actuarially sound in accordance with the Life Expectancy Tables used by the Social Security Administration (Refer to Appendix A-14). 2. payments must be made in equal amounts during the term of the loan with no deferral and no balloon payments being possible; and 3. debt forgiveness is not allowed.

If the above criteria are not met, for purposes of transfer of assets, the value of the promissory notes, loans or mortgages will be the outstanding balance due as of the date of application for long-term care services. 1640.0610 Interspousal Transfers after Approval (MSSI) This policy only applies to nursing home cases (ICP, institutional MEDS-AD, or institutionalized Hospice). It does not apply to Home or Community Based Services (HCBS), Program for All- Inclusive Care for the Elderly (PACE), or Community Hospice.

In determining initial eligibility of an institutionalized individual with a community spouse, the eligibility specialist must consider all countable assets of the institutionalized person and their legal spouse (refer to 1640.0205; 1640.0314.01). A portion of the couple's total countable assets is attributed to the community spouse and not counted when determining the institutionalized spouse's eligibility for Medicaid nursing home services. This portion is known as the community spouse's asset allowance, which are the assets the community spouse may keep to help meet their needs in the community. After the community spouse's asset allowance is subtracted from the couple's total assets, any remaining assets are considered countable assets to the