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Title 8: Medicaid Page 34 Iowa Department of Health and Human Services Employees’ Manual Chapter D: Resources Transfer of Assets Revised July 10, 2026 Transfers That Cause a Medicaid Penalty • Establishing a promissory note, loan or mortgage needs to be examined to determine if a potential transfer of asset has occurred.  Purchase of a life estate in another person’s home for more than its fair market value, regardless of whether the life estate was: • Purchased before February 8, 2006; or • Purchased on or after February 8, 2006, and the purchaser resided in the home for one year after the date of purchase. Transfers That Do Not Cause a Penalty Legal reference: 441 IAC 75.23(5) In the following situations, the transfer is exempt and does not cause a penalty:  A joint account is divided into separate accounts that reflect separate ownership, as long as the funds are divided equally in proportion of ownership. Funds not equally divided in proportion of ownership may be considered transferred and subject to penalty.

Mr. J and Ms. H have $8,000 in a joint account (A) and $3,000 in another joint account (B) that they cannot separate. Ms. H also has an account of $500 in her name alone. Mr. J enters a nursing home and applies for Medicaid. Ms. H has spent $5,000 from account A and $1,000 from account B on Mr. J’s nursing home care. At that point, she removes Mr. J’s name from the accounts. Since Ms. H spent more than half of the accounts on Mr. J’s care ($6,000 out of $11,000), she has rebutted the presumption of divesting. The account owned by Ms. H does not enter into the rebuttal of divesting.  A transfer is made to the institutionalized person’s child or adult child who is disabled as defined by Social Security Administration. The child is considered disabled if the child is: • Receiving SSI, Social Security disability benefits, or Railroad Retirement benefits as a disabled child, or • Declared disabled by a Department disability determination. See 8-C, When the Department Determines Disability.