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SPOUSAL TRANSFER RESULTS in PENALTY: In certain instances, a penalty period must be applied to both spouses. This occurs when either spouse made an uncompensated asset transfer and: 1. Both spouses are institutionalized or eligible for the Medicaid HCBS waiver; and 2. A portion of the penalty remains at the time the spouse applies for and is determined otherwise eligible for Medicaid.

When 1 and 2 are met, the remainder of the existing penalty period is divided between the two spouses. EXAMPLE: Harold is in a nursing home and applies for Medicaid. Prior to his application, his wife Alice transferred an asset that resulted in a 1080-day asset transfer penalty. After Harold has served 300 days of the penalty period, Alice enters a nursing home. The remaining 780 penalty days are applied equally to each spouse, so each ‘serves’ a portion of the penalty.

When both spouses are serving the penalty and one spouse dies or leaves the nursing home/waiver program, the surviving spouse/spouse remaining in the nursing home/waiver program must serve the remainder of the penalty period.

TRANSFERRED ASSETS ARE RETURNED: A transfer penalty may be modified if the client receives either the transferred asset or the financial equivalent back from the person(s) who received the asset. The effect on the individual’s eligibility depends on his/her application status.

ASSETS/VALUE RETURNED BEFORE DENIAL/CLOSURE: When the transferred asset/value is returned in full prior to denial/closure, the penalty is removed, and Medicaid eligibility is re-evaluated. When transferred assets are partially returned prior to denial/closure, the penalty is modified. The penalty period is recalculated based on the adjusted transfer value and the penalty start date is recalculated based on the new date that the individual may be