415.23 Determining and Applying the Penalty Period (AAM)

415.23 Determining and Applying the Penalty Period (AAM)

SR 08-17 Dated 02/06 Previous Policy

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Consider the following factors when determining the penalty period(s) for transfers of assets for less than fair market value.

. When a countable transfer of assets takes place during an existing penalty period, a new penalty period does not begin until the existing penalty period expires.

. For assets transferred on or after 2/8/06, the total value of all transfers that occurred during the look-back period is used to calculate the penalty period.

*

. When a spouse of an individual transfers an asset that results in a penalty for the individual, the penalty period is apportioned between the spouses when:

- the spouse either is or becomes eligible for institutional medical assistance;

- a penalty could be assessed against the spouse; and

- some portion of the penalty against the individual remains at the time the above conditions are met.

. When the penalty period for an individual is interrupted due to the death of the individual or due to discharge from institutionalized care, the remaining penalty period applicable to both spouses is served by the remaining spouse, or shared by both spouses in the latter case.

. Any penalty period imposed for a transfer of assets runs continuously from the starting date, regardless whether the individual remains institutionalized.

Apply the penalty period as follows:

. The penalty period is based solely on the value of the assets transferred.

*

. For HCBC or institutionalized medical assistance applicants/recipients who have transferred assets to an irrevocable trust where the principal is not available to them, the penalty period is unlimited and is based on the amount transferred.

. For financial assistance applicants/recipients who have transferred assets, other than into an irrevocable trust, the penalty period is 36 months from the date of transfer.

. For financial assistance applicants/recipients who have transferred assets to an irrevocable trust where the principal is not available to them, the penalty period is 60 months from month of transfer.

. When the amount of uncompensated value is less than the average monthly nursing facility rate or includes full months and a partial month, a partial month penalty applies.

Use the following steps to determine the actual penalty period:

1. Determine the uncompensated value of the transfer. The uncompensated value is the difference between:

- fair market value; and

- the amount of compensation actually received by the individual in exchange for the asset.

Exception : The uncompensated value for annuities transferred for less than FMV is the original purchase price of the annuity.

2. The penalty period is the number of months plus any part of a month determined by:

- dividing the total uncompensated value by the statewide average monthly nursing facility private pay rate;

- dividing the statewide average monthly nursing facility private pay rate (found in Appendix A of the Medical Assistance Manual) by 30.42 to get a daily rate; and

- dividing any leftover uncompensated value by the daily rate to calculate any partial month penalty.

3. If more than one transfer has been made, combine the penalty into one period. (Apply a separate penalty period to each transfer that is made prior to 2/8/06).

4. *The start date of a penalty period for assets transferred for less than FMV on or after 2/8/06 is:

- for applicants, the date the individual would otherwise be eligible for NF/HCBC services but for the penalty period; or

- for recipients:

. the first day of the month after which assets were transferred for less than FMV; or

. the date in which the individual initially became eligible for HCBC/NF services, if later .

Asset transferred prior to 2/8/06:

. The total value of transfers for one month is used to calculate the penalty when a series of transfers have been made within one month.

. The start date of the penalty period is the first day of the month in which assets were transferred, unless that date occurs during an existing penalty period.

. If multiple transfers are made so that penalty periods do not overlap, the individual penalty periods must be calculated and applied sequentially.