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Aged, Blind and Disabled Manual Policy Manual Number: 125.010 Section: Institutional Medicaid Chapter: Transfer of Assets and Penalty Periods

January 5, 2026 Division of TennCare 15

When an enrollee is already receiving CHOICES, the individual is provided an advance notice before CHOICES benefits end.

Example: Ms. Crabtree entered the nursing facility and was enrolled in CHOICES on June 30, 2016. On March 28, 2017, Ms. Crabtree reported that she transferred an asset on March 20, 2017 with an uncompensated value of $7,000. She is eligible for TennCare Medicaid, but for the transfer of asset for less than FMV. The uncompensated value is divided by the average daily cost of nursing facility care to determine the penalty period: $7,000/182.42 = 38.3 days. The penalty period of 38 days cannot begin until after an advance notice of adverse action is provided. If action is taken timely on the case, the earliest possible effective date for denial of LTSS payments is May 1, 2017. The penalty period starts on May 1, 2017.

d. Spousal Transfer Causes Penalty for Institutionalized Individual If a spousal transfer results in a penalty for the institutionalized individual and the spouse becomes institutionalized during the established penalty period, the remaining penalty months must be apportioned between both spouses.

Example: Mrs. Carver enters a nursing home in 10/2007. A 60 month penalty beginning 10/2007 was assessed due to a transfer by Mr. Carver, the community spouse. In 8/2008, Mr. Carver goes into the nursing home and requests TennCare Medicaid beginning 8/2008 (the 11th month of the penalty period). In 8/2008, the remaining penalty period of 49 months is apportioned between both spouses, giving each a penalty period of 24.5 months or 745 days. During this penalty period, no nursing home payment is paid for either spouse.

If one spouse dies or is discharged from nursing care, the total remainder penalty period remaining for both spouses must be served by the spouse receiving nursing services.

e. Return of Transferred Asset If the entire transferred resource is returned, the period of ineligibility does not apply. To meet this exception, the individual must reacquire the same percentage of ownership interest in the resource that existed prior to the original transfer. If partial ownership of the transferred resource is returned, the period of ineligibility is adjusted based on the ownership interest not returned. Reacquiring physical possession of the resource is not sufficient to meet this exception; the individual must also reacquire legal ownership of the resource.

f. Less Than the Entire Resource is Returned If the entire resource is not returned, the period of ineligibility does not end. Re-compute the uncompensated value based on the adjusted uncompensated value. If additional funds are subsequently returned, it will be necessary to re-compute the uncompensated value again.