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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 5

iii. Asset Exchange versus Asset Conversion

1. Exchange The exchange of one asset for another is not a transfer provided the individual received FMV for the exchanged item. The exchange of a countable asset for one which is excluded is not a transfer of assets for less than FMV as long as the individual remains the owner.

Example: An individual exchanges $1000 cash surrender value of life insurance for an irrevocable burial arrangement of the same value. This is not a transfer of assets for less than FMV.

2. Conversion The conversion of one asset for another is not a transfer of assets for less than FMV provided the individual receives FMV in the exchange, e.g. the individual uses $1500 cash to purchase an automobile valued at $1500.

g. Exempt Asset Transfers

Transfers of assets made under the following circumstances are not considered as transfers of assets for less than FMV:

i. The asset was transferred to the individual’s spouse or to another for the sole benefit of the individual’s spouse prior to establishment of Institutional Medicaid eligibility.

ii. The asset was transferred from the institutionalized or HCBS spouse to a community spouse during the 12-month transfer period after approval of TennCare Medicaid and was part of the Community Spouse Resource Maintenance Allowance (CSRMA). See the Resource Assessment policy.

iii. The asset was transferred to, or to a trust for the sole benefit of, the individual’s minor or adult child who is blind or disabled according to 42 USC 1382c.

iv. The asset was transferred to a trust established for the sole benefit of an individual under age 65 who is disabled according to 42 USC 1382c. See the ABD Trust policy. Contact the Policy Unit regarding assets transferred into a pooled trust for individuals age 65 and over.

v. The asset transferred is the individual’s home and title to the home was transferred to:

1. The spouse of the owner; 2. A child of the owner who is under age 21;