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Example 5 Tally purchases a sailboat for $12,000. He verifies the value of the sailboat to be $12,500. Because this purchase was converting a cash asset into another asset (the sailboat), purchasing and keeping the sailboat isn’t a divestment. Tally’s assets now count the $12,500 sailboat instead of the $12,000 in cash used to purchase the boat.

Example 6 Sterling transferred ownership of his RV to his parents. In payment, his parents signed over to Sterling the deed to their cottage. The FMV of the RV was the same as the FMV of the cottage. This transfer is not a divestment because Sterling received FMV for his transfer, and the cottage will be evaluated as a countable asset. 17.2.3.2 Transfers of Exempt Income or Assets Income or assets determined to be exempt (except homestead property per 17.2.7.1 TRANSFER FOR LESS THAN FAIR MARKET VALUE) are not subject to divestment rules. Example 7 Hattie is eligible for Medicaid and receiving long-term care services. She owns one car. Hattie transfers ownership of the car to her sister. Hattie buys another car, and now once again owns one car. She gives this car to her father. Because one car is an exempt asset, these transfers are not subject to divestment rules. Assets can be permanently or temporarily exempt (see SECTION 16.7 LIQUID ASSETS). The transfer of temporarily exempt assets is not subject to divestment rules during the time they are exempt. This includes, but is not limited to, giving away funds from: • Retroactive Social Security payments during the nine months after the payment was received. • Patient liability or cost share refunds during the nine months after the refund was received. Example 8 On February 15, Sri received a cost share refund of $5,000. This refund is exempt in February and remains exempt for nine months (March through November). Sri gives away the entire $5,000 to her mother and reports that gift to the IM agency.

If Sri gave the $5,000 to her mother between February 15 and November 30, the gift is not a divestment because it was exempt during that time.

If Sri gave the $5,000 to her mother December 1 or later, the gift is a divestment and must be evaluated. 17.2.3.3 Prenuptial Agreements The act of signing a prenuptial agreement is not a divestment. 17.2.3.4 Payments to a Relative While the Institutionalized Person Received Room and Board An institutionalized person paying a relative for room and board is not a divestment if the payments do not exceed fair market value, the institutionalized person is actually receiving room and board, and the institutionalized person provides a written lease that existed during the time they received room and board from the relative. 17.2.3.5 Ownership Returned Before Application Returning the ownership or full value of a divested asset during the look back period is not divestment. This is because both the transfer and the return occurred before the request for Long Term Care services.