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17.3.2 Calculating the Penalty Period The divestment penalty period is calculated in days by dividing the divested amount by the average daily nursing home private pay rate in effect at the time of the application (see SECTION 39.4.6 INSTITUTIONAL COST OF CARE VALUES). This rate is updated annually on January 1. Example 3 Jeff moved to a nursing home and applied for Medicaid on February 1, 2026. One month earlier, Jeff transferred $18,500 in cash to his son, and it is determined to be a divestment that is not allowed resulting in a penalty period. At the time of application, Jeff is otherwise eligible for LTC Medicaid. Since $18,500 divided by the average daily nursing home private pay rate at the time Jeff applied ($352.06) equals 52.54 days, Jeff will have a divestment penalty period of 52 days. For divestments that occur after long term care eligibility is established or subsequent divestments that occur when a person is already in a divestment penalty period, the additional penalty period is calculated using the average daily nursing home private pay rate in effect at the time the divestment penalty period is being determined (see SECTION 17.3.6 DIVESTMENTS DURING A PENALTY PERIOD). 17.3.2.1 Multiple Divestments During the Look Back Period Multiple divestments that occur during the look back period must be calculated by adding the individual divestment amounts together to get the total divestment amount. The total is used to calculate the divestment penalty period. To cure multiple divestments that occurred during the look back period, the applicant must receive the full amount of the total divestment that occurred during the look back period. 17.3.2.2 Multiple Divestments Occurring in Different Months Multiple divestments that occur while the member is eligible for Medicaid are considered separate divestments unless they occur in the same month. 17.3.2.3 Multiple Divestments Occurring in the Same Month Multiple divestments that occur in the same month while the member is eligible for Medicaid are added together to calculate the total amount. 17.3.3 Penalty Period Begin Date for Applicants The penalty period for an applicant begins on the date that meets all of the following: • The person applies for institutional Medicaid or requests one of the Community Waivers programs (Family Care, Family Care Partnership, PACE, or IRIS). • The person enters an institution or meets the appropriate LOC and functional screen criteria. • The person meets all other Medicaid nonfinancial and financial eligibility requirements. An enrollment date is not required for Community Waivers programs applicants to meet the criteria. Note: An applicant who divests excess assets during the application period, including any backdated months, is ineligible due to excess assets until the month that they divested the assets. The divestment penalty period as well as the potential eligibility for card services begins on the date of the divestment.

Example 4: Jeff requested enrollment in Family Care and was determined functionally eligible on March 1. He applied for Waiver Medicaid on March 5. One month earlier, Jeff had transferred $18,500 in cash to his