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Transfers and the DRA

Jan 14, 2016

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Transfers and the DRA. Judie Hughes DHS Health Care Training. MFWCAA – October 2007. Terminology Changes. Uncompensated transfers Transfers resulting in a transfer penalty Transfer penalty Transfer penalty period. Deficit Reduction Act (DRA) of 2005. Signed into law on February 8, 2006. - PowerPoint PPT Presentation

  • Transfers and the DRAJudie HughesDHS Health Care Training

    MFWCAA October 2007

  • Terminology ChangesUncompensated transfers

    Transfers resulting in a transfer penalty

    Transfer penalty

    Transfer penalty period

  • Deficit Reduction Act (DRA) of 2005Signed into law on February 8, 2006.

    Expected to reduce federal entitlement spending by $39 billion between 2006-2010 and $99 billion between 2006-2015.

  • DRA ChangesDocumenting U.S. Citizenship and identity.

    Updating uncompensated transfer policy.

    Implementing the home equity limit.

    Implementing the Continuing Care Retirement Community (CCRC) policies.

    Implementing new rules relating to the disclosure and treatment of annuities

  • DRA Changes to Transfer PolicyExpansion of lookback periodEliminates the $200 uncompensated transfer exemptionConvincing evidence to show the purpose of the transfer was not exclusively to obtain or maintain MA for the client Purchases as transfersPenalty period begin dateOverlapping transfers

  • Lookback Period ExpansionExpanded to 60 months for transfers made on or after February 8, 2006.

    Phased in over 24 months.

    Phase-in begins February 2009.

  • Elimination of $200 ExemptionThe $200 uncompensated transfer exemption is not available if:

    Person requests MA payment of LTC services on or after September 12, 2006

    The transfer was made on or after February 8, 2006.

  • Elimination of $200 Exemption - ExampleGorette applies for MA LTC on September 24, 2006. She reports two uncompensated transfers: $150 in January 2006$175 in March 2006

    Are either of the transfers exempt? Yes - January

  • Convincing Evidence

    Evaluate on a case-by-case basis.

    Need supporting documentation.

    HCPM 19.40.05.05

  • Types of Convincing EvidenceAssets would be below limit if transferred asset retained

    Transfer was beyond client control

    LTC not anticipated at time of transfer

  • More Types of Convincing EvidenceUnexpected loss of assets/income

    Well established history of regular contributions to a religious organization in which client belongs

    Proof of intending to receive fair market value

  • Convincing Evidence Example 1Walter resides in an LTCF and has been receiving MA payment for LTC services since February 2006. In August 2007, Walter has countable assets of $2400. He gives his grandson $25 for a birthday gift the same month.

    Does Walter have convincing evidence? Yes

  • Convincing Evidence Example 2Marjorie resides in a LTCF. At the time of her August 2007 annual renewal, her assets totaled $3200. She gives her daughter $200 to reduce her assets to within the limit.

    Does Marjorie have convincing evidence? No

  • Convincing Evidence Example 3Ge, age 44, applies for MA LTC in August 2007. He transferred $20,000 to his daughter in May 2007 to help her pay for her wedding. A doctor statement indicating Ge was in good health at the time of the transfer was made.

    Does Ge have convincing evidence? Yes

  • Purposes That Are Always a TransferPreserve the estate for heirs

    Avoid probate

    Reduce taxes

  • Purchases as TransfersPurchase on or after July 1, 2006 (within the lookback period or while MA LTC is pending or active):Promissory noteContract for deedLoanMortgageLife Estate Interest in another persons home

  • Purchases as Transfers Not UncompensatedIf all of the following are met:

    Equal payments throughout term of purchased agreementNo deferral of paymentsNo balloon paymentsProhibits the cancellation of the balance upon the death of the lenderIs actuarially sound

  • Purchases as Transfers Actuarial SoundnessPromissory Notes, Loans, and Mortgages

    Compare the term of the purchased agreement to the life expectancy of the purchaser. The difference is the uncompensated amount.

  • Purchases as Transfers Life Estate Uncompensated AmountThe entire purchase price is an uncompensated transfer.

    Exception:The purchaser lives in the home for 12 consecutive months or more following the purchase of the life estate interest. Consider the amount of the purchase price which is greater than the life estate interest to be the uncompensated value.

  • Penalty Period Begin Date - ApplicantsApply penalty period for first month in which the client is requesting and is otherwise eligible for MA LTC, but for the transfer penalty if:

    Transfer made on or after February 8, 2006

    Request for MA LTC on or after July 1, 2006

  • Penalty Period Begin Date Example 1Juan resides in an LTCF and requests MA LTC on July 15, 2007. He reported a transfer of $10,000 made on March 15, 2007. The penalty period is 2.25 months.

    When does the transfer penalty begin? July 2007

  • Penalty Period Begin Date Example 2Rita entered an LTCF in October 2006. She applies for MA LTC on December 15, 2006, requesting retro back to September. Rita reported a transfer of $10,000 made on February 10, 2006. The penalty period is 2.25 months.

    When does the transfer penalty begin? October 2006

  • Penalty Period Begin Date Example 3Tony applies for MA LTC on August 1, 2006. He is requesting retroactive coverage back to June 1, the month he entered an LTCF. He made a transfer in March 2006 resulting in a transfer penalty of 3 months. When does the transfer penalty begin? June 2006

  • Penalty Period Begin Date MA LTC EnrolleesApply penalty period for first month for which 10-day notice can be given if:

    Transfer made on or after February 8, 2006

    Was reported or discovered on or after July 1, 2006

  • Penalty Period Begin Date MA LTC EnrolleesMust apply transfer penalty no later than 3 full calendar months from the date the transfer was reported/discovered.

    If impose after 3 months, send 10-day notice and impose any remaining months of the transfer penalty period.

  • Penalty Period Begin Date Enrollee Example 1Burke is receiving MA payment of LTC services. On October 5, 2007, he reports he refused an inheritance on June 15, 2007. The transfer penalty is 15.80 months.

    When does the transfer penalty begin? November 1 with notice

  • Penalty Period Begin Date Enrollee Example 2Matsui receives MA LTC. All information needed to calculate the penalty was received on November 17, 2007, but it was not acted on until March 10, 2008. The penalty period is 5.80 monthsWhen does the transfer penalty begin? March 2008, but first month can apply ineligibilitywith ten day notice is April 2008. March is month one of the transfer penalty period.

  • Overlapping TransfersTransfer penalties cannot be interrupted or suspended. A penalty period runs consecutively even if the client is no longer MA eligible, or eligible for MA payment of LTC services.

  • Overlapping TransfersAll Transfers made before February 8, 2006: Add the uncompensated value of each overlapping transfer penalty and calculate a new transfer penalty.

    All Transfers made on or after February 8, 2006: Total the uncompensated value and calculate transfer penalty.

  • Overlapping TransfersAdd the transfer penalties together when a transfer made on or after February 8, 2006, overlaps with a transfer made before February 8, 2006. Calculate a new transfer penalty.

  • Overlapping Transfers Example 1Joy requests MA LTC in August 2006. She reports 2 uncompensated transfers with the following transfer penalties:January 2005 $60001.35 months (Feb-Mar)February 2005 $12,0002.70 months (Mar-May)What do we do with the overlapping transfer penalty periods? Add uncompensated value and determine new transfer penalty period (Feb-June)

  • Overlapping Transfers Example 2Melanie requests MA LTC in August 2006. She reports 2 uncompensated transfers with the following transfer penalties:March 2006 $10,0002.25 monthsApril 2006 $1,000partial penaltyWhat is the next step? Add uncompensated values together and calculate tranfer penalty period. (Aug-Oct.)

  • Overlapping Transfers Example 3Pierre requests MA LTC in July 2006. He reports 2 uncompensated transfers with the following transfer penalties:January 2006 $25,0005.63 monthsMarch 2006 $10,0002.25 monthsWhat is the next step? Add the transfer penalties together and calculate new tranfer penalty period. (Feb-Sept)

  • DRA Changes to Transfer PolicyExpansion of lookback periodEliminates the $200 uncompensated transfer exemptionConvincing evidence to show the purpose of the transfer was not exclusively to obtain or maintain MA for the client Purchases as transfersPenalty period begin dateOverlapping transfers

  • Clarified Transfer PolicyUse of SAPSNF

    Returned Assets

  • Statewide Average Payment for a Skilled Nursing Facility (SAPSNF)The average amount paid for a person in an LTCF on a monthly basis.

    Use SAPSNF in effect on the date of the most recent request for initial or continued MA payment of LTC servicesMust be otherwise eligible for MA payment of LTC services, except for having a transfer penalty

  • SAPSNF Example 1Molly requests MA LTC in August 2007. She entered a LTCF on June 1, 2007 and is requesting retro coverage. Molly reports an uncompensated transfer.

    What months SAPSNF figure do we use? June 2007

  • SAPSNF Example 2Becky requests MA LTC in August 2007. She is private pay for August and is requesting coverage for September. Becky reports an uncompensated transfer.

    What months SAPSNF figure do we use? September 2007

  • SAPSNF Example 3Essie is an MA enrollee. She requests MA LTC in August 2007 with a DHS-3543. She entered a