5721 Exempt Transfers - The following transfers are exempt and shall not result in a penalty period:

 

  1. A transfer which was fully executed prior to the look-back period.
     

  2. A transfer of the LTC individual’s home to:
     

    1. The spouse of the LTC individual.
       

    2. A child of the LTC individual who is under the age of 21 or an adult child who meets the blindness or disability criteria of 2662.
       

    3. A sibling of the LTC individual who has an equity interest in the home and who was residing in the home for a period of at least 1 year immediately before the date the individual entered the LTC arrangement.
       

    4. An adult child of the LTC individual other than described in item (b) above who was residing in the home for a period of at least 2 years immediately before the date the individual entered the LTC arrangement and who provided care to the individual which permitted him or her to reside at home rather than in the LTC arrangement. Residence in the home must be verified. The care provided must be documented and related to the LTC individual’s need. Documentation from a third party, preferably a physician or other medical professional, must support the individual’s claim regarding the type of care provided and the duration of such care. The type of care provided is not limited to medical services only, household services are also included if the child provided all, or nearly all, household tasks.
       

  3. A transfer of property, to the LTC individual’s child, regardless of age, who meets the blindness or disability criteria of 2662.
     

  4. A transfer by the LTC individual into a trust for the sole benefit of:
     

    1. The LTC individual’s child who meets the blindness and disability criteria of 2662.
       

    2. An individual under age 65 years who meets the blindness and disability criteria of 2662.
       

  5. A transfer of an exempt asset by the LTC individual or spouse if the resource would have been exempt at the time of transfer. Except the following are considered non-exempt transfers:
     

    1. The home and surrounding property (including the transfer of a life estate interest only).
       

    2. Income-producing real or personal property with a value greater than $6000 or included in a trade or business in which the individual is actually participating in the production of income as outlined in 5334 and 5430 (8). Multiple transfers of such property occurring within the same month shall be regarded as a single transfer for purposes of establishing the $6000 limit as well as the total uncompensated value.
       

    3. A purchase of an annuity, promissory note, contract sale, loan or mortgage is evaluated as a transfer of property according to 5722 regardless of exempt vs non-exempt status.


    4. Any otherwise exempt resource that was transferred by means of a constructive or step transaction transfer as described in 5722(9).
       

  6. A transfer of property that has been approved by the agency prior to transfer. Prior approval is only provided to current applicants or ongoing recipients. Individuals requesting prior approval must submit a request, in writing, with the following information:
     

    1. A description of the specific property transferred. For real property, include the legal description.
       

    2. The equity value in the property.
       

    3. A description of how the proposed transfer will occur (e.g., sale, trade, contract on time); to whom it will be transferred; and the amount and source of compensation the applicant/recipient or spouse is expected to receive.
       

    4. Information regarding any previous or ongoing attempts to sell or receive adequate compensation from the transfer, including any attempts to dispose of the property for fair market value.

      The Operational Management, or designee, will review the request in consultation with KDHE-DHCF Policy and issue a decision. A notification regarding the decision shall be sent to the applicant/recipient      .
       

  7. A transfer of property which was ultimately voided by the Estate Recovery Unit (1725.4).
     

  8. A transfer of property between spouses or a transfer of property to another person for the sole benefit and support of the community spouse.
     

  9. A transfer of property where fair market value was received or is expected to be received within an actuarially sound period. (See 5722.1).
     

  10. A transfer of property that has been returned to the individual or spouse:

    1. Full return of property – If the transferred property, or the fair market equivalent of the property, has been returned to the individual or spouse, no transfer penalty shall be applied.

    2. Partial return of property – If a portion of the transferred property, or the fair market equivalent has been returned to the individual or spouse, the transfer penalty shall be modified but not eliminated. The previously established penalty shall be revoked with eligibility redetermined based on the value of the unreturned property.

Assets returned to the individual must be considered when determining eligibility, including eligibility for the period between the initial transfer penalty period and the date of return.

NOTE: For purposes of this section, a return of assets to the individual or spouse is not restricted to only a direct transfer of the assets back to the individual or spouse. A return would also include instances where expenses or debts of the individual (such as nursing home expenses, home mortgage, medical bills, credit card debt, etc.) have been paid on the individual’s behalf by the recipient of the transferred assets. Any payment made which results in a gain or benefit to the individual shall be considered a return of assets even if the individual had no actual control over the returned assets.

Example 1: Bill transfers $20,000 to his nephew in 01/07. He applies for LTC Medicaid in 11/07 and asks for prior medical. When he learns that Uncle Bill would have a penalty period of 5 months, the nephew returns $12,000 to Uncle Bill, but he keeps $8000. The returned portion of the transferred funds is now used to determine eligibility for all months, including the prior months. The extra $12,000 makes Bill ineligible for assistance. Assistance is then denied. The unreturned portion, $8000, is considered an uncompensated transfer. However, because Bill is not otherwise eligible for Medicaid due to excess resources, no penalty period is established at this time. The penalty period is established if Bill reapplies and is otherwise eligible.

NOTE: The outcome in the above example would have been the same if the nephew had paid $12,000 towards the nursing home bill instead of returning the funds directly to Uncle Bill. The $12,000 would be considered an available resource for all prior months. Since the returned funds have been expended on his care, he may now be otherwise eligible in the month the funds were returned with a new penalty period established based on the $8,000 that was not returned.

Example 2: Marilyn added her granddaughter’s name to her home in 03/07. She applies for LTC medical in 07/07 and asks for prior medical. Granddaughter’s name is removed from the home when the penalty is discovered. No penalty is applicable. Since Marilyn intends to return home, the home is exempt for all prior medical months.

  1. A transfer of future property rights where the present ownership rights of the property are retained. An example is a transfer-on-death deed where ownership of the real estate is not transferred until the owner’s death. See 1725.1(1) for the definition of an expanded estate for estate recovery purposes.