Transfers and the DRA

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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.

   Expected to reduce federal
    entitlement spending by $39 billion
    between 2006-2010 and $99 billion
    between 2006-2015.
                DRA Changes
   Documenting 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 Policy
   Expansion of lookback period
   Eliminates the $200 uncompensated
    transfer exemption
   Convincing evidence to show the purpose
    of the transfer was not exclusively to
    obtain or maintain MA for the client
   Purchases as transfers
   Penalty period begin date
   Overlapping transfers
    Lookback Period Expansion

   Expanded 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 Exemption

The $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 -
             Example

Gorette 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 Evidence

   Assets would be below limit if
    transferred asset retained

   Transfer was beyond client control

   LTC not anticipated at time of
    transfer
               More Types
         of Convincing Evidence

   Unexpected 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 1
 Walter 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 2

 Marjorie 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 3
 Ge, 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 Transfer

   Preserve the estate for heirs

   Avoid probate

   Reduce taxes
     Purchases as Transfers

Purchase on or after July 1, 2006
(within the lookback period or while
MA LTC is pending or active):
   Promissory note
   Contract for deed
   Loan
   Mortgage
   Life Estate Interest in another person’s
    home
      Purchases as Transfers –
        Not Uncompensated

If all of the following are met:
   Equal payments throughout term of
    purchased agreement
   No deferral of payments
   No balloon payments
   Prohibits the cancellation of the balance
    upon the death of the lender
   Is actuarially sound
    Purchases as Transfers –
      Actuarial Soundness

 Promissory 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 Amount

 The 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 -
             Applicants

Apply 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 1

Juan 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 2

Rita 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 3

Tony 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 Enrollees

Apply 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 Enrollees

Must 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 1

Burke 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 2

 Matsui 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 months
When 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 Transfers

Transfer 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 Transfers
   All 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 Transfers

   Add 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 1

 Joy requests MA LTC in August 2006.
 She reports 2 uncompensated transfers
 with the following transfer penalties:
    January 2005    $6000
                     1.35 months (Feb-Mar)
  February 2005     $12,000
                     2.70 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 2
 Melanie requests MA LTC in August
 2006. She reports 2 uncompensated
 transfers with the following transfer
 penalties:
    March 2006     $10,000
                    2.25 months
    April 2006     $1,000
                    partial penalty

 What is the next step? Add uncompensated
   values together and calculate tranfer
   penalty period. (Aug-Oct.)
Overlapping Transfers – Example 3

 Pierre requests MA LTC in July 2006. He
 reports 2 uncompensated transfers with
 the following transfer penalties:
    January 2006     $25,000
                      5.63 months
  March 2006         $10,000
                      2.25 months
 What is the next step? Add the transfer
   penalties together and calculate new
   tranfer penalty period. (Feb-Sept)
DRA Changes to Transfer Policy
   Expansion of lookback period
   Eliminates the $200 uncompensated
    transfer exemption
   Convincing evidence to show the purpose
    of the transfer was not exclusively to
    obtain or maintain MA for the client
   Purchases as transfers
   Penalty period begin date
   Overlapping transfers
      Clarified Transfer Policy

   Use 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 services
   Must be otherwise eligible for MA
    payment of LTC services, except for
    having a transfer penalty
     SAPSNF Example 1
Molly 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 month’s SAPSNF figure do
we use? June 2007
     SAPSNF Example 2
Becky requests MA LTC in August
2007. She is private pay for August
and is requesting coverage for
September. Becky reports an
uncompensated transfer.

What month’s SAPSNF figure do
we use? September 2007
     SAPSNF Example 3
Essie is an MA enrollee. She
requests MA LTC in August 2007 with
a DHS-3543. She entered a LTCF the
same month. Essie reports an
uncompensated transfer.

What month’s SAPSNF figure do
we use? August 2007
SAPSNF Example 3 Continues
Essie is an MA enrollee. She requests MA
LTC in August 2007 with a DHS-3543. She
entered a LTCF the same month. Essie
reports an uncompensated transfer.

What month’s SAPSNF figure do we
use if Essie reported the transfer on an
September 2007 renewal received in
August 2007? September 2006
              Returned Assets

   Verify the return of the assets
   The person who received the
    transferred asset can:
       Return the transferred amount to the
        client, or
       Pay the money directly to the facility
        with verification
   Recalculate the transfer penalty
            Questions?


Presenter contact information:
  Judie.Hughes@state.mn.us

				
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