433-1        TRANSFER OF RESOURCES

If an individual (or spouse) transfers a resource for less than its fair market value to become or remain eligible for Adult Public Assistance (APA), the  individual or couple may be disqualified for up to 36 months.  This disqualification will only apply to transfers made on or after October 1, 2001.

433-1 A.   DEFINITIONS

1. Fair market value

Fair market value is current market value of a resource at the time the resource is transferred.  The current market value of a resource is the going price for which it can reasonably be expected to sell on the open market in the geographic area involved.

2. Equity value

Equity value means the fair market value of a resource less any amounts owed or other legal encumbrances.
 

3. Transfer

Transfer means any action taken to sell, trade, or give away a resource.

4. Compensation

Compensation is the cash or other valuable consideration provided in exchange for the resource.
 

5. Uncompensated Equity value

Uncompensated equity value is the difference between the equity value of the resource and the amount of compensation received by the individual in exchange for the resource.

433-1 B.   TRANSFERS THAT DO NOT AFFECT ELIGIBILITY

Evaluate each transfer to determine if it causes ineligibility for APA. The following transfers do not affect eligibility, but questionable situations may require verification such as receipts, legal documents, and collateral contacts:

1. Transfers of exempt resources;

2. Compensation received was greater than or equal to the equity value of the resource;

3. Resources that would not have caused ineligibility if they had been retained;

4. Transfers made to satisfy a court order or settle a debt;

5. Transfers made as the result of theft, fraud or coercion against the person who transferred the resource;

6. Transfers to a Special Needs or Pooled Trust (as described in Medicaid manual section 5028);

7. Transfers to a trust established for the sole benefit of the individual’s child of any age who is blind or disabled;

8. Transfers to the individual’s spouse, to another person for the sole benefit of the individual’s spouse, or to the individual’s child of any age who is blind or disabled;

9. Transfer of a non-exempt home (i.e., a home that the individual does not consider to be his or her principal place of residence) that is made to the individual’s spouse, the individual’s child under age of 21, or to the individual’s child of any age who is blind or disabled; and

10. Transfers returned in the same month the resource was transferred.  If the entire resource is returned in a subsequent month, eligibility begins the month after the entire resource is returned.

433-1 C.   DETERMINING INTENT OF TRANSFER

When a transfer does not fall into one of the above categories, it is presumed that the client intentionally transferred the resource to become or remain eligible for APA.  However, the individual must be given an opportunity to rebut this presumption and to provide proof that the transfer was made unintentionally or for a different purpose.

To determine intent, ask the client why the resource was transferred.  If they admit that the transfer was made to qualify for APA, then calculate the disqualification period and take appropriate action on the case.

When intent is questionable, consider the following:  What was the client’s life situation and economic health in the time period surrounding the transfer?  Did they just lose a job, or did they quit?  Have they recently been denied APA for excess resources?  How have they survived up until this point?  Although these questions are commonly asked during interviews, they can be especially helpful in deciding whether a resource was intentionally transferred to become or remain eligible for APA.

Unless there is good reason to believe otherwise, examples of resource transfers that will not result in a disqualification penalty include situations where:

• The individual did not believe the transfer would affect eligibility for APA; or

• The individual was not an APA recipient at the time, and did not expect to apply for assistance when the resource was transferred.

Case workers may wish to investigate further and require additional proof to establish whether or not the transfer was made for the purpose of qualifying for APA.

433-1 D.   UNDUE HARDSHIP

The transfer of resource disqualification period may be waived if it appears the individual will suffer an undue hardship as a result of not getting APA benefits.  If none of the other exceptions apply, the case worker must determine whether benefits are payable based on undue hardship before applying a transfer of resource disqualification period.

1. General Rule

Undue hardship exists if:

• Failure to receive APA benefits would deprive the individual of food or shelter, and
   

• The individual’s total available funds (income and liquid resources) are less than the applicable APA payment standard.

• The individual’s total available funds (income and liquid resources) are less than the applicable APA payment standard.

2. Loss of Shelter

An individual would be deprived of shelter if:

• He or she would be subject to eviction from the current residence if APA benefits were not received; and

• There is no other affordable housing available, or there is no other housing available with necessary modifications for a disabled individual.
   

3. Couple Cases

When determining total available funds for an eligible couple or an individual with an ineligible spouse, use:

• The couple’s applicable APA payment standard; and

• the total available funds (income and liquid resources) of both spouses.  

433-1 E.   DISQUALIFICATION PERIOD

Use the uncompensated equity value of the transferred resource to determine the disqualification period.  The disqualification period may not exceed 36 months.  It begins on the first day of the month following the month of the transfer, and continues without interruption until the end of the disqualification period.

To calculate the disqualification period, divide the uncompensated equity value by the individual’s or couple’s applicable maximum payment standard. The result, rounded to the nearest whole number, is the individual’s or couple’s period of ineligibility.

Uncompensated Equity Value = Disqualification Period

Maximum Payment Standard (rounded to the nearest whole month)

Example 1 - Applicant:

An individual in an independent living arrangement applies for APA in December 2001.  In October 2001, the individual transferred property for $800.  The property’s equity value was $5,000.

$5,000 Equity Value
–   800 Compensation
$4,200 Uncompensated Equity Value

$4,200 Uncompensated Value     = 5 Months
$892 Max. Pymt. Standard* (4.71 Rounded to the nearest whole month)

The disqualification period is five months beginning with the month of November, the month after the month of transfer.  The individual is not eligible until April 1.  Deny the application.

* This example is based on the January 1, 2001 APA maximum payment standard for an individual in an independent living situation.

Example 2 - Recipient:

In October 2001, an APA recipient in an independent living arrangement inherits a farm worth $100,000.  After all taxes are paid, the equity value is $50,000.  In October 2001, the individual transfers the title to his sister for $1,000.  The individual reports the transfer in December 2001.

$50,000 Equity Value
–  1,000 Compensation
$49,000 Uncompensated Equity Value

$49,000 Uncompensated Value = 55 Months
$892 Max Pymt. Standard* (54.93 Rounded to the nearest whole month)

The individual is ineligible for36 months beginning in November 2001, the month after the month of the transfer.  Although the individual’s disqualification period is calculated to be 55 months, the actual penalty cannot exceed 36 months. The individual will not be eligible again until November 1, 2004.   The case must be closed and an overpayment claim established for any ineligible months.

* This example is based on the January 1, 2001 APA maximum payment standard for an individual in an independent living situation.

433-1 F.   COORDINATION WITH SSI Supplemental Security Income

1. Length of Disqualification Period

SSI program may also apply a disqualification period if an individual (or spouse) transfers a resource for less than its value.  However, because of the SSI program’s lower payment standards, the SSI disqualification period may be different than the APA disqualification period.

If the APA disqualification period ends before the SSI disqualification period, the individual (or couple) may qualify for APA benefits after the end of the APA disqualification period.  To qualify for assistance, the individual must meet all other APA eligibly requirements except for receipt of SSI benefits.  When the SSI disqualification period ends, the individual will be required to apply for and pursue SSI benefits.

2. SSI Supplemental Security Income Hardship Provisions

The SSI program may decide not to impose a transfer of resource penalty if it determines the penalty would work an undue hardship on the individual.  An SSI decision not to impose a transfer of resource penalty because of undue hardship is sufficient reason not to impose an APA disqualification period for transfer of resources.

433-1 G.   ONE SPOUSE MOVES AWAY

In some transfer of resource situations, the transferred resource may have belonged to only one spouse.  If the spouse who transferred the resource moves away, the disqualification follows that individual.  The other spouse is not affected by any months remaining in the disqualification period. The remaining spouse may apply and be found eligible for APA.  

433-1 H.   MULTIPLE TRANSFERS

For cases involving multiple transfers where the disqualification periods overlap, combine the uncompensated equity value for each transfer and begin the disqualification period the first day of the month following the month of the first transfer.

Example:

An individual applies for APA in December 2001. The individual made two intentional transfers with an uncompensated equity value of $3,000 each, one in October and the other another in November.

$6,000 Uncompensated Value = 7 Months
$892 Max. Pymt. Standard* (6.73 Rounded to the nearest whole month)

Because the transfers were so close together, the disqualification periods for each transfer overlap.  The disqualification period is therefore calculated using the combined uncompensated equity value from both transfers.  The individual is ineligible for seven months, beginning November 1, 2001 and ending May 31, 2002.

* This example is based on the January 1, 2001 APA maximum payment standard for an individual in an independent living situation.

433-1 I.   EFFECT OF RESOURCE TRANSFERS ON INSTITUTIONAL MEDICAID OR MEDICAID WAIVER SERVICES

The transfer of a resource for less than fair market value may affect an individual’s eligibility for institutional Medicaid or Home and Community-Based (HCB) waiver services (see Medicaid manual section 5630.6).  The case worker must document in the case record any information received regarding the individual’s (or spouse's) transfer of a resource for less than fair market value.  The Social Security Administration will provide information to the Division of Public Assistance regarding any such transfers by SSI clients that are discovered.

This information must be retained in the case record for action in case a client enters a nursing home or applies for HCB Medicaid waiver services.