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- WAG 07-02-20: Transfers of Resources and Income (NH, SLF, and DoA HCBS Waiver)

To figure the penalty period use Transfer of Resources Worksheet (HFS 3489):

- Add up the total uncompensated amount of all nonallowable transfers.
- Calculate the number of months in the penalty period. Do this by dividing the total uncompensated amount of all nonallowable transfers by the average monthly private pay rate,
**rounding up**to hundredths (2 decimal places) if necessary. - If the result in Step 2 is not a whole number of months, multiply the fraction by 30 to calculate the number of days in the partial month.
- When the penalty period ends with a partial day, determine the portion of the daily private rate the customer is responsible for on the last, partial day of the penalty period.
- Determine if there was a prior penalty period that has not expired.
- Determine the beginning and ending dates of the penalty period. The beginning date is the
**latest**of:- the day the person becomes otherwise eligible for LTC services, including meeting any spenddown and following any days fully covered by Medicare;
- the date of the transfer; or
- if a prior penalty period has not expired, the day following the day the prior penalty period ends.

For an active AABD DoA Community Care case, the beginning date of the penalty period is the first day of the first month the case can be affected.

**NOTE:** If the net value of all transfers is $5,000 or less, the FCRC calculates the penalty period. If the net value of all transfers is more than $5,000, the HFS Long Term Care - Asset Discovery Investigation (LTC-ADI) directive will report the amount transferred and the FCRC will calculate the penalty period (see **PM 07-02-20-a**).

**Example 1:** Mrs. C enters a group care facility on 08/01/12 and applies for assistance. She reports transfers of $6,000 in 08/07, $500 in 12/07, $3,000 in 04/09, and $800 in 09/10. All these transfers are determined to be non-allowable by LTC-ADI. The private pay rate for the group care facility is $120 per day, or $3,600 per month.

The penalty period is calculated as follows:

- Add the amounts transferred: $6,000 + $500 + $3,000 + $800 = $10,300.
- Divide the total by the private pay rate: $10,300 ÷ $3,600 = 2.861111. Round up to 2.87. The penalty period consists of
**2 full months**and .87 of a third month. - Determine the length of the partial month by multiplying .87 by 30 days: .87 x 30 = 26.1. The penalty period includes the first
**26 days**of the third month, and**1/10th of the 27th day**. - The daily rate is $120; Mrs. C will owe 1/10th of $120, or $12, for the 27th day. If she remains eligible, the Department will pay the difference between $12 and the Department daily rate for that day, and begin paying the full Department rate on the 28th day.
- Since there is no prior penalty period, the penalty period begins on the date Mrs. C becomes eligible for LTC services, which is 08/01/12. The penalty period runs from 08/01/12 through 10/27/12.

**Example 2:** Ms. A enters an LTC facility as a private pay resident in 01/12, with $100,000 in savings. The private pay rate averages $6,000 per month. From 01/12 through 08/12, she pays the nursing home bill out of her savings. During that same period, she gives $5,500 of her savings every month to her nephew. She receives no services or other compensation for these gifts.

As of 08/12, she has given a total of $44,000 to her nephew, and paid $48,000 to the facility. In 09/12, with $8,000 remaining in her savings account, she applies for medical assistance and gives her nephew another $5,500. Her resources now total $2,500.

The transfers to Ms. A's nephew are determined to be non-allowable. The penalty period is calculated as follows:

- Determine the total amount transferred: $5,500 x 9 = $49,500.
- Divide the total by the private pay rate: $49,500 ÷ $6,000 = 8.25. The penalty period consists of
**8 full months**and .25 of a 9th month. - Determine the length of the partial month by multiplying .25 by 30 days: .25 x 30 = 7.5. The penalty period includes the first
**7 days**of the 9th month, and**1/2****of the 8th day**. - The daily rate is $200; Ms. A will owe 1/2 of $200, or $100, for the 8th day. If she remains eligible, the Department will pay the difference, if any, between $100 and the Department daily rate for that day, and begin paying the full Department rate on the 9th day.
- Since there is no prior penalty period, the penalty period begins on the date Ms. A becomes eligible for LTC services, which is 09/01/12. The penalty period runs from 09/01/12 through 05/08/13.

**Example 3:** Mr. E enters a nursing home on 4/12/12 and applies for medical assistance. His first full group care month is 05/12. He transferred $2,400 to his daughter on 04/08/12; the transfer is determined non-allowable. The private pay rate in his facility is $200 per day, or $6,000 per month.

Calculate the penalty period as follows:

Since the total amount transferred is less than one month's charges at the private pay rate, divide the amount of the transfer by the daily private pay rate. $2,400 ÷ $200 = 12. Mr. E could have paid for 12 days of care with the $2,400 he transferred; he has a penalty period of 12 days. The penalty period begins on 05/01/12 and ends on 05/12/12.

For persons subject to a penalty period, enter code 398 BRLTC in Item 80 with the beginning date (MM/YY) of the penalty period in the PERSONS field. Enter Item 80 code 399 ERLTC with the final date (MM/YY) of the penalty period in the PERSONS field.

Notify the person of a penalty period.

- Send Form 458LTC for NH and SLF applicants.
- Send Form 458 for regular medical clients applying for or receiving DoA HCBS waiver services.
- Send Form 458SP for spenddown clients applying for or receiving DoA HCBS waiver services.
- Send Form 157 for active cases.

The notification form must contain a statement of the person's right to request a hardship waiver; see **PM 01-08-00**.

If a penalty period is determined for a person applying for or receiving DoA HCBS waiver services, do not enter code 20 in Item 20 to identify the person as applying for or receiving DoA HCBS waiver services. Enter code 16 in Item 20 to approve the person for payment of other medical services but not LTC.

Each appropriate Family Community Resource Center receives a report, entitled "Expiration of Long Term Care/In-home Care Services Through DoA Penalty Period." It lists cases with a penalty period for NH, SLF, and DoA HCBS waiver services. It is sent the month prior to the final month of the penalty period. This is the month prior to the date (MM/YY) entered for Item 80 code 399 ERLTC. Review the report and authorize payment for NH or SLF services, as appropriate, once the penalty period is over.