# WAG 07-02-20-d: Penalty Period Due to Non-Allowable Transfers

PM 07-02-20-d

## Calculating the penalty period

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

1. Add up the total uncompensated amount of all nonallowable transfers.
2. Calculate the number of months in the penalty period. Do this by dividing the total uncompensated amount of all non-allowable transfers by the average monthly private pay rate, rounding up to hundredths (2 decimal places) if necessary.
3. 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.
4. 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.
5. Determine if there was a prior penalty period that has not expired.
6. 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 less than the allowable transfer limit (see PM 07-02-20 for the resource transfer limit), the FCRC calculates the penalty period. If the net value of all transfers is more than the allowable transfer limit (see PM 07-02-20 for the resource transfer limit), 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).

## Examples

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:

1. Add the amounts transferred: \$6,000 + \$500 + \$3,000 + \$800 = \$10,300.
2. 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.
3. 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.
4. 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.
5. 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:

1. Determine the total amount transferred: \$5,500 x 9 = \$49,500.
2. 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.
3. 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.
4. 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.
5. 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.

RETURNING RESOURCES

For transfers made before January 1, 2012, if parts of the transferred resources are returned to you, the penalty period will be reduced but not eliminated. For transfers made on or after

January 1, 2012, all resources transferred for less than fair market value must be returned to you. If all resources are returned, the penalty will be eliminated.

If you plan to have resources returned to reduce or eliminate your penalty period, please call the Benefits Hotline at 1-800-226-0768 or write to:

Illinois Department of Healthcare and Family Services

Bureau of Medical Eligibility and Special Programs

attn: Long Term Care

PO Box 19145

Springfield IL 62794-9145

HARDSHIP WAIVER

If the penalty period causes an undue hardship, you may request a waiver to reduce or eliminate the penalty period. An undue hardship means you will be deprived of medical care, food, clothing, shelter and other necessities of life if the state does not pay for your long term care services. You must prove that actual, not just possible, hardship exists.

To request an application for hardship waiver, call the Benefits Hotline at 1-800-226-0768 or write to:

Illinois Department of Healthcare and Family Services

Bureau of Medical Eligibility and Special Programs

attn: Long Term Care

PO Box 19145

Springfield IL 62794-9145

Or you can go online to Manage My Case and click on the Report My Changes button or click on Contact us button to send us an email to report returned resources or request a hardship application.

## Unallowable Transfers Found after the Admission has been Processed

If an unallowable transfer is found after the admit has already been completed, only the remaining portion of the penalty period can be applied.

The penalty period begin date is adjusted to the first day of the month following the month of decision for cases that have been approved for LTC services when:

• The case does not have LTC NH/SLP SPD EDG'S; and
• The end month of the penalty period calculated by IES is after the month of decision.

Disregard penalty months that end prior to the month of decision for cases that have been approved for LTC services. Only penalty months that continue past the month of decision will be imposed. The begin date of any remaining penalty period months is the first day of the month following the month of decision.

After certifying the case, review the penalty period end date on the Level of Care Tab or the Resource Tab on the EDG Summary Screen to determine if the penalty period end date is:

• Prior to the month of decision; or
• After the month of decision.

Note: Disregard any partial day calculations.

### If a partial penalty period can be applied:

• Certify case;
• Suppress the 360c notice in IES and send out a manual 458 informing the customer, facility and POA of penalty period;
• Send an email to BLTC at HFS.LTC@illinois.gov and request the OBRA begin and end dates in MMIS be corrected to reflect the adjusted penalty period, include the person's name and RIN;
• Discharge the resident in the LTC subsystem the day the penalty period begins.

#### If a partial penalty period CANNOT be applied:

• Re-run eligibility.
• Penalty period should not be applied.
• The 360c notice should be generated and sent to all appropriate parties.

Example 1. Admission approved with Penalty Period ending Prior to Month of Decision.

Mrs. V moves to a supportive living program on 12/12/2022 and applies for Medicaid on the same day. The application and admission are approved on 12/20/2022. A VCL and 3654 form was sent to the customer and facility after the application was approved. The 3654 form was returned and met criteria to be sent to OIG as a referral. OIG returned recommendation on 02/2023. A caseworker took action on 03/12/2023 to process recommendation. OIG recommended a penalty period be imposed. The end date of the penalty period calculated by IES is 02/18/2023. The penalty period cannot be imposed since the penalty period ends prior to the month of decision.

The worker needs to return to the resource page and add the "Amount Received" data field equal to the Transfer amount, re-run eligibility and certify the case.

Example 2. Penalty Period Ending after the Month of Decision.

Mrs. J moves to a supportive living program on 10/25/22 and applies for Medicaid on the same day. Ms. J's admission (admission TAN submitted 10/25/22) and application are approved on11/12/22. A VCL and 3654 was sent out to the customer and facility after the application/admission was approved. The 3654 was returned and the customer stated they gave money to their grandchildren. A caseworker takes action on the case on 01/05/2023. The end date of the penalty period calculated by IES is 4/15/23. Only the remaining penalty period that extends after 01/05/2023 can be applied.

Caseworker actions in LTC subsystem:

• Enter a discharge date of 02/01/2023 and discharge code of D9;
• Update the TAN status code to 01;
• Send BLTC a request to add OBRA code from 02/01/2023-04/15/2023.

NOTE: Only the penalty months that continue past the month of decision can be imposed. The begin date of the remaining penalty period month(s) is the 1st day of the month following the month of decision.

Refer to the policy memo Provisional Eligibility for Nursing Home and Supportive Living Program Services for further details on processing cases that were granted provisional eligibility.

## How to Review the Penalty Period in IES

IES will automatically calculate the penalty period based on the amount of resources transferred and the start date of LTC eligibility.

A "P" indicator will display on am EDG where a penalty period has been imposed. Select the applicable EDG to see additional details regarding the penalty period.

Select the individual's name.

The "Notice Reasons" screen will display.

•  Notice Reasons show there is a penalty period.
• Select the "Level of Care" Tab.

Level of Care screen shows the penalty period begins 05/01/2017 and ends 09/08/2017.

### Notices

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 360c 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.