PM 07-02-20-b: Allowable Transfers

WAG 07-02-20-b

Allowable transfers of resources or income do not affect eligibility, but any money received is a nonexempt Deleted Inforesource. Resource/income transfers may be allowable because of the date of the transfer; receipt of fair market value (FMV); who the resource or income was transferred to; or the type of transfer.

Refer long term care cases with reported transfers totaling over the allowable transfer limit (see PM 07-02-20 for the resource transfer limit) during the lookback period to Long Term Care Asset Discovery Investigation (LTC-ADI) Deleted Infousing the HFS 3654A Long Term Care Asset Discovery Investigation (LTC-ADI) Referral Form. FCRCs will review reported transfers less than the allowable transfer limit (see PM 07-02-20 for the resource transfer limit).

Deleted InfoIf the FCRC discovers an unusually large transfer as a result of verifications received after an IL444-0267 has been sent for an application that was not initially referred to LTC-ADI, contact LTC-ADI to discuss possible referral at that time. Review by LTC-ADI in such circumstances will be on a case by case basis.

Date of Transfer

The following transfers are allowable because they were made before the relevant "lookback date":

  • All transfers made before 08/11/93 (provided the date of application, entry into a nursing home (NH) or SLF, or receiving or applying for DoA HCBS waiver services is on or after 08/11/96; if reviewing an application made before that date, see WAG 25-06-14, or contact LTC-ADI.
  • Transfers made on or after 08/11/93 and before 02/08/06, as follows:
    • transfers from a revocable trust made more than 60 months before the date of application, entry into an NH or SLF, or receiving or applying for DoA HCBS waiver services;
    • the creation of an irrevocable trust that does not permit payment to, or for the benefit of, the person if the trust is created more than 60 months before application, entry into an NH or SLF, or receiving or applying for DoA HCBS waiver services;
    • the creation of an irrevocable trust that does not permit payment to, or for the benefit of, the person at some point after the trust is created if the date the payment was stopped is more than 60 months before application, entry into an NH or SLF, or receiving or applying for DoA HCBS waiver services; and
    • all other transfers made more than 36 months before application, entry into an NH or SLF, or receiving or applying for DoA HCBS waiver services.
  • Transfers on or after Deleted Info01/01/07 made more than 60 months before the date of application for medical assistance in a NH or SLF, or receiving or applying for DoA HCBS waiver services.

Fair Market Value

Transfers for fair market value (FMV) are allowable.

Fair market value is the value of the resource/income on the open market at the time of the transfer. It is not the highest value that the resource/income could be worth under ideal circumstances. Instead, it is the average value of the resource/income when all factors are considered.

Neither the FMV nor the value received for the resource/income have to be figured exactly. The two values do not have to be equal for it to be an allowable transfer. Use judgment when deciding whether FMV was received.

Intention to Transfer for FMV

Transfers that the person intended to make for FMV are also allowable.

When a transfer is made for less than FMV, a person is presumed to have done so intentionally. This presumption may be rebutted by objective tangible evidence showing:

  • reasonable, good faith efforts to sell the property on the open market were made and the compensation received was the best value offered;
  • a legally binding contract was executed that provided for adequate compensation in a specified form (e.g., goods, services, cash) in exchange for the transferred resource/income;
  • the person acted in good faith that he or she was receiving FMV or the best price for the item or property;
  • the item or property was transferred to a person other than a related party (e.g., a person related by blood, marriage or friendship);
  • the person had other adequate means or plans for support, including medical care, at the time of the transfer; and
  • the transfer was made for reasons exclusive of qualifying or remaining eligible for medical assistance.

Services

Services received can represent value when deciding whether FMV was received if the person provides written proof that payment for services was agreed to when the services were provided. 

A contract for personal care is treated as a transfer for less than FMV unless a written agreement, executed prior to the receipt of services, clearly identifies services and requested reimbursement consistent with the prevailing cost in the service area. Uncompensated transfers to loved ones are not considered transfers for FMV.

Annuities

The purchase of an annuity Deleted Info(or changes made to an annuity) by or on behalf of a person receiving LTC medical assistance or the spouse of that person is a transfer of resources. It is considered a transfer for less than FMV and not allowable unless the annuity names the State of Illinois as the remainder beneficiary in the second position (after the community spouse, minor child, or child with a disability) or in the first position (for up to the total amount of medical assistance paid on behalf of the person receiving long term care services OR if the spouse or a representative of the child disposes of any remainder for less than FMV), and:

  • the annuity is considered a retirement annuity; or
  • is deemed an IRA under a qualified employer plan; or
  • the annuity is directly purchased with proceeds from one of the following: 
    • a traditional IRA;
    • certain accounts or trusts treated as traditional IRAs;
    • a simplified employee pension described in section 408(k) of the Internal Revenue Code; or
    • a Roth IRA described in section 408A of the Internal Revenue Code; or
  • the annuity meets all the following requirements:
    • was purchased from a commercial financial institution or insurance company authorized under federal or state law to issue annuities; and
    • is actuarially sound and based on the estimated life expectancy of the person (see WAG 25-03-12, the actuarial tables published by the Office of the Chief Actuary of the Social Security Administration) Deleted Infoor the annuity pays out over a period less than the person's estimated life expectancy; and 
    • is irrevocable and nonassignable; and
    • pays benefits in approximately equal periodic payments no less than quarterly, with no deferred or balloon payments.
    • Refer LTC cases with annuities to HFS LTC-ADI.  For community cases, refer to the Bureau of Collections.

Promissory notes

The purchase of a promissory note (making a loan in exchange for a written promise to repay) is a transfer for less than FMV unless the following conditions are met:

  • a written instrument recording the transaction is executed, signed and dated on the effective date of the transaction;
  • the instrument provides for a repayment term that is actuarially sound (see WAG 25-03-12); instruments that provide for a repayment term that is less than the person's life expectancy shall be treated as actuarially sound;
  • the instrument provides for payments in equal installments (no less than monthly) during the term of the loan with no deferral and no balloon payments;
  • the instrument prohibits the cancellation of the balance upon the death of a lender;
  • a tangible, verifiable record of consistent, timely payments in the amounts agreed demonstrates a good faith attempt to repay the loan. Unpaid installments delinquent three months or more will result in the Department treating the amount remaining unpaid as a non-allowable transfer; and
  • the instrument provides for assignment to the State of Illinois, as of the date of death, in the second position (after the community spouse, minor child or child with a disability) or in the first position (for up to the total amount of medical assistance paid on behalf of the person receiving long term care services OR if the spouse or a representative of the child disposes of any remainder for less than FMV).

The value of a promissory note, loan, or mortgage that does not satisfy these conditions is the outstanding balance due as of the later of the date of application for medical assistance or the date of the transfer.

Refer long term care cases with promissory notes to HFS LTC-ADI. For community cases, refer to the Bureau of Collections.

Recipients of Transfers

The following transfers to specified persons are allowable:

  • Transfers to a community spouse or to another person for the sole benefit of the community spouse. 

    The LTC spouse and the community spouse may transfer resources and income to each other in any amount without penalty. However, all resources in excess of the Community Spouse Resource Allowance (CSRA), held in the name of either spouse alone or jointly by both, are considered available to the LTC spouse to pay for his or her care. Deleted Info[Completion of the CSRA transfer must be verified at the first redetermination. This verification involves only the resources reported at intake unless there is evidence that one or both spouses failed to accurately report resources at intake. The resources acquired, transferred, etc. by the community spouse after initial determination are not subject to review.]

    In addition to the amount permitted as the CSRA (see PM 07-02-22), the LTC spouse may transfer personal effects, household goods, and one motor vehicle for the sole benefit of the community spouse, regardless of the dollar value. The transfer does not affect eligibility, and the value of the transferred items is not considered available to the LTC spouse. 

  • Transfers from the community spouse to another person for the sole benefit of the community spouse.
  • A transfer of homestead property to:
    • the person's spouse; or
    • the person's child under age 21; or
    • the person's child of any age who is blind or has a disability as determined by the Social Security Administration or the Department's Determination Review Unit; or
    • the person's brother or sister who has an equity interest in the homestead property and who was living in the home for at least one year immediately before the date the person entered the LTC facility or applied for/received DoA HCBS waiver services; or
    • the person's child who provided care (either nursing or support) for the person and who was living in the homestead property for at least two years immediately before the date the person entered the LTC facility or applied for/received DoA HCBS waiver services. Deleted InfoTo be allowed, tangible evidence must be presented to demonstrate:
  1. Deleted Infothe person was in need of care that would have otherwise required an institutional level of care. The evidence may consist of a physician's statement or an evaluation conducted by a medical professional showing the need for such care. A diagnosis of Alzheimer's disease or other dementia-related illness constitutes the need for an institutional level of care; and
  2. Deleted Infothe son or daughter resided with the person for two years immediately before the person began receiving LTC services (NH, SLF or DoA HCBS waiver services). Acceptable evidence may be tax returns, driver's license, cancelled checks or other documentation demonstrating the son's or daughter's residence in the home for the time frame required; and
  3. Deleted Infothe son or daughter provided care to the person that prevented the need for NH, SLF or DoA HCBS waiver services. The evidence may consist of a sworn affidavit or statement signed by the son or daughter.
    • Other transfers of homestead property should be reviewed for their effect on eligibility.
  • Transfers to the person's child of any age (who is blind or has a disability), or to another person for the sole benefit of the person's child (who is blind or has a disability), or to a trust created solely for the benefit of the person's child (who is blind or has a disability) as determined by the Social Security Administration or the Department's Determination Review Unit.
  • Transfers on or after 08/11/93 to a trust created Deleted Infoby a parent, grandparent, legal guardian or court solely for the benefit of a person under age 65 who is disabled as determined by the Social Security Administration or the Department's Determination Review Unit.

Other Allowable Types of Transfers

The following types of transfers are also allowable:

  • purchase of a life estate interest in another person's home, if the purchaser resided in the home for at least twelve consecutive months;
  • charitable gifts and gifts to family members which are consistent with amounts and frequency of such gifts in the past;
  • involuntary transfers due to bankruptcy, theft, elder abuse, death of a spouse, or because the person was mentally unable to handle their affairs; 
  • transfers for less than FMV that are returned to the person in full.  [If a penalty period is established due to a transfer for less than FMV occurring on or after 01/01/12, and the transferred resources are returned to the person in full, consider the transfer allowable, erase the penalty, and treat the resources as available as of the date the penalty was imposed.];
  • transfers for which allowability cannot be determined, because the person is physically or mentally incapable of providing the necessary information to make the determination, and no other adequate source of information is available;
  • transfers made exclusively for a reason other than to qualify for benefits.