Current through Register Vol. 56, No. 18, September 16, 2024
(a) The
provisions of this section shall apply, effective June 18, 2001, only to
persons who are receiving an institutional level of services, including
individuals who are receiving services under a 42 U.S.C. § 1915(c) home
and community care waiver under Medicaid, or who are seeking that level of
service, and who have transferred assets on or after August 11, 1993. An
individual shall be ineligible for institutional level services through the
Medicaid program if he or she (or his or her spouse) has disposed of assets at
less than fair market value at any time during or after the 60-month period
immediately before:
1. In the case of an
individual who is already eligible for Medicaid benefits, the date the
individual becomes an institutionalized individual; or
2. In the case of an individual not already
eligible for Medicaid benefits, the date the individual applies for Medicaid as
an institutionalized individual.
(b) The following definitions shall apply to
the transfer of assets:
1. Individual means:
i. The individual him or herself who is
applying for benefits;
ii. The
individual's spouse;
iii. A person,
including a court or administrative body, with legal authority to act in place
of or on behalf of the individual or the individual's spouse;
iv. Any person including a court or
administrative body, acting at the direction or upon the request of the
individual or the individual's spouse.
2. An institutionalized individual, for the
purposes of this chapter, is a person who is receiving care in a Medicaid
certified nursing facility, intermediate care facility for the mentally
retarded (ICFMR), or a licensed special hospital (Class C) or Title XIX
psychiatric hospital (if under the age of 21 or age 65 and over). For purposes
of this chapter, an institutionalized individual shall also include a person
seeking benefits under a home or community care waiver program. An
institutionalized individual shall not include a person who is receiving care
in an acute care general hospital.
3. Assets shall include all income and
resources of the individual and of the individual's spouse. Assets shall also
include income and resources which the individual or the individual's spouse is
entitled to but does not receive because of action or inaction by the
individual or the individual's spouse; or by any person, including a court or
administrative body with the legal authority to act in place of or on behalf of
the individual or the individual's spouse; or any person, including a court or
administrative body, acting at the direction of or upon the request of the
individual or the individual's spouse. Examples of actions that would cause
income or resources not to be received shall include, but shall not be limited
to:
i. Irrevocably waiving pension
income;
ii. Waiving the right to
receive an inheritance, including spousal elective share pursuant to
3B:8-10;
iii. Not accepting or accessing injury
settlements;
iv. Tort settlements
which are diverted by the defendant into a trust or similar device to be held
for the benefit of an individual who is a plaintiff; and
v. Refusal to take legal action to obtain a
court ordered payment that is not being paid, such as child support or
alimony.
4. Resources,
for the purpose of asset transfer, shall include all resources, both included
and excluded, in accordance with the provisions of this chapter. For example,
the transfer of a home, even if it is serving as the individual's principal
place of residence, shall be subject to the transfer of assets
provisions.
5. Income, for the
purposes of this section, shall have the same definition as found in N.J.A.C.
10:71-5. In determining whether a transfer of assets involves countable income,
the income disregards in N.J.A.C. 10:71-5 shall be applied.
6. Fair-market value shall be an estimate of
the value of an asset, based on generally available market information, if sold
at the prevailing price at the time it was actually transferred. Value shall be
based on the criteria for evaluating assets as found in
N.J.A.C.
10:71-4.1(d).
i. In determining whether or not an asset was
transferred for fair-market value, only tangible compensation, with intrinsic
value shall be considered. For example, a transfer for "love and affection"
shall not be considered a transfer for fair market value.
ii. In regard to transfers intended to
compensate a friend or relative for care or services provided in the past, care
and services provided for free at the time they were delivered shall be
presumed to have been intended to be delivered without compensation. Thus, a
transfer of assets to a friend or relative for the alleged purpose of
compensating for care or services provided free in the past shall be presumed
to have been transferred for no compensation. This presumption may be rebutted
by the presentation of credible documentary evidence preexisting the delivery
of the care or services indicating the type and terms of compensation. Further,
the amount of compensation or the fair market value of the transferred asset
shall not be greater than the prevailing rates for similar care or services in
the community. That portion of compensation in excess of the prevailing rate
shall be considered to be uncompensated value.
iii. Under a life estate, an individual who
owns property transfers the ownership of that property to another individual,
while retaining for the rest of his or her life, or the life of another person,
certain rights to that property. A life estate entitles the owner of the life
estate to possess, use and obtain profits from the property, as long as he or
she lives, although actual ownership of the property has passed to another
individual. In a transaction involving a life estate, a transfer of assets is
involved. In determining whether a penalty shall be assessed in the case of a
transfer involving a life estate, the value of the asset transferred and the
value of the life estate shall be computed. The value of the asset transferred
is computed by determining the fair market value. The value of the life estate
is calculated in accordance with the life estate table published by the Centers
for Medicare and Medicaid Services (CMS) at 49 FR Vol. 49 No. 93, 5-11-84 and
26
CFR 20.2031-7. The value of the life estate
is determined by multiplying the current market value of the property by the
life estate factor that corresponds to the grantor's age. The value of the life
estate is then subtracted from the value of the asset transferred to determine
the portion of the asset that was transferred for less than fair market value.
If only the value of the transferred portion is needed, the current market
value of the asset is multiplied by the remainder factor. The transfer in which
a life estate is retained shall be considered a transfer for less than fair
market value whenever the value of the asset transferred is greater than the
value of the rights conferred by the life estate. The purchase of a life estate
interest shall be treated as a transfer of assets for less than fair market
value unless the purchaser actually lives in the home for at least one full
year after the date of purchase.
7. Uncompensated value (UV) shall be the
difference between the fair market value at the time of the transfer (less any
outstanding loans, mortgages or other encumbrances on the asset) and the amount
of consideration received for the asset. If the asset was jointly owned before
disposal, the UV considered shall be only the individual's share of that value
(see 10:71-4.1(d)) .
If the individual is seeking institutional services or applying for an
institutional level of services and has a spouse residing in the community, the
UV considered shall be either spouse's share of that value (see
10:71-4.8) .
8. In order for a transfer of assets to be
considered to be for the sole benefit of a spouse, disabled child or disabled
individual under the age of 65, for the purposes of this subchapter, the
transfer shall have been arranged in such a way that no individual except the
spouse, disabled child or disabled individual under age 65 can, in any way,
benefit from the assets transferred either at the time of the transfer, or at
any time in the future. For the purpose of this subchapter, the person
administering the funds shall only be compensated for the reasonable costs that
can be directly attributable to the administration of the funds and for
compensation for that administration. In no event shall such compensation
exceed the amounts allowed by law for the administration of trusts. The
transfer of asset penalty exemption for transfers made for the sole benefit of
the spouse, disabled child or disabled individual under the age of 65 does not
impact the treatment of a trust pursuant to
10:71-4.11.
i. If the transfer instrument provides that
there are beneficiaries other than a blind or disabled child, or a disabled
individual under the age of 65, the sole benefit requirement shall not have
been met if the instrument fails to provide that the State shall be the first
remaining beneficiary of residual funds prior to disbursement to any other
beneficiary.
9. The
look-back period shall be 60 months.
i. In the
case of an individual who is already eligible for Medicaid benefits, the
look-back period shall be the 60-month period prior to the date the individual
becomes institutionalized.
ii. In
the case of an individual not already eligible for Medicaid benefits, the
look-back period shall be the 60-month period prior to the date the individual
applied for Medicaid as an institutionalized individual.
iii. When a portion of a trust is treated as
a transfer, the look-back period shall be 60 months from the date the
individual applied for Medicaid as an institutionalized individual, or for a
non-institutionalized individual, the date the individual applied for Medicaid,
or, if the date the transfer was made is later, then the date the transfer was
made (see 10:71-4.11(e)1
iii).
iv. Penalties of
ineligibility shall be assessed for transfers which take place during or after
the look-back period. Periods of ineligibility cannot be imposed for resource
transfers which take place prior to the look-back period.
(c) If an individual or his or her
spouse described in (a) above (including any person acting with power of
attorney or as a guardian for such individual) has sold, given away or
otherwise transferred any assets (including any interest in an asset or future
rights to an asset) within the look-back period, the following steps shall be
taken and shall be fully documented in the case record:
1. The fair market value (FMV) of the asset
shall be ascertained;
2. The amount
of compensation received by the individual for the transfer shall be
determined. The uncompensated value (UV) shall be the difference between the
fair market value at the time of the transfer (less any outstanding loans,
mortgages or other encumbrances on the asset) and the amount of consideration
received for the asset. If the asset was jointly owned before disposal, the UV
considered shall be only the individual's share of that value (see
10:71-4.1(d) ) .
If the individual is seeking institutional services or applying for an
institutional level of services and has a spouse residing in the community, the
UV considered shall be either spouse's share of that value (see
10:71-4.8);
3. The amount of the UV, if any, shall be
added to the amount of the other countable resources;
4. The period of ineligibility for
institutional level services that would result from the asset transfer shall be
determined (see
10:71-4.10
(l));
5. In all
cases where the amount of uncompensated value would result in a period of
ineligibility, the applicant shall be notified of the determination via Form
PA-13. The Form PA-13 shall advise the applicant that he or she may rebut the
presumption that an asset was transferred at less than fair market value in
order to qualify for Medicaid coverage for institutional level care (see (i)
below).
(d) The
provisions of this section shall apply whether or not the asset would have been
considered excluded or exempt at the time of its disposal or transfer. However,
an individual shall not be ineligible for an institutional level of care
because of the transfer of his or her equity interest in a home which serves
(or served immediately prior to entry into institutional care) as the
individual's principal place of residence and the title to the home was
transferred to:
1. The legally married spouse
of the individual;
2. A child of
the institutionalized individual who is under the age of 21 or a child of any
age who is blind or totally and permanently disabled. In the event that the
child does not have a determination from the Social Security Administration of
blindness or disability, the blindness or disability shall be evaluated by the
Disability Review Team of the Division of Medical Assistance and Health
Services, in accordance with
10:71-3.13;
3. A brother or sister of the
institutionalized individual who already had an equity interest in the home
prior to the transfer and who was residing in the home for a period of at least
one year immediately before the individual becomes an institutionalized
individual; or
4. A son or daughter
of the institutionalized individual (other than described in (d)2 above) who
was residing in the individual's home for a period of at least two years
immediately before the date the individual becomes an institutionalized
individual and who has provided care to such individual which permitted the
individual to reside at home rather than in an institution or facility.
i. The care provided by the individual's son
or daughter for the purposes of this subchapter shall have exceeded normal
personal support activities (for example, routine transportation and shopping).
The individual's physical or mental condition shall have been such as to
require special attention and care. The care provided by the son or daughter
shall have been essential to the health and safety of the individual and shall
have consisted of activities such as, but not limited to, supervision of
medication, monitoring of nutritional status, and insuring the safety of the
individual.
(e) The application of a transfer penalty as
set forth in this section shall not apply when:
1. The assets were transferred to a trust
established for the sole benefit of an individual under 65 years of age who is
disabled as defined by the Social Security Administration;
2. The assets were transferred to the
individual's spouse or to another for the sole benefit of the individual's
spouse;
3. The assets were
transferred from the individual's spouse to another for the sole benefit of the
individual's spouse (see
10:71-4.10(b)
7);
4. The assets were transferred
to the community spouse subsequent to the application for Medicaid in
accordance with
10:71-4.8(a)3;
5. The assets were transferred from the
individual or individual's spouse to the individual's child who is blind or
permanently and totally disabled.
i. In the
event that the child does not have a determination from the Social Security
Administration of blindness or disability, the blindness or disability will be
evaluated by the Disability Review Unit of the Division of Medical Assistance
and Health Services in accordance with the provisions of
10:71-3.13; or
6. A satisfactory showing is made,
to the State that:
i. The individual intended
to dispose of the assets at either fair market value or for other valuable
consideration;
ii. The assets were
transferred exclusively for a purpose other than to qualify for medical
assistance; or
iii. All assets
transferred for less than fair market value have been returned to the
individual.
(f) In determining whether an asset was
transferred for the sole benefit of a spouse, child or disabled individual as
defined in
10:71-4.10(b) 8,
the transfer shall be accomplished via a written instrument of transfer, such
as a trust document, which legally binds the parties to a specific course of
action and which clearly sets out the conditions under which the transfer was
made, as well as who can benefit from the transfer. Moreover, the written
instrument shall state that the State of New Jersey shall be the first
remaining beneficiary. A transfer without such a document shall not be
considered to have been made for the sole benefit of the spouse, child or
disabled individual.
(g) When the
asset was transferred at fair market value, the application shall be processed
as usual. No special procedure shall be required.
(h) When the uncompensated value of
transferred assets would result in no period of ineligibility for long-term
care level services, the application shall be processed as usual.
(i) When the uncompensated value of
transferred assets results in a period of ineligibility for long-term care
level services, eligibility for long-term care services shall be denied and the
procedures below shall be followed:
1. The
applicant shall be notified via Form PA-13 that there has been a transfer of
assets for less than fair market value, the amount of the uncompensated value
and the length of the penalty period. The Form PA-13 shall state that the law
presumes that a transfer of assets at less than fair market value is for the
purpose of establishing Medicaid eligibility for long-term level care
services.
2. The applicant shall be
advised that he or she may rebut the presumption that the transfer of assets
was for the purpose of establishing Medicaid eligibility (see (j)
below).
(j) Any
applicant or beneficiary may rebut the presumption that assets were transferred
to establish Medicaid eligibility by presenting convincing evidence that the
assets were transferred exclusively (that is, solely) for some other purpose.
The applicant shall be assisted in obtaining information when necessary.
However, the burden of proof shall rest with the applicant. When the applicant
expresses the desire to rebut the presumption that he or she transferred assets
to establish Medicaid eligibility, the procedures below shall be followed.
1. The applicant's statement concerning the
circumstances of the transfer shall be included in the case record. The
statement shall include, but need not be limited to, the following:
i. The applicant's stated purpose for
transferring the asset;
ii. The
applicant's attempt to dispose of the asset at fair market value;
iii. The applicant's reasons for accepting
less than the fair market value for the asset;
iv. The applicant's means of and plans for,
supporting himself or herself after the transfer; and
v. The applicant's relationship, if any, to
the person(s) to whom the asset was transferred.
2. The applicant shall be asked to submit any
pertinent evidence (for example, legal documents, realtor agreements, and
relevant correspondence) with regard to the transfer.
3. Statements shall be taken from other
individuals, if such statements are material to the decision. The statement
shall indicate if such individual has or had a relationship with the applicant
and the extent of the relationship (that is, related by blood or marriage,
friendship).
(k) The
presence of one or more of the following factors, while not conclusive, may
indicate that the assets were transferred exclusively for some purpose other
than establishing Medicaid eligibility for long term care services:
1. The occurrence after transfer of the asset
of:
i. Traumatic onset of
disability;
ii. Unexpected loss of
other assets which would have precluded Medicaid eligibility; or
iii. Unexpected loss of income which would
have precluded Medicaid eligibility;
2. Court-ordered transfer (when the court is
not acting on behalf of, or at the direction of, the individual or the
individual's spouse); or
3.
Evidence of good faith effort to transfer the asset at fair market
value.
(l) Agency
determination pursuant to client rebuttal shall be as follows:
1. The presumption that assets were
transferred to establish Medicaid eligibility shall be considered successfully
rebutted only if the applicant demonstrates that the asset was transferred
exclusively for some other purpose.
2. If the applicant had some other purpose
for transferring the asset, but establishing Medicaid eligibility appears to
have been a factor in his or her decision to transfer, the presumption shall
not be considered successfully rebutted.
3. The agency's determination shall not
include an evaluation of the merits of the applicant's stated purpose of
transferring assets. The determination shall only deal with whether or not the
applicant has proven that the transfer was solely for some purpose other than
establishing Medicaid eligibility.
4. The final determination regarding the
purpose of the transfer shall be made at a supervisory level at the county
welfare agency and shall be documented in the case record.
5. The applicant shall be sent a notice of
the decision, which shall include information on his or her right to a fair
hearing in accordance with N.J.A.C. 10:49-10.
(m) For the purposes of this subchapter, the
penalty period shall be the period of time during which payment for long-term
care level services is denied. An institutionalized individual who is
ineligible for payment of long-term care services as a result of an asset
transfer shall be precluded from eligibility, but shall be entitled to
ancillary services if otherwise eligible.
1.
In accordance with
42
U.S.C. §
1396p(c)(1)(E), the penalty
period for asset transfer shall be the number of months equal to the total,
cumulative uncompensated value of all assets transferred by the individual, on
or after the look-back date, divided by the average monthly cost of nursing
home services in the State of New Jersey adjusted annually in accordance with
the change in the Consumer Price Index-All Urban Consumers, rounded up to the
nearest dollar. The annual adjustment to the average cost of nursing home
services in New Jersey shall be published as a notice of administrative change
in the New Jersey Register. As of November 2009, the average monthly cost is $
7,282. The penalty period shall begin with the date of the resource transfer.
As of November 2009, the current daily divisor is $ 239.41. A penalty shall be
calculated for partial months of ineligibility. There shall be no limit on the
length of the penalty period.
i. For the
purpose of determining a penalty period, the transfer of real property shall be
considered to have occurred the date the title is recorded or registered with
the appropriate office.
ii. When
calculating the penalty period, all of the whole months are calculated first,
using the monthly average in (m)1 above; then remaining days are calculated
using the daily divisor. The resulting figures will provide the length of the
penalty period in months and days.
2. In the case of an asset transfer which
occurs during an existing asset transfer penalty period, the penalty for the
subsequent transfer shall not begin until the expiration of the previous
penalty period.
3. When assets have
been transferred in amounts and/or frequencies that would make the calculated
penalty periods overlap or structured to run consecutively, the uncompensated
value of all the asset transfers shall be added together and divided by the
average cost of nursing home care. This will result in a single penalty period,
beginning on the first day of the month in which the first transfer was made.
For example: An individual transfers $ 15,000 in January, $ 15,000 in February,
and $ 15,000 in March. Calculated individually, the penalty periods would
overlap. Because the three penalty periods overlap, each of the asset transfers
shall be added together and divided by the average cost of nursing home care
creating a single penalty period beginning on January 1.
4. When assets have been transferred in such
a way that the penalty periods would not overlap, or are not structured to run
consecutively, each asset transfer shall be treated as a separate event, each
with its own penalty period. For example: An individual transfers $ 15,000 in
January, $ 15,000 in November and $ 15,000 in March of the following year. The
penalty period for the January transfer would be January and February. The
penalty for the November transfer would be November and December. The penalty
period for the March transfer would be March and April of the following
year.
(n) When an
individual's income is given or assigned in some manner, such gift or
assignment shall be considered an asset transfer. The following standards shall
be used to determine the penalty period:
1.
Income, in order to be considered transferred, shall have been irrevocably
assigned or otherwise unavailable to the individual. If income has been waived
or deferred and that waiver or deferral can be reversed, the waived or deferred
income shall be considered available to the individual, regardless of whether
the income is actually received, and shall be counted in the determination of
eligibility.
2. In the event an
individual gives up his or her rights to receive a lump sum payment or
transfers a lump sum payment in the month it is received, the period of
ineligibility shall be based on the amount of the lump sum payment to which he
or she was otherwise entitled.
3.
In the event a stream of income (that is, income received on a regular basis),
such as a pension, is transferred, the county welfare agency shall make a
determination of the total projected amount of income that has been
transferred, based on the individual's life expectancy. This determination
shall be based on the most recent life expectancy tables published by the
Centers for Medicare and Medicaid Services. In determining the projected
amount, the county welfare agency shall strictly adhere to the life expectancy
tables without adjustment for the individual's medical condition or other
factors. The projection shall be based on the value of the income at the time
of transfer and there shall be no attempt to account for future cost-of-living
adjustments over the life expectancy of the individual.
4. In determining if there has been a
transfer of income, the county welfare agency need not ascertain the
individual's spending habits over the appropriate look-back period. Unless
there is a reason to believe otherwise, the county welfare agency shall assume
that the individual's income was legitimately spent on the normal costs of
living. The county welfare agency may ask questions of the applicant and/or the
applicant's representative concerning past and present sources and levels of
income and whether the individual has transferred income to others.
(o) When an asset is held by an
individual in common with another person or persons via joint tenancy, tenancy
in common, joint ownership, or similar arrangements, the asset (or the affected
share of the asset) shall be considered to be transferred by the individual
when any action is taken, either by the individual or any other person, that
reduces or eliminates the individual's ownership or control of the asset.
1. If the addition of another name to the
ownership of an asset does not change the individual's ownership interest, the
action does not constitute a resource transfer. For instance, if another name
is added to an individual's account with the term "or," the individual shall
not be considered to have transferred assets since he or she continues to have
unrestricted access to the funds. In the event the newly added owner
subsequently withdraws the funds from the account, that action shall be
considered to be a transfer by the individual. The transfer shall be considered
to have occurred on the date that the funds are withdrawn from the
account.
2. If the addition of
another name to the ownership of an asset restricts the individual's access,
right to sell or otherwise dispose of the asset (for example, the addition of
another name requires that the new co-owner(s) agree to the sale or disposal of
the asset where no such agreement was necessary before), the addition of the
name shall constitute a transfer of assets. The transfer shall be considered to
have occurred on the date that the additional name was added to the account. In
the case of real property for the purpose of this chapter, if another name is
added to a deed, the transfer shall be considered to have occurred the date the
new deed is recorded.
3.
10:71-4.1 shall apply to determine
what portion of a jointly owned resource is presumed to belong to the
individual. Any portion belonging to the individual that is withdrawn by
another owner shall be considered a transfer of assets. If the individual can
satisfactorily establish that the withdrawn funds were, in fact, the sole
property of, and were contributed to the account by the other owner, and thus
never belonged to the individual, the withdrawal of those funds shall not
result in the imposition of an asset transfer penalty.
(p) Annuity provisions shall be as follows:
1. Any annuity purchase in which the entity
issuing the annuity is not a commercial financial institution shall be
considered to be a transfer of an asset in order to qualify for Medicaid
benefits, regardless of the terms of the annuity payout. The entire amount
transferred into such an annuity shall be the amount considered in determining
eligibility.
2. Any commercial
annuity purchased which is not actuarially sound, based on the life expectancy
of the individual (as set forth in life expectancy tables published by the
Centers for Medicare and Medicaid Services) or term certain (the length of
payout is specified and payment does not terminate upon the death of the
annuitant) shall be considered to be a transfer of an asset in order to qualify
for Medicaid benefits. In the event that an annuity is not actuarially sound at
the time of purchase, the amount that shall be considered to have been
transferred at less than fair market value shall be that proportion of the
annuity purchase price which is not actuarially sound. This shall be the same
proportion as the amount by which the pay-out period exceeds the life
expectancy of the individual at the time of the annuity purchase. (Life
expectancy divided by the pay-out period of the annuity multiplied by the
purchase amount of the annuity is subtracted from the total amount of the
annuity to determine the uncompensated value.)
(q) Upon imposition of a period of
ineligibility for long-term care level services because of an asset transfer,
the county welfare agency shall notify the applicant/beneficiary of his or her
right to request an undue hardship exception. An applicant/beneficiary may
apply for an exception to the transfer of asset penalty if he or she can show
that the penalty will cause an undue hardship to him- or herself. The
applicant/beneficiary shall provide sufficient documentation to support the
request for an undue hardship waiver to the county welfare agency within 20
days of notification of the transfer penalty. Within 30 days of receipt of such
documentation, the CWA shall issue notice to the applicant/beneficiary of its
determination.
1. For the purposes of this
chapter, undue hardship shall be considered to exist when:
i. The application of the transfer of assets
provisions would deprive the applicant/beneficiary of medical care such that
his or her health or his or her life would be endangered. Undue hardship may
also exist when application of the transfer of assets provisions would deprive
the individual of food, clothing, shelter, or other necessities of life;
and
ii. The applicant/beneficiary
can irrefutably demonstrate the transferred assets are beyond his or her
control and that the assets cannot be recovered. The applicant/beneficiary
shall demonstrate that he or she made good faith efforts, including exhaustion
of remedies available at law or in equity, to recover the assets
transferred.
2. Undue
hardship shall not exist when the application of a transfer penalty merely
causes the applicant/beneficiary an inconvenience or restricts his or her
lifestyle.
3. In the event that a
waiver of undue hardship is denied, neither the Department of Human Services,
the Department of Health and Senior Services, nor the county welfare agencies
shall have any obligation to take any action to assure that payment of services
is provided during the penalty period.
4. If the request for undue hardship
consideration is denied by the CWA, the CWA shall notify the applicant of the
denial and that the applicant may request a fair hearing in accordance with the
provisions of N.J.A.C. 10:49-10.