A. Chapter Contents

This chapter contains the following topics:

Topic

900.01 Definitions

900.02 Transfer Process Overview

901.00    Establishing Look-Back Periods

902.00    Verifying and Documenting Transfers

903.00    Transfers That Do Not Affect Eligibility

903.01 Transfers Prior to the Look-Back Dates

903.02 Transfers Made By Certain Other Persons

903.03 Transfers That Do Not Include the Customer's Assets

903.04 Removing the Customer's Name from an Account to Rebut Account Ownership

903.05 Adding a Person's Name to a Financial Account

903.06 Purchases and Payment of Debts

903.07 Loans

903.08 Resource Conversions

903.09 Transfers of Excluded Resources

903.10 Transfer of Home Property to Specific Individuals

903.11 Transfer of Countable Resources to or for the Benefit of Specific Individuals

904.00 Transfers That Affect Eligibility

904.01 Actions That Would Cause Income or Resources Not to Be Received

904.02 Creating Joint Ownership

904.03 Withdrawals from Jointly Owned Accounts

904.04 Transfers of Real Property

904.05 Transfer of an Income Stream

904.06 Purchase of a Life Estate in Another Person's Home

905.00 Assets Placed in a Trust

906.00 Compensation Received for Transfers

906.01 Compensation in the Form of Cash

906.02 Compensation in the Form of Real or Personal Property

906.03 Compensation in the Form of Assumption of a Legal Debt

906.04 Compensation in the Form of Personal Care Services

906.05 Compensation Received Prior to a Transfer

907.00    Transfer Penalty Period

907.01 Multiple Transfers Made Before July 1, 2006

907.02 Multiple Transfers Made On or After July 1, 2006

907.03 Partial Month Penalties for Transfers Made on or After October 1, 2007

907.04 Private Pay Rates

908.00    Rebuttal of the Penalty Period

908.01 Return of Transferred Asset

908.02 Receipt of Compensation

908.03 Intent to Dispose of Asset for Current Market Value

908.04 Transfer Not Made to Qualify for ALTCS

908.05 Referral to the Policy Unit

908.06 Undue Hardship

B. Introduction

Beginning March 1, 1981, Congress established a penalty for transferring non-excluded resources at less than fair market value (FMV) in order to become eligible for Medicaid. Effective October 1, 1993 federal law expanded the transfer provisions to apply to assets (income and resources), including home property and transfers to trusts. 

Transfer policy applies only to customers who are applying for or receiving ALTCS services, including:

• Customers who are residing in a medical institution, receive HCBS, or intend to receive HCBS;

• SSI-cash recipients; and

• Customers who are eligible for ALTCS using AF-related (S.O.B.R.A.) budgeting. 

EXCEPTION: Transfer policy does not apply to a customer whose eligibility is determined using AHCCCS Freedom to Work (FTW), even if the customer qualifies for long term care services (AHCCCS FTW-ALTCS).

C. Overview

This chapter explains how to verify and evaluate transfers of income or resources that could impact a customer's eligibility for the ALTCS services.

Transfers that occur after a look-back date must be verified and evaluated. The penalty for transferring assets for less than fair market value is a period of ineligibility for AHCCCS long term care services. 

Transfers with uncompensated value (UV) never result in the in denial or discontinuance of ALTCS eligibility. Even though transfers may result in the ineligibility for long term care services, the customer may receive medical services under ALTCS Acute Care.

The penalty period may be waived if the customer provides, through a rebuttal process, convincing evidence that the transfer penalty should not be applied (MS 908.00), or meets the criteria for an undue hardship waiver (MS 908.06).

D. Individuals Who Make Transfers

Evaluate as transfers, all actions which reduce or eliminate the customer's ownership or control of either income or resources when the action is taken by:

• The customer;

• The customer's spouse;

• Any other person with legal authority to act on behalf of, or acting at the request of, the customer or customer's spouse (including a court or administrative body).

A. Definition of Transfer

Transfer means to convey the legal possession of an asset (resource or income) in whole or in part to another person or entity. Transfer of ownership may occur through any of the following types of transactions:

• Changing title or deed;

• Sale or purchase of an asset;

• Conversion (trade or exchange of one asset for another);

• Making a loan;

• Giving away a resource or income;

• Assigning income to another individual or entity;

• Purchasing an annuity;

•Any actions taken, which cause income or resources to not be received, or not to be available to the customer or the customer's spouse (MS 904.01). This includes income or resources that the customer or the customer's spouse is entitled to but does not receive because of any action by any of the following:

o       The customer or the customer's spouse;

o       A person, including a court or administrative body, with legal authority to act in place of or on behalf of the customer or the customer's spouse;

o       Any person, including a court or administrative body, acting at the direction or upon the request of the customer or the customer's spouse.

After a valid transfer occurs, the income or resource (or share of) is no longer the former owner's to the degree it was prior to the transfer. After a valid transfer occurs, the former owner's total assets (income or resources) have a different value and/or take on a different form.

B. Other Definitions

The following terms are related to transfers:

Term

Definition

Assets

Assets are all the income and resources of the customer and of the customer's spouse. This includes assets to which the customer (or spouse) is entitled or would be entitled if action had not been taken to avoid receiving the assets.

Assignment of Assets

An assigned asset may be considered as constructively received or the assignment may be considered a transfer.

Revocable Assignment: A revocable assignment of income or resources is not a transfer, instead, the assets are considered "Constructively received".

• Constructively received resources (MS 703.06)

• Constructively received income (MS 604.02) 

Irrevocable Assignment: "Irrevocably assigned" means a resource or income has been placed in another's name and only the third party can initiate the action needed to make the resource or income available to the customer.

• If a customer irrevocably assigns a resource to another party, the assignment is a transfer. 

•Irrevocable assignment of income usually means that the right to all future income has been irrevocably assigned to another party. When an individual irrevocably assigns the right to all future payments from a source, evaluate the assignment as a transfer. (MS 904.05)

• When an individual irrevocably assigns income payments that are received periodically (for example; monthly, quarterly, semiannually or annually) but does not assign the right to all future payments from that source, treat the assigned payments as constructively received income.

Carry-Over

The fraction of an ineligible month remaining as a result of dividing the total uncompensated value (UV) of all assets transferred during a calendar month by the customer (or customer's spouse, or someone acting on behalf of the customer or customer's spouse) by the Private Pay Rate for the geographic area in which the individual is institutionalized at the time of application for ALTCS benefits. The Private Pay Rates are listed by location and time frame in MS 907.04.

Compensation

Compensation is all money, real or personal property, food, shelter, or services received by an individual at or after the time of transfer in exchange for the transferred item. 

• Compensation received for a transferred asset must be in a tangible form, with intrinsic value. A transfer for "love and consideration" is not recognized as compensation.

• Compensation does not include payments to an individual that are specifically identified as interest.

• Compensation may include items or services received by the individual prior to the transfer only if they were provided pursuant to a valid contract to provide such items in exchange for payment and the transfer constitutes all, or part of, such payment (MS 906.05).  

Follow the instructions in MS 906.00 to establish the monetary value of the compensation received in exchange for the transferred item. 

Conversion

(of a resource)

Conversion is the sale, trade, replacement, transfer, or exchange of one asset for another (e.g., stocks for cash).  

The conversion of a resource never results in the receipt of income, just a change in resources. 

All conversions are transfers and must be evaluated to determine if adequate compensation was received or if uncompensated value (UV) exists (MS 906.00).

Current Market Value (CMV)

Or

Fair Market Value (FMV)

Current Market Value, sometimes referred to as Fair Market Value is:

• An estimate of the prevailing price of an asset if sold on the open market at the time it was actually transferred, based on criteria used in appraising the value of the specific asset as defined for that asset in this Manual. The sale price of real property sold to a non-relative as the result of public advertising is the current market value; or

• The actual dollar value of the income at the time it was transferred. 

Look-Back Date

The look-back date is the earliest date on which a penalty for transferring assets (income and/or resources) for less than fair market value can be assessed. Penalties can be assessed for transfers that take place on or after the look-back date. 

There are three look-back dates (MS 901.00):

•36 months (three years) for general asset transfers made before July 1, 2006;

•60 months (five years) for transfers involving certain trusts;

•60 months (five years) for general asset transfers made on or after July 1, 2006.

NOTE: For general asset transfers made on or after July 1, 2006, you will not be looking back more than 36 months (three years) until July 2, 2009, and will not be looking back 60 months (five years) until July 2, 2011.

Look-Back Period

The look-back period is the period that begins with the look-back date and ends with the ALTCS application date.

Penalty Period

A penalty period is the number of months an ALTCS customer may be ineligible for long term care services when transfers occurred during or after the look-back period (MS 901.00) without receipt of adequate compensation.  

MS 907.00 describes how to calculate the duration of the penalty period.

Private Pay Rate

The Private Pay Rate is the average cost for a private pay patient in Arizona (MS 907.02). The Private Pay Rate varies according to the customer's county of residence.

Resources

Resources are items of real or personal property, including cash, that the customer (or spouse) owns which may be used to meet the customer's need for food, clothing, or shelter.

Uncompensated Value (UV)

Uncompensated value (UV) is the difference between the current market value (CMV) (less any outstanding loans, mortgages, or other legal encumbrances on the resource, or the actual dollar value of the income) at the time of transfer, and the amount of compensation received as a result of the transfer.

All transfers of assets are assumed to result in uncompensated value unless they are specifically excluded by policy (MS 903.00).

The customer may rebut the amount of uncompensated value (MS 908.00).

A. Introduction

This subsection provides a step-by-step overview of the processes related to transfers of assets. Consult the referenced manual sections for the details related to each step

B. Process Steps

Follow these steps to identify, verify and evaluate transfers.

Step

Action

1

Establish the customer's look-back dates using the policy in MS 901.00.

2

Identify all transfers that occurred or may have occurred during the look-back periods (MS 902.00). During the interview, obtain a verbal declaration or a written statement that contains as much of the following information as possible for each transfer:

• A description of the item transferred;

• An approximate value of the item transferred;

• The date or estimated date of transfer;

• The reason for the transfer;

• The name of the person who actually authorized the transfer, and that person's relationship to the customer;

• The name of the person to whom the asset was transferred and that person's relationship to the customer (if any);

• The type of compensation (if any) that the customer received; and

• The approximate value of the compensation received.

3

Give the customer a Request for Information asking for the following documentation for all transfers that occurred or may have occurred during or after the look-back periods (MS 902.00):

• Ownership of the asset immediately prior to transfer*;

• The date of the transfer*;

• The current market value of the transferred asset*;

• The ownership of the asset following the transfer*;

• The value of any legal encumbrances against the asset; and

• The type and value of the compensation received (if any).

If the customer...

Then...

Provides the requested documentation marked with an asterisk (*)

Continue to Step 4.

(Documentation of encumbrances and compensation may be obtained later in the process.)

Does not provide documentation of the items marked with an asterisk (*)

Deny or discontinue eligibility for failure to verify income or resources, depending on the type of asset transferred.

4

Determine if the transfer is exempt or may be exempt from a transfer penalty based on the policy in MS 903.00, Transfers That Do Not Affect Eligibility.

5

Give the customer opportunity to provide any additional documentation required in MS 903.00 to document that the transfer meets the exemption criteria.

In addition, give the customer opportunity to provide documentation of legal encumbrances and compensation received for the transferred asset if this information was not previously provided.

If ...

Then...

The documentation received verifies that the transfer qualifies as an exempt transfer

• File the documentation in the case record; and

• Document the exemption in the ACE comments screen.

•STOP

• The customer does not provide the requested documentation to verify the exemption, or

• The documentation provided does not establish an exemption

Continue to Step 6

The customer does not provide information to verify encumbrances or compensation

Complete Step 6 using the information available.

6

Calculate the uncompensated value (MS 906.00) of the transfer(s) and the resulting penalty period (MS 907.00).

If the penalty period...

Then...

Ends prior to the month of application or does not affect prospective eligibility for an active customer

Document the transfer(s) in ACE

STOP

Affects the application month or any prospective months

Send the customer a Notice of Uncompensated Value (DE-510) giving the customer opportunity to present evidence to rebut the penalty period.

Continue with Step 7.

7

Allow the customer 15 days to respond to the Notice of Uncompensated Value (DE-510) by providing documentation to rebut the amount of uncompensated value and the penalty period specified on the notice. Do not take any action to deny or discontinue ALTCS eligibility without the customer's written consent until the 15- day period specified on the DE-510 has expired.

If the customer...

Then...

Makes it clear before the end of the 15-day period that he or she does not intend to rebut the penalty period

Obtain a written statement from the customer verifying this intention, apply the transfer penalty and disposition the case.

STOP

Does not provide any documentation to rebut the penalty period within the 15 days

Assume that the customer does not wish to rebut the penalty period. Apply the transfer penalty if the customer is otherwise eligible for ALTCS.

STOP

Provides information to rebut the penalty period

Continue to Step 8.

8

Send a Policy Clarification Request (DE-637) to the Central Office, Program Support Administration.(MS 908.05)

9

The Central Office, Program Support Administration reviews the transfer documentation and rebuttal information and issues a response indicating one of the following decisions:

• The penalty period is successfully rebutted and no penalty period should be applied;

• The penalty period is partially rebutted and a reduced penalty period should be applied; or

• The rebuttal is unsuccessful and the proposed penalty period should be applied.

A. Definition

The look-back period is the period that begins with the look-back date and ends with the date the customer applies for ALTCS.

B. Policy

The look-back date is the earliest date on which a penalty for transferring assets (income and/or resources) for less than fair market value can be assessed.

• A transfer that occurs on or after the look-back date may result in a penalty period.

• Investigate all transfers that occurred during or after the look-back period and apply the appropriate policy.

• A transfer that occurred prior to the appropriate look-back date does not affect the customer's eligibility, unless there was a penalty period established for the transfer by a prior application and that penalty period has not expired. 

• Review all prior applications to determine if a transfer penalty period was previously established. When a penalty period established by a previous application has not expired, the penalty period applies to the current application even if the transfer occurred prior to the look-back date for the current application.

EXAMPLE: Mr. and Mrs. Jaspar transfer their home property to their daughter and their vacation home to their son in May 2000. Mr. Jaspar applies for ALTCS in February 2003 and a penalty period of 80 months is assessed, beginning 05/01/00 and ending 12/31/07. Mr. Jaspar receives ALTCS Acute for 12 months, then eligibility is discontinued when he does not complete the renewal process. In June 2006, Mr. Jaspar reapplies for ALTCS. Because a penalty period was established by a previous application, the remaining penalty period of 18 months ending 12/31/07 applies to this application even though the transfer date is prior to the look-back date for the 06/06 application.

C. Look Back Dates

Each customer has three look-back dates:

If the transfer consisted of...

Then the look-back date is...

A general transfer of assets made before July 1, 2006

36 months (3 years) prior to the most recent ALTCS application date.

Transfer of an asset to a trust

60 months (5 years) prior to the most recent ALTCS application date.

NOTE: You will not be looking back more than 36 months (three years) until July 2, 2009, and will not be looking back 60 months (five years) until July 2, 2011.

A. Policy

Identify, verify and document all transfers that occurred on or after the look-back dates, including transfers that occurred after the application date.

Documentation is required to establish that a valid transfer of ownership occurred (i.e., the income or resource, or share of the income or resource, is no longer the former owner's to the degree it was before the transfer.

For help identifying transfers, see the tips in How to Identify Transfers.

B. Required Proof

When a countable income or resource has been transferred, obtain documentation to verify:

• The date of the transfer. For transfers of real property, the date of transfer is the date the transfer document is signed and notarized, not the date the document is recorded;

• Ownership of the item both before and after the transfer;

• The CMV of the transferred item or the actual cash value of income at the time of the transfer; and

• Any and all legal encumbrances against the transferred item at the time of the transfer.

MS 900.02.B. contains additional processing information.

A. Overview

A transfer penalty may not be applied to the transfers listed in this section.

The following transfers do not affect eligibility when the exemption criteria specified in the corresponding subsection is met:

• Transfers that occurred prior to the look-back dates (MS 903.01);

• Transfers made by certain other persons (MS 903.02);

• Transfers that do not include the customer's assets (MS 903.03);

• Removing the customer's name from a financial account in which the customer has no financial interest (MS 903.04);

• Adding a person's name to a financial account, which does not restrict the availability of the account to the customer (MS 903.05);

• Purchases and payments of debts (MS 903.06);

• Loans (MS 903.07);

• Resource conversions (MS 903.08);

• Transfers of excluded resources (MS 903.09);

• Transfer of home property to specific individuals; (MS 903.10); and

• Transfer of countable resources to or for the benefit of specific individuals (MS 903.11).

B. Proof

Verification of the exemption criteria is required to confirm that the transfer does not affect the customer's eligibility.

A. Policy

A transfer that occurred prior to the look-back dates defined in MS 901.00 does not affect the customer's eligibility, unless a period of ineligibility that was previously determined has not yet expired. Therefore, review all previous applications to determine whether a period of ineligibility for long term care services as a result of a transfer was previously established. 

B. Proof

Verify the date of the transfer when the customer initially reports that the transfer occurred or may have occurred during the applicable look-back periods or does not remember the transfer date. 

If documentation verifies that the transfer occurred prior to the applicable look-back period, no additional documentation of the transfer is required.

A. Policy

A transfer made by someone other than the customer, the customer's spouse or any other person with the legal authority to act on behalf of, or acting at the request of the customer, including a court or administrative body does not affect the customer's eligibility. For example, a transfer made by a parent does not affect the customer's eligibility, unless the parent was acting on behalf of the customer.

B. Proof

Verify the following:

• The ownership of the assets;

• Who made the transfer; and

•  That person's relationship to the customer.

A. Policy

When the transfer did not include the assets of the customer or the customer's spouse, the transfer does not affect the customer's eligibility.

B. Proof

Verify ownership of the item prior to the transfer.