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4.7.4 EXCEPTIONS

A divestment that occurred in the lookback period or any time after does not affect eligibility if any of the following exceptions apply:

 

  1. The person who divested shows that the divestment wasn't made with the intent of receiving MA.

 

The person must present evidence that shows the specific purpose and reason for making the transfer.  Verbal assurances that s/he was not trying to become financially eligible for Medicaid are not sufficient. S/he must show that s/he expected private health insurance or other resources would cover his/her institutional expenses.  Take into consideration statements from physicians, insurance agents, insurance documents, and bank records that confirm the person's statements.

 

  1. The community spouse divested assets that were part of the community spouse asset share.
     

    1. After the institutionalized person is determined eligible, the community spouse can divest assets that are part of the community spouse asset share (5.10.4.2).  S/he can give them to anyone without affecting the eligibility of the institutionalized spouse.

 

Example 1: When Ralph went into a nursing home and applied for MA, Edith’s community spouse asset share was $42,000.  After Ralph became eligible, Edith gave $30,000 of the community spouse asset share to a favorite nephew.  This divestment did not affect Ralph’s eligibility.  Edith is allowed to divest all or any part of the community spouse asset share.

 

    1. If the community spouse receives assets from the eligible institutionalized spouse that were not part of the community spouse asset share, s/he cannot give them to anyone except persons listed in 4.7.4, #8. Giving them to someone other than these persons could cause the institutionalized person to become ineligible.

 

Example 2:  Ralph is an institutionalized MA recipient. He recently inherited $25,000, and immediately transferred it to Edith, his community spouse.  This $25,000 is not part of the community spouse asset share.  Therefore, Edith cannot transfer the money to anyone except  “a child of any age of either spouse who is either blind or permanently and totally disabled or both” (4.7.4, #8).  If she transfers it to anyone else, Ralph's eligibility for institutional services may be affected.

 

Homestead property is an exception.  After the institutionalized person has become eligible, s/he can transfer the homestead to the community spouse, and the community spouse can transfer it to anyone. The community spouse’s divestment of homestead property after the institutionalized person has become eligible, does not affect the institutionalized person’s eligibility.

 

Example 3: When Ralph applied for institutional MA, he and Edith owned a home together.  Homestead property is not counted as part of the community spouse asset share.  After Ralph became eligible, he signed his 1/2 share of the home over to Edith.  Edith can divest the part of the homestead which Ralph gave to her without affecting Ralph's eligibility

 

    1. If the community spouse has assets that were not part of the community spouse asset share and that the eligible institutionalized spouse did not give to her, she can give them to anyone. Her divestment will not affect the institutionalized spouse’s eligibility.

 

Example 4: After Ralph entered the nursing home and became eligible for MA, Edith inherited $12,000 from a favorite uncle.  She gave it to a favorite nephew.  This divestment does not affect George’s eligibility because the money, even though not part of the community spouse asset share, did not come from Ralph.

 

Note:  While these examples show that in some circumstances the community spouse's divestments don't affect the institutionalized person's eligibility, they may affect the community spouse's eligibility if s/he later enters an institution and applies for MA.

 

  1. The ownership of the property is returned to the person in the fiscal group who originally disposed of it.
     

  2. Division of property as part of a divorce or separation action, and loss of property due to foreclosure or repossession aren't divestment.
     

  3. The person intended to dispose of the asset  either at fair market value or other valuable consideration.

 

Example 5:  Gary had a lucky 3-cent postage stamp that he carried in his wallet.  A friend admired it, so Gary sold it to him for $0.03, unaware that it was worth more. The friend sold it to a stamp dealer for $7300.  When Gary applies for MA, this divestment will be disregarded.

 

  1. The agency determines that denial of eligibility would work undue hardship on the person.  "Undue hardship" is a serious impairment to the institutionalized person's immediate health.

 

The IM worker must verbally inform the person of this undue hardship provision if the IM worker has determined the person has divested.  The undue hardship notice must be included on all manual MA institution denials and closures due to divestment.

 

  1. The institutionalized person or his/her spouse divests homestead property to his/her:
     

    1. Spouse.
       

    2. Child who meets at least 1 of the following conditions/situations:
       

      • Under 21 years of age

        OR
         

      • Blind

        OR
         

      • Permanently & totally disabled

        OR
         

      • Been residing in the institutionalized person's home for at least 2 years immediately before the person became institutionalized, and provided care to him/her which permitted him/her to reside at home rather than in the institution.  This care must have been provided for the entire 2 years immediately before the person became institutionalized.  Get a notarized statement that the person was able to remain in his/her home because of the care provided by the child.
         

Note: The statement must be from his/her physician or from someone else who has personal knowledge of his/her living circumstances.  A notarized statement from the child does not satisfy these requirements.

 

    1. Sibling who:
       

      • Was residing in the institutionalized person's home for at least 1 year immediately before the date the person became institutionalized.

 

Verify that the sibling was residing in the institutionalized person's home for at least 1 year immediately before the person became institutionalized.  Don't require a specific type of verification. Some examples of verification are written statements from nonrelatives, social services records, tax records, and utility bills with the address and the sibling's name on them.

 

and

 

      • Has a verified equity interest in the home.

 

  "Equity interest" means an ownership interest in a  homestead.

 

Ask to see a copy of the deed or the land contract or some other document to verify the sibling's equity interest in the homestead.  Since the sibling's name on the document is not sole proof, you may need to require other documentation such as canceled checks and receipts.

 

 

  1. The institutionalized person or his/her community spouse divests a nonhomestead asset or assets to:

 

  1. Spouse.
     

  2. A child of any age of either spouse who is either blind or permanently and totally disabled or both.

 

 

This page last updated in Release Number: 07-03

Release Date: 04/18/07

Effective Date: 04/18/07