NECESSITY, FUNCTION, AND CONFORMITY: The Cabinet for Health and
Family Services has responsibility to administer the Medicaid program.
KRS
205.520(3) authorizes the
cabinet, by administrative regulation, to comply with any requirement that may
be imposed or opportunity presented by federal law for the provisions of
medical assistance to Kentucky's indigent citizenry.
KRS
205.6322 requires the cabinet to promulgate
administrative regulations to prohibit the sheltering of assets in medical
assistance long-term care cases. This administrative regulation establishes
trust and transferred resource requirements for Medicaid eligibility
determinations for individuals for whom resources are considered for Medicaid
eligibility purposes.
Section 1.
Transferred Resources.
(1) Transfer of
resources on or before August 10, 1993.
(a)
If an institutionalized individual applies for Medicaid, a period of
ineligibility shall be computed if during the thirty (30) month period
immediately preceding the application, but on or before August 10, 1993, the
individual or the spouse disposed of property for less than fair market
value.
(b) The period of
ineligibility shall begin with the month of the transfer and shall be equal to
the lesser of:
1. Thirty (30) months;
or
2. The number of months derived
by dividing the total uncompensated value of the resources transferred by the
transferred resource factor at the time of the application.
(2) Transfer of
resources after August 10, 1993 and before February 8, 2006.
(a) If an institutionalized individual
applies for Medicaid, a period of ineligibility for NF services, ICF IID
services, or 1915(c) home and community based services shall be computed if:
1. During the thirty-six (36) month period
immediately preceding the baseline date, but after August 10, 1993, and before
March 9, 2007, assets were transferred; or
2. During the sixty (60) month period
immediately preceding the baseline date, but after August 10, 1993, and before
March 9, 2007, a trust was created whereby the individual or the spouse
disposed of property for less than fair market value.
(b) The period of ineligibility shall:
1. Begin with the month of the transfer;
and
2. Be equal to the number of
months derived by dividing the total uncompensated value of the resources
transferred by the transferred resource factor at the time of the
application.
(3) Transfer of resources on or after
February 8, 2006.
(a) If an institutionalized
individual applies for Medicaid, a period of ineligibility for NF services, ICF
IID services, or 1915(c) home and community based services shall be computed
if:
1. During the sixty (60) month period
immediately preceding the baseline date, but on or after February 8, 2006,
assets were transferred; or
2.
During the sixty (60) month period immediately preceding the baseline date, but
on or after February 8, 2006, a trust was created whereby the individual or the
spouse disposed of property for less than fair market value.
(b) The period of ineligibility
shall:
1. Begin with the month of Medicaid
eligibility for NF services, ICF IID services, or 1915(c) home and community
based services; and
2. Be equal to
the number of months derived by dividing the total uncompensated value of the
resources transferred by the transferred resource factor at the time of
application.
(4) Jointly held resources shall be
considered pursuant to
42
U.S.C.
1396p(c)(3).
(5) The addition of another individual's name
to a deed shall constitute a transfer of resources.
(6)
(a) If a
spouse's transfer of resources results in an ineligibility period for the
institutionalized spouse, the ineligibility period shall be apportioned between
the spouses if the spouse is subsequently institutionalized and a portion of
the ineligibility period against the first institutionalized spouse remains.
(b) If one (1) spouse is no longer
subject to the ineligibility period, the remaining ineligibility period
applicable to both spouses shall be served by the remaining
spouse.
(7) The
requirements of this subsection shall apply to an agreement in which an
individual, prior to institutionalization, employed another person as a
caregiver and made payment for all services provided by the caregiver prior to
the individual's entry in a nursing facility.
(a) The caregiver agreement shall have:
1. Been notarized;
2. Identified and specified the cost of each
caregiver service;
3. Specified
that payment shall not have:
a. Been made for
a service not recognized in the agreement as a caregiver service; or
b. Duplicated a service provided by another
source; and
4. Included
a provision that required payment to be made by the caregiver to the individual
for the cost of each caregiver service not provided in accordance with the
agreement.
(b) The cost
of each caregiver service that was not provided in accordance with the
agreement and not repaid by the caregiver shall be considered a transfer of
resources.
(8)
(a) The requirements of this subsection shall
apply to resources sold by contractual agreement, including land contracts or
contract for deeds.
(b) The
contract shall:
1. Be actuarially
sound;
2. Not contain balloon
payments; and
3. Be without
forgiveness of debt if there is termination of the sale.
(c) A contract that does not meet the
requirements established in paragraph (b) of this subsection shall be treated
as the disposal of assets for less than fair market value.
(9)
(a) The
requirements of this subsection shall apply to annuities.
(b) A determination shall be completed
regarding the purpose of the purchase of an annuity in order to determine if
resources were transferred for less than fair market value.
(c) If the expected return on the annuity is
commensurate with the life expectancy of the beneficiary, the annuity shall be:
1. Actuarially sound; and
2. Not considered a transfer of resources for
less than fair market value.
(d) In accordance with
42
U.S.C.
1396p(c)(1)(F), the
purchase of an annuity occurring on or after February 8, 2006 shall be treated
as the disposal of assets for less than fair market value unless the cabinet is
named:
1. The remainder beneficiary in the
first position for at least the total amount of medical assistance paid on
behalf of the institutionalized individual; or
2.
a. A
beneficiary in the second position after the community spouse or a minor or
disabled child; and
b. A
beneficiary in the first position if the community spouse or a representative
of the child disposes of any remainder for less than fair market
value.
(10)
(a)
The purchase of an annuity shall be considered a transfer of resources if:
1. The expected return on the annuity is not
commensurate with the life expectancy of the beneficiary, making the annuity
not actuarially sound; and
2. The
annuity:
a. Does not provide substantially
equal monthly payments as provided in paragraph (b) of this subsection; and
b. Has a balloon or deferred
payment of principal or interest.
(b) Payments shall be considered
substantially equal if the total annual payment in any year varies by five (5)
percent or less from the payment in the previous year.
(11) The policies in this subsection shall
apply regarding the transfer of home property.
(a) Transfer of home property to an
individual listed in paragraph (b) of this subsection shall not constitute a
transfer of resources for less than fair market value.
(b) Home property may be transferred to:
1. The spouse;
2. An individual:
a. For whom the home owner is a parent; and
b. Who is:
(i) Under age twenty-one (21) years; or
(ii) Blind or disabled;
3. A sibling who has:
a. Equity interest in the home and lived with
the institutionalized individual for one (1) year prior to
institutionalization; or
b. A child
who:
(i) Resided with the institutionalized
individual for two (2) years prior to institutionalization; and
(ii) Provided care to the individual to
prevent institutionalization.
(c) Transfer of home property to any
individual not listed in paragraph (b) of this subsection shall constitute a
transfer of resources for less than fair market value.
(12)
(a) For
multiple or incremental transfers prior to February 8, 2006, the ineligibility
periods shall accrue and run consecutively beginning with the month of the
initial transfer.
(b) For multiple
or incremental transfers made on or after February 8, 2006, the ineligibility
period shall begin with the month of Medicaid eligibility for NF services, ICF
IID services, or 1915(c) home and community based services.
(13) An individual shall not be
ineligible for Medicaid or an institutional type of service:
(a) By virtue of subsections (1) to (10) of
this section to the extent that the conditions specified in
42
U.S.C.
1396p(c)(2)(B), (C), and
(D) or
907 KAR 20:035 are met;
or
(b) Due to transfer of resources
for less than fair market value except in accordance with this
section.
(14)
(a) The disposal of a resource, including
liquid assets, at less than fair market value shall be presumed to be for the
purpose of establishing eligibility unless the individual:
2. Makes a satisfactory showing to the
department that the disposal was exclusively for some other purpose.
(b) The value of the transferred
resource shall be disregarded if:
2. It is for a reason other than to qualify
for Medicaid; or
3. The transferred
resource was:
a. Not a homestead; and
b. Considered an excluded resource
at the time it was transferred.
(c) If the resource was transferred for an
amount equal to the assessed value for tax purposes, the resource shall be
considered as being disposed of for fair market value.
(d) If the assessed agricultural value is
used for tax purposes, the transfer shall be required to be for an amount equal
to the fair market value.
(15)
(a)
1. After determining that the purpose of a
transfer was to become or remain Medicaid eligible, the cabinet shall add the
uncompensated equity value of the transferred resource to other currently held
resources to determine if retention of the property would have resulted in
ineligibility.
2. For this purpose,
the resource considered available shall be the type of resource it was prior to
transfer, e.g., if nonhomestead property was transferred, the uncompensated
equity value of the transferred property shall be counted against the
permissible amount for nonhomestead property.
(b) If retention of the resource would not
have resulted in ineligibility, the value of the transferred resource shall be
disregarded.
(c) If retention would
result in ineligibility, the cabinet shall compute a period of ineligibility
for Medicaid or an institutional type of service as provided for in subsections
(1) to (10) of this section.
(16)
(a)
Uncompensated value shall be excluded from consideration if good cause or undue
hardship exists.
(b) A waiver of
consideration of the uncompensated amount shall be granted subject to the
criteria established in this subsection.
(c) Good cause shall be determined to exist
if an expense or loss was incurred by the individual or family group due to:
1. A natural disaster, for example fire,
flood, storm, or earthquake;
2.
Illness resulting from accident or disease;
3. Hospitalization or death of a member of
the immediate family; or
4. Civil
disorder or other disruption resulting in vandalism, home explosions, or theft
of essential household items.
(d) An undue hardship shall be determined to
exist if:
1. Application of transferred
resource penalties deprive an individual of:
a. Medical care which shall result in an
endangerment to the individual's health or life; or
b. Food, clothing, shelter, or other
necessities of life; or
2. The cabinet determines that:
a. The transfer of resources is not
recoverable;
b. The transfer of
resources was not intended by the applicant to result in Medicaid
coverage;
c. The transfer of
resources was made in circumstances beyond the applicant's control;
or
d. The applicant would be unable
to receive necessary medical care unless an undue hardship exemption is
granted.
(e)
1. The exclusions shall not exceed the amount
of the incurred expense or loss.
2.
The amount of the uncompensated value to be excluded shall not include any
amount which is payable by Medicaid, Medicare, or other insurance.
(f) If an institutionalized
individual is subject to a period of ineligibility because the individual or
individual's spouse disposed of property, assets, or resources for less than
fair market value, the cabinet shall notify the individual in writing and
include an explanation of:
1. The criteria
upon which an undue hardship waiver may be granted;
2. The process for seeking an undue hardship
waiver; and
3. How to appeal an
adverse action in accordance with Section 5 of this administrative
regulation.
(g) Upon
consent of the institutionalized individual or individual's personal
representative, the facility in which the individual resides may:
1. Request an undue hardship waiver on behalf
of the institutionalized individual;
2. Present information to the cabinet
regarding the institutionalized individual's case; and
3. File an appeal in accordance with Section
5 of this administrative regulation on behalf of the institutionalized
individual if the cabinet denies the facility's request for an undue hardship
waiver.
(h) If the
cabinet suspends or terminates a recipient's eligibility because the cabinet
discovers that the recipient or recipient's spouse transferred resources for
less than fair market value and an undue hardship waiver is requested on behalf
of the recipient, the cabinet shall provide payments for nursing facility
services in order to hold the bed at the facility for up to, but not more than,
thirty (30) days from the date of suspension or termination.
(i) If the cabinet decides in favor of a
recipient's request for an undue hardship waiver and reverses its previous
decision to suspend or terminate eligibility, the cabinet shall cover the
recipient's nursing facility services at the facility's full rate for the
period the individual is eligible under the undue hardship waiver.
(17) Disclaiming of an inheritance
by an individual entitled to the inheritance shall be considered a transfer of
resources.
Section 2.
Treatment of Resources for a Long-Term Care Applicant who has Long-Term Care
Partnership Insurance.
(1) The amount of
benefits paid by the long-term care partnership insurance policy as a direct
reimbursement to providers for long-term care expenses or benefits paid on a
per diem basis issued directly to the individual shall be used during the
eligibility determination process to determine the amount of resources the
applicant shall have excluded from the eligibility determination and protected
from estate recovery in accordance with
907
KAR 20:025.
(2) If an applicant disposed of a resource
for less than fair market value resulting in a transfer penalty, the applicant
may choose to apply the allowable exclusion, dollar-for-dollar, to the
transferred resources for the purpose of avoiding a penalty.
Section 3. Treatment of Trusts.
(1) Regarding a Medicaid qualifying trust
created on or before August 10, 1993, if an individual, or the spouse for the
individual's benefit, creates, other than by will, a trust or similar legal
device with amounts payable to the same individual, the trust shall be
considered a "Medicaid qualifying trust" if the trustee of the trust is
permitted to exercise discretion as to the amount of the payments from the
trust to be paid to the individual.
(a) Except
as provided by paragraph (b) of this subsection, the amount considered
available to the trust beneficiary shall be the maximum amount the trustee may,
using the trustee's discretion, pay in accordance with the terms of the trust,
regardless of the amount actually paid.
(b) The cabinet may consider as available
only that amount actually paid if to do otherwise would create an undue
hardship upon the individual in accordance with Section 1(16)(d) of this
administrative regulation.
(2) For purposes of determining eligibility
in accordance with Section 1(1) to (10) of this administrative regulation
regarding trust agreements, the rules provided for under
42
U.S.C.
1396p(d)(3) shall be
met and shall apply to a trust created after August 10, 1993 and established by
an individual subject to
42
U.S.C.
1396p(d)(4).
(a) An individual shall be considered to have
established a trust if assets of the individual were used to form all or part
of the corpus of the trust and if any of the individuals described under
42
U.S.C.
1396p(d)(2)(A)(i), (ii), (iii), and
(iv) established the trust other than by a
will.
(b)
1. If the corpus of a trust includes income
or resources of any other person or persons, the trust rules shall apply to the
portion of the trust attributable to the income or resources of the
individual.
2. In determining
countable income and resources, income and resources shall be prorated based on
the proportion of the individual's share of income or resources.
(d)
1.
Payments made from revocable or irrevocable trusts to or on behalf of an
individual shall be considered as income to the individual with the exception
of payments for medical care or medical expenses.
2. Payments for medical care or medical
expenses shall be excluded as income.
(e) A trust which is considered to be
irrevocable and terminates if action is taken by the grantor shall be
considered a revocable trust.
(f)
An irrevocable trust which may be modified or terminated by a court shall be
considered a revocable trust.
(g)
If payment from a revocable or irrevocable trust may be made under any
circumstance, the amount of the full payment that could be made shall be
considered as a resource including amounts that may be disbursed in the distant
future.
(h) Placement of an
excluded resource into an irrevocable trust shall not change the excluded
nature of the resource.
(i)
Placement of a countable resource into an irrevocable trust shall constitute a
transfer of resources for less than fair market value.
(3) The treatment of trusts established in
this section shall be waived if undue hardship criteria is met as established
in Section 1(16)(b) of this administrative regulation.
(4) Regarding subsection (1), (2), or (3) of
this section, for trusts created on or prior to August 10, 1993, any resources
transferred into a previously established trust after August 10, 1993 shall be
considered a transfer of resources and subject to an ineligibility period as
provided for under Section 1 of this administrative regulation using the
thirty-six (36) month transfer rules.
(5) An individual may create a qualifying
income trust, in accordance with this subsection, to establish financial
eligibility for Medicaid.
(a) A transfer of
resources shall not apply to a qualifying income trust if:
1. The trust is established in Kentucky for
the benefit of an individual;
2.
The trust is composed solely of the income of the individual, including
accumulated interest in the trust;
3. Upon the death of the individual, the
department receives all amounts remaining in the trust, up to an amount equal
to the total medical assistance paid on behalf of the individual by Medicaid;
and
4. The trust is
irrevocable.
(b) The
money in a qualifying income trust shall:
1.
Be maintained in a separate account; and
2. Not be commingled with any other checking
or savings account.
(c)
The corpus of a qualifying income trust and interest generated by the trust
shall not be counted as available income for an individual for the
determination of Medicaid eligibility.
(d) A qualifying income trust shall state
that the funds shall only be used for:
1.
Valid medical expenses, including patient liability; or
2. The community spouse income allowance
established in accordance with
907
KAR 20:035.
(e) All expenditures from a qualifying income
trust shall require verification by the department that the expenditures are
allowable expenditures.
(f)
Allowable payments from a qualifying income trust shall be made:
1. Every month; or
2. By the end of the month following the
month the funds were placed in the trust.
(g) If payments by the qualifying income
trust are made for medical care, the individual shall be considered to have
received fair market value for income placed in the trust.