Medicaid permits a nursing home resident to make certain transfers. But transfers outside those permitted will result in a denial of Medicaid payment because the transfer is an “improper transfer”.
An “improper transfer” does not infer the transfer is illegal, it just means that Medicaid will not pay for care. The reason is so that persons cannot give away property and leave taxpayers paying the bill.
An improper transfer of assets is a transfer for less that fair market value. For example, if the nursing home resident or some one else in control of the resident’s assets sells property for what the property is reasonably worth, it will not be an improper transfer. But if the transfer is not for value, the difference in value and transfer price (if any) is the improper transfer amount. The amount of the transfer will result in a penalty period, that is, a denial of payment for a period of time.
Whether the transfer is an improper transfer not only depends on receiving fair market value but also on the “look back period”. The look back period is how far back Medicaid will look to determine if a transfer is an improper transfer. Transfers before the look back period begins will not affect eligibility.
Before February 8, 2006, a 36-month look back period applied. After that date, a 60-month look back period applied. So, for example, a transfer made in 1992 will be outside the look back period (36 months) and will not result in a denial of benefits regardless of whether fair market value was received. But a transfer in 2011 (60 months) will result in a denial of benefits for a certain period of time.
The time period is determined by the amount of the transfer divided by the “average private pay rate”. The “average private pay rate” is an amount determined every year by the Ohio Department of Aging. Currently, the APPR is $6,023.
For example, and ease of calculation, $6,000 as the APPR will be used. Alice transfers $60,000, all of her money, to an adult child in March 2011 and enters a nursing home. She applies for Medicaid in March 2011. The 60-month look back period begins at the date Alice enters the nursing facility and applies for Medicaid. Alice will not be able to receive Medicaid payments for her nursing home care for 10 months [$60,000 transferred divided by $6,000 (APPR)] beginning the date she entered a nursing home facility and applied for Medicaid and was otherwise eligible for Medicaid but for the “improper transfer”.
Where serial transfers are made, determining the penalty period becomes more complex.