Revision 24-4; Effective Dec. 1, 2024

Revision 18-1; Effective March 1, 2018

Transfer of assets policy applies when assets are transferred by a person who resides in an institutional setting (for example, a Medicaid certified long-term care facility) or is receiving home and community-based waiver services through a Home and Community-Based Services waiver, or by the person’s spouse or someone else acting on the person’s behalf.

Transfer of assets policy does not apply to the mandatory groups of MEPD programs such as Pickle. See Section A-1000, General Information, and Section A-2000, Mandatory Coverage Groups, for information. Transfer of assets policy also does not apply to the Medicare Savings programs such as QMB, SLMB, etc.

There is a "look-back" period to find transfers of assets prior to the date the person is institutionalized or, if later, the date the person applies for Medicaid.

If a transfer of assets for less than fair market value is found, Medicaid must withhold payment for nursing facility care (and certain other long-term care services) for a period of time referred to as the penalty period.

The length of the penalty period is determined by dividing the value of the transferred asset by the average private-pay rate for nursing facility care in Texas. There is no limit to the length of the penalty period.

For certain types of transfers, no penalty is applied. The principal exceptions to the transfer of asset penalty are transfers:

• to a spouse or to a third party for the sole benefit of the spouse;
• by a spouse to a third party for the sole benefit of the spouse;
• to certain disabled individuals or to trusts established for those individuals;
• for a purpose other than to qualify for Medicaid; and
• for which imposing a penalty would cause undue hardship.

Example: Assets transferred to an Achieving a Better Life Experience (ABLE) account for the benefit of a disabled child are not subject to a penalty period. (See Section I-3300 “For the Sole Benefit” Requirements.)

I-1210 Transfer of Assets Terms

Revision 09-4; Effective December 1, 2009

The term assets, with respect to person, includes all income and resources of the person and of the person's spouse, including any income or resources that the person or such person's spouse is entitled to but does not receive because of action by:

• the person or such individual's spouse;
• a person, including a court or administrative body, with legal authority to act in place of or on behalf of the person or such individual's spouse; or
• any person, including any court or administrative body, acting at the direction or upon the request of the person or such individual's spouse.

Examples of actions that would cause income or resources not to be received are:

• irrevocably waiving pension income;
• waiving the right to receive an inheritance;
• not accepting or accessing injury settlements; and
• tort settlements that are diverted by the defendant into a trust or similar device to be held for the benefit of the plaintiff.

Revision 24-4; Effective Dec. 1, 2024

As part of Public Law 109-171, Deficit Reduction Act (DRA) of 2005, policy about transfer of assets changed when the DRA was signed into law on Feb. 8, 2006. The implementation of the DRA in Texas was effective Oct. 1, 2006.

Transfer of assets policy in Texas before the DRA, based on the Omnibus Budget Reconciliation Act (OBRA) of 1993 (Public Law 103-66), continues with these areas as exceptions found in the DRA transfer of assets rules:

• look-back period;
• penalty start date;
• purchase of life estates;
• purchase of promissory notes, loans or mortgages; and
• undue hardship.

As part of the DRA, there was a major change to the value of a home and eligibility for Medicaid. Refer to Section F-3600, Substantial Home Equity, and Section F-3700, Continuing Care Retirement Communities.

I-1310 Persons Impacted by Transfer of Assets

Revision 09-4; Effective December 1, 2009

Transfer of assets policy applies when assets are transferred by a person who resides in an institutional setting (for example, a Medicaid certified long-term care facility) or is receiving home and community-based waiver services through a Home and Community-Based Services waiver, or by the person’s spouse or someone else acting on the person’s behalf.

Transfer of assets policy does not apply to the mandatory groups of MEPD programs such as Pickle. See Section A-1000, General Information, and Section A-2000, Mandatory Coverage Groups, for information. Transfer of assets policy also does not apply to the Medicare Savings programs such as QMB, SLMB, etc.

Under transfer of assets policy, recipients residing in a Medicaid long-term care facility remain eligible for all other Medicaid benefits and continue to receive Medicaid benefits other than vendor payment for the length of the penalty period. However, a person residing in a state supported living center is denied Medicaid for any penalty period resulting from an uncompensated transfer of assets. This is because the only benefit provided under a MEPD program for a person in a state supported living center is vendor payments.

If a person applying for a Home and Community-Based Services waiver requires receipt of waiver services to be eligible for Medicaid, then the person is ineligible for all Medicaid benefits. Based on pre-DRA transfer of assets policy, the Home and Community-Based Services waiver person is ineligible for the length of the penalty period. Based on post-DRA, the Home and Community-Based Services waiver person is ineligible until the transfer does not appear during the look-back period.

Denial of a Home and Community-Based Services waiver based on an uncompensated transfer does not disqualify the person for pure Qualified Medicare Beneficiary (QMB) or Specified Low-Income Medicare Beneficiary (SLMB) benefits. If all eligibility criteria for QMB or SLMB are met, HHSC staff can certify the person for QMB or SLMB, as appropriate.

In spousal situations, if assets are transferred to a third party before institutionalization or by the community spouse, HHSC does not include the uncompensated amount of the transfer in calculating the spousal protected resource amount or countable resources upon application for Medicaid.

I-1320 Applications and Other Actions on or After Oct. 1, 2006

Revision 09-4; Effective December 1, 2009

Post-DRA transfer of assets policy impacts any person who applies for Medicaid in an institutional setting on or after Oct. 1, 2006. Post-DRA transfer of assets policy also impacts any person who is Medicaid eligible in the community and requests a program transfer for Medicaid in an institutional setting on or after Oct. 1, 2006. This includes:

Applicants — For applications filed on or after Oct. 1, 2006, consider both pre-DRA and post-DRA policy for an institutional program or waiver services.

Program transfer requests — For program transfer requests from any Medicaid program to an institutional program or waiver services on or after Oct.1, 2006, consider both pre-DRA and post-DRA policy.

Redeterminations — For redeterminations of institutional or waiver services worked on or after Oct.1, 2006, consider both pre-DRA and post-DRA policy.

Reported changes — For reported changes worked on or after Oct.1, 2006, consider both pre-DRA and post-DRA policy for institutional or waiver services.

Note: Pre-DRA or post-DRA transfer of assets policies regarding penalty do not apply to an individual who has had continuous Medicaid coverage before March 1, 1981. This includes any person who is Medicaid eligible in the community and requests a program transfer to an institutional program or waiver services and who has had continuous Medicaid coverage before March 1, 1981.

I-1330 Transfer Transaction Date

Revision 09-4; Effective December 1, 2009

If the transfer transaction date is:

• before Feb. 8, 2006, use pre-DRA policy in determining eligibility for vendor payment and waiver services, regardless of the application file date/program transfer or the date of the case manager action for an existing case; or
• on or after Feb. 8, 2006, use pre-DRA and post-DRA policy in determining eligibility for vendor payment and waiver services based on application file date/program transfer or the date of the case manager action for an existing case.

Revision 09-4; Effective December 1, 2009

A person may incur a transfer penalty by transferring income. Transfers of income include:

• waiving the right to receive an inheritance even in the month of receipt;
• giving away a lump sum payment even in the month of receipt; or
• irrevocably waiving all or part of federal, state or private pensions or annuities.

The date of transfer is the date of the actual change in income, if within the look-back period or during an ongoing month.

Interspousal transfers of income are permitted (for example, obtaining a court order to have community property pension income paid to a community spouse).

Because revocable waivers of pension benefits can be revoked and the benefits reinstated, no uncompensated value is developed, and no transfer of assets penalty is incurred.

Such pension waivers are subject to nonfinancial requirements and the person must apply for reinstatement of the full pension amount or the person is ineligible for all Medicaid benefits.

Example: In August of this year, a person authorized a revocable reduction of $100 per month in her Civil Service Annuity (CSA) benefit, which was effective Sept. 1 of this year. Because gross income is within the special income limit, and all eligibility criteria are met, the person may be certified for Medicaid. The person is sent written notice that she must apply for reinstatement of the full CSA amount within 30 days. If she does so, her eligibility is re-evaluated based upon receipt of the full benefit. If she fails to do so, denial action is initiated.

Revision 09-4; Effective December 1, 2009

Any action by the person's co-owner(s) to eliminate the person's ownership interest or control of a joint asset, with or without the person's consent, is a transfer of assets. Placing another person's name on an account or other asset that results in limiting the person's control of an asset (right to dispose) is a transfer of assets.

Joint bank account procedures are consistent with this policy.

I-1510 Participation Examples

Revision 13-2; Effective June 1, 2013

• The person and her brother jointly own (one-half interest each) non-homestead real property. Both of their names appear on the warranty deed. The person's brother, without the person's knowledge or consent, filed another warranty deed that shows him as the sole owner. This action by the person's co-owner constitutes a transfer.
• Joe Davis is a co-signer on a joint bank account, along with his son and daughter. Mr. Davis' children deleted his name from both the styling and signature card. Form H1299, Request for Joint Bank Account Information, shows that all of the funds belonged to Mr. Davis and that the children's names were added so they could access the funds in an emergency. Mr. Davis said he did not know that his name had been deleted, nor did he authorize this action. This must be developed as an uncompensated transfer. Depending upon the circumstances, the undue hardship provisions of Section I-4300, Undue Hardship, may apply.
• The person has a bank account styled solely in his name. His daughter adds her name to the account styling and control as an "and," thereby restricting the person's use of the account without the daughter's approval. This must be developed as an uncompensated transfer.
• When someone uses an applicant’s money to purchase a vehicle, and the title is placed in both the applicant’s name and the other person’s name, consider the entire purchase price of the vehicle as a transfer, because when the applicant’s money was used to purchase a vehicle with the applicant and the other person as owners, the applicant’s ownership or control of the asset was reduced or limited.

Examples

• A vehicle was purchased for $15,000 on June 30, 2012. All of the money was the applicant’s; however, the title was put in the applicant’s and her son’s name because he would be driving her around in the car. The entire $15,000 is considered the transferred amount.
• A vehicle was purchased June 30, 2012, for $10,761.57. $8,100 of the applicant’s money was used, and her son paid the remaining $2,661.57. The title of the car is in both names. The $8,100, which the applicant provided for the purchase, is considered the transferred amount.

Revision 09-4; Effective December 1, 2009

A partial transfer of real property occurs when a person transfers only a portion of real property. A person may engage in partial transfers of real property repeatedly, once per month over a period of months, with the apparent purpose of gifting away the entirety of the real property while at the same time shortening or avoiding a transfer of assets penalty. This is sometimes referred to as aggressive transferring.

Since the estate planning community incorporates many different approaches in partial transfers of real property, a transaction-by-transaction analysis by agency legal staff is critical for a correct determination of any resulting penalty period. Accordingly, eligibility staff who encounter partial transfers of real property must promptly refer each transaction to their regional attorney for a case-by-case legal opinion.