Disqualifying Transfers 510-05-80

 

Definitions 510-05-80-05

(Revised 8/1/05 ML #2981)

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(N.D.A.C. Section 75-02-02.1-33.1)

 

For purposes of this section:

1. Assets or income an individual disposes of means assets or income to which the individual is entitled, or would be entitled if action, or inaction, causes the individual  to not receive the asset or income. Examples of actions which would cause assets or income not to be received are:

1. Irrevocably waiving pension income;
2. Waiving an inheritance; or
3. Not accepting or accessing injury settlements.

2. Fair Market value means:

1. In the case of a liquid asset that is not subject to reasonable dispute concerning its value, such as cash, bank deposits, stocks, and commodities, one hundred percent of apparent fair market value;
2. In the case of real or personal property that is subject to reasonable dispute concerning its value:

1. If transferred in an arms-length transaction to someone not in a confidential relationship with the individual or anyone acting on the individual's behalf, 75% of estimated fair market value; or
2. If transferred to someone in a confidential relationship with the individual or anyone acting on the individual's behalf, 100% of estimated fair market value; and
3. In the case of income, one hundred percent of apparent fair market value.

3. "Nursing care services" means nursing care provided in a medical institution, a nursing facility, a swing bed, the state hospital, or a home and community based services setting.
4. "Relative" means child, stepchild, grandchild, parent, stepparent, grandparent, aunt, uncle, niece, nephew, brother, sister, stepbrother, stepsister, half-brother, half-sister, first cousin, or in-law.
5. "Someone in a confidential relationship" includes an applicant or recipient’s power of attorney, guardian, conservator, legal custodian, caretaker, trustee, attorney, accountant, or agent, and may include a relative or other person with a close and trusted relationship to the individual.

 

State law prohibits individuals with a confidential relationship from personally benefiting from transactions involving the applicant or recipient’s income or assets. They also have a duty to act in the highest good faith and not obtain any advantage over the applicant or recipient; to not use or deal with an applicant or recipient's property for their own profit; to refrain from transactions adverse to the applicant or recipient; and to refrain from using undue influence to obtain any advantage from the applicant or recipient.

 

Accordingly, transfers of an applicant or recipient's real or personal property made by an applicant or recipient to the person with the confidential relationship must be at 100% of estimated fair market value. Transfers for less than 100% may be subject to the disqualifying transfer provisions.

 

Transfers of an applicant or recipient’s property made by someone with a confidential relationship, for which 100% of fair market value was not received, are not considered to be transfers without adequate compensation when an applicant or recipient is not competent, or if competent, does not approve.  In these situations the uncompensated value is considered to be available to the applicant or recipient because the person who made the transfer must account for and replace any amounts lost by the applicant or recipient.  

 

For example:  Ms. Smith has a power of attorney to act on behalf of her mother who is incompetent.  She transfers property owned by her mother, and valued at $60,000, to herself and her two siblings.  Medicaid will still consider $60,000 as available to Ms. Smith’s mother as Ms. Smith did not act in the best interest of her mother.  Ms. Smith’s mother has the legal ability to make the funds available, or to affect the return of the property.

 

The confidential relationship issue is closely tied to fair market value.  When dealing with personal or real property, the fair market value of the property is an estimate of the property's value.  "True" fair market value is established when such property sells for the highest amount possible.  When selling such property to someone who has a confidential relationship with the seller, the property may not be sold for the highest amount possible, and therefore, the "true" fair market value is not established.  The value of the property, for Medicaid purposes, is still an estimate.  When selling such property to someone who does not have a confidential relationship with the seller, the property is more likely to be sold for the highest amount possible, which will establish "true" fair market value, and which may be more or less than the estimated fair market value.

6. "Uncompensated value" means the difference between fair market value as of the date of transfer and the value of any consideration received.

When the party that receives the transferred property also assumes any outstanding loan(s) on the property, the amount of the outstanding loan(s) is consideration received.

 

Example: Mr. Green owns property with an estimated value of $80,000. He has a mortgage for $50,000 on the property. If Mr. Green sells the property for $30,000 and the purchaser assumes the mortgage, Mr. Green is actually receiving $80,000 in compensation, and there is no disqualifying transfer. If the purchaser does not assume the mortgage, the uncompensated value is $50,000 (the difference between $30,000 and the estimated market value of $80,000).

7. "Community spouse" has the same meaning as in 05-65-10, Definitions for Spousal Impoverishment.
8. "Home and community based services spouse" has the same meaning as in 05-65-10, Definitions for Spousal Impoverishment
9. "Institutionalized spouse" has the same meaning as in 05-65-10, Definitions for Spousal Impoverishment.
10. The average cost of nursing facility care is:

Year	Daily Rate	Monthly Rate
2005	144.48	4395
2004	137.59	4185
2003	129.71	3945
2002	127.05	3864
July-Dec 2001	120.08	3652
Jan-June 2001	109.98	3345
2000	104.94	3192
1999	97.68	2971
1998	94.31	2869
1997	89.00	2713
1996	85.00	2562
1995	80.00	2419
1994	74.00	2339