Hardship Provision 510-05-80-20

(Revised 2/04 ML #2900)

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

 

Occasionally an individual will incur out-of-pocket obligations to pay for nursing care that exceeds the total value of the assets or income transferred. Such an individual may be able to demonstrate that an undue hardship exists and receive an alternative penalty period. In order to demonstrate an undue hardship, unpaid nursing care bills incurred after the disqualifying transfer was made, must:

  1. Total more than the uncompensated value of income and assets transferred for less than fair market value by the individual or the individual’s spouse;
  2. Not be subject to payment by any third party (such as long-term care insurance or a relative); and
  3. Have been incurred during times when the individual did not have assets in excess of the appropriate asset level.

To determine whether an individual has demonstrated an undue hardship, determine if the amount of the unpaid nursing care costs, incurred during periods when the individual had no excess assets, is greater than the uncompensated value of all disqualifying transfers. If the relevant unpaid bills are greater, the alternative penalty period begins on the first day of the month in which the individual first has no excess assets. The length of the alternative penalty period is the number of months equal to the amount of the uncompensated value of all disqualifying transfers, divided by the monthly average unpaid nursing care charges incurred by the individual on or after the beginning of the alternative penalty period.

 

Example 1: Mr. White made a disqualifying transfer of $60,000 after he entered a nursing facility. Using an average cost of care of $3,345, the period of ineligibility is 17.94 months. In month 15, Mr. White claims that a hardship exists because his actual average monthly nursing care costs total $4,200, and his unpaid nursing facility bill totals $67,200. Mr. White establishes that he had only $2,000 in assets after he made his $60,000 disqualifying transfer. Divide $60,000 by the individual’s monthly average unpaid nursing care charges of $4,200 to establish an alternative penalty period of 14.29 months.

 

Example 2: Same as Example 1 except Mr. White has nursing care insurance that pays $1,500 per month after the conclusion of each month of care. Mr. White’s insurance has paid $22,500 on the nursing home bill, but no other payment has been made. The remaining balance is $44,700. Mr. White has not shown that his unpaid nursing facility costs ($44,700) exceed the amount of his disqualifying transfer ($60,000). He has failed to demonstrate an undue hardship exists.

 

Example 3: While in a nursing facility, Ms. Brown made a disqualifying transfer of $10,000, leaving herself otherwise within the asset limits. Using the average cost of care of $3,345, the period of ineligibility is 2.99 months. At the end of month 2, Ms. Brown claims that a hardship exists because her actual cost of care was $5,100 per month, she has no insurance, and she has made no payment for that care. Ms. Brown has established that outstanding nursing facility bills, incurred when she was otherwise eligible ($10,200), exceed the uncompensated amount of her disqualifying transfer ($10,000). Divide $10,000 by Ms. Brown’s monthly average unpaid nursing care charges of $5,100 to establish the alternative penalty period of 1.96 months.

 

Example 4: Ms. Black made a disqualifying transfer of $20,000 one month before she entered nursing care. She paid for the first two months of her care to reduce her assets to within asset limits. She has no insurance, has incurred charges averaging $4,000 per month in the month since, and has made no payment. Using the average cost of care of $3,345, the period of ineligibility is 5.98 months. Ms. Black must incur at least $20,000 in unpaid nursing care charges before she can show an undue hardship. At $4,000 per month, that will take only five months, but the alternative penalty period does not begin until Ms. Black reduced her assets, two months after she entered nursing care, and three months after she made the disqualifying transfer. In this case, the regular penalty period will expire before Ms. Black can show undue hardship.