(Revised 11/1/06 ML #3047)
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(N.D.A.C. Section 75-02-02.1-33.1)
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The number of months and days of ineligibility for an individual shall be equal to the total uncompensated value of all income and assets transferred by the individual, or individual's spouse, on or after the look-back date, divided by the average monthly cost, or daily cost as appropriate, of nursing facility care in North Dakota at the time of the individual's first application.
The following example demonstrates how the monthly and daily period of ineligibility is calculated:
Example: On December 10, 2002, Mr. Brown made a disqualifying transfer of $70,000. He applied for Medicaid on July 18, 2003. The average cost of nursing facility care at the time of application is $3945 per month and $129.71 per day. $70,000 divided by $3945 is 17.74 months. Seventeen months at $3945 per month is $67,065, leaving $2935 to which the daily rate is applied. $2935 divided by $129.71 is 22.63 days. Mr. Brown's penalty period is 17 months and 23 days (partial days are rounded up).
Since the average cost of care used is the amount from when an individual first applies for Medicaid, if Mr. Brown had previously applied for Medicaid in July 2001 (regardless of the action taken on that application) the average cost of care used to calculate the penalty period would be $3652 per month and $120.08 per day. Mr. Brown's penalty period would have been 19 months and 6 days.
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For transfers made before February 8, 2006:
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The period of ineligibility begins the first day of the month in which the income or assets were transferred for less than fair market value, or if that day is within any other period of ineligibility under this chapter, the first day thereafter that is not in such a period of ineligibility.
For Example: Mr. Smith made a disqualifying transfer in January 2005 that resulted in a ten-month period of ineligibility. The period begins the first day of the month of transfer, January 2005, and goes through October 2005. In July 2005, he made a second disqualifying transfer that resulted in a 12-month period of ineligibility. Because the month of transfer, July 2005, was already within a period of ineligibility, the 12-month period from the second transfer only begins in November 2005, and goes through October 2006.
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Separate transfers made within the same month may be combined as one transfer. Separate penalty periods must be established for transfers made in separate months.
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For transfers made on or after February 8, 2006:
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The period of ineligibility begins on the latest of:
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The first day of the month in which the income or assets were transferred for less than fair market value;
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The first day on which the individual is receiving nursing care services and is “otherwise eligible” for Medicaid (per subsection 4); or
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The first day thereafter which is not in such a period of ineligibility.
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Separate transfers for which a penalty period has not yet been created, regardless of whether made in separate months, may be combined into one larger transfer for processing purposes.
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When determining if an individual is “otherwise eligible” for Medicaid:
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The individual must have applied for Medicaid and must meet all nonfinancial eligibility criteria;
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Countable assets must be within appropriate Medicaid asset levels; and
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The monthly cost of nursing care and other medical care the individual is responsible for must be equal to or greater than the individual’s recipient liability.
This “otherwise eligible” determination is used to establish whether an individual would be eligible for Medicaid if they were not subject to a penalty period. If so, the “otherwise eligible” determination is used to establish the penalty period start.
An applicant who is determined to be “otherwise eligible” does not mean that the applicant is actually eligible for Medicaid. Since Medicaid is prohibited from paying any nursing care services during a penalty period, these nursing care expenses are not allowed as a deduction in the Post Eligibility Treatment of Income (510-05-85-25(3)). As a result, an individual who made a disqualifying transfer may be “otherwise eligible” for penalty period start purposes, but the individual is not approved for Medicaid because there is no medical need per 510-05-35-35.
Example 1: Mr. Brown made a disqualifying transfer in March 2006 that results in a 6-month penalty period. He entered the nursing home in May 2006 and used his remaining assets to cover his cost of care. In September 2006 his assets were under $3000 and he applied for Medicaid. In determining when Mr. Brown’s penalty period begins it is necessary to establish when he is “otherwise eligible” for Medicaid. First, he meets all nonfinancial criteria. Second, his assets are within the appropriate level beginning September 2006. Third, he has income of $900 per month; he is allowed the $50 income level; and he pays a Medicare premium of $88.50 per month. This leaves him with a recipient liability of $761.50 per month. He has actual nursing care costs of $4820 per month and other medical expenses of $150 per month for total medical costs of $4970 per month. These medical costs exceed his recipient liability. He meets all of the criteria to be “otherwise eligible” so his penalty period starts September 1, 2006.
His application for Medicaid is still denied because in determining medical need, his other medical expenses of $150, excluding the nursing care costs, do not exceed his recipient liability.
Example 2: Mr. White made a disqualifying transfer in March 2006, entered the nursing home in May 2006, and used his remaining assets to cover his cost of care. In September 2006 his assets were under $3000 and he applied for Medicaid. In determining whether Mr. White is “otherwise eligible” for Medicaid, it is first established that he meets all nonfinancial criteria. Second, his assets are within the appropriate level beginning September 2006. Third, he has income of $1500 per month; he is allowed the $50 income level; and he pays a Medicare premium of $88.50 per month. This leaves him with a recipient liability of $1361.50 per month. He has actual nursing care costs of $3520 per month, and he has nursing home insurance that pays $75 per day ($2250 in a 30-day month). As a result, the nursing care costs that he is responsible for ($1270) does NOT exceed his recipient liability, and he is not “otherwise eligible.” His penalty period would not start and his application for Medicaid is denied for no medical need.
If at a later date his nursing care costs increase, or his insurance ends, causing his nursing care costs to exceed his recipient liability, he would become “otherwise eligible,” and his penalty period would only start at that time.
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If a transfer results in a period of ineligibility for an individual receiving nursing care services, and the individual’s spouse begins receiving nursing care services and is "otherwise eligible" (per subsection 4) for Medicaid, the remaining period of ineligibility shall be apportioned equally between the spouses if the transfer was made on or after the individual's spouse's look-back date. Any months remaining in the period of ineligibility must be assigned or reassigned to the spouse who continues to receive the nursing care services if one spouse dies or stops receiving nursing care services.
Example: Mr. and Mrs. White make a disqualifying transfer in January 2004. Mrs. White enters LTC in February 2004 and is informed that the transfer in January will cause her to be ineligible for Medicaid coverage of her nursing care services until June 30, 2006. On March 1, 2005, Mr. White also enters LTC and is otherwise eligible for Medicaid. There are still 16 months of the penalty period remaining, which is divided between them. They will both be ineligible for eight months, or through October 2005.
If Mr. White left LTC on June 20, 2005, his remaining four months and ten days from his ineligibility period must be given back to Mrs. White, extending her period of ineligibility through February 10, 2006.
Example: Mr. and Mrs. Brown make a large disqualifying transfer that causes 70 months of ineligibility. At the same time, Mr. Brown enters LTC, applies for Medicaid, and is ineligible because the disqualifying transfer was made on or after his look-back date. Mrs. Brown enters LTC 48 months later and applies for Medicaid. The disqualifying transfer was made prior to her look-back date (36 months) so none of Mr. Brown's remaining 22 months of penalty period is assigned to Mrs. Brown.
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As with any adverse action, proper notice is required before the adverse action can be taken. On an application, proper notice is given in the approval or denial notice. In an ongoing case, even though the penalty period should have already begun, it cannot be imposed until an advance notice is provided to the recipient. For the period of time from when the penalty period should have started through the date it is imposed following advance notice, an overpayment must be processed (manually).
Example: Ms. Green is a current Medicaid recipient receiving HCBS. On November 2 she made a disqualifying transfer of her home and reported it to the county on December 5. The county determines a penalty period from November 1 through September 15 of the next year. An advance notice is sent to Ms. Green informing her that Medicaid will stop paying her HCBS services from December 16 through September 15 of next year. A manual overpayment is established for HCBS payments made by Medicaid for the period of November 1 through December 15.
