441—75.23 (249A) Disposal of assets for less than fair market value after August 10, 1993. In determining Medicaid eligibility for persons described in 441—Chapters 75 and 83, a transfer of assets occurring after August 10, 1993, will affect Medicaid payment for medical services as provided in this rule.
	 75.23(1) Ineligibility for services. When an individual or spouse has transferred or disposed of assets for less than fair market value as defined in 75.23(11) on or after the look-back date specified in 75.23(2), the individual shall be ineligible for medical assistance as provided in this subrule.
	  a.   	 Institutionalized individual. When an institutionalized individual or the spouse of the individual disposed of assets for less than fair market value on or after the look-back date, the institutionalized individual is ineligible for medical assistance payment for nursing facility services, a level of care in any institution equivalent to that of nursing facility services, and home- and community-based waiver services. The period of ineligibility is equal to the number of months specified in 75.23(3). The department shall determine the beginning of the period of ineligibility as follows:
	 (1) 	 Transfer before February 8, 2006. When the transfer of assets was made before February 8, 2006, the period of ineligibility shall begin on the first day of the first month during which the assets were transferred, except as provided in subparagraph (3).
	 (2) 	 Transfer on or after February 8, 2006. Within the limits of subparagraph (3), when the transfer of assets was made on or after February 8, 2006, the period of ineligibility shall begin on the later of:
	  1. 	 The first day of the first month during which the assets were transferred; or
	  2. 	 The date on which the individual is eligible for medical assistance under this chapter and would be receiving nursing facility services, a level of care in any institution equivalent to that of nursing facility services, or home- and community-based waiver services, based on an approved application for such care, but for the application of this rule.
	 (3) 	 Exclusive period. The period of ineligibility due to the transfer shall not begin during any other period of ineligibility under this rule.
	  b.   	 Noninstitutionalized individual. When a noninstitutionalized individual or the spouse of the individual disposed of assets for less than fair market value on or after the look-back date, the individual is ineligible for medical assistance payment for home health care services, home and community care for functionally disabled elderly individuals, personal care services, and other long-term care services. The period of ineligibility is equal to the number of months specified in 75.23(3). The department shall determine the beginning of the period of ineligibility as follows:
	 (1) 	 Transfer before February 8, 2006. When the transfer of assets was made before February 8, 2006, the period of ineligibility shall begin on the first day of the first month during which the assets were transferred, except as provided in subparagraph (3).
	 (2) 	 Transfer on or after February 8, 2006. Within the limits of subparagraph (3), when the transfer of assets was made on or after February 8, 2006, the period of ineligibility shall begin on the later of:
	  1. 	 The first day of the first month during which the assets were transferred; or
	  2. 	 The date on which the individual is eligible for medical assistance under this chapter and would be receiving home health care services, home and community care for functionally disabled elderly individuals, personal care services, or other long-term care services, based on an approved application for such care, but for the application of this rule.
	 (3) 	 Exclusive period. The period of ineligibility due to the transfer shall not begin during any other period of ineligibility under this rule.
	  c.   	 Client participation after period of ineligibility. Expenses incurred for long-term care services during a transfer of assets penalty period may not be deducted as medical expenses in determining client participation pursuant to subrule 75.16(2).
	 75.23(2) Look-back date.
	  a.   	 Transfer before February 8, 2006. For transfers made before February 8, 2006, the look-back date is the date that is 36 months (or, in the case of payments from a trust or portion of a trust that are treated as assets disposed of by the individual, 60 months) before:
	 (1) 	 The date an institutionalized individual is both an institutionalized individual and has applied for medical assistance; or
	 (2) 	 The date a noninstitutionalized individual applies for medical assistance.
	  b.   	 Transfer on or after February 8, 2006. For transfers made on or after February 8, 2006, the look-back date is the date that is 60 months before:
	 (1) 	 The date an institutionalized individual is both an institutionalized individual and has applied for medical assistance; or
	 (2) 	 The date a noninstitutionalized individual applies for medical assistance.
	 75.23(3) Period of ineligibility. The number of months of ineligibility shall be equal to the total cumulative uncompensated value of all assets transferred by the individual (or the individual’s spouse) on or after the look-back date specified in subrule 75.23(2), divided by the statewide average private-pay rate for nursing facility services at the time of application. The department shall determine the average statewide cost to a private-pay resident for nursing facilities and update the cost annually. For the period from July 1, 2013, through June 30, 2014, this average statewide cost shall be $5,057.65 per month or $166.37 per day.
	 75.23(4) Reduction of period of ineligibility. The number of months of ineligibility otherwise determined with respect to the disposal of an asset shall be reduced by the months of ineligibility applicable to the individual prior to a change in institutional status.
	 75.23(5) Exceptions. An individual shall not be ineligible for medical assistance, under this rule, to the extent that:
	  a.   	 The assets transferred were a home and title to the home was transferred to either:
	 (1) 	 A spouse of the individual.
	 (2) 	 A child of the individual who is under the age of 21 or is blind or permanently and totally disabled as defined in 42 U.S.C. Section 1382c.
	 (3) 	 A sibling of the individual who has an equity interest in the home and who was residing in the individual’s home for a period of at least one year immediately before the individual became institutionalized.
	 (4) 	 A son or daughter of the individual who was residing in the individual’s home for a period of at least two years immediately before the date of institutionalization and who provided care to the individual which permitted the individual to reside at home rather than in an institution or facility.
	  b.   	 The assets were transferred:
	 (1) 	 To the individual’s spouse or to another for the sole benefit of the individual’s spouse.
	 (2) 	 From the individual’s spouse to another for the sole benefit of the individual’s spouse.
	 (3) 	 To a child of the individual who is blind or permanently and totally disabled as defined in 42 U.S.C. Section 1382c or to a trust established solely for the benefit of such a child.
	 (4) 	 To a trust established solely for the benefit of an individual under 65 years of age who is disabled as defined in 42 U.S.C. Section 1382c.
	  c.   	 A satisfactory showing is made that one of the following is true:
	 (1) 	 The individual intended to dispose of the assets either at fair market value, or for other valuable consideration.
	 (2) 	 The assets were transferred exclusively for a purpose other than to qualify for medical assistance.
	 (3) 	 All assets transferred for less than fair market value have been returned to the individual.
	  d.   	 The denial of eligibility would work an undue hardship. Undue hardship shall exist only when all of the following conditions are met:
	 (1) 	 Application of the transfer of asset penalty would deprive the individual of medical care such that the individual’s health or life would be endangered or of food, clothing, shelter, or other necessities of life.
	 (2) 	 The person who transferred the resource or the person’s spouse has exhausted all means including legal remedies and consultation with an attorney to recover the resource.
	 (3) 	 The person’s remaining available resources (after the attribution for the community spouse) are less than the monthly statewide average cost of nursing facility services to a private pay resident, counting the value of all resources except for:
	  1. 	 The home if occupied by a dependent relative or if a licensed physician verifies that the person is expected to return home.
	  2. 	 Household goods.
	  3. 	 A vehicle required by the client for transportation.
	  4. 	 Funds for burial of $4,000 or less.
Hardship will not be found if the resource was transferred to a person who was handling the financial affairs of the client or to the spouse or children of a person handling the financial affairs of the client unless the client demonstrates that payments cannot be obtained from the funds of the person who handled the financial affairs to pay for long-term care services.
	 75.23(6) Assets held in common. In the case of an asset held by an individual in common with another person or persons in a joint tenancy, tenancy in common, or similar arrangement, the asset, or the affected portion of the asset, shall be considered to be transferred by the individual when any action is taken, either by the individual or by any other person, that reduces or eliminates the individual’s ownership or control of the asset.
	 75.23(7) Transfer by spouse. In the case of a transfer by a spouse of an individual which results in a period of ineligibility for medical assistance under the state plan for the individual, the period of ineligibility shall be apportioned between the individual and the individual’s spouse if the spouse otherwise becomes eligible for medical assistance under the state plan. The remaining penalty period shall be evenly divided on a monthly basis, with any remaining month of penalty (prorated as a half month to each spouse) applied to the spouse who initiated the transfer action.
If a spouse subsequently dies prior to the end of the penalty period, the remaining penalty period shall be applied to the surviving spouse’s period of ineligibility.
	 75.23(8) Definitions. In this rule the following definitions apply:
“Assets” shall include all income and resources of the individual and the individual’s spouse, including any income or resources which the individual or the individual’s spouse is entitled to but does not receive because of action by:
	  1. 	 The individual or the individual’s spouse.
	  2. 	 A person, including a court or administrative body, with legal authority to act in place of or on behalf of the individual or the individual’s spouse.
	  3. 	 Any person, including any court or administrative body, acting at the direction or upon the request of the individual or the individual’s spouse.
“Income” shall be defined by 42 U.S.C. Section 1382a.
“Institutionalized individual” shall mean an individual who is an inpatient in a nursing facility, who is an inpatient in a medical institution and with respect to whom payment is made based on a level of care provided in a nursing facility or who is eligible for home- and community-based waiver services.
“Resources” shall be defined by 42 U.S.C. Section 1382b without regard (in the case of an institutionalized individual) to the exclusion of the home and land appertaining thereto.
“Transfer or disposal of assets” means any transfer or assignment of any legal or equitable interest in any asset as defined above, including:
	  1. 	 Giving away or selling an interest in an asset;
	  2. 	 Placing an interest in an asset in a trust that is not available to the grantor (see 75.24(2)“b”(2));
	  3. 	 Removing or eliminating an interest in a jointly owned asset in favor of other owners;
	  4. 	 Disclaiming an inheritance of any property, interest, or right pursuant to Iowa Code section 633.704 on or after July 1, 2000 (see Iowa Code section 249A.3(11)“c”);
	  5. 	 Failure to take a share of an estate as a surviving spouse (also known as “taking against a will”) on or after July 1, 2000, to the extent that the value received by taking against the will would have exceeded the value of the inheritance received under the will (see Iowa Code section 249A.3(11)“d”); or
	  6. 	 Transferring or disclaiming the right to income not yet received.
	 75.23(9) Purchase of annuities. Funds used to purchase an annuity for more than its fair market value shall be treated as assets transferred for less than fair market value regardless of when the annuity was purchased or whether the conditions described in this subrule were met.
	  a.   	 The entire amount used to purchase an annuity on or after February 8, 2006, with a Medicaid applicant or member as the annuitant shall be treated as assets transferred for less than fair market value unless the annuity meets one of the conditions described in paragraph 75.23(9)“b” and also meets the condition described in paragraph 75.23(9)“c.”
	  b.   	 To be exempted from treatment as an asset transferred at less than fair market value, an annuity described in paragraph 75.23(9)“a” must meet one of the following conditions:
	 (1) 	 The annuity is an annuity described in Subsection (b) or (q) of Section 408 of the United States Internal Revenue Code of 1986.
	 (2) 	 The annuity is purchased with proceeds from:
	  1. 	 An account or trust described in Subsection (a), (c), or (p) of Section 408 of the United States Internal Revenue Code of 1986;
	  2. 	 A simplified employee pension (within the meaning of Section 408(k) of the United States Internal Revenue Code of 1986); or
	  3. 	 A Roth IRA described in Section 408A of the United States Internal Revenue Code of 1986.
	 (3) 	 The annuity:
	  1. 	 Is irrevocable and nonassignable;
	  2. 	 Is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the United States Social Security Administration); and
	  3. 	 Provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made.
	  c.   	 To be exempted from treatment as an asset transferred at less than fair market value, an annuity described in paragraph 75.23(9)“a” must have Iowa named as the remainder beneficiary for at least the total amount of medical assistance paid on behalf of the annuitant or the annuitant’s spouse, if either is institutionalized. Iowa may be named either:
	 (1) 	 In the first position; or
	 (2) 	 In the second position after the spouse or minor or disabled child and in the first position if the spouse or a representative of the child disposes of any of the remainder for less than fair market value.
	  d.   	 The entire amount used to purchase an annuity on or after February 8, 2006, with the spouse of a Medicaid applicant or member as the annuitant shall be treated as assets transferred for less than fair market value unless Iowa is named as the remainder beneficiary for at least the total amount of medical assistance paid on behalf of the annuitant or the annuitant’s spouse, if either is institutionalized. Iowa may be named either:
	 (1) 	 In the first position; or
	 (2) 	 In the second position after the spouse or minor or disabled child and in the first position if the spouse or a representative of the child disposes of any of the remainder for less than fair market value.
	 75.23(10) Purchase of promissory notes, loans, or mortgages.
	  a.   	 Funds used to purchase a promissory note, loan, or mortgage after February 8, 2006, shall be treated as assets transferred for less than fair market value in the amount of the outstanding balance due on the note, loan, or mortgage as of the date of the individual’s application for medical assistance for services described in 75.23(1), unless the note, loan, or mortgage meets all of the following conditions:
	 (1) 	 The note, loan, or mortgage has a repayment term that is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the United States Social Security Administration).
	 (2) 	 The note, loan, or mortgage provides for payments to be made in equal amounts during the term of the loan, with no deferral and no balloon payments made.
	 (3) 	 The note, loan, or mortgage prohibits the cancellation of the balance upon the death of the lender.
	  b.   	 Funds used to purchase a promissory note, loan, or mortgage for less than its fair market value shall be treated as assets transferred for less than fair market value regardless of whether:
	 (1) 	 The note, loan, or mortgage was purchased before February 8, 2006; or
	 (2) 	 The note, loan, or mortgage was purchased on or after February 8, 2006, and the conditions described in 75.23(9)“a” were met.
	 75.23(11) Purchase of life estates.
	  a.   	 The entire amount used to purchase a life estate in another individual’s home after February 8, 2006, shall be treated as assets transferred for less than fair market value, unless the purchaser resides in the home for at least one year after the date of the purchase.
	  b.   	 Funds used to purchase a life estate in another individual’s home for more than its fair market value shall be treated as assets transferred for less than fair market value regardless of whether:
	 (1) 	 The life estate was purchased before February 8, 2006; or
	 (2) 	 The life estate was purchased on or after February 8, 2006, and the purchaser resided in the home for one year after the date of purchase.
This rule is intended to implement Iowa Code sections 249A.3 and 249A.4.
[ARC 7834B, IAB 6/3/09, effective 7/8/09; ARC 8444B, IAB 1/13/10, effective 3/1/10; ARC 8898B, IAB 6/30/10, effective 7/1/10; ARC 9404B, IAB 3/9/11, effective 5/1/11; ARC 9582B, IAB 6/29/11, effective 7/1/11; ARC 0192C, IAB 7/11/12, effective 7/1/12; ARC 0821C, IAB 7/10/13, effective 7/1/13]