Category Archives: Transfers For Less Than Fair Market Value

Transfers For Less Than Fair Market Value

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THIS ARTICLE IS INTENDED TO SUPPORT THE READER’S AWARENESS AND UNDERSTANDING.  IT IS NOT LEGAL ADVICE.   IF THE READER SEEKS LEGAL ADVICE CONCERNING HIS OR HER PARTICULAR SITUATION, HE OR SHE SHOULD SEEK OUT AN ATTORNEY IN A LAWYER CLIENT RELATIONSHIP.

Financial needs-based benefits such as MA-LTC are not intended to preserve the estates of individuals who have the means to support themselves. Accordingly, individuals who have the means to support themselves should not create entitlement to a needs-based benefit by transferring countable or covered assets in order to decrease net worth .   Also , financial products should not be sold or marketed to individuals who have the means to support themselves for the purpose of establishing entitlement to a needs-based benefit .

When an individual transfers an asset for less than fair market value , the County Assistance Office ( CAO ) can presume that the asset was disposed of to establish or maintain eligibility for Medical Assistance Long Term Care ( MA LTC) and deny payment of MA LTC services for a specific period of time.   The look back date is the earliest date to assess a period of ineligibility penalty for the transfer of assets for less than FMV.  For individuals applying for payment of services in an LTC facility or HCBS ( i.e Home and Community Based Services ) who are not recipients of MA, the look back period begins five years prior to the application date for MA LTC .  When there is a transfer of assets for less than FMV,  MA-LTC will be denied during a “period of ineligibility . 

Needs-based benefits like MA-LTC ( or the Veteran’s “Aid and Attendance ”  Improved Pension Benefit ) are not intended to preserve the estates of individuals who have the means to support themselves. Accordingly, individuals who have the means to support themselves should not create entitlement to a needs- based benefit by transferring countable or covered assets in order to decrease net worth  . See 38 CFR § 3.276 (a)(8) (b and (c)  – Asset transfers and penalty periods; See also See Department of Veteran’s Affairs Adjudication Procedures Manual M21-1, Part IX , Subpart iii , 1.J.5.c Transfers for Less Than Fair Market Value ; See 38 CFR § 3.276 (a)(8) (b and (c)  – Asset transfers and penalty periods. 

Also , financial products should not be sold or marketed to individuals who have the means to support themselves for the purpose of establishing entitlement to a needs-based benefit . See Department of Veteran’s Affairs Adjudication Procedures Manual M21-1, Part IX , Subpart iii , 1.J.5.c  Transfers for Less Than Fair Market Value ; See 38 CFR § 3.276 (a)(8) (b and (c)  – Asset transfers and penalty periods.  Such activity would constitute fraud, misrepresentation or unfair business practice related to the sale or marketing of financial products and justify a complaint contemporaneously filed with State, Local, or Federal authorities reporting the incident. See Department of Veteran’s Affairs Adjudication Procedures Manual M21-1, Part IX , Subpart iii , 1.J.5.c  Transfers for Less Than Fair Market Value ; See 38 CFR § 3.276 (a)(8) (b and (c)  – Asset transfers and penalty periods.

When an individual transfers (gives away or sells) an asset for less than FMV, the CAO can presume that the asset was disposed of to establish or maintain eligibility for MA LTC. The individual may rebut this presumption with convincing evidence that the transfer of assets was solely for a purpose other than to qualify for MA LTC  See Pennsylvania Long Term Care Handbook  Chapter 440.813 Rebuttal Process See also 55 Pa. Code 178.105( c )  

If the individual does not rebut the presumption, the CAO will presume that the asset was transferred to qualify for MA LTC.  The following will apply: The uncompensated value is considered a transfer of an asset for less than FMV. Payment of LTC services is denied for a specific period of time. An individual who is not eligible for payment of LTC services under the transfer of assets requirements remains ineligible until one of the following occurs: the presumption of intent to qualify for payment of LTC services is successfully rebutted at a pre-hearing conference, at a hearing or through a court order.;  the asset is re-conveyed to the individual.; the individual later receives full uncompensated value of the asset;  the period of ineligibility for payment of LTC services has elapsed  ; the Department approves an undue hardship waiver request in part or in full.  See 55 Pa. Code 178.106;  Pennsylvania Long Term Care Handbook  Chapter 440.814   CAO Process – Presumption not Rebutted

The disposition of an asset occurs when there is a transfer of ownership of, or interest in, a property.  This may affect the individual’s eligibility for payment of LTC services.  Disposing of an excluded or countable asset includes, but is not limited to:

  • Spending liquid or converting non-liquid assets to pay medical expenses.

NOTE: If an asset is used to pay medical expenses during the requested date of MA coverage (retroactive) or continuing eligibility period (before expiration of an advance notice to end MA due to excess resources), the CAO will treat the asset as if it never existed.

  • Selling, exchanging or transferring the ownership title to real or personal property.
  • Selling real or personal property.
  • Spending resources to buy items for the benefit of the individual or spouse.
  • Unidentified deposits on financial statements.
  • Unidentified withdrawals from bank accounts.
  • Tax assessor online pages showing change in ownership of property.
  • Exchanging the asset for other property.
  • Purchasing annuities.
  • Decreasing the value of the asset by placing an encumbrance, mortgage or judgment on it.
  • Decreasing the value of an interest in a property by placing an encumbrance or by adding an individual to the title.
  • Decreasing the value of the asset by adding another individual’s name to the title, deed or account.
  • Receiving cash from disposing of an excluded or countable resource and disposing of the cash.
  • Purchasing life estate interest.
  • Receiving  promissory notes and mortgages in exchange for cash or property.
  • Making formal and informal loans to others.
  • Establishing a trust.

NOTE: As a condition of eligibility, the individual (or someone applying on behalf of the individual such as a guardian and/or trustee) must report and give proof of all trusts that are or will be established with the individual as a beneficiary. This includes Special Needs Trusts.

  • Cashing a life insurance policy
  • Establishing a burial reserve
  • Assigning income to someone else
  • Giving real or personal property to some else

NOTE: The eligibility of a spouse receiving MA is not affected if his or her community spouse owns an asset other than the home and disposes of it after the CAO authorizes MA for the spouse receiving LTC services. See PA Long Term Care Handbook Chapter 440.81  Description of disposition of an asset; See Also 55 Pa. Code § 178.1(c) ; 55 Pa. Code § 178.1(j)

If an individual or the individual’s spouse disposes of or transfers assets for less than FMV,  the CAO will apply the fair consideration requirements to the individual who is applying for or receiving: MA LTC in an LTC facility, ICF/ID facility, ICF/ORC facility, or  Home and Community Based Services (HCBS).   The CAO will deny eligibility for payment of LTC services to otherwise eligible individuals who transfer assets for less than FMV.

The disposal of assets for less than FMV also applies to an individual acting on behalf of an applicant or recipient.  This includes a guardian, attorney, individual with power-of-attorney or the adult son or daughter. Assets include all income and resources of the individual and his or her spouse. This includes both income and resources that the individual or spouse is entitled to but does not receive because of any action by:  The individual or the individual’s spouse, an individual or a court or administrative body with legal authority to act in place of or on behalf of the individual or the individual’s spouse,  any individual or a court or administrative body acting at the direction or upon the request of the individual or the individual’s spouse.

Examples of actions that cause the individual not to receive income or resources include: irrevocably waiving pension income., waiving the right to receive an inheritance, not accepting or accessing injury settlements, diverting tort settlements, by the defendant, into a trust or similar device to be held for the benefit of an individual who is a plaintiff, refusing to take legal action to get a court-ordered payment that is not being paid, such as child support or alimony.  In most cases, an action that causes income or resources not to be received is considered a transfer of assets for less than FMV.  See Pennsylvania Long Term Care Handbook;   Chapter 440.8 Disposition of Assets and Fair Consideration

The look back date is the earliest date that the CAO can assess a penalty for the transfer of assets exceeding $500 .00 monthly for less than FMV. In order to determine the look back period, the following rules should be applied: for individuals applying for payment of services in an LTC facility or HCBS who are not recipients of MA, the look back period begins five years prior to the application date for MA LTC  See LTC Handbook 440.82 Look back date and look back period

When there is a transfer of assets for less than FMV, the CAO may deny eligibility for payment of LTC services including: LTC facility services, including services in an ICF/ID; a level of care in an institution equivalent to LTC facility services; Services provided under an approved HCBS waiver program. The ineligibility period for the individual who disposes of assets for less than FMV equals:   The total uncompensated value of all the assets transferred by the individual or spouse on or after the look back date divided by the average daily private pay rate in effect at the time the period of ineligibility is determined. See 55 Pa. Code § 178.104 (d). 

In 2025 the average monthly ( $ 12,160.58 )  and daily ($ 399.80)  private pay rates.  See Pennsylvania LTC Handbook Chapter 468 Appendix A ; See also DHS Operations Memorandum 24-1101 

For an applicant, the begin date for a period of ineligibility for payment of LTC service due to a transfer of assets for less than FMV is: the date the individual  would otherwise qualify for MA and payment of LTC services based on an approved application but for the transfer of assets without receiving FMV.  See Pennsylvania LTC Handbook 440.851 Period of Ineligibility for Payment of LTC Services

An applicant/recipient is ineligible for MA on the date that his resources exceed the MA resource limit in Appendix A for the appropriate MA Program and he remains resource ineligible until his resources are equal to, or less than, the resource limit. The disposition of excess resources shall meet the fair consideration provisions for the appropriate program. See 55 PA. Code 178.1 (c )