Effect of Change in Penalty Rate

Planning may have been undertaken last year with the anticipation of a penalty rate of $7,282. Counsel should be cognizant of the effect of a change in the penalty rate on the date of eligibility.

(A) The period of ineligibility is determined with respect to the average nursing home cost as at the time of application: 42 U.S.C. 1396(c) (1) (E).
(B) An increase in the penalty rate shortens the penalty period. Therefore, such increase between the date of transfer and the anticipated date of eligibility results in an earlier date of eligibility.

Med. Com. 12-10 changes the penalty rate from $7,282 to $7,757 as of May 29, 2012, retroactive to November 1, 2011. An increase between the date of transfer and the anticipated date of eligibility results in an earlier date of eligibility.

Example: An individual transfers $60,000 on December 1, 2011. The anticipated penalty period would be $60,000 divided by $7,282 which equals 8.23 months. However, Med. Com. 12-10 changed the penalty rate to $7,757. Therefore, the period of ineligibility is $60,000 divided by $7,757 which equals 7.7 months and results in an earlier date of eligibility.

Planning point: Counsel should review all transfers during the look-back period. The increased penalty rate may warrant an earlier date of eligibility.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© July 2012, Post 207