Change in Penalty Rate

Change in Penalty Rate

Under both OBRA ’93 and the Deficit Reduction Act, the penalty period is determined by dividing the amount of the transfer by the applicable average nursing home costs. In addition, in January of each year, the penalty is increased retroactively to November 1 of the prior year. Therefore, the penalty rate through October 31, 2008 was $6,942. Subsequently in January 2009 the penalty rate was adjusted to $7,282 per month retroactive to November 1, 2008. Assume a transfer on November 15, 2008, of $100,000. If all the requirements of Medicaid have been met but for the transfer, the penalty due to the transfer would appear to be 100,000 ÷ 6,942 = 14.4 months.

See Post 15 for the starting date of the transfer penalty under the Deficit Reduction Act.

However, the newly instituted rate, which is retroactive to November 1, 2008, requires a divisor of 7,282. The actual period of ineligibility giving consideration to the retroactivity is 13.73 months.

Key point: If a transfer occurs on or after November 1 of a given year and an application is made for Medicaid, anticipate a lesser penalty due to the above retroactivity rule.

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


© August 2009, Post 51