42 U.S.C. § 1396p — Liens, adjustments and recoveries, and transfers of assets

(a) (1) The State^* may not place a lien on a person’s property before death because of medical assistance^* paid or to be paid under the State plan, except: (A) a court may impose one for incorrectly paid benefits; or (B) the State may lien the real property of an inpatient in a nursing facility^*, intermediate care facility for people with intellectual disabilities, or other medical institution who must spend all but a minimal amount needed for personal needs on medical care^*, if, after notice and a hearing under State procedures, the State finds the person^* cannot reasonably be discharged and return home. (2) The State may not lien the home if the person’s spouse, child under 21 (or a blind or disabled child under the stated program rules), or qualifying sibling with an equity interest who lived there for at least one year before admission is lawfully living there. (3) Such a lien dissolves when the person leaves the institution and returns home.
(b) (1) The State may not adjust or recover correctly paid assistance, except it must do so: (A) from the estate, or when liened property is sold, for an institutionalized person described in (a)(1)(B); (B) from the estate of a person who was at least 55 when receiving assistance, for nursing-facility, home- and community-based, and related hospital and prescription-drug^* services, or, if the State chooses, for all plan services except Medicare cost sharing and section 1396a(a)(10)(E) benefits; and (C) from the estate for long-term-care services when a person received or is entitled to receive benefits under a qualifying long-term-care policy whose assets were disregarded. The exception in (C) applies to a State plan amendment approved by May 14, 1993, if it meets (iv), or to an amendment providing a qualified State long-term-care-insurance partnership that disregards assets to the extent of policy payments or because the person received or is entitled to receive them. (iii) A qualified partnership is an approved amendment that disregards assets equal to policy benefits if: (I) the insured lived in the State when coverage began; (II) the policy is a qualified policy under section 7702B(b) issued no earlier than the amendment’s effective date; (III) it meets the model regulation and Act requirements in paragraph (5); (IV) it provides compound inflation protection if bought before age 61, some inflation protection if bought from age 61 through 75, and may provide it if bought at 76 or older; (V) the Medicaid agency gives the State insurance department information and technical help so sellers are trained and understand these policies and their relation to other coverage; (VI) the issuer regularly reports benefit payments, their amounts, termination, and other Secretary^*-required information; and (VII) the State imposes a policy-term or benefit requirement on partnership policies only if it imposes it on long-term-care policies generally. For an exchanged policy, (I) uses the first policy’s coverage. A group-contract certificate counts as a policy. (iv) A State with an amendment approved by May 14, 1993 meets the consumer-protection condition if the Secretary finds its standards are at least as strict as those in effect under that amendment on December 31, 2005. (v) The Secretary’s reporting regulations must be made after consulting the named insurance officials, issuers, experienced States, other States, and consumer representatives; must specify data, format, and reporting frequency; and may be shared with the State. (vi) After consulting the named Federal agencies, insurance officials, issuers, States, and consumers, the Secretary must develop recommendations for Congress to authorize and fund a uniform electronic minimum data set in a secure centralized system accessible to States, the Secretary, and other Federal agencies. (2) The State may recover only after the surviving spouse dies, if any, and when no surviving child under 21 (or qualifying blind or disabled child) remains. For a home lien, no qualifying sibling or son or daughter may be continuously and lawfully living there since admission; the son or daughter must have lived there at least two years before admission and provided care that allowed the person to remain home. (3)(A) The State agency must create Secretary-standard procedures to waive this subsection, other than (1)(C), for undue hardship. (B) Those procedures must exempt income, resources, and property exempt under the April 1, 2003 manual instructions because of Federal responsibility for Indian Tribes and Alaska Native Villages. The Secretary may add Indian estate-recovery exemptions. (4) “Estate” includes all real and personal property and other assets included under State probate law. A State may also include other property or assets in which the deceased had legal title or an interest at death, including property passing through joint tenancy, tenancy in common, survivorship, life estate, living trust, or another arrangement; it must include those interests for a person covered by (1)(C)(i). (5)(A) The required model-regulation protections are sections 6A except paragraph 5 and related model-Act requirements, 6B except paragraph 7, 6C, 6D, 6E, 7, 8 except 8F–8I, 9, 11, 12, 14, 15, 22, 23 including inaccurate medical histories except section 23C paragraphs 1, 6, and 9, 24, 25, contingent nonforfeiture provisions of 26 when the policyholder rejects the offered provision, 29, and 30. The required model-Act protections are sections 6C, 6D, section 8’s contingent-nonforfeiture provisions, 6F, 6G, 6H, 6J, 6K, and 7. (B) “Model regulation” and “model Act” mean the long-term-care models adopted by the National Association of Insurance Commissioners as of October 2000. Listed provisions include provisions needed to implement them. A policy is treated as meeting them if the State insurance commissioner certifies, satisfactorily to the Secretary, that it does. (C) Within 12 months after that Association revises or updates a listed provision or a substantively related provision, the Secretary must review it and incorporate the change if doing so would improve qualified partnerships.
(c) (1)(A) To satisfy section 1396a(a)(18), the State plan must say that an institutionalized person or spouse—or, if the State chooses, a noninstitutionalized person or spouse—who transfers assets for less than fair market value on or after the look-back date is ineligible for the specified long-term-care services during a penalty period beginning on the date in (D) and lasting the number of months in (E). (B)(i) The look-back date is 36 months before the date in (ii), or 60 months for trust payments treated as transfers under (d)(3)(A)(iii) or (d)(3)(B)(ii), and for other transfers on or after February 8, 2006. (ii) For an institutionalized person it is the first date the person is institutionalized and has applied; for a noninstitutionalized person it is the application date or, if later, the transfer date. (C)(i) For an institutionalized person, the services are nursing-facility services, an equivalent institutional level of care, and home- or community-based services under section 1396n(c) or (d) waivers. (ii) For a noninstitutionalized person, they are services under section 1396d(a)(7), (22), or (24), excluding (i), plus any other State-selected long-term-care services otherwise available. (D)(i) For a transfer before February 8, 2006, the penalty starts on the first day of the first month in or after the transfer when assets were transferred below market value and that is not in another penalty period. (ii) For a later transfer, it starts on the later of that kind of month’s first day or the date the person is eligible and would otherwise receive the institutional level of care under an approved application but for the penalty, and it cannot overlap another penalty period. (E)(i) For an institutionalized person, months equal total cumulative uncompensated transfers since the look-back date divided by the State’s, or its chosen community’s, average monthly private-patient nursing-facility cost at application. (ii) For a noninstitutionalized person, months may not exceed that quotient. (iii) For a transfer, reduce one result by the other result when both apply. (iv) Do not round down or ignore a fractional month. (F) Buying an annuity counts as a below-market transfer unless the State is first remainder beneficiary for at least all assistance paid, or is second after a spouse or minor or disabled child and becomes first if that person disposes of the remainder below market. (G) “Assets” includes an annuity bought by or for an applicant for nursing-facility or other long-term-care services unless it is a section 408(b) or (q) annuity, is bought with proceeds from a section 408(a), (c), or (p) account or trust, a simplified employee pension, or a Roth IRA, or is irrevocable, nonassignable, actuarially sound under the Social Security Actuary’s publications, and paid in equal amounts without deferral or balloon payments. (H) For multiple fractional transfers in more than one month, the State may combine their total uncompensated value as one transfer and begin the penalty at the earliest applicable date. (I) “Assets” includes funds used for a note, loan, or mortgage unless repayment is actuarially sound, payments are equal with no deferral or balloon payment, and the lender’s death does not cancel the balance. If not, value is the outstanding balance when the person applies. (J) It includes buying a life estate in another person’s home unless the buyer lives there for at least one year afterward. (2) No penalty applies to the extent: (A) a home was transferred to the spouse; a child under 21 or qualifying blind or disabled child; a sibling with an equity interest who lived there at least one year before institutionalization; or a son or daughter who lived there at least two years before institutionalization and provided care that allowed the person to stay home; (B) assets went to the spouse or solely benefited the spouse, went from the spouse solely for the spouse, went to the qualifying child, or went to a trust solely benefiting a disabled person under 65; (C) the person shows the State that the transfer was for fair value or other valuable consideration, for a purpose other than qualifying, or that all below-market assets were returned; or (D) the State finds denial would cause undue hardship. The facility may apply with the person’s or representative’s consent. While a nursing-facility hardship application meeting Secretary criteria is pending, the State may pay to hold the bed for up to 30 days. (3) For jointly held property, a transfer occurs when anyone reduces or eliminates the person’s ownership or control. (4) A State may impose no below-market resource-transfer penalty outside this subsection. If a spouse’s transfer causes a penalty and the spouse later qualifies, the State must reasonably apportion the penalty between them under Secretary standards. (5) “Resources” has the section 1382b meaning without its subsection (a)(1) exclusion.
(d) (1) For eligibility or benefit amounts, and subject to (4), paragraph (3) applies to a trust established by the person. (2)(A) A person established a trust if the person’s assets form all or part of it and it was established other than by will by the person, spouse, someone legally authorized to act for either, or someone acting at either’s direction or request. (B) If others also contributed, these rules apply to the person’s attributable portion. (C) Subject to (4), they apply regardless of the trust’s purpose, trustee discretion, distribution restrictions, or restrictions on using distributions. (3)(A) For a revocable trust, the corpus is available resources, payments to or for the person are income, and other payments are assets transferred by the person under (c). (B) For an irrevocable trust, any portion or income that could under any circumstance pay the person is available resources; payments to or for the person are income, and payments for another purpose are a (c) asset transfer. A portion or income that could never pay the person is treated, from establishment or from the later date payment became impossible, as assets transferred under (c), including later payments from that portion in its value. (4) These rules do not apply to: (A) a trust for a disabled person under 65 established by the person, parent^*, grandparent, guardian, or court if the State receives remaining amounts at death up to all assistance paid; (B) a State trust containing only the person’s pension, Social Security, other income, and accumulated income, with the same State repayment, when the State covers section 1396a(a)(10)(A)(ii)(V) people but not nursing-facility people under (C); or (C) a pooled trust for a disabled person if a nonprofit establishes and manages it, each beneficiary has a separate account though funds are pooled for management, accounts are solely for disabled people and established by the person, parent, grandparent, guardian, or court, and the trust pays the State from amounts not retained after death up to all assistance paid. (5) The State agency must create Secretary-standard procedures to waive these trust rules for undue hardship. (6) “Trust” includes similar legal devices; it includes an annuity only as and to the extent the Secretary specifies.
(e) (1) For long-term-care assistance, an application and each recertification must disclose any interest the person or community spouse has in an annuity or Secretary-specified similar instrument, whether irrevocable or treated as an asset. The form must say that providing assistance makes the State a remainder beneficiary under (2). (2)(A) For a disclosed annuity under (c)(1)(F), the State must notify the issuer that it has a preferred remainder interest for assistance provided. The issuer may notify other remainder-interest holders. (B) The State may require the issuer to report changes in withdrawn income or principal from the latest disclosure, and the State must consider that information in deciding its assistance obligation or eligibility. (3) The Secretary may guide States on transactions treated as below-market transfers. (4) A State may still deny assistance based on annuity income or resources.
(f) (1)(A) For nursing-facility or other long-term-care assistance, a person is ineligible if home equity exceeds $500,000, subject to (B), (C), and (2), despite other provisions. (B) A State may substitute a higher amount up to $750,000 without the statewideness and comparability requirements. (C) Beginning in 2011, both amounts rise yearly with the all-items CPI for urban consumers, U.S. city average, rounded to the nearest $1,000. (2) The rule does not apply if the spouse or a child under 21, or a qualifying blind or disabled child, lawfully lives in the home. (3) The person may still use a reverse mortgage or home-equity loan to reduce equity. (4) The Secretary must create a hardship-waiver process.
(g) (1) For eligibility or benefit amounts, the rules in (2) apply to residents of continuing-care or life-care communities that charge entrance fees. (2) The fee is an available resource to the extent that: (A) the person can use it, or the contract allows its use, to pay care when other income or resources are insufficient; (B) the person can receive any remaining fee when dying or ending the contract and leaving; and (C) the fee does not give an ownership interest in the community.
(h) (1) “Assets” includes all income and resources of the person and spouse, including income or resources they are entitled to but do not receive because of action by either of them, by someone legally authorized to act for either, or by someone acting at either’s direction or request. (2) “Income” has the meaning in section 1382a. (3) “Institutionalized individual” means an inpatient in a nursing facility, an inpatient in a medical institution paid at a nursing-facility level, or a person described in section 1396a(a)(10)(A)(ii)(VI). (4) “Noninstitutionalized individual” means someone receiving services specified in (c)(1)(C)(ii). (5) “Resources” has the section 1382b meaning, but for an institutionalized person the subsection (a)(1) exclusion does not apply.