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2007 Minnesota Statutes

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256B.0595 PROHIBITIONS ON TRANSFER; EXCEPTIONS.
    Subdivision 1. Prohibited transfers. (a) For transfers of assets made on or before August
10, 1993, if a person or the person's spouse has given away, sold, or disposed of, for less than
fair market value, any asset or interest therein, except assets other than the homestead that are
excluded under the supplemental security program, within 30 months before or any time after the
date of institutionalization if the person has been determined eligible for medical assistance, or
within 30 months before or any time after the date of the first approved application for medical
assistance if the person has not yet been determined eligible for medical assistance, the person is
ineligible for long-term care services for the period of time determined under subdivision 2.
(b) Effective for transfers made after August 10, 1993, a person, a person's spouse, or any
person, court, or administrative body with legal authority to act in place of, on behalf of, at
the direction of, or upon the request of the person or person's spouse, may not give away, sell,
or dispose of, for less than fair market value, any asset or interest therein, except assets other
than the homestead that are excluded under the supplemental security income program, for the
purpose of establishing or maintaining medical assistance eligibility. This applies to all transfers,
including those made by a community spouse after the month in which the institutionalized
spouse is determined eligible for medical assistance. For purposes of determining eligibility for
long-term care services, any transfer of such assets within 36 months before or any time after an
institutionalized person applies for medical assistance, or 36 months before or any time after a
medical assistance recipient becomes institutionalized, for less than fair market value may be
considered. Any such transfer is presumed to have been made for the purpose of establishing or
maintaining medical assistance eligibility and the person is ineligible for long-term care services
for the period of time determined under subdivision 2, unless the person furnishes convincing
evidence to establish that the transaction was exclusively for another purpose, or unless the
transfer is permitted under subdivision 3 or 4. In the case of payments from a trust or portions of a
trust that are considered transfers of assets under federal law, or in the case of any other disposal
of assets made on or after February 8, 2006, any transfers made within 60 months before or any
time after an institutionalized person applies for medical assistance and within 60 months before
or any time after a medical assistance recipient becomes institutionalized, may be considered.
(c) This section applies to transfers, for less than fair market value, of income or assets,
including assets that are considered income in the month received, such as inheritances, court
settlements, and retroactive benefit payments or income to which the person or the person's
spouse is entitled but does not receive due to action by the person, the person's spouse, or any
person, court, or administrative body with legal authority to act in place of, on behalf of, at the
direction of, or upon the request of the person or the person's spouse.
(d) This section applies to payments for care or personal services provided by a relative,
unless the compensation was stipulated in a notarized, written agreement which was in existence
when the service was performed, the care or services directly benefited the person, and the
payments made represented reasonable compensation for the care or services provided. A
notarized written agreement is not required if payment for the services was made within 60
days after the service was provided.
(e) This section applies to the portion of any asset or interest that a person, a person's
spouse, or any person, court, or administrative body with legal authority to act in place of, on
behalf of, at the direction of, or upon the request of the person or the person's spouse, transfers
to any annuity that exceeds the value of the benefit likely to be returned to the person or spouse
while alive, based on estimated life expectancy using the life expectancy tables employed by
the supplemental security income program to determine the value of an agreement for services
for life. The commissioner may adopt rules reducing life expectancies based on the need for
long-term care. This section applies to an annuity described in this paragraph purchased on or
after March 1, 2002, that:
(1) is not purchased from an insurance company or financial institution that is subject to
licensing or regulation by the Minnesota Department of Commerce or a similar regulatory agency
of another state;
(2) does not pay out principal and interest in equal monthly installments; or
(3) does not begin payment at the earliest possible date after annuitization.
(f) Effective for transactions, including the purchase of an annuity, occurring on or after
February 8, 2006, the purchase of an annuity by or on behalf of an individual who has applied for
or is receiving long-term care services or the individual's spouse shall be treated as the disposal
of an asset for less than fair market value unless the department is named as the remainder
beneficiary in first position for an amount equal to at least the total amount of medical assistance
paid on behalf of the individual or the individual's spouse; or the department is named as the
remainder beneficiary in second position for an amount equal to at least the total amount of
medical assistance paid on behalf of the individual or the individual's spouse after the individual's
community spouse or minor or disabled child and is named as the remainder beneficiary in the
first position if the community spouse or a representative of the minor or disabled child disposes
of the remainder for less than fair market value. Any subsequent change to the designation of
the department as a remainder beneficiary shall result in the annuity being treated as a disposal
of assets for less than fair market value. The amount of such transfer shall be the maximum
amount the individual or the individual's spouse could receive from the annuity or similar
financial instrument. Any change in the amount of the income or principal being withdrawn from
the annuity or other similar financial instrument at the time of the most recent disclosure shall
be deemed to be a transfer of assets for less than fair market value unless the individual or the
individual's spouse demonstrates that the transaction was for fair market value.
(g) Effective for transactions, including the purchase of an annuity, occurring on or after
February 8, 2006, the purchase of an annuity by or on behalf of an individual applying for
or receiving long-term care services shall be treated as a disposal of assets for less than fair
market value unless it is:
(i) an annuity described in subsection (b) or (q) of section 408 of the Internal Revenue
Code of 1986; or
(ii) purchased with proceeds from:
(A) an account or trust described in subsection (a), (c), or (p) of section 408 of the Internal
Revenue Code;
(B) a simplified employee pension within the meaning of section 408(k) of the Internal
Revenue Code; or
(C) a Roth IRA described in section 408A of the Internal Revenue Code; or
(iii) an annuity that is irrevocable and nonassignable; is actuarially sound as determined in
accordance with actuarial publications of the Office of the Chief Actuary of the Social Security
Administration; and provides for payments in equal amounts during the term of the annuity, with
no deferral and no balloon payments made.
(h) For purposes of this section, long-term care services include services in a nursing facility,
services that are eligible for payment according to section 256B.0625, subdivision 2, because they
are provided in a swing bed, intermediate care facility for persons with developmental disabilities,
and home and community-based services provided pursuant to sections 256B.0915, 256B.092,
and 256B.49. For purposes of this subdivision and subdivisions 2, 3, and 4, "institutionalized
person" includes a person who is an inpatient in a nursing facility or in a swing bed, or
intermediate care facility for persons with developmental disabilities or who is receiving home
and community-based services under sections 256B.0915, 256B.092, and 256B.49.
(i) This section applies to funds used to purchase a promissory note, loan, or mortgage
unless the note, loan, or mortgage:
(1) has a repayment term that is actuarially sound;
(2) provides for payments to be made in equal amounts during the term of the loan, with no
deferral and no balloon payments made; and
(3) prohibits the cancellation of the balance upon the death of the lender.
In the case of a promissory note, loan, or mortgage that does not meet an exception in clauses
(1) to (3), the value of such note, loan, or mortgage shall be the outstanding balance due as of the
date of the individual's application for long-term care services.
(j) This section applies to the purchase of a life estate interest in another individual's home
unless the purchaser resides in the home for a period of at least one year after the date of purchase.
    Subd. 1a.[Repealed, 2001 c 203 s 19]
    Subd. 1b. Prohibited transfers. (a) Notwithstanding any contrary provisions of this section,
this subdivision applies to transfers involving recipients of medical assistance that are made on or
after July 1, 2003, and to all transfers involving persons who apply for medical assistance on or
after July 1, 2003, if the transfer occurred within 72 months before the person applies for medical
assistance, except that this subdivision does not apply to transfers made prior to July 1, 2003. A
person, a person's spouse, or any person, court, or administrative body with legal authority to
act in place of, on behalf of, at the direction of, or upon the request of the person or the person's
spouse, may not give away, sell, dispose of, or reduce ownership or control of any income, asset,
or interest therein for less than fair market value for the purpose of establishing or maintaining
medical assistance eligibility. This applies to all transfers, including those made by a community
spouse after the month in which the institutionalized spouse is determined eligible for medical
assistance. For purposes of determining eligibility for medical assistance services, any transfer of
such income or assets for less than fair market value within 72 months before or any time after a
person applies for medical assistance may be considered. Any such transfer is presumed to have
been made for the purpose of establishing or maintaining medical assistance eligibility, and
the person is ineligible for medical assistance services for the period of time determined under
subdivision 2b, unless the person furnishes convincing evidence to establish that the transaction
was exclusively for another purpose or unless the transfer is permitted under subdivision 3b or 4b.
Convincing evidence of any one of the following facts shall establish that a gift that is a
charitable contribution to an organization described in section 170(c) of the Internal Revenue
Code of 1986, as amended, was made exclusively for a purpose other than establishing or
maintaining medical assistance eligibility, unless at the time of the gift the donor or donor's
spouse was receiving long-term care services, was advised by a medical professional of the need
for long-term care services, or was a medical assistance applicant or recipient:
(1) the donor made one or more gifts to the same donee organization more than 180 days
prior to the date of the gift in question; or
(2) the gift was made to an organization for which the donor had provided volunteer services,
acknowledged in writing by the organization, prior to the date of the gift.
A person may alternatively establish with other convincing evidence that a charitable gift was
made exclusively for a purpose other than establishing or maintaining medical assistance
eligibility.
(b) This section applies to transfers to trusts. The commissioner shall determine valid trust
purposes under this section. Assets placed into a trust that is not for a valid purpose shall always
be considered available for the purposes of medical assistance eligibility, regardless of when the
trust is established.
(c) This section applies to transfers of income or assets for less than fair market value,
including assets that are considered income in the month received, such as inheritances, court
settlements, and retroactive benefit payments or income to which the person or the person's
spouse is entitled but does not receive due to action by the person, the person's spouse, or any
person, court, or administrative body with legal authority to act in place of, on behalf of, at the
direction of, or upon the request of the person or the person's spouse.
(d) This section applies to payments for care or personal services provided by a relative,
unless the compensation was stipulated in a notarized written agreement that was in existence
when the service was performed, the care or services directly benefited the person, and the
payments made represented reasonable compensation for the care or services provided. A
notarized written agreement is not required if payment for the services was made within 60
days after the service was provided.
(e) This section applies to the portion of any income, asset, or interest therein that a person, a
person's spouse, or any person, court, or administrative body with legal authority to act in place of,
on behalf of, at the direction of, or upon the request of the person or the person's spouse, transfers
to any annuity that exceeds the value of the benefit likely to be returned to the person or the
person's spouse while alive, based on estimated life expectancy, using the life expectancy tables
employed by the supplemental security income program, or based on a shorter life expectancy if
the annuitant had a medical condition that would shorten the annuitant's life expectancy and that
was diagnosed before funds were placed into the annuity. The agency may request and receive a
physician's statement to determine if the annuitant had a diagnosed medical condition that would
shorten the annuitant's life expectancy. If so, the agency shall determine the expected value of the
benefits based upon the physician's statement instead of using a life expectancy table. This section
applies to an annuity described in this paragraph purchased on or after March 1, 2002, that:
(1) is not purchased from an insurance company or financial institution that is subject to
licensing or regulation by the Minnesota Department of Commerce or a similar regulatory agency
of another state;
(2) does not pay out principal and interest in equal monthly installments; or
(3) does not begin payment at the earliest possible date after annuitization.
(f) Transfers under this section shall affect determinations of eligibility for all medical
assistance services or long-term care services, whichever receives federal approval.
    Subd. 2. Period of ineligibility. (a) For any uncompensated transfer occurring on or before
August 10, 1993, the number of months of ineligibility for long-term care services shall be the
lesser of 30 months, or the uncompensated transfer amount divided by the average medical
assistance rate for nursing facility services in the state in effect on the date of application. The
amount used to calculate the average medical assistance payment rate shall be adjusted each
July 1 to reflect payment rates for the previous calendar year. The period of ineligibility begins
with the month in which the assets were transferred. If the transfer was not reported to the local
agency at the time of application, and the applicant received long-term care services during what
would have been the period of ineligibility if the transfer had been reported, a cause of action
exists against the transferee for the cost of long-term care services provided during the period of
ineligibility, or for the uncompensated amount of the transfer, whichever is less. The action may
be brought by the state or the local agency responsible for providing medical assistance under
chapter 256G. The uncompensated transfer amount is the fair market value of the asset at the time
it was given away, sold, or disposed of, less the amount of compensation received.
(b) For uncompensated transfers made after August 10, 1993, the number of months of
ineligibility for long-term care services shall be the total uncompensated value of the resources
transferred divided by the average medical assistance rate for nursing facility services in the state
in effect on the date of application. The amount used to calculate the average medical assistance
payment rate shall be adjusted each July 1 to reflect payment rates for the previous calendar year.
The period of ineligibility begins with the first day of the month after the month in which the
assets were transferred except that if one or more uncompensated transfers are made during a
period of ineligibility, the total assets transferred during the ineligibility period shall be combined
and a penalty period calculated to begin on the first day of the month after the month in which the
first uncompensated transfer was made. If the transfer was reported to the local agency after the
date that advance notice of a period of ineligibility that affects the next month could be provided
to the recipient and the recipient received medical assistance services or the transfer was not
reported to the local agency, and the applicant or recipient received medical assistance services
during what would have been the period of ineligibility if the transfer had been reported, a cause
of action exists against the transferee for the cost of medical assistance services provided during
the period of ineligibility, or for the uncompensated amount of the transfer, whichever is less.
The action may be brought by the state or the local agency responsible for providing medical
assistance under chapter 256G. The uncompensated transfer amount is the fair market value of
the asset at the time it was given away, sold, or disposed of, less the amount of compensation
received. Effective for transfers made on or after March 1, 1996, involving persons who apply for
medical assistance on or after April 13, 1996, no cause of action exists for a transfer unless:
(1) the transferee knew or should have known that the transfer was being made by a
person who was a resident of a long-term care facility or was receiving that level of care in the
community at the time of the transfer;
(2) the transferee knew or should have known that the transfer was being made to assist the
person to qualify for or retain medical assistance eligibility; or
(3) the transferee actively solicited the transfer with intent to assist the person to qualify
for or retain eligibility for medical assistance.
(c) For uncompensated transfers made on or after February 8, 2006, the period of ineligibility
begins on the first day of the month in which advance notice can be given following the month
in which assets have been transferred for less than fair market value, or the date on which the
individual is eligible for medical assistance under the Medicaid state plan and would otherwise
be receiving long-term care services based on an approved application for such care but for
the application of the penalty period, whichever is later, and which does not occur during any
other period of ineligibility.
(d) If a calculation of a penalty period results in a partial month, payments for long-term care
services shall be reduced in an amount equal to the fraction.
(e) In the case of multiple fractional transfers of assets in more than one month for less
than fair market value on or after February 8, 2006, the period of ineligibility is calculated by
treating the total, cumulative, uncompensated value of all assets transferred during all months
on or after February 8, 2006, as one transfer.
    Subd. 2a.[Repealed, 2001 c 203 s 19]
    Subd. 2b. Period of ineligibility. (a) Notwithstanding any contrary provisions of this section,
this subdivision applies to transfers, including transfers to trusts, involving recipients of medical
assistance that are made on or after July 1, 2003, and to all transfers involving persons who
apply for medical assistance on or after July 1, 2003, regardless of when the transfer occurred,
except that this subdivision does not apply to transfers made prior to July 1, 2003. For any
uncompensated transfer occurring within 72 months prior to the date of application, at any time
after application, or while eligible, the number of months of cumulative ineligibility for medical
assistance services shall be the total uncompensated value of the assets and income transferred
divided by the statewide average per-person nursing facility payment made by the state in effect
at the time a penalty for a transfer is determined. The amount used to calculate the average
per-person nursing facility payment shall be adjusted each July 1 to reflect average payments for
the previous calendar year. For applicants, the period of ineligibility begins with the month in
which the person applied for medical assistance and satisfied all other requirements for eligibility,
or the first month the local agency becomes aware of the transfer and can give proper notice, if
later. For recipients, the period of ineligibility begins in the first month after the month the agency
becomes aware of the transfer and can give proper notice, except that penalty periods for transfers
made during a period of ineligibility as determined under this section shall begin in the month
following the existing period of ineligibility. If the transfer was not reported to the local agency,
and the applicant received medical assistance services during what would have been the period
of ineligibility if the transfer had been reported, a cause of action exists against the transferee
for the cost of medical assistance services provided during the period of ineligibility or for the
uncompensated amount of the transfer that was not recovered from the transferor through the
implementation of a penalty period under this subdivision, whichever is less. Recovery shall
include the costs incurred due to the action. The action may be brought by the state or the local
agency responsible for providing medical assistance under this chapter. The total uncompensated
value is the fair market value of the income or asset at the time it was given away, sold, or disposed
of, less the amount of compensation received. No cause of action exists for a transfer unless:
(1) the transferee knew or should have known that the transfer was being made by a
person who was a resident of a long-term care facility or was receiving that level of care in the
community at the time of the transfer;
(2) the transferee knew or should have known that the transfer was being made to assist the
person to qualify for or retain medical assistance eligibility; or
(3) the transferee actively solicited the transfer with intent to assist the person to qualify
for or retain eligibility for medical assistance.
(b) If a calculation of a penalty period results in a partial month, payments for medical
assistance services shall be reduced in an amount equal to the fraction, except that in calculating
the value of uncompensated transfers, if the total value of all uncompensated transfers made in a
month not included in an existing penalty period does not exceed $200, then such transfers shall
be disregarded for each month prior to the month of application for or during receipt of medical
assistance.
(c) Ineligibility under this section shall apply to medical assistance services or long-term
care services, whichever receives federal approval.
    Subd. 3. Homestead exception to transfer prohibition. (a) An institutionalized person is
not ineligible for long-term care services due to a transfer of assets for less than fair market value
if the asset transferred was a homestead and:
(1) title to the homestead was transferred to the individual's:
(i) spouse;
(ii) child who is under age 21;
(iii) blind or permanently and totally disabled child as defined in the supplemental security
income program;
(iv) sibling who has equity interest in the home and who was residing in the home for a period
of at least one year immediately before the date of the individual's admission to the facility; or
(v) son or daughter who was residing in the individual's home for a period of at least two
years immediately before the date of the individual's admission to the facility, and who provided
care to the individual that, as certified by the individual's attending physician, permitted the
individual to reside at home rather than in an institution or facility;
(2) a satisfactory showing is made that the individual intended to dispose of the homestead at
fair market value or for other valuable consideration; or
(3) the local agency grants a waiver of a penalty resulting from a transfer for less than fair
market value because denial of eligibility would cause undue hardship for the individual, based
on imminent threat to the individual's health and well-being. Whenever an applicant or recipient
is denied eligibility because of a transfer for less than fair market value, the local agency shall
notify the applicant or recipient that the applicant or recipient may request a waiver of the penalty
if the denial of eligibility will cause undue hardship. With the written consent of the individual or
the personal representative of the individual, a long-term care facility in which an individual is
residing may file an undue hardship waiver request, on behalf of the individual who is denied
eligibility for long-term care services on or after July 1, 2006, due to a period of ineligibility
resulting from a transfer on or after February 8, 2006. In evaluating a waiver, the local agency
shall take into account whether the individual was the victim of financial exploitation, whether the
individual has made reasonable efforts to recover the transferred property or resource, and other
factors relevant to a determination of hardship. If the local agency does not approve a hardship
waiver, the local agency shall issue a written notice to the individual stating the reasons for the
denial and the process for appealing the local agency's decision.
(b) When a waiver is granted under paragraph (a), clause (3), a cause of action exists against
the person to whom the homestead was transferred for that portion of long-term care services
granted within:
(1) 30 months of a transfer made on or before August 10, 1993;
(2) 60 months if the homestead was transferred after August 10, 1993, to a trust or portion of
a trust that is considered a transfer of assets under federal law;
(3) 36 months if transferred in any other manner after August 10, 1993, but prior to February
8, 2006; or
(4) 60 months if the homestead was transferred on or after February 8, 2006,
or the amount of the uncompensated transfer, whichever is less, together with the costs incurred
due to the action. The action shall be brought by the state unless the state delegates this
responsibility to the local agency responsible for providing medical assistance under chapter
256G.
    Subd. 3a.[Repealed, 2001 c 203 s 19]
    Subd. 3b. Homestead exception to transfer prohibition. (a) This subdivision applies to
transfers involving recipients of medical assistance that are made on or after July 1, 2003, and
to all transfers involving persons who apply for medical assistance on or after July 1, 2003,
regardless of when the transfer occurred, except that this subdivision does not apply to transfers
made prior to July 1, 2003. A person is not ineligible for medical assistance services due to
a transfer of assets for less than fair market value as described in subdivision 1b, if the asset
transferred was a homestead, and:
(1) a satisfactory showing is made that the individual intended to dispose of the homestead at
fair market value or for other valuable consideration; or
(2) the local agency grants a waiver of a penalty resulting from a transfer for less than fair
market value because denial of eligibility would cause undue hardship for the individual and there
exists an imminent threat to the individual's health and well-being. Whenever an applicant or
recipient is denied eligibility because of a transfer for less than fair market value, the local agency
shall notify the applicant or recipient that the applicant or recipient may request a waiver of the
penalty if the denial of eligibility will cause undue hardship. In evaluating a waiver, the local
agency shall take into account whether the individual was the victim of financial exploitation,
whether the individual has made reasonable efforts to recover the transferred property or resource,
and other factors relevant to a determination of hardship. If the local agency does not approve a
hardship waiver, the local agency shall issue a written notice to the individual stating the reasons
for the denial and the process for appealing the local agency's decision.
(b) When a waiver is granted under paragraph (a), clause (2), a cause of action exists against
the person to whom the homestead was transferred for that portion of medical assistance services
granted within 72 months of the date the transferor applied for medical assistance and satisfied
all other requirements for eligibility or the amount of the uncompensated transfer, whichever is
less, together with the costs incurred due to the action. The action shall be brought by the state
unless the state delegates this responsibility to the local agency responsible for providing medical
assistance under this chapter.
    Subd. 4. Other exceptions to transfer prohibition. An institutionalized person who has
made, or whose spouse has made a transfer prohibited by subdivision 1, is not ineligible for
long-term care services if one of the following conditions applies:
(1) the assets were transferred to the individual's spouse or to another for the sole benefit of
the spouse; or
(2) the institutionalized spouse, prior to being institutionalized, transferred assets to a spouse,
provided that the spouse to whom the assets were transferred does not then transfer those assets to
another person for less than fair market value. (At the time when one spouse is institutionalized,
assets must be allocated between the spouses as provided under section 256B.059); or
(3) the assets were transferred to the individual's child who is blind or permanently and
totally disabled as determined in the supplemental security income program; or
(4) a satisfactory showing is made that the individual intended to dispose of the assets either
at fair market value or for other valuable consideration; or
(5) the local agency determines that denial of eligibility for long-term care services would
work an undue hardship and grants a waiver of a penalty resulting from a transfer for less than fair
market value based on an imminent threat to the individual's health and well-being. Whenever an
applicant or recipient is denied eligibility because of a transfer for less than fair market value, the
local agency shall notify the applicant or recipient that the applicant or recipient may request a
waiver of the penalty if the denial of eligibility will cause undue hardship. With the written
consent of the individual or the personal representative of the individual, a long-term care facility
in which an individual is residing may file an undue hardship waiver request, on behalf of the
individual who is denied eligibility for long-term care services on or after July 1, 2006, due to
a period of ineligibility resulting from a transfer on or after February 8, 2006. In evaluating a
waiver, the local agency shall take into account whether the individual was the victim of financial
exploitation, whether the individual has made reasonable efforts to recover the transferred
property or resource, whether the individual has taken any action to prevent the designation
of the department as a remainder beneficiary on an annuity as described in section 256B.056,
subdivision 11, and other factors relevant to a determination of hardship. If the local agency does
not approve a hardship waiver, the local agency shall issue a written notice to the individual
stating the reasons for the denial and the process for appealing the local agency's decision. When
a waiver is granted, a cause of action exists against the person to whom the assets were transferred
for that portion of long-term care services granted within:
(i) 30 months of a transfer made on or before August 10, 1993;
(ii) 60 months of a transfer if the assets were transferred after August 30, 1993, to a trust or
portion of a trust that is considered a transfer of assets under federal law;
(iii) 36 months of a transfer if transferred in any other manner after August 10, 1993, but
prior to February 8, 2006; or
(iv) 60 months of any transfer made on or after February 8, 2006,
or the amount of the uncompensated transfer, whichever is less, together with the costs incurred
due to the action. The action shall be brought by the state unless the state delegates this
responsibility to the local agency responsible for providing medical assistance under this chapter;
or
(6) for transfers occurring after August 10, 1993, the assets were transferred by the person or
person's spouse: (i) into a trust established for the sole benefit of a son or daughter of any age who
is blind or disabled as defined by the Supplemental Security Income program; or (ii) into a trust
established for the sole benefit of an individual who is under 65 years of age who is disabled as
defined by the Supplemental Security Income program.
"For the sole benefit of" has the meaning found in section 256B.059, subdivision 1.
    Subd. 4a.[Repealed, 2001 c 203 s 19]
    Subd. 4b. Other exceptions to transfer prohibition. This subdivision applies to transfers
involving recipients of medical assistance that are made on or after July 1, 2003, and to all
transfers involving persons who apply for medical assistance on or after July 1, 2003, regardless
of when the transfer occurred, except that this subdivision does not apply to transfers made prior
to July 1, 2003. A person or a person's spouse who made a transfer prohibited by subdivision 1b is
not ineligible for medical assistance services if one of the following conditions applies:
(1) the assets or income were transferred to the individual's spouse or to another for the sole
benefit of the spouse, except that after eligibility is established and the assets have been divided
between the spouses as part of the asset allowance under section 256B.059, no further transfers
between spouses may be made;
(2) the institutionalized spouse, prior to being institutionalized, transferred assets or income
to a spouse, provided that the spouse to whom the assets or income were transferred does not
then transfer those assets or income to another person for less than fair market value. At the time
when one spouse is institutionalized, assets must be allocated between the spouses as provided
under section 256B.059;
(3) the assets or income were transferred to a trust for the sole benefit of the individual's
child who is blind or permanently and totally disabled as determined in the supplemental security
income program and the trust reverts to the state upon the disabled child's death to the extent the
medical assistance has paid for services for the grantor or beneficiary of the trust. This clause
applies to a trust established after the commissioner publishes a notice in the State Register that
the commissioner has been authorized to implement this clause due to a change in federal law
or the approval of a federal waiver;
(4) a satisfactory showing is made that the individual intended to dispose of the assets or
income either at fair market value or for other valuable consideration; or
(5) the local agency determines that denial of eligibility for medical assistance services
would cause undue hardship and grants a waiver of a penalty resulting from a transfer for less
than fair market value because there exists an imminent threat to the individual's health and
well-being. Whenever an applicant or recipient is denied eligibility because of a transfer for less
than fair market value, the local agency shall notify the applicant or recipient that the applicant or
recipient may request a waiver of the penalty if the denial of eligibility will cause undue hardship.
In evaluating a waiver, the local agency shall take into account whether the individual was the
victim of financial exploitation, whether the individual has made reasonable efforts to recover the
transferred property or resource, and other factors relevant to a determination of hardship. If the
local agency does not approve a hardship waiver, the local agency shall issue a written notice to
the individual stating the reasons for the denial and the process for appealing the local agency's
decision. When a waiver is granted, a cause of action exists against the person to whom the
assets were transferred for that portion of medical assistance services granted within 72 months
of the date the transferor applied for medical assistance and satisfied all other requirements for
eligibility, or the amount of the uncompensated transfer, whichever is less, together with the costs
incurred due to the action. The action shall be brought by the state unless the state delegates this
responsibility to the local agency responsible for providing medical assistance under this chapter.
    Subd. 5. Notice of receipt of federal waiver. In every instance in which a federal waiver
that allows the implementation of a provision in this section is granted, the commissioner shall
publish notice of receipt of the waiver in the State Register.
    Subd. 6. No bad effect on realty conveyance, encumbrance. This section does not
invalidate or impair the effectiveness of a conveyance or encumbrance of real estate.
    Subd. 7. Notice of rights. If a period of ineligibility is imposed under subdivision 2 or 2a,
the local agency shall inform the applicant or recipient subject to the penalty of the person's
rights under section 325F.71, subdivision 2.
History: 1986 c 444; 1989 c 282 art 3 s 52; 1990 c 568 art 3 s 40-42; 1992 c 513 art 7 s
42; 1Sp1993 c 1 art 5 s 35; 1994 c 388 art 1 s 2; 1995 c 207 art 6 s 34-37; 1996 c 451 art 2 s
11-19,62; 2001 c 203 s 7,8,19; 2002 c 220 art 15 s 10-12; 1Sp2003 c 14 art 12 s 24-29; 2004 c
266 s 1; 2005 c 56 s 1; 2005 c 155 art 3 s 1; 2006 c 282 art 17 s 30-33

NOTE: The amendments to subdivisions 1, 2, 3, and 4, by Laws 1995, chapter 207, article
6, sections 34 to 37, are effective retroactive to August 11, 1993, except that portion amending
subdivision 2, paragraph (c), is effective retroactive to transfers of income or assets made on or
after September 1, 1994. Laws 1995, chapter 207, article 6, section 125, subdivision 2, and
Laws 1995, chapter 263, section 6.
NOTE: Subdivisions 1b, 2b, 3b, and 4b, as added by Laws 2003, First Special Session
chapter 14, article 12, sections 25, 27, 28, and 29, are effective July 1, 2003, to the extent
permitted by law. If any provision is prohibited by federal law, the provision shall become
effective when federal law is changed to permit its application or a waiver is received. The
commissioner of human services shall notify the revisor of statutes when federal law is enacted
or a waiver or other federal approval is received and publish a notice in the first State Register
published after the federal change is effective. Laws 2003, First Special Session chapter 14, article
12, sections 25, 27, 28, and 29, the effective dates.
NOTE: The amendment to subdivision 1b by Laws 2004, chapter 266, section 1, is effective
upon publication in the State Register of receipt of federal approval for the 72-month lookback
period described in paragraph (a). Laws 2004, chapter 266, section 1, the effective date.

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