Effective August 5, 2012, the Department of Health and Human Services reinstated a transfer penalty for MaineCare residential care benefits. The new rule as well as the Public Policy and Comments are available here. The new transfer penalty applies to individuals already receiving residential care benefits as well as to new applicants, but it only applies to transfers made on or after the effective date.

DHHS had been imposing a transfer penalty on residential care prior to April of 2009. That penalty was imposed on all residential care services. The new penalty only applies to non-medical services an individual is receiving in the facility (e.g. room and board). Assuming that an otherwise eligible applicant has family members who will pay for the non-medical services, he or she could start receiving MaineCare benefits to pay for the medically necessary services (e.g. personal care and rehab) despite the imposition of a transfer penalty on the non-medical services.

As with the transfer penalty imposed on MaineCare nursing home benefits, the lookback is 60 months, and the new residential care penalty is calculated by dividing the value of the transfer by the current divisor of $7,667. This is the DHHS-determined average monthly private rate for a semi-private room for a nursing facility.

Example: An individual who is otherwise financially and medically eligible for MaineCare residential care benefits applies for those benefits. Assume he made gifts totaling $50,000 within the preceding five years. DHHS would impose a transfer penalty of 6.5 months ($50,000 ÷ $7,667 = 6.5). For the next 6.5 months, the applicant would not receive MaineCare benefits to cover the non-medical services but could receive the benefits to cover the medically necessary services.

Caution: The third paragraph of the new rule provides: “This transfer penalty is separate and distinct from any transfer penalty imposed on institutionalized individuals…” This suggests that if an individual receives MaineCare benefits for residential care and later needs care at the nursing home level, DHHS might try to impose a second penalty on the same transfers. This “double jeopardy” scenario is not specifically discussed in the rules, but it is a possibility and requires careful planning.