Look-Back Date and Look-Back Period

3258. TRANSFERS OF ASSETS FOR LESS THAN FAIR MARKET VALUE 3258.4 Look-Back Date and Look-Back Period.--The look-back date is the earliest date on which a penalty for transferring assets for less than fair market value can be assessed. Penalties can be assessed for transfers which take place on or after the look-back date. Penalties cannot be assessed for transfers which take place prior to the look-back date. The look-back date varies for individuals transferring assets, depending on whether they are institutionalized, and there are special rules for some trusts, as described in subsection E. A. Institutionalized Individual.-- For an individual in an institution, the look-back date is 36 months prior to the baseline date. The baseline date is the first date as of which the individual was: o Institutionalized; and, o Applied for medical assistance under the State plan. When an individual is already a Medicaid recipient and becomes institutionalized, the baseline date is the date upon which both of the above conditions are met, that is, the first day of institutionalization. B. Noninstitutionalized Individual.--For a noninstitutionalized individual, the look-back date is 36 months prior to the baseline date, which is the date the individual: o Applies for medical assistance under the State plan; or, if later, o The date on which the individual disposes of assets for less than fair market value. C. Multiple Periods of Institutionalization and Multiple Applications.--When an individual has multiple periods of institutionalization or has made multiple applications for Medicaid (whether or not they are successful), the look-back date is based on a baseline date that is the first date upon which the individual has both applied for Medicaid and is institutionalized. Similarly, if a noninstitutionalized individual has applied for Medicaid more than once and has made more than one transfer of assets, the baseline date is that date on which the individual has first applied for Medicaid or, if later, made the first transfer of assets for less than fair market value after applying. Thus, each individual has only one look-back date, regardless of the number of periods of institutionalization, applications for Medicaid, periods of eligibility, or transfers of assets. D. Look-Back Period.--The look-back period is the period that begins with the look-back date and ends with the baseline date. This can be 36 or 60 months, depending on whether certain kinds of trusts are involved. (See subsection E for look-back periods involving trusts.) The look-back period is the period of time prior to the baseline date during which a previous transfer of assets for less than fair market value can be penalized. However, it is important to note that transfers which occur after the baseline date are also subject to penalty if they are made for less than fair market value. NOTE: The 36 month look-back periods described above do not become fully effective until August 11, 1996. Prior to that date, a 36 month look-back period actually begins at some time before the date transfers are covered by these rules. While the 36 month look-back period is effective for transfers made on or after August 11, 1993, any transfers actually made before that date are treated under the rules described in §3250. Thus, the look-back period is phased in over the 36-month period ending August 11, 1996. EXAMPLE 1: Institutionalized Individual An individual is institutionalized on February 13, 1997. He/she applies for Medicaid on April 7, 1997. The look-back date is the date 36 months prior to the baseline date, when both initiating requirements are met, i.e., institutionalization and application for Medicaid. That date is April 7, 1997. Thus, the look-back date is April 7, 1994. The look-back period is from April 7, 1994, through April 7, 1997. EXAMPLE 2: Institutionalized Individual An individual is institutionalized on February 13, 1995. He/she applies for Medicaid on April 7, 1995. The look-back date is 36 months prior to April 7, 1995, or April 7, 1992. However, because the transfer provisions of OBRA 1993 apply only to transfers made on or after August 11, 1993, any transfers made prior to August 11, 1993, are treated under the rules in §3250. EXAMPLE 3: Noninstitutionalized Individual An individual applies for Medicaid on February 13, 1997. On April 7, 1997, he/she transfers an asset for less than fair market value. The look-back date in this case is April 7, 1994, 36 months prior to the baseline date on which he/she transferred the asset. If the asset had been transferred before February 13, 1997 (the date of application for Medicaid), the baseline date would have been February 13, 1997 (the date of application). The look-back period would begin February 13, 1994, and extend to February 13, 1997. E. Look-Back Period for Transfers of Assets Involving Trusts.--When an individual establishes a revocable trust a portion of which is disbursed to someone other than the grantor or for the benefit of the grantor, that portion is treated as a transfer of assets for less than fair market value. When an individual establishes an irrevocable trust in which all or a portion of the trust cannot be disbursed to or on behalf of the individual, that portion is treated as a transfer of assets for less than fair market value. When a portion of a trust is treated as a transfer, the look-back period discussed in subsection D is extended to 60 months from: o The date the individual applied for Medicaid and was institutionalized; or, o For a noninstitutionalized individual, the date the individual applied for Medicaid or, if later, the date the transfer was made. When a trust is irrevocable but some or all of the trust can be disbursed to or for the benefit of the individual, the look-back period applying to disbursements which could be made to or for the individual but are made to another person or persons is 36 months. When the trust is revocable, the transfer is considered to take place on the date upon which the payment to someone other than the grantor was made. If the trust is irrevocable, the transfer is considered to have been made as of the date the trust was established or, if later, the date upon which payment to the grantor was foreclosed. When an individual places assets into an irrevocable trust and can still benefit from those assets, the amount transferred is any of those assets which have been paid out for a purpose other than to or for the benefit of the individual. When an individual places assets in an irrevocable trust and can no longer benefit from some or all of those assets, that unavailable portion of the trust is considered as transferred for less than fair market value. The value of these assets is not reduced by any payments from the trust which may be made from these unavailable assets at a later date. See §§3259ff. for a discussion of treatment of trusts in determining eligibility for Medicaid. See §3259.6 for rules which apply when assets which may involve a transfer of assets for less than fair market value are placed in a trust.