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If you’re an Ohio practitioner, you’re probably aware that as of January 1, 2016, Ohio no longer permits a partial cure of transferred assets. Prior to January 1, 2016, when a portion of an improperly transferred asset was returned, the returned portion was considered an available resource beginning in the month the asset was originally transferred. A penalty was not assessed for the amount of assets returned. However, there was still a penalty period for the remaining amount that was transferred and the individual could lose base Medicaid eligibility. The Restricted Medicaid Coverage Period (“RMCP”) would then need to be recalculated and any applicable RMCP amount would be adjusted. Commonly referred to as a reverse half-a-loaf plan, the partial cure technique usually consists of the following steps, in a nutshell:
- Applicant gifts entire net worth
- Applicant applies for Medicaid
- Medicaid assigns penalty period in light of gift
- Giftees use gifted funds to pay applicant’s care costs during penalty period (the actual partial cure process)
- Midway through the plan the applicant asks Medicaid to recalculate the penalty period
- Medicaid reduces the penalty period based on the giftees’ return of funds via payment to the long-term care facility
- Applicant is eligible for Medicaid accordingly
Now, as of January 1, 2016, in order to void imposition of a RMCP, all of the assets in question or their fair market value equivalent must be returned. A return of any amount less than the total value of all of the improperly transferred assets will have no effect on the period of restricted coverage 5160:1-3-07 The returned asset or its equivalent must be considered an available asset beginning in the month the asset was originally transferred. An overpayment must be submitted for any months during which the individual received Medicaid until the assets have been properly spent down below the resource limit.