2-009.10 Deprivation of Resources

469 NAC 2-009.10

Any action taken by the individual, or any other person or entity, that reduces or eliminates the individual’s or spouse's recorded ownership or control of the asset for less than fair market value (full value)  is a deprivation of resources. The worker must verify the fair market value of the resource at the time the resource was disposed of and determine the equity value of the resource by taking into consideration any encumbrances against the resource.  This includes:

1. Recorded transfer of ownership of real property;

2. Not receiving the spousal share of an augmented estate;

3. Purchase of a life estate in another individual's home without meeting the 12-month requirement to reside there;

4. Promissory notes, loans, mortgages, and contract sales for less than fair market value and not enforced;

5. Purchase of an irrevocable, nonassignable annuity if Medicaid is not the preferred beneficiary and the annuity is issued on February 8, 2006, or later;

6. Any transfer above the protected spousal reserved amount to a community spouse; and

7. Purchase of any contract or financial instrument, including an endowment or insurance, where the criteria for fair market value are not met.

The criteria for fair market value are not met when:

1. The term of the instrument exceeds the life expectancy of the applicable client(s);

2. The instrument does not provide for equal monthly or annual payments commencing immediately during the term of the contract;

3. The instrument does not provide for the recovery of assets in the event of default; or

4. The instrument contains exculpatory or cancellation terms of balance due.

An exculpatory provision forgives or clears a debt.  For example, a client lives in a nursing home and loaned money to a relative with a promissory note.  The promissory note states that the obligation to pay any remaining balance ceases at the time of the client's death.

A service given for free at the time cannot later be claimed as an amount owed.

When an asset is placed in an annuity on February 8, 2006 or later, see annuity regulations at 469 NAC 2-009.07A6c(2).

Trust regulations at 469 NAC 2-009.07A6 ff. take precedence over deprivation when an asset is placed in a trust.

When real property in which the individual has a life estate is sold, the individual or spouse must receive as a lump sum his/her life estate interest from the net proceeds, or the entire net proceeds invested and the individual(s) who has the life estate receives all the income.

{2/14/2009}

2-009.10A Deprivation of Resources for a Grant

2-009.10B Deprivation of Resources for Medical Assistance 

2-009.10C Transfers Not Considered Deprivation for Grant or Medical