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CHAPTER 2—REFORM OF ASSET 
TRANSFER RULES 
SEC. 3111. LENGTHENING LOOK-BACK PERIOD; CHANGE IN 
BEGINNING DATE FOR PERIOD OF INELIGI-
BILITY. 
(a) LENGTHENING LOOK-BACK PERIOD FOR ALL 
DISPOSALS TO 5 YEARS.—Section 1917(c)(1)(B)(i) of the 
Social Security Act (42 U.S.C. 1396p(c)(1)(B)(i)) is 
amended by inserting ‘‘or in the case of any other disposal 
of assets made on or after the date of the enactment of 
the Medicaid Reconciliation Act of 2005’’ before ‘‘, 60 
months’’. 
(b) CHANGE IN BEGINNING DATE FOR PERIOD OF 
INELIGIBILITY.—Section 1917(c)(1)(D) of such Act (42 
U.S.C. 1396p(c)(1)(D)) is amended— 
(1) by striking ‘‘(D) The date’’ and inserting 
‘‘(D)(i) In the case of a transfer of asset made be-
fore the date of the enactment of the Medicaid Rec-
onciliation Act of 2005, the date’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(ii) In the case of a transfer of asset made on or 
after the date of the enactment of the Medicaid Reconcili-
ation Act of 2005, the date specified in this subparagraph 
is the first day of a month during or after which assets
249 
have been transferred for less than fair market value, or 
the date on which the individual is eligible for medical as-
sistance under the State plan and is receiving services de-
scribed in subparagraph (C) but for the application of the 
penalty period, whichever is later, and which does not 
occur during any other period of ineligibility under this 
subsection.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers made on or after the 
date of the enactment of this Act. 
(d) AVAILABILITY OF HARDSHIP WAIVERS.—Each 
State shall provide for a hardship waiver process in ac-
cordance with section 1917(c)(2)(D) of the Social Security 
Act (42 U.S.C. 1396p(c)(2)(D))— 
(1) under which an undue hardship exists when 
application of the transfer of assets provision would 
deprive the individual— 
(A) of medical care such that the individ-
ual’s health or life would be endangered; or 
(B) of food, clothing, shelter, or other ne-
cessities of life; and 
(2) which provides for— 
(A) notice to recipients that an undue 
hardship exception exists;
250 
(B) a timely process for determining 
whether an undue hardship waiver will be 
granted; and 
(C) a process under which an adverse de-
termination can be appealed. 
(e) ADDITIONAL PROVISIONS ON HARDSHIP WAIV-
ERS.— 
(1) 
APPLICATION
BY
FACILITY.—Section 
1917(c)(2) of the Social Security Act (42 U.S.C. 
1396p(c)(2)) is amended— 
(A) by striking the semicolon at the end of 
subparagraph (D) and inserting a period; and 
(B) by adding after and below such subpara-
graph the following: 
‘‘The procedures established under subparagraph 
(D) shall permit the facility in which the institu-
tionalized individual is residing to file an undue 
hardship waiver application on behalf of the indi-
vidual with the consent of the individual or the legal 
guardian of the individual.’’. 
(2) AUTHORITY TO MAKE BED HOLD PAYMENTS 
FOR HARDSHIP APPLICANTS.—Such section is further 
amended by adding at the end the following: ‘‘While an 
application for an undue hardship waiver is pending under 
subparagraph (D) in the case of an individual who is a
251 
resident of a nursing facility, if the application meets such 
criteria as the Secretary specifies, the State may provide 
for payments for nursing facility services in order to hold 
the bed for the individual at the facility, but not in excess 
of payments for 30 days.’’. 
SEC. 3112. DISCLOSURE AND TREATMENT OF ANNUITIES 
AND OF LARGE TRANSACTIONS. 
(a) IN GENERAL.—Section 1917 of the Social Secu-
rity Act (42 U.S.C. 1396p) is amended by redesignating 
subsection (e) as subsection (f) and by inserting after sub-
section (d) the following new subsection: 
‘‘(e)(1) In order to meet the requirements of this sec-
tion for purposes of section 1902(a)(18), a State shall re-
quire, as a condition for the provision of medical assist-
ance for services described in subsection (c)(1)(C)(i) (re-
lating to long-term care services) for an individual, the ap-
plication of the individual for such assistance (including 
any recertification of eligibility for such assistance) shall 
disclose the following: 
‘‘(A) A description of any interest the individual 
or community spouse has in an annuity (or similar 
financial instrument which provides for the conver-
sion of a countable asset to a noncountable asset, as 
may be specified by the Secretary), regardless of
252 
whether the annuity is irrevocable or is treated as an 
asset. 
‘‘(B) Full information (as specified by the Sec-
retary) concerning any transaction involving the 
transfer or disposal of assets during the previous pe-
riod of 60 months, if the transaction exceeded 
$100,000, without regard to whether the transfer or 
disposal was for fair market value. For purposes of 
applying the previous sentence under this subsection, 
all transactions of $5,000 or more occurring within 
a 12-month period shall be treated as a single trans-
action. The dollar amounts specified in the first and 
second sentences of this subparagraph shall be in-
creased, beginning with 2007, from year to year 
based on the percentage increase in the consumer 
price index for all urban consumers (all items; 
United States city average), rounded to the nearest 
$1,000 in the case of the first sentence and $100 in 
the case of the second sentence. 
Such application or recertification form shall include a 
statement that under paragraph (2) the State becomes a 
remainder beneficiary under such an annuity or similar 
financial instrument by virtue of the provision of such 
medical assistance.
253 
‘‘(2)(A) In the case of any annuity in which an insti-
tutionalized individual or community spouse has an inter-
est, if medical assistance is furnished to the individual for 
services described in subsection (c)(1)(C)(i), by virtue of 
the provision of such assistance the State becomes the re-
mainder beneficiary in the first position for the total 
amount of such medical assistance paid on behalf of the 
individual under this title (or, where there is a community 
spouse or minor or disabled child in such first position, 
in the position immediately succeeding the position of such 
spouse or child or both). 
‘‘(B) In the case of disclosure concerning an annuity 
under paragraph (1)(A), the State shall notify the issuer 
of the annuity of the right of the State under subpara-
graph (A) as a preferred remainder beneficiary in the an-
nuity for medical assistance furnished to the individual. 
Nothing in this paragraph shall be construed as pre-
venting such an issuer from notifying persons with any 
other remainder interest of the State’s remainder interest 
under subparagraph (A). 
‘‘(C) In the case of such an issuer receiving notice 
under subparagraph (B), the State may require the issuer 
to notify the State when there is a change in the amount 
of income or principal being withdrawn from the amount 
that was being withdrawn at the time of the most recent
254 
disclosure described in paragraph (1)(A). A State shall 
take such information into account in determining the 
amount of the State’s obligations for medical assistance 
or in the individual’s eligibility for such assistance. 
‘‘(3)(A) For purposes of subsection (c)(1), a trans-
action described in paragraph (1)(B) shall be deemed as 
the transfer of an asset for less than fair market value 
unless the individual demonstrates to the satisfaction of 
the State that the transfer of the asset was for fair market 
value. 
‘‘(B) The Secretary may provide guidance to States 
on categories of arms length transactions (such as the pur-
chase of a commercial annuity) that could be generally 
treated as a transfer of asset for fair market value. 
‘‘(4) Nothing in this subsection shall be construed as 
preventing a State from denying eligibility for medical as-
sistance for an individual based on the income or resources 
derived from an annuity described in paragraph (1)(A).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions (including the pur-
chase of an annuity) occurring on or after the date of the 
enactment of this Act.
255 
SEC. 3113. APPLICATION OF ‘‘INCOME-FIRST’’ RULE IN AP-
PLYING COMMUNITY SPOUSE’S INCOME BE-
FORE ASSETS IN PROVIDING SUPPORT OF 
COMMUNITY SPOUSE. 
(a) IN GENERAL.—Section 1924(d) of the Social Se-
curity Act (42 U.S.C. 1396r–5(d)) is amended by adding 
at the end the following new paragraph: 
‘‘(6) APPLICATION
OF ‘INCOME
FIRST’ RULE 
FOR
FUNDING
COMMUNITY
SPOUSE
MONTHLY
IN-
COME ALLOWANCE.—For purposes of this subsection 
and subsection (e), any transfer or allocation made 
from an institutionalized spouse to meet the need of 
a community spouse for a community spouse month-
ly income allowance under paragraph (1)(B) shall be 
first made from income of the institutionalized 
spouse and then only when the income is not avail-
able from the resources of such institutionalized 
spouse.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to transfers and allocations 
made on or after the date of the enactment of this Act 
by individuals who become institutionalized spouses on or 
after such date.
256 
SEC. 3114. DISQUALIFICATION FOR LONG-TERM CARE AS-
SISTANCE FOR INDIVIDUALS WITH SUBSTAN-
TIAL HOME EQUITY. 
(a) IN GENERAL.—Section 1917 of the Social Secu-
rity Act, as amended by section 3112, is further amended 
by redesignating subsection (f) as subsection (g) and by 
inserting after subsection (e) the following new subsection: 
‘‘(f)(1) Notwithstanding any other provision of this 
title, subject to paragraph (2), in determining eligibility 
of an individual for medical assistance with respect to 
nursing facility services or other long-term care services, 
the individual shall not be eligible for such assistance if 
the individual’s equity interest in the individual’s home ex-
ceeds $500,000. The dollar amount specified in the pre-
ceding sentence shall be increased, beginning with 2011, 
from year to year based on the percentage increase in the 
consumer price index for all urban consumers (all items; 
United States city average), rounded to the nearest 
$1,000. 
‘‘(2) Paragraph (1) shall not apply with respect to 
an individual if— 
‘‘(A) the spouse of such individual, or 
‘‘(B) such individual’s child who is under age 
21, or (with respect to States eligible to participate 
in the State program established under title XVI) is 
blind or permanently and totally disabled, or (with
257 
respect to States which are not eligible to participate 
in such program) is blind or disabled as defined in 
section 1614, 
is lawfully residing in the individual’s home. 
‘‘(3) Nothing in this subsection shall be construed as 
preventing an individual from using a reverse mortgage 
or home equity loan to reduce the individual’s total equity 
interest in the home. 
‘‘(4) The Secretary shall establish a process whereby 
paragraph (1) is waived in the case of a demonstrated 
hardship.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to individuals who are deter-
mined eligible for medical assistance with respect to nurs-
ing facility services or other long-term care services based 
on an application filed on or after January 1, 2006. 
SEC. 3115. ENFORCEABILITY OF CONTINUING CARE RE-
TIREMENT COMMUNITIES (CCRC) AND LIFE 
CARE COMMUNITY ADMISSION CONTRACTS. 
(a) ADMISSION POLICIES OF NURSING FACILITIES.— 
Section 1919(c)(5) of the Social Security Act (42 U.S.C. 
1396r(c)(5)) is amended— 
(1) in subparagraph (A)(i)(II), by inserting 
‘‘subject to clause (v),’’ after ‘‘(II)’’; and
258 
(2) by adding at the end of subparagraph (B) 
the following new clause: 
‘‘(v) TREATMENT
OF
CONTINUING 
CARE RETIREMENT COMMUNITIES ADMIS-
SION
CONTRACTS.—Notwithstanding sub-
clause (II) of subparagraph (A)(i), subject 
to subsections (c) and (d) of section 1924, 
contracts for admission to a State licensed, 
registered, certified, or equivalent con-
tinuing care retirement community or life 
care community, including services in a 
nursing facility that is part of such com-
munity, may require residents to spend on 
their care resources declared for the pur-
poses of admission before applying for 
medical assistance.’’. 
(b) TREATMENT
OF
ENTRANCE
FEES.—Section 
1917 of such Act (42 U.S.C. 1396p), as amended by sec-
tions 3112(a) and 3114(a), is amended by redesignating 
subsection (g) as subsection (h) and by inserting after 
subsection (f) the following new subsection: 
‘‘(g) TREATMENT OF ENTRANCE FEES OF INDIVID-
UALS RESIDING
IN CONTINUING CARE RETIREMENT 
COMMUNITIES.—
259 
‘‘(1) IN
GENERAL.—For purposes of deter-
mining an individual’s eligibility for, or amount of, 
benefits under a State plan under this title, the rules 
specified in paragraph (2) shall apply to individuals 
residing in continuing care retirement communities 
or life care communities that collect an entrance fee 
on admission from such individuals. 
‘‘(2) TREATMENT
OF
ENTRANCE
FEE.—For 
purposes of this subsection, an individual’s entrance 
fee in a continuing care retirement community or 
life care community shall be considered a resource 
available to the individual to the extent that— 
‘‘(A) the individual has the ability to use 
the entrance fee, or the contract provides that 
the entrance fee may be used, to pay for care 
should other resources or income of the indi-
vidual be insufficient to pay for such care; 
‘‘(B) the individual is eligible for a refund 
of any remaining entrance fee when the indi-
vidual dies or terminates the continuing care re-
tirement community or life care community 
contract and leaves the community; and 
‘‘(C) the entrance fee does not confer an 
ownership interest in the continuing care retire-
ment community or life care community.