Rhode Island Code of Regulations › Title 210 - Executive Office of Health and Human Services › Chapter 50 - Medicaid Long-Term Services and Supports › Subchapter 00 - Long-Term Services › Part 6 - Medicaid Long-Term Services and Supports: Financial Eligibility › Section 210-RICR-50-00-6.8 - Asset Transfers Involving Loans - Promissory Notes, Mortgages and Commercial and Informal Lending Instruments

Current through June 14, 2024
A. Loans are
				  financial instruments that allow an applicant or beneficiary to lend an asset
				  to another person for a set period in exchange for fixed payments.
				  §40-00-3.5 .5 of this Title contains the provisions for evaluating each of
				  these instruments and the treatment of principal and interest when determining
				  income and resource eligibility.
B.
				  The use of loans to borrow or lend assets during the Medicaid LTSS application
				  look-back period, or on or after the date eligibility is established, is
				  evaluated to determine whether a disqualifying transfer exists. Treatment is as
				  follows:
1. Disqualifying transfer - The use
				  of loan to transfer assets on or after February 8, 2006 may be a disqualifying
				  if the transaction is for less than fair market value and in amount that cannot
				  be reasonably paid back within the expected life-time of the applicant or
				  beneficiary or the non-LTSS spouse. Commercial and informal loans that do not
				  meet the criteria set forth in §40-00-3.5 .5(A)(2)(d) of this Title are
				  treated as gifts and, therefore, as disqualifying transfers excepted as
				  provided herein under §
											6.6(B)   of
				  this Part. Mortgages made for less than fair market value are disqualifying
				  transfers for Medicaid LTSS eligibility purposes. The penalty period for
				  disqualifying transfers made using a loan is the total uncompensated value of
				  the transfer including principal and interest amortized over the repayment
				  period.
2. Allowed transfer - Use
				  of one of these financial instruments is considered an exempt transfer when the
				  loan agreement states the total amount of the debt, including principal and
				  interest amortized over the life of the loan, and:
a. Actuarily sound. The repayment terms are
				  actuarially sound, as determined in accordance with actuarial publications of
				  the Office of the Chief Actuary of the Social Security
				  Administration;
b. Equal payments.
				  The debt payments are made in equal amounts during the full term of the loan,
				  with no deferral or balloon payments of principal or interest;
c. Limits. The cancellation of the balance
				  upon the death of the lender is prohibited.
3. Prepayment - Early payment of a debt
				  incurred as an allowed asset transfer under subsection (§
											6.8(B)(2)   of
				  this Part) is subject to review by the State for a disqualifying transfer if it
				  is the result of making higher, multiple, or unequal payments of principal
				  and/or interest or otherwise violates the criteria therein. Unequal payments
				  are only permitted when they are required under the terms of commercial loan
				  that has variable interest rates.