WSR 06-17-075



(Health and Recovery Services Administration)

[ Filed August 14, 2006, 9:15 a.m. , effective September 14, 2006 ]

Effective Date of Rule: Thirty-one days after filing.

Purpose: The rule implements HB 2304 (legislation adopted by 2005 legislature) by giving the department further authority to: (1) File a lien against the real property of a living resident of a nursing home or other medical institution (known as Tax Equity and Fiscal Responsibility Act, or TEFRA liens) if it determines, after notice and opportunity for a hearing, that the individual cannot reasonably be expected to be discharged from the medical institution and return home; (2) expand the statute of limitations from ten years to twenty years for Medicaid liens placed for collections of debts due the department; (3) broaden the eligibility class of who may be entitled to deferred recovery when the recovery would cause an undue hardship. By broadening the eligible class for the exemption, the department is addressing the issue for all similarly affected citizens of the state and avoiding unintended adverse consequences of recovery; and (4) revise the chapter using "Plain Talk" as directed by the Governor's Executive Order 05-03, dated March 24, 2005.

Citation of Existing Rules Affected by this Order: Repealing WAC 388-527-2792 and 388-527-2795; and amending WAC 388-527-2700, 388-527-2730, 388-527-2737, 388-527-2742, 388-527-2750, and 388-527-2790.

Statutory Authority for Adoption: Chapter 292, Laws of 2005 (SHB 2304).

Other Authority: RCW 43.20B.080, 74.39A.170, 42 U.S.C. Section 1396p.

Adopted under notice filed as WSR 06-03-046 on January 10, 2006.

Changes Other than Editing from Proposed to Adopted Version: Changes to the final rule compared to the proposed rule (strikeouts and underlined text indicate deleted or added language since the proposal).


WAC 388-527-2730 Definitions.


(3) For a client who died on or after XXXXX (the effective date of this rule): September 14, 2006,

(a) Any property and other assets to which the individual had any legal title or interest at the time of death (to the extent of such interest). This includes assets conveyed by the client to a survivor, heir, or assignee of the deceased through joint tenancy, tenancy in common survivorship, life estate, living trust, or other arrangement; and

(b) nonprobate assets as defined by RCW 11.02.005. and any life estate interest held by the recipient immediately before death.

"Joint Tenancy" means ownership of property held under circumstances that entitle one or more owners to the whole of the property on the death of the other owner(s), including but not limited to, joint tenancy with right of survivorship and tenants by the entirety.

"Qualified Individual" - means an heir or an unmarried individual who, immediately prior to the client's death, was eighteen years of age or older, shared the same regular and permanent residence with the client and with whom the client had an exclusive relationship of mutual support, caring, and commitment.

WAC 388-527-2737 Deferring recovery.

(2) The department places a lien to secure the department's interest in the estate while the conditions in subsection (1) of this section exist may place a lien against property to evidence the department's right to recover after the deferral period specified in subsection (1) of this section.

WAC 388-527-2750 Delay of recovery for undue hardship.

The department delays recovery under this section when the department determines that recovery would cause an undue hardship for the heir(s) a qualified individual(s). This delay is limited to the period during which the undue hardship exists. The undue hardship must exist at the time of the client's death in order to be considered for a delay of recovery. The department limits an heir to one request for a delay of recovery due to undue hardship for each estate subject to recovery action.

(1) Undue hardship exists when:

(a) The estate subject to the adjustment or recovery is the sole income-producing asset of one or more of the heirs qualified individuals and income is limited; or

(b) Recovery would cause the heir, who would otherwise be eligible for public assistance, to become homeless deprive a qualified individual(s) of shelter and the qualified individual lacks the financial means to obtain and maintain alternative shelter.

(2) Undue hardship does not exist when:

(a) The adjustment or recovery of the decedent's cost of assistance would merely cause the heir qualified individual inconvenience or restrict his or her lifestyle; or

(b) The undue hardship was created as a result of estate planning methods by which the heir qualified individual or deceased client divested, transferred or otherwise encumbered assets, in whole or in part, to avoid recovery from the estate.

(4) When a delay of recovery is granted, the department may revoke the delay of recovery if the heir(s) qualified individual(s):

(a) (i) Fails to supply timely information and resource declaration when requested by the department;

(b) (ii) Sells, transfers, or encumbers title to the property;

(c) (iii) Fails to reside full-time on the premises;

(d) (iv) Fails to pay property taxes and utilities when due;

(e) (v) Fails to keep the property maintained and in good repair;

(vi) Fails to establish and continuously maintain adequate fire/casualty insurance in the amount equal to the state's lien interest. The insurance policies must identify the State of Washington as the primary payee on the property insurance policies. The person granted the delay of recovery must provide the department with documentation of the coverage status on an annual basis.

(f) (vii) Have a change in any circumstances under subsection (1) of this section for which the delay of recovery due to undue hardship was granted; or

(g) (viii) Dies.

WAC 388-527-2790 Filing liens.

(4)(b) Whether the decedent had legal title to the property; and

(c) Whether a lien is allowed under the provisions of 42 USC 1396p (a) and (b).

WAC 388-527-2810 Life estates and joint tenancy.

(1) The department may enforce a lien authorized under this section against a decedent's life estate or joint tenancy interest in real property held by the decedent immediately prior to his or her death until the lien is satisfied. The department will not apply a lien against a decedent's life estate interest providing the decedent had not previously transferred an interest in the property while retaining a life estate.

(a) The value of the life estate subject to the lien is the fair market value of the decedent's interest in the property subject to the life estate immediately prior to death.

(2) The department's methodology for calculating the value of the life estate is determined using the fair market value of the property.

(a) To determine the value of the life estate....

(b) To determine the value of the asset that was transferred for less than fair market value, the department subtracts the value of the life estate from the fair market value of the property. If the life estate is jointly owned, the department determines the decedent's proportionate share.

WAC 388-527-2820 Liens prior to death.

(1) Subject to the requirements of 42 USC Section 1396p(a)....

(1)(b) The department determines, after notice and opportunity for a hearing, that the client cannot reasonably be expected to be discharged from the medical institution and return home; and

(c) None of the following are lawfully residing in the client's home:

(i) The client's spouse;

(ii) The client's child who is under age twenty-one, or is blind or permanently and totally disabled as defined in Title 42 USC Section 1382c; or

(iii) A sibling of the client (who has an equity interest in such income and who was residing in the client's home for a period of a least one year immediately before the date of the client's admission to the medical institution).

WAC 388-527-2860 Interest assessed on past due debt.

(1) The recovery debt becomes past due and accrues interest at a rate of one percent per month on recoverable estate assets beginning nine months after the earlier of:

A final cost-benefit analysis is available by contacting Bill Ward, DSHS-Office of Financial Recovery (OFR), P.O. Box 45862, Olympia, WA 98504-5862, phone (360) 664-5501, e-mail

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 7, Amended 6, Repealed 2.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 7, Amended 6, Repealed 2.

Date Adopted: August 14, 2006.

Liz Begert Dunbar

for Robin Arnold-Williams


Reviser's note: The material contained in this filing exceeded the page-count limitations of WAC 1-21-040 for appearance in this issue of the Register. It will appear in the 06-18 issue of the Register.

Washington State Code Reviser's Office