How DHS describes the penalty calculation
DHS calculates uncompensated value as the difference between the resource's fair market value at transfer and the compensation received. The manual says the months of ineligibility are calculated by dividing all uncompensated transfers by the current divisor; any remaining fraction is converted to days and rounded up (DHS Medical Services Policy Manual, H-308).
The Arkansas divisor is not described as a private-pay figure. DHS defines it as the weighted average per-diem Medicaid rate multiplied by 30.42 and rounded to a monthly amount, re-determined yearly by the Division of Medical Services with changes effective April 1 (DHS Medical Services Policy Manual, H-316).
The public DHS policy directs readers to Appendix R for the current divisor, but a current 2026 Appendix R dollar amount was not located in the sources reviewed. A plan should use the divisor in effect for the case rather than a stale online example (DHS Medical Services Policy Manual, H-308 and H-316).
Penalty timing and hardship matter
For a nursing-home applicant or recipient, DHS says the penalty begins on the first day of the transfer month or the date Medicaid eligibility otherwise exists, whichever is later. During the penalty, other Medicaid services may remain available if eligibility requirements are met, but vendor payment and waiver coverage have the restrictions described in policy (DHS Medical Services Policy Manual, H-310).
DHS also provides an undue-hardship waiver path for a nursing-facility vendor-payment or waiver denial caused by an uncompensated resource or income transfer. Its policy specifies food, shelter, medically necessary care, insufficient resources for one month of facility care, and inability to recover the transferred resource among the conditions for hardship (DHS policy packet, H-700 and H-720).
Look-back: 60 months.
Formula: uncompensated value divided by the current DHS divisor, with fractional months converted to days.
2026 divisor: confirm directly with DHS because the current public Appendix R amount was not located (
DHS Medical Services Policy Manual).
Do not label a transaction by its paperwork alone
A family gift, below-market sale, deed, trust funding, or payment for services can all require a fair-market-value and exception analysis. Keep appraisals, bank records, contracts, receipts, and care records before a crisis makes reconstruction difficult.
Not mutually exclusive. Most families combine two or three funding pillars — this one rarely stands alone.
The
Journey Assessment ranks all ten pillars against your specific situation and
recommends the top three.
