Authority: IC 12-13-7-3; IC 12-15-1-10

Affected: IC 12-15-2-10

Sec. 24. (a) At the time an applicant is notified that they are being denied Medicaid benefits due to:

1. (1) section 1.1 of this rule;
2. (2) section 22 of this rule; or
3. (3) both sections 1.1 and 22 of this rule;

the state shall notify the applicant that a hardship exception to the rules exists.

(b) An applicant may file for a hardship exception only if the applicant chooses not to file for an administrative appeal on the merits of their determination. By filing a request for a hardship exception, an applicant:

1. (1) admits that a transfer for less than adequate consideration was made and the agency's determination of any penalty was correct;
2. (2) waives the right to file a request for an administrative appeal; and
3. (3) revokes any previously filed administrative appeal.

If an applicant simultaneously files an administrative appeal and a hardship exception, the request for the hardship exception will be denied and forwarded to the administrative law judge (ALJ) for consideration.

(c) The following persons can apply for the hardship exception and will have standing to pursue an appeal of denial of such exception:

1. (1) The applicant for benefits.
2. (2) The applicant's personal representative.
3. (3) The nursing facility in which the applicant currently resides, so long as the applicant or the applicant's personal representative consent.

(d) A request for a hardship exception must be received by the office of Medicaid policy and planning by close of business as defined in 405 IAC 1.1-1-3(c) not later than thirty-three (33) calendar days from the mailing date of the notification to the applicant of the denial of Medicaid benefits under subsection (a).

(e) In order to qualify for a hardship exception, the member shall supply written documentation proving that the application of transfer of asset rules will deprive the applicant of:

1. (1) medical care such that the applicant's health would be endangered; or
2. (2) food, clothing, shelter, or other necessities of life.

(f) An undue hardship shall not exist when:

1. (1) the imposition of the transfer of assets provisions:

   1. (A) merely cause the applicant inconvenience; or
   2. (B) such imposition might restrict the applicant's lifestyle but not put the applicant at risk of serious deprivation;
2. (2) an individual is required to the sell an asset in an arms length transaction, which would result in a sale of the asset that is less than the current fair market value;

3. (3) the undoing of a transfer causes:

   1. (A) adverse tax consequences; or
   2. (B) penalties, interest, or other contract damages;
4. however where such penalties, interest, and contract damages are incurred in a contract between members of the same family (including step- and half- family members) the penalties, interest, and damages shall be considered transfers for inadequate consideration;

5. (4) the applicant claims that:

   1. (A) imposition of the transfer penalty will result in the dissolution of a marriage; or
   2. (B) the only way to avoid the transfer penalty is to dissolve the marriage;
6. (5) the undoing of a transfer will cause hardship to an individual who is not the applicant.

This list shall not be exclusive, and the decision to deny an undue hardship exception shall not be limited to situations described in this subsection.

(g) The decision to grant or deny an undue hardship exception shall be made by the office within forty-five (45) days of receiving a request for an exception. Denial of an undue hardship exception under this section may be appealed by following the rules under 405 IAC 1.1. An ALJ may only issue a hardship waiver when the denial of the hardship waiver by the office is being appealed.

(Office of the Secretary of Family and Social Services; 405 IAC 2-3-24; filed Aug 18, 2009, 11:33 a.m.: 20090916-IR-405080325FRA; filed Feb 17, 2012, 10:42 a.m.: 20120314-IR-405110724FRA; readopted filed Oct 28, 2013, 3:18 p.m.: 20131127-IR-405130241RFA; readopted filed Nov 13, 2019, 11:54 a.m.: 20191211-IR-405190487RFA; filed Jun 11, 2021, 2:35 p.m.: 20210707-IR-405190602FRA; readopted filed Oct 8, 2025, 3:16 p.m.: 20251105-IR-405240502RFA)