North Carolina Department of Health and Human Services
Division of Health Benefits
Medicaid Eligibility Unit
AGED, BLIND AND DISABLED MEDICAID MANUAL
MA-2230
1
FINANCIAL RESOURCES
REVISED 05/17/24 – CHANGE NO. 09-24
CHANGE NOTICE 09-24
• Section I.A.3 – Updated the MQB reserves limit.
DHB Administrative Letter NO: 06-23, Continuous Coverage Unwinding (CCU) Period
After COVID-19 Public Health Emergency (PHE): Medicaid Procedures - Amended
DHB Administrative Letter NO: 01-22, Emergency Rental Assistance
I. POLICY PRINCIPLES
Resources are an important factor in determining Medicaid eligibility. Countable
resources are compared to a limit established by federal law. An applicant/beneficiary
(a/b) is ineligible for Medicaid if countable resources exceed the resource limit or the
“reserve” limit. The DMA-5030, Reserve History Sheet must be used to document
resources at application, change in situation and at redeterminations.
A. Resource Policy Rules
1. Resources
Resources are all financial assets that a Medicaid a/b or a person who is
financially responsible for him:
a. Owns, or has the right, authority, or power to convert to cash, and
b. Are legally available for the a/b’s support and maintenance.
2. Resource Eligibility Determination
When determining Medicaid eligibility, some assets are countable resources
and others are excluded. Always verify resources, determine their availability
and whether available resources are countable.
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3. Resource Limits
To qualify for Medicaid, the a/b’s countable resources must be equal to or less
than the limits listed below:
Number of
Persons
M-AABD, C. N.
M Resource
Limit
N-QB (Q/B/E)
Resource Limit
M-WD Resource
Limit
HCWD Resource
Limit
Individual
$2,000
$9,430
$4,000
Minimum
Community
Spouse Resource
Allowance (see
MA-2231)
Couple $3,000 $14,130 $6,000
4. First Moment
North Carolina Department of Health and Human Services
Division of Health Benefits
Medicaid Eligibility Unit
AGED, BLIND AND DISABLED MEDICAID MANUAL
MA-2230
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FINANCIAL RESOURCES
Verify the value of countable liquid resources (see definition in B.3. below) as
of the first moment of the month. Increases of resources during the month do
not affect eligibility for month of increase.
NOTE: While countable resources are only applied to the resource limit on the
first moment of the month following receipt, if they are given away in the
month of receipt, evaluate for transfer of resources according to MA-2240,
Transfer of Assets
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FINANCIAL RESOURCES
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(I.A.4.)
5. Excess Resources
a. If countable resources exceed the allowable limit:
(1) Notify an applicant via the DMA-5097 of excess resources and the
opportunity to rebut the value of those resources that can be
rebutted (II.G.1.) or reduce the value of resources. Follow the
policy in MA-2303, Verification Requirements for Applications,
and MA-2304, Processing the Application, for time frames and
disposition instructions when there are excess resources.
(2) Notify a beneficiary via the DMA-5097 of excess resources and
the opportunity to rebut the value of those resources that can be
rebutted (II.G.2.) or reduce the value of resources.
(a) Allow the beneficiary 12 calendar days to provide proof of
rebuttal of value or reduction of resources.
(b) If proof of rebuttal or reduction is not received within 12
calendar days, send a timely notice proposing termination
for excess resources. Terminate the case unless, the value
of the resources are rebutted or resources are reduced prior
to the effective date of termination.
b. Refer to I.C., II.G., VII.E., and VIII.E for further instructions on rebutting
the value of resources. Refer to I.D. and XIII.H. for further policy on
reduction of resources and MA-2240, Transfer of Assets, for allowable
transfers that may reduce resources.
6. The following are not considered resources in determining Medicaid
eligibility or transfer of assets.
a. Cash to purchase medical or social services, cash placed in an irrevocable
burial account, (see XIII. for applying to the burial exclusion), money used
as part of a Plan for Achieving Self-Support (PASS) see H. below, and
past due SSI benefits placed in a Dedicated Account for a child under age
18 who has a representative payee, (see I. below).
For one calendar month following its receipt, cash paid by a recognized
medical or social services program is not a resource provided the cash is
not income and not repayment for a bill already paid.
b. Home energy assistance/support and maintenance assistance (HEA/SMA)
regardless of how long a person retains it.
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(I.A.6.)
FINANCIAL RESOURCES
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c. Certain stock in Alaska regional or village corporations. Do not include
shares of stock held by a native Alaskan in a regional or village
corporation as a resource.
B. Types of Resources
There are three types of resources considered when determining Medicaid eligibility -
real property, personal property and liquid assets.
1. Real Property
Real property includes land and all buildings or dwellings which are
permanently affixed to the land. This includes mobile homes if the county tax
office considers them to be real property. Verify with the county tax office.
2. Personal Property
Personal property includes all personal effects and household goods as well as
any types of motor vehicles, boats, trailers or farm and garden equipment.
(i.e. mobile homes are considered personal property unless county tax office
considers the mobile home to be real property. This can be verified by county
tax records or office.)
3. Liquid Assets
Liquid assets include cash, bank accounts, certificates of deposit as well as
any item that can be converted to cash (i.e. cash value bearing life insurance
policy).
C. Rebuttal of Resource Value for Real or Personal Property or Promissory Note
If the value of the a/b’s total resources exceeds the resource limit the a/b can disagree
with and rebut the value of real or personal property or a promissory note. The a/b
must be informed via the DMA-5097 or DMA-5097S that he has the right to rebut
and prove that the resource has a lesser value.
D. Reduction of Resources
In addition to rebuttal, the a/b must be given the opportunity to reduce countable
resources which exceed the resource limit. See MA-2303, Verification Requirements
For Applications and MA-2304, Processing the Application, for application
processing standards. A beneficiary may reduce resources within the timely notice
time frame.
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(I.)
FINANCIAL RESOURCES
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E. Burial Exclusion
Up to $1,500 of otherwise countable liquid assets may be excluded for burial
purposes. See Item XIII. below.
F. Protection of Resources
1. When a married applicant is “institutionalized” for long-term care or applies
for CAP, the spouse who remains in the community may be able to keep a
share of the couple’s assets. This amount is excluded from the countable
resources of the institutionalized or CAP spouse. This amount is known as the
Community Spouse Resource Allowance (CRSA). See MA-2231,
Community Spouse Resource Protection, for instructions.
2. For individuals with a community spouse, apply the Long Term Care
Partnership Program disregard after applying the CRSA, if the individual is
still over reserve. See XII.D below for instructions on how to apply the
resource disregard for individuals with a qualified Long Term Care
Partnership Program policy.
G. Transfer of Assets
Transfer of assets may result in a period of ineligibility known as a sanction if the a/b
or a/b’s spouse requests assistance with institutional services or receives in-home
health services and supplies. See MA-2240, Transfer of Assets.
1. Always document in the case record any transfer of assets by the a/b or
financially responsible spouse.
2. Include in the documentation the amount of the transfer, date of the transfer,
and any other identifying information, etc.
3. Always complete the Assets Transfer Tracking Screen for any a/b to indicate
that a transfer of assets evaluation has been completed. Refer to MA-2240,
Transfer of Assets, for procedures.
H. Plan to Achieve Self-Support (PASS)
The Social Security Act authorizes the exclusion of resources of an individual who
has a disability or is blind when the individual needs such income and resources to
fulfill an approved Plan to Achieve Self-Support (PASS).
Verify the exclusion amount by viewing the notice of approval from the SSA office.
Since the PASS is issued for a specific period of time and can be amended by SSA
due to changes, it should be verified at each redetermination.
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AGED, BLIND AND DISABLED MEDICAID MANUAL
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(I.)
FINANCIAL RESOURCES
REISSUED 01/01/2011 – CHANGE NO. 02-11
I. Dedicated Accounts for Individuals under Age 18
Section 213 of the Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 requires that when an individual under age 18 becomes eligible for
Supplemental Security Income (SSI), and is eligible for past due SSI monthly
Benefit’s, the representative payee must establish a dedicated account in a financial
institution into which the past due benefits will be paid.
Other underpayments of SSI benefits may also be paid into this account by Social
Security. No other funds may be deposited into a dedicated account. A dedicated
account including any interest earned is excluded from income and is not a countable
resource.
Obtain account statements to verify that only past due payments of SSI benefits have
been deposited into the dedicated account. If other funds including regular monthly
SSI benefit payments have been deposited into the account, it is no longer considered
a dedicated account and should be evaluated for being a countable resource.
II. FINANCIAL RESOURCE PROCEDURES
The following information contains procedures for verifying and counting resources.
Detailed information about various topics in this section is referenced for convenience.
A. Determine Whose Resources Are Counted
The a/b’s available resources are always counted when determining eligibility. In
addition, if the a/b is married or is under age 18, a spouse or parent(s) may be
financially responsible for the a/b. The spouse’s or parent’s resources must be
evaluated when determining eligibility. See III. below for information on how to
determine whose resources are counted.
B. Determine Availability of Resources
Even though an a/b, spouse or parent has financial assets, the assets may not be an
available resource to the a/b under certain circumstances. Item IV. below provides
information on how to determine availability of resources.
C. Request and Verify Resources
1. Liquid Assets - First Moment Balance
Always verify liquid assets as of the “first moment” of the month of
verification. For all Medicaid classifications:
a. Request the closing balance/value on the last working day of the month
pre-ceding the verification month.
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(II.C.1.)
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b. The closing balance/value on the last business day of the preceding month
is the “first moment” balance/value of the verification month.
2. Personal and Real Property Assets
The value of personal property and real property changes only when re-
evaluated for tax purposes. Verify the value at any time during the month.
D. Resource Verification Month
1. Applications
The month to verify resources is:
a. Ongoing Certification Period - The month of application, or, if there are
excess resources, the month resources are reduced.
b. Retroactive Certification Period - Each month of any 1, 2, or 3 month
period.
2. Redeterminations
For eligibility reviews, there is some flexibility as long as the “verification
month” is:
a. No earlier than the month in which the review process (verifications,
appointment letter, etc.) is started, and
b. No later than the first month of the new certification period
3. Change In Situation
Verify resources for the month of change. If countable resources exceed the
allowable limit:
a. Notify the beneficiary via the DMA-5097 or DMA-5097S of excess
resources and the opportunity to rebut or reduce the value of resources.
Allow 12 calendar days to provide proof of rebuttal or reduction of
resources.
b. If, at the end of 12 calendar days, proof of rebuttal or reduction of
resources is not received, send a timely notice of termination.
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(II.D.3.)
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c. The beneficiary must provide proof that resources have been reduced no
later than the effective date of termination.
d. If proof is submitted by the termination effective date, continue eligibility.
4. Appeal Reversals
Verify resources as of the first month of each certification period (c.p.). Begin
with the retroactive 1-3 months and go forward by c.p.’s of 6 months. Verify
any reported increases in resources during a c.p.
E. Calculate Countable Resources
1. Add the value of all countable real property assets. Include equity value based
on tax value at this point. Rebuttal of current market value is only necessary
if there are excess resources. See VII. below to determine how to count real
property.
2. Add the value of all countable personal property assets. Include the equity
value of excess vehicles. Rebuttal of personal property value is only
necessary if there are excess resources. See VIII. to determine how to count
personal property.
3. Add the value of all countable liquid assets. See X.-XII below to determine
how to count trust funds, life insurance and other liquid assets.
4. Total all countable assets available to the a/b and financially responsible
persons. See MA-2260, Financial Eligibility Regulations-PLA, for resource
limits and parental deeming of resources. Refer to MA-2231, Community
Spouse Resource Protection, when the a/b is institutionalized and has a spouse
in the community. See XII.D below for instructions on how to apply a
resource disregard for individuals with a qualified Long Term Care
Partnership policy.
F. Compare Countable Resources to Resource Limit
1. Private Living Arrangement
The PLA a/b meets resource eligibility criteria if total countable resources are
equal to or less than the resource limit for the a/b (individual or couple limit)
on the first moment of the verification month.
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(II.F.)
FINANCIAL RESOURCES
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2. Long Term Care
a. A single (unmarried or widowed) a/b in LTC meets resource criteria if
total countable resources are equal to or less than the resource limit for
one person.
b. Married LTC a/b with a spouse in the community –
Subtract the Community Spouse Resource Allowance (CSRA) from total
countable resources of the couple. The a/b meets resource criteria if the
remaining resources are equal to or less than the limit for one person.
Rules and procedures for determining the amount of the CSRA are found
in MA-2231, Community Spouse Resource Protection.
3. See G. - J. below if resources exceed allowable limits
G. Rebuttal of Real/Personal Property Value or Promissory Note
The a/b may rebut the value of real or personal property (including partial interest) or
promissory note when countable resources exceed allowable limits. Rebuttal
requirements are listed in items VII. and VIII. Refer also to instructions in MA-2303,
Verification Requirements For Applications. When the a/b successfully rebuts the
value of an asset, use the lesser value for all months for which eligibility is being
determined, including retroactive months.
1. Rebuttal Requirements for Applications
When total countable resources exceed the allowable limit and the total
includes equity in real property, personal property or a promissory note, notify
the applicant in writing on the DMA-5097, Request for Information (or DMA-
5097S), of the right to rebut.
a. Indicate the current value of countable resources and inform the applicant
of the right to rebut the value and show that the asset has lesser value.
State the latest date the rebuttal can be provided.
b. Refer to MA-2304, Processing The Application, for information
concerning processing time frames for applications.
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(II.G.)
FINANCIAL RESOURCES
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2. Rebuttal Requirements for Ongoing Cases
a. When total countable resources exceed the allowable limit and the total
includes equity in real property, personal property or a promissory note,
notify the beneficiary in writing on the DMA-5097, Request for
Information, (or DMA-5097S) of the right to rebut the value of these
resources.
Indicate the current value of countable resources and inform the
beneficiary of the right to rebut the value and show that the asset has lesser
value. Allow 12 calendar days to provide proof of rebuttal of the value of
the resource(s).
b. If proof of rebuttal or reduction is not received within 12 calendar days,
send a timely notice proposing termination for excess resources.
Terminate the case unless, the value of resources are rebutted or resources
are reduced prior to the effective date of termination.
H. Burial Exclusion
Up to $1,500 of countable liquid assets for the a/b, spouse and financially responsible
parent may be excluded for burial purposes. Using the burial exclusion is one method
of reducing total countable resources which exceed the limit. See XIII. below.
I. Approving/Denying the Application for Resources
Refer to MA-2260, Financial Eligibility Regulations – PLA, to determine if countable
resources, as determined in this section, are within allowable limits.
1. Countable Resources are Within Limits
Approve the application effective with the month that countable resources are
equal to or below the allowable limit and all other eligibility criteria are met.
2. Countable Resources Exceed Limits
a. Medically Needy - M
If resources are reduced to allowable limits within the application
processing time, authorize Medicaid as of the day that both resource and
deductible requirements are met, whichever occurs last and all other
requirements are met.
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(II.I.2.)
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b. Categorically Needy - N, Q, B, E, and MWD.
If resources are reduced to allowable limits within the application
processing time, authorize Medicaid the month that resources are below
the limit as of the first moment and all other requirements are met.
J. Eligibility Redeterminations/Change in Situation
1. Countable Resources Are Within Limits
The a/b is eligible if countable resources are equal to or below the appropriate
limit as of the first moment of the verification month and all other eligibility
requirements are met.
2. Countable Resources Exceed Limits
If the beneficiary has excess resources at redetermination or change in
situation, he must reduce resources to the allowable limit prior to the effective
date of termination.
a. Send a DMA-5097, Request for Information, (or DMA-5097S) notifying
the beneficiary of excess resources including the resource limit and
options for rebuttal of resources (whose value can be rebutted), burial
exclusion, or other reduction of resources, that are applicable to the types
of resources he owns. Allow 12 calendar days for him to provide proof of
rebuttal or reduction of resources.
b. If the beneficiary does not provide proof of rebuttal or reduction of
resources within 12 calendar days, send a timely notice proposing
termination for excess resources. Terminate the case unless the values of
the resources are rebutted or resources are reduced prior to the effective
date of termination.
III. WHOSE RESOURCES TO COUNT
In addition to resources owned by the a/b, the resources owned by a spouse or parent
must be counted if they are available for the a/b’s use. This principle is known as
financial responsibility. This section describes who is financially responsible when
determining Medicaid eligibility and how their resources are counted. See IV below for
information on determining availability of resources.
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(III.)
FINANCIAL RESOURCES
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A. Applicant/Beneficiary
Always count the a/b’s available resources in determining eligibility. If the a/b does
not have a spouse or parent (a/b under age 18) compare total countable resources to
the resource limit for one person.
B. Financial Responsibility - Spouse for Spouse
A spouse is financially responsible for the a/b when they live together. Use the
following procedures to determine whose resources to count and which resource limit
to use when an a/b has a spouse:
1. Private Living Arrangement - Legal Spouses Live Together
Compare the total countable resources of the couple to the resource limit for 2
persons unless one of them receives Work First Family Assistance (including
Transitional Medicaid benefits), SSI or Medicaid under the Community
Alternatives Program (CAP). Then use the resource limit for one. Refer to
MA-2250, Income.
2. Private Living Arrangement - Legal Spouses Live Apart
Compare total countable resources of the a/b to the resource limit for one
person. Evaluate any jointly owned resources for availability as specified in
IV.B.
3. CAP Beneficiary(s)
a. One Spouse is CAP
Deduct the Community Spouse Resource Amount (CSRA) from the total
combined countable resources of the couple. Compare the remainder to
the resource limit for one. See MA-2231, Community Spouse Resource
Protection, for CSRA.
b. Both Spouses are CAP
Compare the total countable resources of each spouse to the resource limit
for one. If resources are owned jointly, count 50% for each spouse.
4. Long Term Care - One Spouse is Institutionalized (Applies whether or not the
institutionalized spouse is applying for help with long term care.)
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(III.B.4.)
FINANCIAL RESOURCES
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Refer to MA-2231 Community Spouse Resource Protection, for procedures
for protecting resources for a spouse living in the community when the a/b
began a continuous period of institutionalization on or after October 1, 1989.
a. Couple Apart More Than 12 Consecutive Months
If the couple had been apart for at least 12 consecutive months when one
of them becomes institutionalized, compare the available resources of the
a/b to the resource limit for one. Evaluate jointly owned assets for
availability as specified in IV.B. - Assets Jointly Owned With a Non-
Financially Responsible Individual.
b. Couple Apart Less Than 12 Consecutive Months
If the couple were living together or separated less than 12 consecutive
months, deduct the Community Spouse Resource Amount from the total
combined countable resources of the couple. Compare the remainder to
the resource limit for one. See MA-2231, Community Spouse Resource
Protection, for CSRA.
NOTE Do not count a prior period of institutionalization as part of the 12
month period of separation unless the couple was legally separated during
this time.
c. CPI Prior to 10/1/89
If the current continuous period of institutionalization (see MA-2270,
Long Term Care Need and Budgeting, for definition) began before
10/1/89:
(1) The legal spouse of the institutionalized a/b is not financially
responsible beginning with the month after month of entry into a
nursing level of care.
(2) Compare the total available assets of the institutionalized a/b to the
resource limit for one.
(3) Do not apply spousal resource protection procedures.
(4) Evaluate any jointly owned assets for availability as specified in
IV.B. below.
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(III.B.)
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5. Long Term Care - Both Spouses Institutionalized
a. Spouses In Separate LTC Rooms
The spouses are not financially responsible for each other. Compare
available resources owned by each spouse who is an a/b to the resource
limit for one. In addition:
(1) If both are beneficiaries, count half of any jointly owned assets for
each spouse.
(2) If one spouse is not a Medicaid a/b, see Item IV.B. - Assets Jointly
Owned With a Non-Financially Responsible Individual.
b. Spouses in Same LTC Room
If both spouses are beneficiaries and are in the same room, compare
available resources of both spouses to the resource limit for two.
C. Financial Responsibility - Parent for Children
When establishing resource eligibility for disabled children under age 18 who live
with their parents, evaluate available resources of the parent to determine if resources
must be deemed to the child. See MA-2260, Financial Eligibility Regulations – PLA.
Do not count (or deem) the assets of the parents if:
1. The parent(s) receive SSI, Work First, or CAP.
2. The child has been out of the parents’ home for more than one month,
(Beginning with the 2nd month do not count the parents’ resources. See MA-
2260, Financial Eligibility Regulations – PLA, I.A.2.) or
3. The child is approved for CAP services (Community Alternatives Program).
IV. AVAILABILITY OF RESOURCES
Only count a resource if it is available to the a/b. Available means that the a/b can access
and use the resource. Resources of a financially responsible spouse or parent may also be
countable (See III. above).
This section provides information on how to determine if countable resources held by the
applicant/beneficiary or financially responsible person are available for the a/b’s use.
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(IV.)
FINANCIAL RESOURCES
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A. General Policy Rules
1. Except as stated in 2. – 4. below, Resources
a. Held solely by the a/b are considered available for the a/b’s use.
b. Held by a financially responsible spouse or parent are considered available
and may be counted in determining the a/b’s eligibility. See MA-
2260../../../../../../../OnLine
Manuals/Content/AppData/Local/Microsoft/Local
Settings/Temp/MA2260.pdf, Financial Eligibility Regulations – PLA, for
instructions.
2. Resources are considered available unless the a/b or financially responsible
person shows evidence of legal restraints such as judgments, estates, boundary
disputes, or legally binding agreements.
3. Resources may not be available if the a/b or financially responsible person is
incompetent. Refer to VI. below.
4. The a/b or individual acting on his behalf is responsible for providing
evidence that resources are not available.
B. Shared Ownership of Resources
1. A/B and Financially Responsible Spouse/Parent
Countable resources owned jointly by the a/b and a financially responsible
individual are available to the a/b when determining eligibility.
Joint ownership of real property by persons who are not married is tenancy-in-
common. (Spouses my also own real property as tenants-in-common, but
absent a legally binding agreement to that effect, joint ownership of real
property by spouses is as tenants-by-entirety. Refer to Definitions Relating to
Real Property, in VII below.
NOTE: Tenancy-in-common interest in real property is not countable. Do not
count it even if owned by financially responsible individuals. Refer to MA-
2240, Transfer of Assets, for policy on sanctioning transfers of tenancy-in-
common interest in real property.
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(IV.B.)
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2. Individual Who is Not Financially Responsible
Countable resources owned jointly by the a/b or financially responsible
spouse/parent with an individual who is not financially responsible may be
available to the a/b.
a. Other Owner Receives Public Assistance
If the owner(s) are beneficiaries of Medicaid, Work First Family
Assistance (WFFA), Special Assistance (SA) or SSI:
(1) If there is no legally binding agreement specifying the share of the
resources owned by each individual, divide the value of the asset
equally among the owners and count the resulting amount as
available to the a/b, or
(2) If there is a legally binding agreement specifying the share of the
resources owned by each individual, count the value of the share
specified for the a/b or financially responsible person.
(3) Evaluate for transfer if resources are held jointly with a child for
whom the A/B does not have financial responsibility.
b. Spouse of Financially Responsible Parent
If the other person is the spouse of the financially responsible parent (the
a/b’s stepparent) and does not receive Medicaid, WFFA, SSI, SA, or CAP:
(1) The value of liquid assets/personal property owned jointly by the
financially responsible parent and his spouse is available and a
portion may be deemed to the child a/b (see MA-2260, Financial
Eligibility Regulations – PLA) if:
(a) The financially responsible parent can dispose of the
assets/property without the consent and participation of the
spouse, or
(b) The spouse agrees to and, if necessary, participates in the
disposal of the assets/property.
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(IV.B.2.b. (2)
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(2) Unless specific shares have been specified by a legally binding
agreement, one-half of the value of real property jointly owned by
the financially responsible parent and spouse are available and a
portion may be deemed to the child a/b (See MA-2260, Financial
Eligibility Regulations – PLA.) if:
(a) The parent can dispose of the property without the consent
and participation of the spouse, or
(b) The spouse agrees to and, if necessary, participates in the
disposal of the property.
(3) If there is a legally binding agreement specifying that a share of the
property is owned by the financially responsible parent, that
portion of the resource is available to the parent and can be deemed
to the child if:
(a) The parent can dispose of the property without the consent
and participation of the spouse, or
(b) The spouse agrees to and, if necessary, participates in the
disposal of the property.
c. Other Owner is Not a Spouse
If the other person is not a spouse of a financially responsible parent and
does not receive Medicaid, WFFA, SSI, SA, or CAP the assets are
available if:
(1) The a/b or financially responsible person can dispose of the asset
without the consent or participation of the other owner, or
(2) If the consent/participation of the other owner is required, he
agrees to and, if necessary, participates in its disposal.
NOTE: Joint ownership of real property by persons who are not
married is tenancy-in-common. These interests are not countable.
(Spouses may also own property as tenants-in-common, but absent
a legally binding agreement to that effect, joint ownership of real
property by spouses is as tenants-by-entirety. Refer to Definitions
Relating to Real Property, in VII below.)
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(IV.B.)
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3. Obtaining Consent
If the a/b or financially responsible person jointly owns a resource with a
person who is not financially responsible for the a/b and it requires the
consent and participation of the other owner to dispose of the resource, verify
with the other owner if he will consent to and participate in disposing of the
resource.
This situation may occur when spouses own property as tenants-by-entirety
but a separated and property division has not been accomplished. It may
occur when a liquid asset requires the signatures of two persons to be
accessed.
NOTE: The consent and participation of other tenants-in-common is not
required for another tenant-in-common to dispose of his tenancy-in-common
interest in real property.
a. Application Requirements
If the other owner:
(1) Consents to disposal - count the resource.
(2) Refuses to dispose - do not count the resource.
(3) Does not respond or cannot be located - do not count.
Follow policy in MA-2304, Processing the Application, that is
related to inability to locate the applicant before excluding the
resource. Document all attempts to locate. If you learn of the
other owner’s death, contact his family to determine the disposition
of the resource and who, if anyone, is the current owner.
NOTE: Refer to MA-2304, Processing the Application, for notice
requirements.
b. Redetermination/Change in Situation Requirements
(1) Attempt to re-verify the other owner’s willingness to consent or
participate. Allow 12 calendar days for the other owner to
respond.
(2) If no response is received from the other owner, notify the
beneficiary that the other owner’s response is required. Allow the
beneficiary 12 calendar days to provide the information. If the
information is not provided, send timely notice proposing
termination for excess resources.
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(IV.B.3.b.(2))
FINANCIAL RESOURCES
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C. Additional Circumstances Affecting Availability
An asset may be unavailable to the a/b because of an unsettled estate, resulting trust,
or alleged incompetence.
1. Unsettled Estate
Verify if the a/b or financially responsible spouse/parent has a legal right to an
asset if it is part of an unsettled estate. Assets are normally unavailable until
the estate is settled (probated).
a. Contact the Clerk of Court to determine availability.
NOTE: Liquid assets may be available earlier if the account was joint with
“right of survivorship” held by a/b. Contact the financial institution for
verification.
b. An estate which has been filed for probate is normally open up to 12
months unless there is a continuation approved by the Clerk of Court.
Document the date at which the estate should be probated and contact the
Clerk of Court later to verify availability.
2. Resulting Trust/Legally Binding Agreement
Assets may not be available if there is a pre-existing agreement in which the
a/b holds assets for another party but does not have an ownership interest.
This pre-existing agreement is called a “resulting trust” or is sometimes
referred to as a “legally binding agreement.” See V. below for procedures to
evaluate a resulting trust/legally binding agreement.
3. Incompetency
When countable resources exceed the allowable limit and it is alleged that the
a/b is incompetent, assets may be excluded until a determination of
competence can be completed. See VI. below for procedures when
incompetence is alleged.
D. Transfer of Assets
When the a/b or the a/b’s spouse is requesting or receiving assistance with a nursing
facility or intermediate care facility for the mentally retarded, inappropriate level of
care bed in a hospital, CAP waiver programs, or Program of All-Inclusive Care for
the Elderly (PACE), and the a/b, or a/b’s spouse, or legal guardian/POA makes a
resource belonging to the a/b or a/b’s spouse unavailable, evaluate for transfer of
assets. Evaluate at each application, redetermination and applicable change in
situation. Refer to MA-2240, Transfer of Assets.
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(IV.D.)
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E. Applicant/Beneficiary Defrauded
When it is determined that an a/b has been defrauded, i.e., the legal guardian/POA has
taken an asset but refuses responsibility for the consequences, make a referral to
Adult Protective Services for investigation.
1. Determine eligibility, excluding the assets in question.
2. Refer to MA-2240, Transfer of Assets, to determine how fraud affects the
a/b’s eligibility.
F. Marital Separation, Prenuptial, and Postnuptial Agreements
The terms of these agreements do not take precedence over Medicaid availability
rules. Count the resources according to policy in IV. A. through E.
EXAMPLE: A prenuptial agreement specifies that savings and property owned by
Mrs. Jones prior to marrying Mr. Jones are unavailable to him. This agreement does
not matter should Mr. Jones apply for Medicaid. Count Mrs. Jones’ assets when
determining eligibility.
G. Documentation
Attempt to obtain a copy of existing legal documents related to availability. These
documents provide leads and help determine ownership interest or legal right to sell.
The following chart lists types of documents and their possible effect on availability
for determining Medicaid eligibility.
Documentation Possible impact on availability
Separation agreement NO impact – follow Medicaid rules.
Prenuptial agreement
Postnuptial agreement
Divorce decree with property If a/b’s ownership interest is taken away by a
settlement divorce decree, the asset is unavailable.
Will Liquid and personal property assets are unavailable
until released by the Clerk of Court.
Deed A signed deed is a valid document to consider for
availability of real property. A deed of gift must be
registered within two years from the date it is
signed to remain valid. See VII.C.3. Only the court
can “set aside” a valid deed.
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(IV G)
FINANCIAL RESOURCES
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Court Orders Refer all court orders which contradict availability
rules to DMA, Medicaid Eligibility Unit,
919-855-4000. Send a fax of the court order to
(919) 715-0801.
V. RESULTING TRUSTS/LEGALLY BINDING AGREEMENTS
A. Policy Rules
1. It is presumed that a resource owned by an individual is also available to him,
unless there are circumstances which make the resource unavailable.
2. The terms of a divorce decree, will, deed, court order, resulting trust or legally
binding agreement may cause a resource technically owned by an individual
to be unavailable to him.
3. A resulting trust exists when a person has a resource in his own name but is
holding it for the benefit of another person and he:
a. Retains no legal interest in the resource, and
b. Will not benefit from the disposal of the resource.
4. If the a/b or a person financially responsible for the a/b alleging that a
resource is held in trust for someone else continues to retain a legal interest in
the resource and/or will receive the proceeds from the disposal of the
resource, it is not considered to be held in trust for someone else and is a
countable resource.
5. If the a/b or a person financially responsible for the a/b claims a resource is
not available because of a resulting trust/legally binding agreement, he must
cooperate by presenting necessary documentary evidence to show that the
resource is unavailable.
6. A legally binding agreement may be either a written or a verbal contract. The
evidence must be sufficient to:
a. Convince others of the validity of the agreement,
b. Show that the agreement existed at the time of the purchase/deposit of the
resource, and
c. Show that the legal title holder holds the resource/property in trust for the
party applying the purchase price or making the deposit.
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(V)
B. Procedures
FINANCIAL RESOURCES
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1. When a resource is apparently owned by an individual who has applied for
Medicaid, determine whether it may not be actually available to him because
of a legally binding agreement or resulting trust.
a. Written Contract
(1) Review the contract and determine if it affects the availability of
the resource.
(2) Determine the intent and terms of the agreement between parties,
including the type of resource, the date of the contract, reason for
its existence, and specific terms of the agreement.
(3) Contact the county or agency attorney if there are questions
regarding the terms or validity of the written contract.
b. Verbal Contract/Agreement
Ask the a/b to submit 2 different types of the following evidence:
(1) Written statement(s)/affidavit(s) from the parties involved in the
verbal agreement:
(a) Giving the type of resource,
(b) The intent and terms of the agreement, and
(c) Describing the involvement of the parties to the agreement.
(2) Canceled checks or receipts for payments on a mortgage, loan, etc.,
showing who is making payments on the resource,
(3) Letter(s) or statement(s) from finance companies, banks, credit
unions, loan officers, automobile salespersons, insurance
companies or agents, or others identifying the type of resource and
supporting claims that the resource is held for another individual
who is making payments on the resource, or
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(4) Written statements from at least 2 knowledgeable persons:
(a) Identifying the type of resource, and
(b) Giving the circumstances surrounding ownership, and
(c) Availability of the resource and the basis for their
knowledge.
c. Real Property
(1) Contact the county attorney to request assistance in determining
availability if the resource in question involves real property.
(2) Only a court can set aside a deed to real property.
d. Liquid Assets/Bank Accounts
Obtain the following documentation for a bank account the a/b alleges is
in his name only for check cashing purposes or because the other
individual needs the a/b or financially responsible person’s name on the
account in the event of absence, illness, or for other reasons:
(1) Primary Verification
A written statement from each individual whose name is on the
account, attesting to actual ownership of the funds and why the
a/b’s or financially responsible person’s name is on the account.
(2) Alternative Verification
A statement regarding the ownership of funds from the a/b or
financially responsible person and one other knowledgeable
source, such as:
(a) The parties involved in the agreement,
(b) Finance companies, banks, credit unions, loan officers,
automobile salespersons, insurance companies or agents, or
(c) An individual who knows the circumstances surrounding
ownership and availability of the resource.
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(V.B.1.(2.))
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e. Motor Vehicles
Obtain the documentation in (1) below and one of documents listed in
items (2), (3), and (4), below for a motor vehicle in the name of the a/b or
financially responsible person who alleges that he is not the owner:
(1) Written statement(s) or affidavit(s) from the a/b and the other
party(ies) involved in a verbal contract:
(a) Giving the intent and terms of the agreement and the
involvement of the parties to the agreement, and
(b) Stating that the true owner, who is not the a/b or financially
responsible person, makes monthly payments on the
vehicle and pays the insurance premiums or taxes on the
vehicle.
(2) Cancelled checks or receipts for payments on a loan, etc., showing
who is making payments on the vehicle.
(3) Letter(s) or statement(s) from finance companies, banks, credit
unions, loan officers, automobile salesmen, insurance companies
or agents, or others supporting claims of the cost or of
responsibility for the vehicle.
(4) Written statements from at least 2 knowledgeable sources as to the
circumstances surrounding ownership and availability of the
vehicle. Include the basis for their knowledge.
2. Do not count the resource for the a/b who shows by the evidence that it is held
in trust for another individual.
3. If the other individual applies for Medicaid, it must be counted as a resource
for that individual.
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FINANCIAL RESOURCES
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VI. INCOMPETENCY
A. General
1. Resources owned by or in which the a/b or person financially responsible for
the a/b has a legal interest are not available to the a/b if:
a. The a/b or person financially responsible for him who owns countable
resources is alleged to be incompetent and has no legal guardian or
someone with previously established durable power of attorney (POA) to
make the resources available, or
b. He has a legal guardian/POA who does not act to make the resources
available.
1. If an a/b does not have resources that exceed the resource limit,
incompetence is not an issue.
2. When an a/b has excess resources and he is alleged to be
incompetent or has been ruled incompetent by a North Carolina
court, use the following policy to determine if the resources may
be excluded.
B. Definitions
1. Incompetent Adult
“Incompetent adult” means an adult or emancipated minor who lacks
sufficient capacity to manage the adult’s own affairs or to make or
communicate important decisions concerning the adult’s person, family, or
property whether the lack of capacity is due to mental illness, mental
retardation, epilepsy, cerebral palsy, autism, alcoholism, senility, disease,
injury, or similar cause or condition.
2. Guardian of the Estate
A guardian of the estate which may be appointed by a court permanently, or
for an interim period of time, allows the lawfully appointed guardian to act on
behalf of the incompetent individual in any state where resources belonging to
the individual are located. Court approval is needed for disposition of real
property.
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3. Guardian of the Person
A court may appoint a guardian of the person to take care of an individual’s
personal needs. The guardian of the person does not have authority to access
resources of the individual.
4. General Guardian
A general guardian is a guardian of both the estate and the person. He can
access the individual’s assets.
5. Interim Guardian
An interim guardian is appointed only to handle an immediate crisis or need
before an incompetence hearing process is completed. Interim guardianship
may be of the person, the estate, or a general guardian. He may be able to
access the individual’s assets if the court so orders. Examine the order
appointing the interim guardian to determine his authority.
6. Durable Power of Attorney
a. A durable power of attorney is a document by which an individual grants
authority to (an) other individual(s) to serve as his attorney-in-fact to act
on his behalf in legal matters.
b. It must be executed when the individual granting the POA is fully
competent, and it remains valid after incompetence occurs.
c. It must be registered with the Register of Deeds with a copy provided for
the Clerk of the Court for accounting purposes.
d. The date of execution of the document must predate the onset of
incompetence.
e. If the power of attorney does not meet these criteria or is otherwise
determined by the court to be invalid, the resources of an incompetent
person are not available until a guardian is appointed and, for real
property, until the court approves the sale. (See VI.D.6.b.)
7. General or Limited Power of Attorney
a.
A general or limited power of attorney authorizes one or more persons to
act in the absence of the person granting it.
c. It ends if the individual becomes incompetent. The resources become
unavailable at this point until a guardian is appointed and, for real
property, until the court approves the sale.
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(VI.)
C. Policy Rules
FINANCIAL RESOURCES
REVISED 05/01/11 – CHANGE NO. 06-11
1. Otherwise countable and available/accessible resources, held solely or jointly
by an allegedly incompetent a/b, are exempt prior to a formal declaration of
incompetence, appointment of a guardian, and, for real property, court
approval of sale if:
a. A written statement as described in VI.D.1.c., below, from a
knowledgeable source supports the allegation of incompetence, and
b. The a/b is allegedly incompetent for a period of at least 30 consecutive
days or until his death (whether or not 30 days has elapsed since the period
of incompetence began), and
NOTE: If applicant has not yet been incompetent for 30 days hold
application for the 30 day period.
c. The resources cannot be accessed on behalf of the a/b because:
(1) He has no legal representative/guardian/durable POA, or
(2) His legal representative/guardian/durable POA is unable, fails, or
refuses to act to make the resources available.
2. Incompetency for Medicaid eligibility purposes may be:
a. Alleged by someone who is in a position to know, as indicated in
VI.D.1.b., below, or
b. Formally declared by a North Carolina court.
3. Incompetency may be alleged at any time including, but not limited to:
a. During the application/redetermination process, or
b. When an a/b receives new resources, or
c. When unreported resources are discovered, or
d. When a change in situation causes a previously exempt resource to
become countable, or
e. When the value of a resource increases; or
f. When the a/b’s medical condition changes.
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(VI.C.)
FINANCIAL RESOURCES
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4. Exclude otherwise countable resources of an allegedly incompetent individual
if a representative has not been previously established who is legally
authorized to act on the incompetent individual’s behalf in legal matters,
including accessing his resources.
5. For purposes of Medicaid eligibility, a formal judgment of incompetence is
not required if the a/b has previously executed a valid durable power of
attorney and his attorney-in-fact is able and willing to act in the a/b’s behalf.
See definition in B. above.
a. Resources held by the incompetent a/b with a valid durable POA are
considered available and countable, unless b. below applies.
b. If the durable POA is unable or unwilling or otherwise fails or refuses to
act on the a/b’s behalf to make the resources available, the resources are
unavailable, but a legal guardian of the estate must be established for the
a/b. See VI.D.1 and 4 below for procedures.
6. When the a/b has been formally declared incompetent by a North Carolina
court and a guardian of the estate has been appointed by the court, resources
are available under certain conditions described in procedures below.
D. Procedures – Incompetence
1. Alleged Incompetence
Inform the family member or representative of an a/b who may not be
competent, including a public agency acting on the a/b’s behalf, that:
a. Otherwise countable resources may be exempt for a certain period of time
if the a/b is alleged to be incompetent for a period of at least 30
consecutive days or until his death, (whether or not 30 days has elapsed
since the period of incompetence began) and
(1) The a/b does not have someone legally authorized to act on his
behalf to access his resources, or
(2) His legal representative/guardian/durable POA is unable, fails or
refuses to act to make the resources available,
and
b. The alleged incompetence is supported by the written statement, or
testimony at an incompetency hearing, by one of the following:
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(1) A physician, or
(2) A nurse, social worker, or psychologist, and
c. The statement/testimony includes
(1) An explanation of the reasons the a/b is believed to be
incompetent, such as medical conditions or diagnoses, and
(2) The approximate onset of the alleged incompetence, and
(3) Ending date of alleged incompetence, if the person has improved,
and
(4) The basis for the knowledge or opinion of the individual alleging
the incompetence.
2. Exclude Resources
Exclude all resources, beginning with the first month for which assistance is
requested:
a. For all months that the evidence as defined in VI.D.1.b.& c., above,
clearly shows that the a/b was incompetent, or
b. Until one of the following occurs:
(1) A North Carolina court rules that the a/b is incompetent and
appoints a guardian of the estate or general guardian, and, in the
case of real property, court approval of a sale has been obtained
(See VI.D.6.b.), or
(2) The court rules that the a/b is not incompetent, or
(3) The court dismisses the case because of the death or recovery of
the a/b.
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(VI.D.)
FINANCIAL RESOURCES
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3. Requirement to Formally Establish Incompetence
Inform the a/b’s family or representative that steps must be taken to establish
the a/b’s incompetence formally in a North Carolina court. If the a/b’s
representative states that he is willing and able to act on the a/b’s behalf,
explain that:
a. All documents and petitions necessary to have the a/b formally declared
incompetent must be filed with a North Carolina court in order to have a
guardian of the estate or general guardian appointed by the court, and
b. The necessary legal documents must be filed with the court within 30
calendar days of the latter of:
(1) The date of application for Medicaid, or
(2) The discovery of a previously unreported resource or receipt of a
new resource in an ongoing case.
4. Referral for Guardianship Services
Refer the case to the county dss director’s designee in the services unit at any
point that the a/b’s representative:
a. Requests guardianship services, or
b. If the family or representative pursues guardianship, but only guardian of
person is appointed, or
c. Is offered and accepts the assistance of the dss in filing the necessary legal
documents, or
d. States that he is unwilling or unable to file the necessary documents, or
e. Refuses to participate or cooperate in the court proceedings required to
make the resources available to the a/b, or
f. Fails to take the necessary steps outlined in VI.D.3., above, within 30
calendar days of contact by the IMC regarding his responsibilities.
NOTE:The County is to always pursue general guardian or guardian of the
estate.
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(VI.D.)
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5. No Ruling of Incompetence
Count resources at the beginning of the next month if:
a. The court finds that the a/b is competent, or
b. The court dismisses the case because of the death or recovery of the a/b, or
c. The services unit determines that guardianship is not the appropriate
alternative to meet the a/b’s needs.
(1) Document the period of alleged incompetence, beginning and
ending dates or date of death, as indicated in VI.D.1.c. above, or
(2) Document that prior to the date of a finding of competence the
a/b’s medical condition substantially improved.
6. Incompetence Is Established by the Court
When a formal declaration of incompetence has been determined by a North
Carolina court and a general guardian or guardian of the estate appointed,
regard the resources as follows:
a. Count liquid resources and personal property resources beginning with the
first day of the month immediately following the month in which the legal
guardian is appointed.
b. Count real property resources only after the Court has given final approval
for sale of the property.
(1) Inform the guardian that he must petition the Clerk of Court for
approval to dispose of or convert the real property resource.
(2) Count the value of the real property resource on the first day of the
month immediately following the month in which the Court issues
an “Order Confirming Sale”, unless the guardian has taken steps to
exclude it by converting it to an exempt resource.
(3) The “Order Confirming Sale” is a document issued to the guardian
authorizing final sale of the property and must be signed by the
Clerk of Court and a Superior Court Judge. It is only issued after a
sales contract has been executed and no further bids have been
received during a period of time allowed by the Court.
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(VI.D.)
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7. Failure of Legal Guardian to Act
a. If a legal guardian fails to access liquid resources or fails to begin the
process to access real property for the a/b’s use within 30 calendar days of
appointment, make a referral to the county director’s designee.
b. The county director’s designee must:
(1) Determine if the guardian is acting in the a/b’s best interests, and
(2) Inform the IMC either that the present guardian is acting in the
a/b’s best interests or that a new guardian must be appointed.
c. The director’s designee must make a referral to the Clerk of Court for
intervention if he determines that the a/b’s interests are not being served or
are questionable.
d. Continue to exclude the resources until the Clerk of Court acts to appoint a
new guardian.
e. Count the resources as described in VI.D.2.b., above, if the director’s
designee determines that the a/b’s best interests are being served or if the
Clerk of Court appoints a new guardian.
8. Documentation
a. File copies of the durable power of attorney and/or order of guardianship
in the a/b’s case record.
b. File copies of documents to show that all required steps have been taken to
establish formal guardianship and that the guardian has taken the
necessary actions to make the a/b’s resources available.
9. Computation of Countable Resources
a. Exclude all resources for any month or portion of a month for which
assistance is requested and there is documentation that the a/b is not
competent to access his resources.
b. Count all resources that are available to the a/b either because he has
recovered sufficiently to access his resources himself or because of the
appointment of a legal guardian of the estate who has authority to access
his resources, beginning with the first day of the month following his
recovery or the appointment of a legal guardian (and in the case of real
property, court approval of sale).
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FINANCIAL RESOURCES
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VII. REAL PROPERTY ASSETS
Real property consists of land and any attachments such as dwellings and other buildings.
Property other than the home site may be a countable resource unless it can be excluded
for one of the reasons in VII.A. below. Please review the following for definitions of
types of ownership and property interest.
Single Ownership - Property owned by one individual
Tenancy-By-Entirety - Property owned jointly by husband and wife
Most property owned by a husband and wife is held by them as tenants-by-the-entirety. If
the conveyance of the property is made to the couple during the marriage, they hold the
property as tenants-by-the-entirety even if it is not specifically stated in the deed. If the
couple divorces, the tenancy-by-the-entirety is dissolved and the former spouses become
tenants-in-common of the property and either person can market his half-share. Legal
separation does not dissolve tenancy-by-the-entirety.
Tenancy-In-Common - Property owned jointly by two or more individuals who
generally are not husband and wife. Property owned by 2 or more persons who generally
are not married to one another or given to 2 or more persons by gift, will, or by intestate
succession is held as tenancy-in-common. These related or unrelated persons have an
undivided fractional interest in the whole property for the duration of the tenancy. An
individual owner may sell or give his individual interest in the property to another
without the consent and participation of the other owners, and he may file suit with the
court for partition of the property.
Though property owned jointly by husband and wife is owned by tenancy-by-entirety, a
legally binding agreement can be made that creates tenancy-in-common between husband
and wife.
Life Estate Interest
An individual may transfer his property to another and retain certain rights in the
property, such as the right of possession and use of the property, the right to obtain profits
from the property, and the right to sell his life estate interest for his lifetime. Its duration
is measured by the lifetime of the tenant or of another person, or by the occurrence of
some specific event, such as remarriage of the tenant. The contract establishing the life
estate may restrain one or more rights of the individual. He does not have title to the
property, and he does not have the right to sell the property.
Remainder Interest
Upon the death or occurrence of a previously designated specific event of the life estate
holder, the remainder interest holder ("remainder man") will hold full title in fee simple.
An owner of real property may designate several individuals as remainder men who
would hold ownership in common by will or agreement. The remainder man can
generally sell his remainder interest in the property during the life estate holder's tenancy.
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(VII)
Fee Simple Interest
The owner(s) who hold(s) a fee simple title to the property has no restrictions or
limitations on that ownership. The owner(s) may sell or transfer the ownership interest
without time conditions imposed by others.
Dower rights
A type of life estate interest once granted to a widow in her husband's real property. If the
a/b has a dower interest in real property it is probably life estate only. If questionable,
consult with county attorney.
Property agreement
A pledge, or security of a particular property, for the payment of a debt or the
performance of some other obligation within a specified time. On real property usually
called mortgage, land contract, deed of trust, or promissory note. On personal property
known as, chattel mortgages.
A. Non-Countable Real Property
Exclude the following when determining countable resources:
1. The Home site - equity of the home site used as the a/b principal place of
residence is not counted. An a/b can have only one home site exclusion.
a. The home site is any property in which the a/b or financially responsible
person has an ownership interest and which is used as his principal place
of residence.
b. The home site may be either real or personal property, fixed or mobile,
and located on land or water (i.e. motor home, houseboat).
NOTE: If the a/b requests institutional services, see MA-2242, Home
Equity Value & Eligibility For Institutional Services.
c. Do not count the value of the home site if one of the following is true:
(1) It is the a/b’s (or financially responsible person’s) principal place
of residence.
(2) The a/b (or financially responsible person) is not currently living in
the home, but his legal spouse or his dependent relative lives there,
regardless of whether the spouse or dependent relative lived there
when the a/b left the home.
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(a) Dependency may be of any kind. The relative may depend
on the a/b for housing, financial support, food, clothing etc.
Accept the a/b’s statement or if the a/b is unable to state his
intent, the written statement of his representative (guardian,
power of attorney, spouse, or Medicaid representative as
defined in MA-2301, Conducting a Face-to-Face Interview,
II.B.) regarding who lives in the home and their
dependency.
(b) Relative means the following:
1) Natural child, adopted child, stepchild, grandchild;
2) Parent, stepparent, grandparent;
3) Aunt, uncle, niece, nephew;
4) Brother, sister, stepbrother, stepsister, half-brother,
half-sister;
5) Cousin, or
6) In-law.
(c) The written statement must specify:
1) Who lives in the home,
2) How they are related, and
3) How the person is dependent on him.
Complete the DMA-5160, Statement of Spouse or Dependent
Relative in The Home, and file the completed and signed form in
the Medicaid case record.
(3) The a/b (or financially responsible person), spouse, or dependent
relative does not live in the home, but the a/b (or financially
responsible person) states in writing his subjective intent to return
home. The term “subjective intent” means that it is his intent,
regardless of the circumstances of his absence from the home, to
return home.) If the a/b is unable to state his intent, obtain the
written statement of his representative (guardian, power of
attorney, spouse, or Medicaid representative as defined in MA-
2301, Conducting a Face-to-Face Interview, II.B.).
d. If an a/b (or financially responsible person) has left his home and it is not
excluded under VII.A.1.c., it ceases to be his home site the month after he
leaves the home. It remains the home site during the month he leaves.
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e. Once ownership is established by the a/b or financially responsible person
in a new principal place of residence, the former principal place of
residence becomes non-home site property.
f. Temporary Absence from the Home by the Spouse or Dependent Relative
The home site remains excluded if the spouse or dependent relative is out
of the home but intends to return. (See VII.A.1.c.(3) and VII.A.2.)
g. Exclude the home site when the home is damaged or destroyed by disaster
and the a/b intends to repair/rebuild and return. Accept his statement of
intent to repair/rebuild and return.
h. Home site out of state – Exclude the home site of a person who is in North
Carolina with North Carolina residence (For example he is here for
employment purposes, in an nursing facility or staying with a family
member for an indefinite period of time.) if any one of the criteria in
VII.A.1.c. is met.
2. Intent to Return Home
NOTE: Refer to MA-2242, Home Equity Value & Eligibility For Institutional
Services.
Do not count the value of property that was the a/b’s home site if he states his
subjective intent to return to the home. (The term “subjective intent” means
that it is his intent, regardless of the circumstances of his absence from the
home, to return home.) Do not consider other factors, such as the a/b’s age or
physical condition, condition of the home or whether it is currently rented, or
other circumstances when determining intent to return home. If he is mentally
competent, age and physical condition are not factors in evaluating intent.
The time of return may be indefinite, and there is no time limit on this
exclusion. (See c. below if the a/b is unable to make a statement or makes a
self-contradictory statement.)
a. Verify at application and each redetermination the a/b’s intent to return
home. Use the DMA-5159, Statement of Intent to Return Home. File the
completed and signed form in the Medicaid case record.
Always accept the a/b’s statement unless it is self-contradictory or the a/b
has been determined legally incompetent. If the statement is self-
contradictory or the a/b is incompetent, refer to c. below.
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b. If the a/b is competent and his statement is not self-contradictory, the
statement supersedes all other statements made by any other individuals.
Do not request statements of others as to the a/b’s intent and ignore any
that are volunteered.
c. If the a/b’s statement is self-contradictory, he is legally incompetent, or if
he is unable to make a statement, obtain the signed statement (See
VII.A.2.a.) from his representative (guardian, power of attorney, spouse,
or Medicaid representative as defined in MA-
2301../../AppData/Local/Microsoft/Local Settings/Temp/MA2301.pdf,
Conducting a Face-to-Face Interview, II.B.), as to the a/b’s intent to return
home.
Examples of self-contradictory statements:
“Sometimes I want to go home and sometimes I don’t.”
“I intend to go home, but I want to stay here.”
“Yes, I want to go home, but I really don’t know if I should.”
3. Property Contiguous to the Home site – All or some of the tax value of
property contiguous to the home site and the buildings located on that
property, regardless of value, is excluded.
a. Contiguous means a shared boundary.
(1) Contiguous property is real property with boundaries that touch the
principal place of residence.
(2) The presence of streets, roads, lakes, rivers, or streams is to be
disregarded in determining whether property is contiguous.
b. If the a/b or financially responsible person has an ownership interest in the
principal place of residence, the value of all contiguous property is
excluded from countable resources. This is part of his home site and is
excluded from countable resources as such.
c. If the a/b or financially responsible person has no ownership interest in the
principal place of residence but does have ownership in the contiguous
property, exclude up to $12,000.00 in the tax value of contiguous
property. Refer to VII.B.1. below, to determine that portion that is
countable. This exclusion is separate and apart from the home site
exclusion.
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4. Non-Countable Ownership Interests
Do not count the following types of ownership interest in real property:
a. Life estate interest in real property.
NOTE: Income produced from a life estate is countable to the life estate
holder regardless of who receives the income.
b. Remainder interest if there is more than one remainder holder, unless the
remainder interest is owned by a married couple as tenancy by the
entirety.
c. Tenancy-in-common ownership in real property, including tenancy-in-
common remainder interest. (Refer to MA-2240, Transfer of Assets, for
possible sanctions resulting from a transfer of tenancy-in-common interest
in real property.)
5. Non-Home site Property Which Meets Current Use Requirements
Property that meets the home site exclusions in VII.A.1., 2., 3. does not have
to meet the current use requirements.
If “currently in use” for certain purposes, property may be excluded.
a. If the non-business property produces a net annual income of at least 6%
of its equity, as calculated by the 6% test in Item IX., exclude up to $6,000
in its equity. The 6% income requirement may be waived if the lower
return is for reasons beyond the a/b’s control. (See IX.H.2.)
Non-business property cannot be made income-producing for a period of
time which has already passed if there was no prior arrangement.
Real property that is excluded as the home (See VII.A.1., 2., and 3.) or
that is otherwise excluded, may produce income. However, it is not
subject to the 6% income test.
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b. Property Used in Trade or Business (e.g. a family farm)
The property is excluded if actively involved in a trade or business
regardless of value and amount of profit. However, it must be in current
use as trade or business property or, if not in use for reasons beyond the
individual’s control, there must be a reasonable expectation that the
required use will resume (Refer to VII.A.5.d.). The property maybe
excluded if used in trade or business when:
(1) Active involvement exists—the a/b or financially responsible
person must be actively involved in the business operation on a
day to day basis. The information reported on the Schedule E,
Supplemental Income and Loss, should be checked to determine
whether the individual is actively engaged in the business. If the
income is listed as Non-Passive Income (27k), the individual is
actively engaged in the business. If it is listed as Passive Income
(27h), he is not actively engaged in the business.
(2) Consider the following when determining if a trade or business
exists in newly formed LLC’s and/or questionable situations:
(a) Does the IRS regard it as a trade or business?
(b) Does the individual have documents to support the claim of
trade or business? Examples include tax reports/returns
SS-4.
(c) Does the individual have business licenses, permits,
registration?
(d) Is the individual a member of a business or trade
association?
(e) The good faith intention of making a profit or producing
income.
(f) Continuity of operations, repetition of transactions, or
regularity of activities.
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(g) Regular occupation.
(h) Holding out to others as being engaged in the selling of
goods or services.
(3) Verification
Obtain a copy of the business tax return (i.e., Form 1040 and the
appropriate Schedules) for the tax year prior to the application or
redetermination. If the current tax return is not available, obtain a
copy of the latest tax return or business records. Obtain the a/b’s
statement describing the trade or business, business assets and the
number of years in business.
c. Property Used to Produce Goods/Services for Home Consumption
Exclude up to $6,000 equity in non-business real or personal property used
to produce goods or services solely for home consumption (i.e. land or
equipment used to produce vegetables or livestock solely for home
consumption). There is no requirement that the property produce a certain
rate of return.
(1) The equity is the tax value less any encumbrances on the property.
(2) From the equity, deduct $6,000. The remainder is a countable
resource.
This $6,000 exclusion is separate and apart from the $6,000
exclusion of non-business income producing property that
produces a net annual income of 6% of its equity.
EXAMPLE: A/b owns 10 acres and uses 1 acre and a tractor to
grow food - exclude the tractor and one acre in determining the
equity value. The equity value in the acre is $3,000, and the equity
in the tractor is $1,500. The total equity is $5,500, which is less
than $6,000. The equity of the acre and the tractor is excluded.
d. Property Which Does Not Meet Current Use Requirements
Exclude property which does not meet current use requirements in a.-c.
above if:
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(1) It has been in use within 12 months, and
(2) That use will resume within 12 months.
6. Burial Spaces
Burial spaces include grave sites, crypts, mausoleums, urns, or other
repositories customarily used for the remains of a deceased person.
Exclude the value of all burial spaces owned by the a/b or person financially
responsible for the a/b in determining eligibility for MAABD, MQB-Q, MQB-
B, MQB-E, and MWD.
7. Rights of Use
The a/b or financially responsible spouse/parent(s) may own rights of use in
non-business real property. Rights of use are tied to land or the natural
resources of land and may have countable value separate from the land.
Exclude $6,000 in equity of the right of use, if owned separately from the land
by the a/b if it meets the 6% income producing criteria.
NOTE: Land is also income-producing if the a/b owns the land and rents or
leases a right of use which produces net income. Up to $6,000 in equity in the
land is excluded if it produces a net annual income of at least 6% of its equity
based on criteria in Item IX.
Types of rights of use:
a. Mineral Rights – ownership interest in certain natural resources, such as
coal, oil, sulfur, gas, etc., coming from the ground.
b. Timber Rights – ownership of timber growing on land, with or without
ownership of the surface of the land.
c. Hunting or fishing rights
d. For every one acre of a farm’s tobacco allotment, two acres of cleared land
are tied to the tobacco allotment.
EXAMPLE: Farmer allotted 5 acres of tobacco. Farmer must have 10
(2X5) acres of cleared land.
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e. The a/b may provide verification from the Tobacco Transition Payment
Program of a different number of acres than the common 2:1 ratio.
f. Exclude up to $6,000 of equity in real property that is tied to a tobacco
allotment (not already excluded due to being contiguous to the home site)
if
(1) The allotment is rented to another individual, and
(2) The income produced by the tobacco allotment produces a net
annual income of 6% of the equity in the acreage tied to the
allotment. Refer to IX. below for determining if the property meets
the 6% income test.
g. If an individual rents his tobacco allotment to someone else, consider the
rental payment as annual rental income. Prorate for 12 months to
determine monthly income.
8. The Tobacco Transition Payment Program (TTPP)
On October 22, 2004, Congress enacted the “Fair and Equitable Tobacco
Reform Act of 2004” which repealed the tobacco quota system for certain
types of tobacco grown in the United States and provides for compensating
tobacco quota owners and quota growers with the value of lost quota. USDA
established the Tobacco Transition Payment Program (TTPP), also known as
the Tobacco Buy-Out. TTPP allowed eligible quota owners and quota
growers who apply for the program to receive annual installment payments
over a 10 year period (2005-2014) as compensation.
The TTPP does not provide a lump sum payment instead of the installment
payments, however effective October 14, 2005, it allows the quota
owner/grower to enter into an assignment or successor-in-interest contract
with an approved financial institution and receive a discounted cash payment
in exchange for the installment payments. The successor-in-interest option to
sell to a family member was effective March 20, 2006.
Note: An individual could have multiple contracts if he owned quota or grew
eligible tobacco in different counties.
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Follow these procedures for the quota owners/growers participating in the
TTPP:
a. Determine if the balance of the tobacco allotment contract can be sold to
an approved financial institution for a lump sum cash payment. Contact
one of the approved financial institutions listed on the National Tobacco
Processing Center Participant List website at:
http://www.fsa.usda.gov/Internet/FSA_File/siimasterlist2007.pdf and
document the following.
(1) Quota Type, Grower or Owner
(2) Name of TTPP Contract Holder
(3) Financial Institution Contacted
(4) Date of Contact
(5) Name/Title of Individual Contacted
(6) Telephone Number
(7) Outcome- Whether Contract is Salable or Not Salable
The caseworker must document this information on the DMA-5030,
Reserve History Sheet.
b. Once the balance of the allotment contract is verified as salable to an
approved financial institution, the remaining discounted contract value is
counted as a resource.
(1) Determine the cash value of the TTPP contract by completing the
following steps:
(a) Does the quota holder have a copy of the Commodity
Credit Corporation, CCC-960 document? If yes, using
their CCC-960 document, verify his eligibility for the
installment payments, whether the quota holder is a quota
owner or a quota grower, and the total remaining amount
payable in installment payments.
If no, contact the local USDA office to obtain the pertinent
information. A list of the local USDA offices is available
at www.fsa.usda.gov. Click on “contact us” in the tool bar.
On the next screen, scroll down to the heading, “County
Offices” and click on “Locate the Service Center closest to
you.”
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(b) Subtract from the total (10 year) amount due in installment
payments the amount for all installment payments that the
quota holder has already received or has assigned to a third
party.
(c) Apply the current month CCC maximum discount rate in
effect to the installment payment balance remaining on the
USDA contract. To obtain the monthly discount rate for
each month in the current year, go to the USDA’s website
at www.fsa.usda.gov. On the home page, click on “more”
to the right of “News Releases: and scroll down to find the
specific monthly release entitled, “USDA Announces CCC
Lending Rates for (select month needed). To find monthly
rates for previous years, on the home page enter the year in
the “View News Releases by Year” field, and scroll down
to the specific monthly release. Click on the item to open
it.
(d) To compute the discounted amount, subtract the CCC
discount rate for the current month from 100 percent.
Multiply the total amount due in installment payments
times the remaining percentage.
Example:
Ms. Jade applied for Medicaid on 09/15/2008. During the
interview, she provided a copy of her CCC-960 document,
indicating a notification date of 01/04/2005, and states she
has 6 installment payments remaining since she has
received 4 payments. The contract total is for $8,888.00.
$8,888.00 divided by 10 payments equal $888.00 per
payment. She has already received 4 payments totaling
$3552.00. $8,888.00 minus $3552.00 equals $5,336.00
total for the remaining payments. The worker checks the
USDA website for the current CCC maximum discount rate
and determines it is 10 percent. 100 percent – 10 percent =
90 percent. The worker then multiplies $5,336.00 by .9 to
determine the current resource value for the TTPP contract.
$5,336.00 x .9 = $4,802.40.
c. If the balance of the allotment contract for a tobacco quota owner has been
verified as non-salable to an approved financial institution for a lump sum
payment:
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(1) The annual payments received by the quota owner are
counted as annual unearned income for the year in which
they are received.
(2) The annual payments received by the quota grower are
counted as annual self-employment income in each year
of receipt. Refer to MA-2250, Income.
d. If you verify that the balance of the allotment contract has been sold to an
approved financial institution by a tobacco quota owner, this is considered
a conversion of a resource in the transaction month. If there is any cash
payment remaining in the following month it is a countable resource.
Any cash payment received from entering into an assignment or
successor-in interest contract with an approved financial institution by a
tobacco quota grower or those who rent the land is considered net earned
self-employment income for the year in which the assignment or contract
was completed. Refer to MA-2250, Income.
Since each contract must meet the TTPP guidelines, the cash received is
considered fair market value for the installment payments, and would not
require an evaluation for a Transfer of Assets.
Follow these steps for tobacco quota owners/growers who have entered
into an assignment or completed a successor-in-interest contract to receive
lump sum cash payment from an approved financial institution for the
tobacco transition installment payments.
(1) Verify that the Commodity Credit Corporation approved the
assignment by obtaining a copy of CCC assignment form from the
a/b or financially responsible person or by contacting the local
USDA office. To verify a successor-in-interest contract, if a copy
is not available from the a/b or financially responsible person,
contact the National Tobacco Processing center at 1-800-673-2331.
(2) Determine the parties involved, the amount assigned, and obtain a
copy of the third party agreement between the a/b or financially
responsible person and the financial institution to verify the
amount and when the cash payment was received.
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e. The TTPP does not apply the maximum discount rate to contracts made
between a participating quota owner/grower with family members,
transfers upon death of a tobacco quota owner or grower, individuals who
entered into an assignment or successor-in-interest contract prior to
10/22/2004, and one year contracts made with TTPP approved financial
institutions. Evaluate for a potential Transfer of Assets using fair market
value. Refer to MA-2240, Transfer of Assets.
f. For an assignment contract made with a third party in exchange for other
property, the property obtained is a conversion of a resource in the month
the contract is completed, and becomes the new resource as of the first
moment of the month following the assignment month. Refer to MA-2240,
Transfer of Assets, as a sanction may apply.
9. Uncleared Land, Woodlands, Forests
Exclude up to $6,000 in equity as income-producing if the property meets the
6% net income criteria in Item IX. and:
a. The a/b has a written contract to sell the timber on a specified date,
AND
b. The a/b can produce documentation that the timber is cut on a regular
basis. Examples of such evidence include but are not limited to:
(1) Old contracts for cutting/sale of timber, or
(2) Evidence of purchase of seedlings for replanting of cut timberland,
or
(3) Statements of forest service personnel or other such officials that
the individual is engaged in tree farming.
10. Property Agreements/Promissory Notes
Exclude the value of any property agreement which is not legally negotiable
(cannot be sold). This includes promissory notes, loan agreements, etc. (Refer
to MA-2240 Transfer of Assets, IX.C.)
a. Examine the terms of the agreement or note to determine if the owner has
the legal right to sell his interest without the participation of the
buyer/borrower. If salable, the note is a countable resource.
b. If there is a clause which prevents sale or transfer of the note, it is not a
countable resource.
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c. Contact the agency/county attorney for assistance if negotiability cannot
be determined from the terms of the agreement.
d. Count any payments as unearned income.
B. Countable Real Property
The following are countable resources:
1. Property Contiguous to the Principal Place of Residence
a. When the a/b or financially responsible person has no ownership interest
in the principal place of residence but does have ownership interest in
contiguous property, count the tax value of contiguous property in excess
of $12,000.
FOR EXAMPLE: An applicant lives in the home of his son. His son owns
the house and lot. The applicant owns the lot next to his son. The
applicant’s lot has a tax value of $30,000. Exclude up to $12,000 in tax
value of the applicant’s lot. The remaining tax value, $18,000, is a
countable asset unless otherwise excluded. Refer to VII.A. for
exclusions.
b. Property contiguous to the principal place of residence with a tax value of
$12,000 or less is excluded.
2. Former Home site
a. Count the former home site as a resource when it can no longer be
excluded for reasons listed in A.1., above or cannot be excluded as income
producing property.
b. Transfer of home site or former home site
Transfer of a home site or former home site, even after it is made income
producing, may result in a sanction for transfer of assets if the a/b or ar’s
spouse is requesting or receiving assistance with institutional services or
in-home health services and supplies after institutional care. Refer to MA-
2240, Transfer of Assets.
3. Non-home site Property
a. Count the value of non-home site real property owned solely by the a/b or
financially responsible spouse or parent, unless it meets current use
requirements in VII.A.5. above. Refer to MA-2260, Financial Eligibility
Regulations – PLA, for procedures to deem resources from a parent to a
child a/b.
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b. If a single owner dies without leaving a will, property may be unavailable
to a spouse until released by the clerk of court. See item IV.C.1.
4. Remainder Interest in Real Property
a. Count the remainder interest in real property. A remainder interest in real
property is created when a person owns real property but another
individual retains the right to use the property for the remainder of his life
(a life estate). The person to whom the property was transferred has a
remainder interest in the property. Refer to VII above, for definitions of
types of property interest.
b. To determine the value of a remainder interest, multiply the total tax value
of the real property on the date the life estate is transferred by the
Remainder % from the Life Estate and Remainder Interest Tables, based
on the age of the individual whose life determines the length of the life
estate. The resulting amount is the tax value of the remainder interest.
Refer to https://secure.ssa.gov/poms.nsf/lnx/0501140120
5. Unused Tobacco Allotment
Count the value of the land if the allotment is not being used, unless it can be
excluded another way.
6. Time Shares
a. A time share is the right to use property, such as a resort property, for a
specific time period, usually no more than a few weeks.
b. A time share interest is a fee simple property interest.
c. If the time share is an available asset, it is countable as a resource. If there
is an individual deed to the property, it is considered available. Obtain a
copy of the deed.
d. Count 15% of the purchase price as the established value.
7. Salable Property Agreement/Promissory Note
A property agreement (usually a promissory note) which can be sold is a
countable resource. (Refer to MA-2240, Transfer of Assets, IX.C.)
a. Count the balance due on the note as an available resource.
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b. The a/b may rebut the value of the agreement. See procedures in VII.E.
below.
C. Verify Ownership of Real Property
During the interview question the a/b about real property. Use the Resource
Interview Guide, located at
http://www.ncdhhs.gov/dma/county/medicaidtraining.htm.
Search the following county records. Document the description and tax value of all
property listed:
1. County tax listings – Check tax listings as follows:
a. At every application; and
b. Redeterminations – check tax listings once per year (in the first
redetermination of the year) and at the first redetermination which follows
an increase in tax rates or property values.
2. Grantee/Grantor books - Registrar of Deeds
a. Check at application.
b. Redeterminations
(1) PLA – Check annually. At every other review, ask if property has
been given or received since the date of the last Grantee/Grantor
check and obtain verification, if needed. Document the
change/transfer on the Reserve History Sheet.
(2) LTC – Check at each review. Check at change in situation from
PLA to LTC. Determine if any property has been transferred to or
from the a/b or the financially responsible person since the last tax
listing.
c. Search under the names of all financially responsible persons and their
parents and spouses, particularly if deceased. Check in the county where
the person last lived and check variations of names, (i.e. John Doe for Jon
Doe).
d. Check Clerk of Court records for recorded wills or probated estate files if
a budget unit member has died or if the budget unit member is a possible
heir.
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3. Copy of the Deed – Verify ownership interest in real property by a copy of the
deed. A deed does not have to be registered or notarized to be valid. It must
be signed by the grantor, delivered, and accepted by the grantee. However, a
deed of gift must be registered within two years of the date the deed is signed
to remain valid.
4. Look for the following leads that ownership interest may exist in the
eligibility record: copies of wills, tax bill or statement, evidence of judgments,
liens, or boundary disputes.
D. Calculate the Value of Real Property to Include in Resource Total
Calculate the value of all property which is not excluded from the resource
determination process.
1. Determine the Current Market Value
a. Verify and record tax value of real property by using county tax office
records. For Medicaid determinations, the tax value is the current market
value (CMV), unless rebutted according to VII.E.
b. Deduction for Individual Over Age 65 - If the person was age 65 or older,
or permanently disabled on January 1 of the current tax year, county tax
offices make a deduction from the assessed value before taxes are
computed. For resources, the tax assessed value, before any such
deduction, is the CMV.
2. Verify Encumbrances
For property that is not excluded, verify encumbrances by written or verbal
statement of the creditor. Also, verify encumbrances for income producing
property when determining if it meets 6% requirement. See Section IX.
a. Encumbrances reduce the a/b’s equity in a countable asset. Examples of
encumbrances are:
(1) Liens and mortgages by banks or loan companies,
(2) Lien by a hospital, nursing home or other medical provider. Must
specifically identify the asset which is attached and there must be
an outstanding bill for a/b. County dss must see lien.
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b. It is the a/b’s responsibility to provide a dated, signed written statement or
provide the name of creditor, loan number, or other information necessary
to verify encumbrances.
c. Verify the amount needed to pay off the mortgage or lien as of the date of
the verification, rather than the sum of the remaining payments.
d. Remainder Interest - Multiply any amount needed to pay off the
mortgage/lien on the property by the Remainder % from the Life Estate
and Remainder Interest Tables, based on the age of the life estate holder.
(If there is more than one life estate holder, use the age of the youngest life
estate holder.) Deduct this amount from the value obtained in VII.B.4.b.
to establish equity. Refer to the chart at,
https://secure.ssa.gov/poms.nsf/lnx/0501140120
3. Deduct Encumbrances
Subtract encumbrances from the CMV of the countable property interest to
arrive at countable equity.
a. Count equity in the resource total unless otherwise exempt.
b. Encumbrance on Excluded and Countable Property
If there is a single encumbrance (loan, etc.) on both excluded and
countable real property:
(1) Divide the CMV of the countable property by the total CMV of
everything which is mortgaged. The result is the percentage of the
total encumbrance that applies to the countable property.
(2) Multiply the amount needed to pay off the mortgage by this
percentage.
(3) Subtract this amount from the tax value of the countable property
to determine equity.
EXAMPLE: Applicant owns two tracts of land which are
mortgaged together. They are not contiguous to the home site.
One tract consists of 5 acres used to produce goods and services
for home consumption. It has a CMV of $13,000. The other tract
is 10 uncleared acres that are not used in any way. The CMV of
this property is $20,000. Mortgage pay-off amount is $15,000 on
the first day of the month of application.
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CMV of 5 acres $13,000
CMV of 10 acres (counted) 20,000
Total CMV of encumbered land 33,000
Determine the encumbrance on the countable acres by dividing the
CMV of countable acres by total CMV of encumbered land and
applying the resulting percentage to the total payoff amount:
$20,000 divided by $33,000 = .606 or 61% of land is countable.
(Round down if .49 or lower, round up if .50 or over).
61% of the $15,000 pay-off amount is $9,150.
CMV of countable acres;
$20,000
Encumbrance on these acres
-9,150
Countable equity
10,850
4. Count the Equity of Real Property
a. Determine equity for all types of interest or estate in countable real
property by following steps 1. - 3. above.
b. Document verification source and amount of liens on the eligibility form.
c. Do not count the value of any property which is excluded.
d. The remaining equity in countable real property is countable resources for
Medicaid. If countable assets exceed the resource limit, the value of the
real property may be rebutted.
E. Rebuttal
The current market value of real property, based on its tax value (See VII.D.1.), may
be rebutted by documentary evidence to establish a lesser value.
NOTE: Also follow these instructions for rebuttal of the current market value of a
promissory note. (Refer to MA-2240, Transfer of Assets, IX.C.)
1. Documentary evidence is a statement from a knowledgeable source located in
the same geographic area as the property. (For rebuttal of personal property,
see VIII.E.)
NOTE: Geographic area is the same area as covered by local radio, television,
newspaper and other media.
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2. The statement from the knowledgeable source must be written, signed and
have enough information to identify the source easily. It must:
a. Be specific as to the value and the point in time for which the estimate is
made,
b. Provide a reason for the value of the resource being less than the value
established by the policy in this section, and
c. Include the basis for his knowledge or expertise.
3. If the statement is questionable, the county must obtain an estimate from
another knowledgeable source and use the average value.
The county must use its judgment as to whether or not a statement of lesser
value is questionable. It must document in the record the reason for doubting
the statement. The statement may be questionable if:
a. The value of the resource provided in the statement is substantially lower
(more than half) than the value determined following the policy in this
section,
b. The reason given for the lower value does not seem to support the lower
value,
c. The source providing the statement of a lesser value does not have
experience with valuing real property in the county or surrounding
counties,
d. The source providing the statement of a lesser value has an interest in the
property or stands to gain from the property’s valuation, e.g. is one of the
tenants-in-common, is the remainder interest holder, stands to inherit the
property, etc., or
e. For other reason that causes the county to doubt the statement.
4. Examples of types of knowledgeable sources are:
a. Licensed real estate brokers;
b. Local Farm Service Agency office;
c. Local office of the Farmer’s Home Administration;
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d. Commercial banks, savings and loan association, mortgage companies and
similar lending institutions;
e. An official of the local real property tax jurisdiction, or
f. County Agricultural Extension Service;
g. Professional appraisers;
h. For promissory notes, companies which are in the business of buying and
selling promissory notes.
5. Applications
See MA-2303, Verification Requirements for Applications and MA-2304,
Processing the Application, for processing time frames and requirements for
providing rebuttal evidence.
6. Redeterminations
Allow a beneficiary twelve calendar days to provide evidence to establish a
lesser value. If at the end of the 12 calendar days, he has not provided the
evidence, send a timely notice proposing termination for excess resources.
7. Updating Rebuttal Evidence
a. Real property - Verify the rebuttal value in the first redetermination of the
year and at the first redetermination which follows an increase in tax rates
or property values. This is the same timeframe for verifying the tax value
of the real property.
b. Promissory note - Verify the rebuttal value at each redetermination. This
is necessary due to the potential for change for a liquid asset.
VIII. PERSONAL PROPERTY ASSETS
Personal property consists of an individual’s personal effects, household goods, motor
vehicles and other property which is not classified as real property (e.g. mobile home,
motor home, boat, etc.).
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A. Non-Countable Personal Property Excluded From Countable Resources
Do not count as an available resource:
1. Personal effects and household goods
Includes all clothing, jewelry, furniture, appliances, artwork and other
decorative items, etc.
NOTE: Assets that are inventory of a discontinued business are a countable
resource. These resources are not the personal property of the a/b.
2. Mobile home/motor home used as the home site
Exclude the principal residence, regardless of location.
3. Motor Vehicles used for transportation
a. Vehicle Exclusion
Exclude only one motor vehicle if the a/b lives:
(1) At home and the motor vehicle is used for transportation of the
eligible a/b and/or a person living in the home with the a/b.
(2) In a nursing facility and the motor vehicle is used to transport the
a/b, a community spouse or a dependent/disabled child.
Assume the motor vehicle is used for transportation unless there is
evidence to the contrary. Evidence that may be used to show the
vehicle is not used for transportation is that the vehicle is
unlicensed or an individual cannot travel by car but must be
transported by ambulance.
If there is doubt as to the use of the vehicle, obtain a statement
regarding how the vehicle is used for transportation for the
individual. For example, for a vehicle owned by an individual in a
nursing facility to be excluded, it would have to be used to
transport the applicant/beneficiary, a community spouse or a
dependent/disabled child. Obtain a statement from the person who
has the vehicle that the vehicle is used to transport the a/b,
community spouse or dependent/disabled child and the nature of
the transportation. If the statement appears questionable, count the
vehicle as a resource.
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b. Applying the Exclusion When More Than One Automobile That is Used
for Transportation is Owned
Apply the exclusion in the manner most advantageous to the individual. If
the eligible a/b owns more than one automobile used for transportation of
the eligible a/b or a member of the eligible a/b’s household, the total
exclusion applies to the automobile with the greater equity value.
Count the equity value of any automobile, other than the one excluded, as
a resource when it is owned by an eligible a/b. See VIII.D.3. to determine
the equity value.
c. Reduction of Resources
When the equity value of an unlicensed vehicle causes the a/b to be over
the reserve limit and that vehicle then becomes licensed, evaluate for
reduction of reserve. Reduction of resources occurs on the day a vehicle
becomes licensed. Reduction of resources does not go back to the date of
application.
4. Property Excluded Due to Usage
a. Business Property
Exclude personal property used in the operation of a trade or business,
self-employment enterprise, or farm regardless of equity value or whether
there is a net profit. Refer to VII.A.5.b.for further instructions to exclude
business property.
(1) Property includes operating capital and fixed assets of the business
such as equipment, livestock, vehicles, etc.
(2) Liquid assets – Exclude liquid assets of the business if not co-
mingled with personal funds.
(3) Active involvement – The a/b or financially responsible person
must be actively involved in the business on a day to day basis.
b. Income Producing Property
Exclude up to $6,000 in non-business, income producing personal
property which meets the 6% net annual income test criteria in Item IX.
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c. Property Which Produces Goods or Services for Home Consumption
Exclude up to $6,000 in total combined equity of all non-business personal
and real property used to produce goods and services solely for home
consumption (i.e. a tractor and garden used to produce vegetables for
home consumption).
d. If the property is not currently in use for one of the reasons for exclusion
in a., b., or c. above, exclude it if:
(1) It has been in use within 12 months, and
(2) It will resume within 12 months.
B. Countable Personal Property
Count as an available resource property not otherwise excluded.
Count the value of property such as boats, motors, campers, trailers, farm and garden
equipment, equipment from a discontinued business, mobile home, motor home,
houseboat, unlicensed vehicle, etc. as an available resource if it cannot be excluded
per VIII.A. above:
1. Based on usage
2. As the home site, or
3. As an essential vehicle.
C. Verify Ownership of Personal Property
1. Interview
During the interview, question the a/b about personal property. Use the
Resource Interview Guide, located at,
http://www.ncdhhs.gov/dma/county/medicaidtraining.htm. Accept the client’s
statement of ownership unless questionable. Verify ownership if
questionable.
2. Vehicle Licensed by DMV:
a. Primary verification source is DOT/DMV computer inquiry into vehicle
valuation system.
(1) Check full names of all financially responsible adult members.
(2) The owner of a vehicle is the person whose name is on the title
unless the parties involved can establish that a legally binding
agreement/resulting trust exist. Refer to Item V. for information on
resulting trusts/legally binding agreements.
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b. Alternative sources of verification of ownership to be used if ownership is
questionable include:
(1) County tax records
(2) Vehicle registration
(3) Vehicle title
(4) Insurance policy on vehicle
(5) Records of firm that financed the purchase
(6) Evidence of a legally binding agreement such as records that
indicate who has been making payments or maintaining insurance
coverage on the vehicle.
3. Personal property valued by tax office and not licensed by DMV:
a. Accept as verification the a/b’s verbal statement of ownership.
b. Check full names of all financially responsible adult case members against
county tax records.
c. List all items of personal property owned by the a/b and financially
responsible spouse/parents.
D. Calculate and Establish the Value of Countable Personal Property
If the personal property cannot be excluded,
1. Verify the current market value:
a. Through Vehicle Valuation Inquiry (VVI) if licensed and valued by DMV.
b. Through the county tax office if valued by the tax office and not licensed
by DMV.
c. Use the NADA book or internet site www.nadaguides.com for unlicensed
vehicles not registered in the tax office. If the unlicensed vehicle is older
than those listed, use the last value given in NADA. All vehicles licensed
or unlicensed have a value.
2. Verify encumbrances (amount owed on a car loan) by either the written or verbal
statement of the loan holder. Ask for the payoff as of the first day of the
verification month, rather than the sum of the remaining payments; i.e., future
interest payments are not an encumbrance.
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3. Equity value is current market value minus encumbrances.
Subtract the payoff amount from Current Market Value. Current Market
Value (CMV) is established by VVI or a/b’s rebuttal.
4. For all personal property, the amount of equity counted in resources is the
total equity value of all countable personal property.
5. Rebuttal
If the a/b has excess resources, and owns non-exempt personal property, the
a/b has the right to rebut the value of personal property by establishing a lesser
value. It is the tax value that is rebutted, not equity or encumbrances. Follow
procedures in E. below.
E. Rebuttal Procedures
The a/b has the right to rebut the equity value of any type of personal property
counted in total countable resources. When the tax/DMV value of an excess motor
vehicle or the equity value of any other personal property e.g., boats, trailers,
unlicensed vehicles, campers, etc., results in excess resources:
1. Send the DMA-5157, Notice of Total Countable Resources; The Right to
Rebut Value, to the a/b to be completed and signed by the a/b and returned by
the deadline date. File the completed and signed form in the Medicaid case
record.
2. Explain that the a/b has the right to disagree with (rebut) that value, and
provide a signed and dated statement from a car dealer or dealer of item in
question that verifies:
a. Make, model, year, color and general description of the vehicle/personal
property, and
b. Market value of the vehicle/personal property (what it could reasonably be
sold for, not what he would offer on a trade-in).
c. For applications, notification must be made on a DMA-5097, Request for
Information (or DMA-5097S). Put information under “other”. For
redeterminations or change in situation also use the DMA-5097/DMA-
5097S, Request for Information.
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EXAMPLE: “We have verified the value of your motor vehicle at $700
through the Department of Motor Vehicles. This $700 counts toward your
resource limit of $2,000. If you disagree with the $700 value, you must
provide a written statement from a car dealer, which shows the make,
model, year, color, general description and value of the car. Statement
must be received by (date).”
3. Notify a/b immediately if it becomes apparent during application or review
process that the value will not result in ineligibility and verification of lesser
value is no longer needed.
4. If a/b disagrees with the DMV/tax/CMV:
a. Applications
See MA-2303, Verification Requirements for Applications and MA-2304
Processing the Application, for processing time frames and requirements
for rebuttal.
b. Redeterminations
Allow a beneficiary twelve calendar days to provide evidence. If at the
end of the twelve calendar days, evidence has not been provided, send a
timely notice proposing termination.
5. Proceed with denial of application or termination using the DMV/tax/CMV if
a/b:
a. Fails or refuses to provide rebuttal evidence by deadline; or
b. Fails to respond at all to notification of assigned value; or
c. Agrees with the assigned value.
6. Document in the eligibility record:
a. Date and how the a/b was contacted about value of the personal property;
and
b. A/B’s response and the date he responded. If no response, indicate this
also.
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7. File a copy of the appraisal/verification of rebutted value from the dealer in
the case record.
8. When the tax/CMV of personal property has been successfully rebutted, do
not re-verify the rebuttal value at redetermination unless the DMV/tax/CMV
has increased, or there is some indication of a change in the value of the
property.
IX. INCOME PRODUCING REAL/PERSONAL PROPERTY
The 6% test is used to determine if up to $6,000 in equity of real or personal property
(usually rental property), which cannot otherwise be excluded (e.g. a home site to which
the a/b intends to return, business property, property of an incompetent person with no
power of attorney or guardian, etc.) is excluded from countable resources because it is
“income producing.” To exclude $6,000 equity, the property must produce a net annual
income of at least 6% of its equity after all expenses related to producing income are
deducted.
The 6% net annual income requirement is waived when property that has formerly
produced income is anticipated to resume to do so within 12 months. (See VII.A.4.d.,
VIII.A.4.d., and IX.H.2.)
A. Overview of Steps for a Single Piece of Income Producing Property
Use these steps and the DMA-5158, Income Producing Property Guide, to determine
if $6,000 equity in real/personal property can be excluded as income producing
property. The steps are explained in greater detail in C. - G. below.
1. Determine the equity value of the income producing property based on the
CMV (tax value) of the property.
2. Regardless of the amount of income produced, subtract $6,000 from the
equity value. Add this amount to the value of other countable resources.
a. If the total is over the resource limit, do not determine how much income
the property produces. Stop here.
b. If the total does not exceed the resource limit, proceed to determine if the
property produces a net annual income of at least 6% of the property’s
equity.
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3. Determine the equity value of the property based on the present use value. (If
no present use value is assigned, use the tax value.) Multiply that equity value
by .06 to determine the 6% net annual income the property must produce.
4. Determine the amount of net annual income produced by the property.
5. Compare the 6% figure to the net annual income.
If the net annual income produced by the property is equal to or greater than
6% of the equity value, the property is income producing, exclude $6,000 of
the property’s equity.
B. Overview of Steps When There is More Than One Piece of Income Producing
Property
If the individual owns more than one piece of income producing property, the $6,000
exclusion applies to the total equity of all property that produces a net annual income
of 6% of its equity.
1. Total the equity value of all properties producing income, and follow steps in
IX.A.2.a & b.
2. If the property’s equity value after deducting $6,000 and the value of other
countable resources does not exceed the resource limit (IX.A.2.b.) apply the
6% income requirement to each piece of income producing property
separately. Each separate property must meet the 6% income test for any of
its equity to be excluded.
Follow steps in IX.A.3. – 5 to determine if a piece of property meets the 6%
income test.
3. Total the equity of all pieces of property that meet the 6% income test, and
deduct $6,000. The equity over $6,000 is a countable resource, unless
otherwise excluded.
Refer to IX.H.5. & 6. for detail instructions when the a/b owns more than one
piece of income producing property.
C. STEP 1: Determine the Equity Value of the Property Based on the Tax Value:
Current Market Value (CMV) – Encumbrances/liens = Equity Value.
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1. Real Property Value
Real property includes land and everything attached to it that produces rent or
land use fees, such as mineral or timber rights, trailer rent, hunting/fishing
rights, mortgages, rent of buildings, etc.
The CMV is the tax value of the land. Always use the tax value (unless
rebutted) for the following:
a. When determining equity of income producing property for the $6,000
portion of the $6,000/6% test.
b. When counting real property as a resource, use the tax value to calculate
the countable equity value.
2. Personal Property Value
Use the CMV as determined in VIII. to determine the equity.
3. Subtract the encumbrances (loans, mortgages, liens) on the property (Refer to
VII.D.3.) from the CMV. (Refer to IX.C.1.) The result is the equity value of
the property to use in determining the value of the property for the $6,000
exclusion.
D. STEP 2: Determine if the A/B is Ineligible Based on Countable Resources,
Regardless of the 6% Net Annual Income Test.
1. From the total equity value of all property alleged to be income producing,
deduct $6,000.
2. Add the remaining equity value to the value of all other countable resources.
a. If the resulting total of countable resources exceeds the resource limit, the
a/b is ineligible. Proceed no further. Notify the a/b via the DMA-
5097/DMA-5097S, Request for Information, of his opportunity to rebut
the value of resources and to reduce resources, as instructed in I.A.5. If
proof of rebuttal or reduction of resources is not provided within 12
calendar days, deny or send advance notice proposing termination.
b. If the resulting total of countable resources does not exceed the resource
limit, go to Step 3.
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E. STEP 3: Determine the Equity Value for the 6% Income Test and the Amount of
Income the Property Must Produce.
1. Use the equity determined in Step, unless a “present use value” is assigned by
the tax office.
2. Present Use Value - The present use value is based on the value of the land in
its current production use and is less than the tax value. (The county may use
another term for present use value such as land use value, etc).
If a present use value is assigned, use it only for determining equity for the 6%
net income test. (Do not use the present use value for the $6,000 portion of
$6,000/6% test.) Deduct encumbrances from the present use value.
3. Multiply the equity value by .06 to determine the net annual income that the
property must produce for the 6% test.
F. STEP 4: Determine Net Annual Income Produced
Verify the annual income amount produced by each piece of property. Use this
amount only to determine if the property can be excluded from countable resources.
1. Calculate Gross Income
a. If the same amount is received monthly, multiply this amount by 12
months (i.e., amount X 12 months = gross annual income).
b. If received other than monthly, calculate a gross annual income amount,
according to instructions in MA-2250., Income.
c. If gross annual income has changed in the past 12 months (base period),
use the amount currently being received to determine gross annual
income.
2. Verify Operational Expenses
Regardless of whether income is received monthly or other than monthly:
a. Verify operational expenses for the previous calendar year based on
expenses on the tax form if using tax statements to determine income, or
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b. Verify operational expenses for the twelve months prior to the application
or redetermination interview for a business if using business records.
(Do not include unexpected expenses as part of the 6% test.)
3. Deduct gross annual allowable operational expenses paid by the a/b.
Deduct predictable expenses paid by the a/b which are necessary for the
production or collection of income. Allowable expenses include but are not
limited to the following:
a. The interest portion of a mortgage payment,
b. Property taxes,
c. Insurance,
d. Maintenance,
e. Utility costs paid by the a/b,
f. Labor costs,
g. Real estate agent’s fees,
h. Sales taxes,
i. Advertising for tenants,
j. Verified transportation costs related to a rental property operation,
k. Interest payments on loans for equipment necessary to produce the rental
income.
4. Non-allowable Expenses
Do not deduct the following expenses from rental income:
a. Expenses paid by a third party unless reimbursed by the a/b.
b. The principal portion of a mortgage payment. (The principal is deducted
from the CMV as an encumbrance.)
c. A capital expenditure. This is an expense for an addition to or increase in
the value of the property and is subject to depreciation for tax purposes
(e.g., principal portion of mortgage payment, additions to existing
structure).
d. The property depreciation amount claimed as a federal income tax
deduction.
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e. Replacement of an existing feature of the property which could have been
repaired. (e.g., furnace could be repaired but is replaced with new heating
system).
f. Replacement of an existing feature of the property which could not be
repaired with one that is greater in value (e.g., replacement of shingle roof
with brick tile roof) which results in improvement and increases the value
of the property.
5. Calculate Net Annual Income.
Subtract gross allowable operational expenses from gross annual income. DO
NOT ROUND!
Gross annual income
- Gross annual operational expenses
Net annual income
G. STEP 5: Compare Net Annual Income Amounts
For each piece of income producing property, compare the net annual income
produced (STEP 4) to the net annual income that must be produced to exclude up to
$6,000 equity in the property (STEP 3).
1. If the net annual income produced is less than the net annual income that must
be produced, the property does not meet the 6% net annual income
requirement. Count all of the equity, based on the tax value, of the property as
a resource.
2. If the net annual income is equal to or greater than the net annual income that
must be produced, then the property produces 6% net annual income.
3. Total the equity value (based on the tax value) of the pieces of property that
produce a net annual income of at least 6% of their equity value. Only those
pieces of property that meet the 6% income test can be included in the $6,000
exclusion. See IX.B. For detail instructions on multiple pieces of property,
see IX.H.5. & 6.
a. From the total equity of the property that meets the 6% income
requirement, subtract $6,000.
b. The equity over $6,000 is a countable resource.
NOTE: Re-verify encumbrances and income produced at each application
and redetermination as they are subject to change.
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EXAMPLE 1:
CMV (Tax value) of property $70,000 Present Use Value $58,000
Property tax per year $ 300 Insurance per year $ 300
Other operational expenses
per month
$ 100 Monthly gross rent $ 450
A/B pays all expenses himself. Principal amount of the mortgage on the property is
$10,000.
STEP 1 Determine equity value of the property based on the tax value.
$70,000 CMV (tax value)
- $10,000 Encumbrances (principal of mortgage)
$60,000 Equity
STEP 2 Determine if the a/b is ineligible based on countable resources, regardless of the
6% net annual income test.
$60,000 Equity based on CMV (tax value)
- $ 6,000 D
$54,000
After deducting $6,000 that could be excluded if the property produced a net annual
income of at least 6% of its equity value, $54,000 would still be counted. The a/b is
ineligible due to excess resources. Send DMA-5097/DMA-5097S, Request for
Information, to offer opportunity to rebut the value. If proof of rebuttal not provided
within 12 calendar days, deny or send timely notice of termination. (See I.A.5.)
EXAMPLE 2:
CMV (tax value) of property
$70,000
Present Use Value
$65,000
Property tax per year $ 300 Insurance per year $ 300
Principal amount on
mortgage
$63,000 Annual interest on
mortgage payment
$ 3,850
Other operational expenses
per month
$ 100 Monthly gross rent $ 600
A/b pays all expenses himself. His only other resource is a bank account with a
balance of $550.
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STEP 1 Determine equity value of the property based on the tax value.
$70,000 CMV (tax value)
- $63,000 Encumbrances (principal of mortgage)
$ 7,000 Equity
STEP 2 Determine if the a/b is ineligible based on countable resources, regardless of the
6% net annual income test.
$ 7,000
Equity based on CMV (tax value)
- $ 6,000
$ 1,000
Equity after deduction of potential $6,000 exclusion
+$ 550
Bank account
$ 1,550
Total countable resources
EXAMPLE 2:
CMV (tax value) of property
$70,000
Present Use Value
$65,000
Property tax per year $ 300 Insurance per year $ 300
Principal amount on
mortgage
$63,000 Annual interest on
mortgage payment
$ 3,850
Other operational expenses
per month
$ 100 Monthly gross rent $ 600
A/b pays all expenses himself. His only other resource is a bank account with a
balance of $550.
STEP 1 Determine equity value of the property based on the tax value.
$70,000
CMV (tax value)
- $63,000
Encumbrances (principal of mortgage)
$ 7,000
Equity
STEP 2 Determine if the a/b is ineligible based on countable resources, regardless of the
6% net annual income test.
$ 7,000
Equity based on CMV (tax value)
- $ 6,000
$ 1,000
Equity after deduction of potential $6,000 exclusion
+$ 550
Bank account
$ 1,550
Total countable resources
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$1,550 is less than the $2,000 resource limit. If the property produces a net annual
income of at least 6% of the equity value (based on the present use value), $6,000 is
excluded from the equity (based on the CMV [tax value]) and the a/b can meet the
resource requirement.
STEP 3: Determine the equity value for the 6% income test.
$65,000 Present use value
- $63,000 Encumbrance (principal of mortgage)
$ 2,000 Equity based on present use value to use in the 6% income test
x .06
$ 120 The property must produce a net annual income of $120 to meet
the 6% net annual income test.
STEP 4: Determine the net annual income.
$ 600 Gross monthly rent
x 12 Months
$ 7,200 Gross annual rent
- $ 3,850 Interest on mortgage
- $ 300 Property taxes
- $ 300 Insurance
- $ 100 Other operational expenses
$ 2,650 Net annual income
STEP 5: Compare net annual income to 6% of the equity value based on the present use
value determined in Step 3.
The net annual income of $2,650 is greater than $120, which is 6% of the equity
value of the property, based on the present use value. $6,000 is excluded from
the equity based on the CMV (tax value) of the property and the remainder,
$1,000 is a countable resource.
H. Special Instructions for Income Producing Property
1. If income is verified according to instructions in MA-
2250../../AppData/Local/Microsoft/Local Settings/Temp/MA2250.pdf,
Income, and included in the monthly budget, then the income is considered
received for purposes of the 6% income test. This is true even if it is
discovered that the income was not actually paid to the a/b. The income is
counted in the person’s budget and is included in his deductible or patient
monthly liability.
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(IX.H.)
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2. The 6% net annual income requirement is waived when property which has
formerly produced annual income produces no income due to natural disaster.
EXAMPLE: Storms, drought, fire, hurricanes, etc.
a. A statement to this effect from the local ASCS office (for crop damage),
insurance company, FEMA, or county extension agent is necessary as
verification.
b. The property would have to produce an income in the next 12 months for
the income producing exemption to continue, unless the conditions, which
prevented the production of income, were beyond the a/b’s control.
3. An asset is income-producing on the day that a contract for rental/lease is
signed or a verbal agreement is made (rent may be paid monthly, quarterly,
semi-annually, annually, etc., and may be due at some point after the date of
the contract/verbal agreement).
a. For classifications N, Q, B, or E or if the case is MWD or QI-2, begin
excluding $6,000 equity on the first day of the month following the month
contract or agreement is signed/made.
b. For classification M, begin excluding $6,000 equity on the day that the
contract or agreement is signed/made.
4. If there is no contract or prior agreement, the asset is income-producing on the
day that the first payment is paid.
a. For classifications N, Q, B, or E or if the case is MWD or QI-2, begin
excluding $6,000 equity on the first day of the month following the month
the first payment is made.
b. For classification M, begin excluding $6,000 equity on the day that the
first payment is made.
EXAMPLE: Applicant applies in October for September retro and on-
going coverage. At the intake interview, he learns that he has equity in
real property which causes resource ineligibility, but that it can be
excluded if rented.
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He states his brother has been hunting on the property in the retro period,
but he has not been paid and there was no prior agreement to rent the
property. The property cannot be excluded as income-producing until the
day the payment is paid or contract signed for Medically Needy and until
the first day of the following month if classified N, Q, B, or E, or if the
case is MWD or QI-2.
5. Different Pieces of Land
a. If the individual owns different pieces of property, each piece of property
must meet the 6% test to be excluded as income producing.
b. The equity of all pieces of property that meet the 6% test is combined
when applying the $6,000 exclusion.
c. Different parcels of contiguous property are treated as separate pieces of
property. Contact the tax office to verify if property is divided into parcels.
(1) Each piece of land identified by the tax office as a separate parcel
is treated as a separate piece of property. It must produce net
income which is at least 6% of its equity.
(2) The tax office may list a piece of property as one parcel even if
separate values are shown for portions of the property such as
woodland and farmland. The separate portions do not have to meet
the 6% requirement, but the entire parcel must.
(3) The entire parcel does not have to be rented, however, the total
income for the parcel must meet the 6% requirement.
(4) The operational expenses paid by the a/b on the non-income
producing portion of a parcel (i.e., taxes, insurance) must be
deducted from the gross income when determining if the 6%
requirement is met.
6. Applying the 6% Test When There Are Multiple Pieces of Property/Multiple
Income Producing Activities
a. Total the equity value of all properties producing income.
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b. Regardless of the amount of income produced, subtract $6,000 from the
total equity value. Add this amount to the value of other countable
resources.
(1) If the total is over the reserve limit do not determine how much
income the various properties produce. The a/b is ineligible due to
excess resources even with $6,000 deducted from the equity of
income producing property.
(2) If the total does not exceed the resource limit, proceed to determine
which individual properties meet the 6% income test.
c. If verification specifies the amount received for each piece of property,
total the amounts received for a piece and compare to the 6% amount
required for that piece.
d. If verification does not specify the amount received for each piece, the a/b
must provide a statement specifying the amount of income to apply to
each piece.
e. If two or more individuals make payments for portions of a piece of
property to the a/b and their statements do not identify separate amounts,
the a/b must specify the amount of income from each person to apply to
each piece.
f. Use the statements to determine if the property meets the 6% criteria.
NOTE: While the a/b’s statement is not acceptable for the amount of
income received, it is acceptable for apportioning the income among
separate pieces of property.
EXAMPLE: The applicants are a married couple over age 65. They own
2 separate pieces of land not contiguous to their home site. Each piece
contains woodland and farmland. Two individuals rent different parts of
the 2 pieces of land. Each renter pays one amount for all the land he rents.
#1 rents the farmland on both pieces for $300 annually and #2 rents the
woodland on both parcels for $250 annually. As part of the agreement
they also pay the taxes on the properties. There are no other expenses.
The rental statements do not specify an amount of rent for each piece of
property.
Property 1 has equity of $5,000.
Property 2 has equity of $3,000.
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The total equity of the property is $8,000. Subtracting $6,000 leaves a
remaining equity of $2,000. The applicants have a bank account with a
$429 balance and no other countable resources. Total resources after
subtracting $6,000 equity from the income producing property is $2,429
which would meet the resource requirement. Proceed to determine if the
property meets the 6% income test
6% of property 1’s equity is $300. 6% of property 2’s equity is $180.
Request that the a/b’s specify the amount of rent for each property.
Scenario 1 -
The a/b’s state that of the $300 farmland rental from renter #1, $200 is for
property 1 and $100 is for property 2. Of the $250 woodland rental from
renter #2, $150 is for property 1 and $100 is for property 2.
Total rental for property 1 - $200 (farm) + $150 (woodland) = $350
Property 1 meets the 6% test.
Total rental for property 2 - $100 (farm) + $100 (woodland) = $200
Property 2 also meets the 6% test.
Since both properties meet the 6% test, the equity value of both is
combined ($8,000). $2,000 is a countable resource.
Scenario 2 –
The a/b’s state that of the $300 farmland rental from renter #1, $225 is for
property 1 and $75 is for property 2. Of the $250 woodland rental from
renter #2, $175 is for property 1 and $75 is for property 2.
Total rental for property 1 - $225 (farm) + $175 (woodland) = $400
Property 1 meets the 6% test.
Total rental for property 2 - $75 (farm) + $75 (woodland) = $150 Property
2 does not meet the 6% test. It must produce $30 more to produce the
required $180.
Only property 1 meets the 6% test. Since its equity is less than $6,000 it is
fully excluded. Property 2 does not meet the 6% test, so its equity
($3,000) is counted.
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FINANCIAL RESOURCES
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X. LIQUID ASSETS
Liquid assets include cash, bank accounts, certificates of deposit or any asset which can
be converted to cash. Trust Funds (Section XI.) and life insurance policies (Section XII.)
are also considered to be liquid assets.
A. Ownership of Liquid Assets
Ownership affects the availability of a liquid asset.
1. One Owner - Unlimited access
If there is only one owner of a bank account, insurance policy, etc., access by
the owner is unlimited. The asset is totally available.
When ever policy indicates that a liquid asset is available but a/b states that it
is owned by someone else refer to Section V. for policy on resulting trusts.
2. Jointly Owned Bank Accounts
a. “OR” account—Either owner may withdraw all funds without the
permission of other owner(s). The liquid asset is 100% available.
b. “AND” account—Signatures of both owners are required to withdraw any
funds.
(1) If the other owner consents to or participates in withdrawal for a/b,
the asset is 100% available for the a/b.
(2) If the other owner refuses to consent or participate, the asset is not
available. However, a transfer of assets penalty may apply if the
a/b is institutionalized. Refer to MA-2240 Transfer of Assets, for
transfer of assets policy.
(3) If the other owner does not respond or cannot be located, the asset
is not legally available to the a/b. Assume the other owner is
refusing to dispose after the 2 standard requests for information.
c. “FOR” account - A guardian is established for the depositor. The
guardian has no ownership interest.
3. Funds held For a Minor
The funds belong to the minor if:
a. It can be shown that the funds originally belonged to the minor and a
resulting trust (See Section V.) exists in favor of the minor; or
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b. The funds did not originally belong to the minor but:
(1) The minor’s name and Social Security number were put on the
account, or
(2) Documentation, provided in accordance with V., establishes that
the funds have been transferred to the child and a resulting trust
exists. If the original owner was the a/b, evaluate for transfer of
assets.
4. Checking and Savings Accounts of a Deceased Spouse
Assets are unavailable until released by the clerk of court (usually when the
estate is probated).
5. Resulting Trust
Refer to Section V. if an a/b states that assets are being held for another
individual.
6. Incompetency
Refer to Section VI. if incompetency on the part of the a/b is alleged.
B. First Moment Verification Requirement
Always verify liquid assets as of the first moment of the first day of the month.
Request the account balance as of close of business on the last working day of the
preceding month.
C. Non-Countable Liquid Assets
Do not count as an available resource:
1. Monthly income - The portion used by the a/b to pay monthly bills, whether
deposited in an account or not.
2. Life Insurance - See Item XII.
3. Relocation Assistance - Exclude assistance provided under the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of 1970 for
nine months.
4. Retirement accounts (including IRA’s)
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Exclude a retirement account if the funds cannot be withdrawn in a lump sum
payment. This includes profit sharing or funds which can only be paid out in
a monthly repayment plan.
NOTE: Do not deem retirement accounts from spouse or parent in PLA
budgeting. Count available retirement funds in the assessment for spousal
resource protection MA-2231../../AppData/Local/Microsoft/Local
Settings/Temp/MA2231.pdf, Community Spouse Resource Protection).
5. Irrevocable pre-need burial contract/trust.
Do not count the value of an irrevocable contract. Refer to Burial Exclusion
in Section XIII.
6. Bank accounts
a. Exclude accounts which are solely in the name of a deceased spouse or
parent of the a/b until released by the clerk of court.
b. Exclude accounts used solely in the operation of a trade, business, farming
operation or self-employment enterprise.
c. Exclude “AND” accounts which are not available. See X.A.2. above.
7. Home Replacement Funds
When an a/b sells an excluded home, exclude the proceeds of the sale if the
a/b plans to use them to buy another excluded home and does so within 3 full
calendar months of receiving the proceeds. If the proceeds of the sale of the
home are given away without purchasing another home, apply transfer of
resource policy in MA-2240 Transfer of Assets.
8. Lump Sum Payments
a. Social Security (RSDI) and SSI
Exclude any portion of the lump sum of SSI or RSDI from resources for
the 9 calendar months following the month of receipt. This includes
SSA/SSI lump sums that are prorated and paid out over a period of time.
b. Federal Disaster Relief
Permanently exclude payments from Federal Disaster Relief and
Emergency Assistance Act of 1974 (Public Law 93-288), or some other
Federal statute because of a presidentially declared major disaster.
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c. Cash and In-kind Receipts for Replacement or Repair of Lost, Damaged,
or Stolen Excluded Resources:
Exclude for 9 months from the date of receipt. Extend the exclusion for
up to an additional 9 months for cash receipts if, for the first 9 months,
circumstances beyond the a/b’s control:
(1) Prevent repair or replacement of the lost, damaged, or stolen
property; and
(2) Keep the a/b from contracting for such repair or replacement.
(3) Exclude interest earned by these funds from income and resources
for the time the funds are excluded.
(4) Document the circumstances for excluding the resources.
d. Victims’ Compensation Payments
Exclude payments from a fund established by a state to aid victims of
crime from resources for 9 months from date of receipt.
(1) To be excluded, the a/b must demonstrate that the payment was
compensation for expenses incurred or losses suffered as the result
of crime.
(2) Do not exclude interest earned from income or resources.
e. Child Tax Credit (CTC), North Carolina Earned Income Tax Credit (NC
EITC) and Federal Earned Income Tax Credit (EITC)
Exclude refunds of Child Tax Credit (CTC), North Carolina Earned
Income Tax Credit (NC EITC), and Federal Earned Income Tax Credit
(EITC) for 12 calendar months beginning the month the refund or
payment is received.
f. Exclude all other Federal and State tax refunds for 12 calendar months
beginning the month the refund or payment is received,
g. Verification
(1) Verify the amount by examining the check or award letter, or by
contacting the source.
(2) Ask the a/b if any portion of the payment remains, such as cash on
hand or in a bank account, and verify according to the guidelines
given for the specific asset.
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(3) If a/b states that a lump sum payment that might have resulted in
excess resources for the budget unit has been spent, accept the
a/b’s written statement of the following facts:
(a) When and how the money was spent;
(b) Whether or not any of the money is still available;
(c) Whether or not any of the money was given away.
h. If lump sum payments are given away in the month of receipt, evaluate for
transfer of resources according to MA-2240, Transfer of Assets.
9. Income Received Other Than Monthly
Payments or deposits of income, which are received other than monthly are
prorated as income. Do not count as a resource for any months in which the
payment is counted as income.
Examples: Annual rental payments - Do not count as an available resource for
12 months following receipt.
Promissory note payments received semi-annually - Do not count as an
available resource for 6 months following receipt.
10. German Reparation Payments
Do not count German Reparation Payments as an available resource, even
when retained in the month following receipt.
11. Funds established as a result of the class settlement in the case of Susan
Walker v. Bayer Corporation, et al. The case involved hemophiliacs who
contracted the HIV virus from contaminated blood products.
Note: If the payments are placed in an account that earns interest, the interest
may be countable. Follow procedures in MA-
2250../../AppData/Local/Microsoft/Local Settings/Temp/MA2250.pdf,
Income, VIII. M. to calculate interest income.
12. Grants, scholarships, and fellowships are amounts paid by private nonprofit
agencies, the U.S. government, instrumentalities or agencies of the U.S., state
and local governments, foreign governments, and private concerns to enable
qualified individuals to further their education and training by scholastic or
research work, etc.
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(X.C.12.)
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a. Any portion of educational assistance that is not used to pay current
tuition, fees or other necessary educational expenses, but will be used for
paying this type of educational expense at a future date is excluded from
resources for 9 months beginning the month after the month it was
received. This applies to undergraduate as well as graduate students.
b. All financial assistance received by undergraduate/graduate students for
educational purposes made under the Higher Education Act of 1965
(HEA) or Bureau of Indian Affairs (BIA) student assistance programs is
excluded from income and resources regardless of use. Refer to MA-
2250, Income.
EXAMPLES: Perkins Loans; Stafford Loans such as the National Direct
(Defense) Loan; Federal Supplemental Educational Opportunity Grant
(FSEOG); Pell Grants, College Work-Study Programs including PACE,
NC Student Incentives Grants; Upward Bound; etc.
D. Countable Liquid Assets
1. Life Insurance (See Section XII.)
2. Trust Funds (Refer to Section XI. for instructions for determining if funds are
a countable resource.)
3. All other liquid assets as defined in X. E. - P. below. These are:
a. Cash
b. Patient Accounts of an Institutionalized Individual
c. Bank Accounts
d. Retirement Plans, IRA’s and 401-K Plans
e. Stocks and Mutual Funds, including stock owned by an individual in
his/her own Corporation
f. Bonds and Securities
g. Promissory Notes
h. Countable Lump Sum Payments
i. Liquid Assets of a Business
j. Proceeds of a Loan
k. Revocable Burial Contract
l. Proceeds of a Reverse Mortgage
4. Medicare Medical Health Savings Accounts
Count annual deposits made into an individual’s account by Medicare. If
others make deposits, count those deposits as resources. These plan account
funds are a countable resource for Medicaid purposes.
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5. Dividends and Interest
Count dividends and interest earned on resources. If any of the dividend or
interest is retained in the month after receipt, it is a countable resource.
E. Cash
1. Count cash on hand as of the first moment of the month in the resource total.
This includes currency and undeposited checks.
2. Verification—accept the a/b’s statement. If the a/b denies having cash on
hand, record his statement.
F. Patient Accounts for Institutionalized Individuals
Patient accounts are those held by the nursing facility. Contact the business manager
to verify the first moment balance.
Also question whether the representative holds or has the a/b’s money in a bank.
G. Bank Accounts
Liquid assets held by a bank or other financial institution (checking, savings,
certificate of deposit (CD), money market, EBT account, Medicare Health Savings
Account, etc.)
1. Verification
Ask if the a/b or financially responsible spouse/parents have an account at a
bank, savings and loan, credit union, EBT account, or other financial
institution. Ask a/b or financially responsible spouse/parents if their federal
benefits (SSA/SSI or VA) are deposited into an EBT account and the money
is withdrawn with a debit card. It may appear from the client’s situation that
there is a possibility of bank accounts, even though it is denied.
a. If the client reports that he cashes his check at a bank or other financial
institution, contact the bank asking for any accounts in the client’s name.
b. If the client reports that he has an EBT account verify the balance through
the North Carolina EBT Production System that is located in each county.
NOTE: Verify the 1st moment balance of the EBT account by viewing
the credits at the end of the previous month and subtracting what was
spent (debits) to get the 1st moment balance.
c. Do not pend an application or delay a redetermination for the response.
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d. Third Party Verification Sources
(1) Bank statement, or
(2) Account ledger or passbook, or
(3) Written contact with the bank or savings institution.
2. Use form DSS-3431, Request for Financial Information, when contacting
financial institutions.
a. Instructions for using the DSS-3431, Request for Financial Information
are as follows:
(1) Complete Page 1 of the form, giving the name and address of the
financial institution and the name and identifying information for
the a/b.
(2) Explain the provisions of the Financial Privacy Act. Have the
client sign and date page 2. The caseworker must complete each
field on page 2, and complete page 3 as needed.
b. Ensure that the a/b understands that:
(1) He has the right not to give his consent;
(2) Once consent is given, it may not be revoked;
(3) The consent is valid for a period not to exceed twelve months; and
(4) Giving consent is not a condition of doing business with any
financial institution.
(5) It is the responsibility of the a/b to obtain consent from all of the
joint owners of the account(s).
c. The provisions are:
(1) Financial Records are treated as confidential.
(2) Customer’s authorization is required prior to the release of
financial records from any financial institution.
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(3) Any disclosure of financial records outside of the provisions of the
Financial Privacy Act, including any government authority
participation to solicit information in violation of the Act, will be
liable to the customer.
d. Refusal to give consent for DSS-3431, Request for Financial Information,
will result in denial or termination of benefits for failure to cooperate in
establishing eligibility.
3. Documentation
Document the following in the application/redetermination workbook:
a. Type of account (checking, savings, certificate of deposit (CD), money
market, EBT account, Medicare Health Savings Account, etc.)
b. Type of ownership/interest
c. Account number and name of financial institution
d. A/B’s statement of first moment balance for the verification month
e. Source and date of third party verification, if required
4. Deduct Outstanding Checks
a. Deduct from the first moment balance the amount of any check written by
the a/b or financially responsible person which:
(1) Is mailed or delivered prior to the first moment of the verification
month; and
(2) Had not cleared the bank prior to the first moment of the
verification month.
b. Do not deduct the check if it:
(1) Was written as prepayment to a Medicaid provider for a service
which is covered by Medicaid; or
(2) Is more than six months old. Six months from the date a check is
written it becomes stale dated and will not be honored by the bank.
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c. For MN cases over the resource limit as of the first moment, deduct
checks written after the first moment as of the day the check is written.
d. Verify the date a check cleared the bank by the bank statement, or by
written or verbal contact with the bank.
EXAMPLE: A check dated 10/12 did not clear the bank until 11/5. The
check is “outstanding” on November 1st.
e. If a check has not cleared the bank, compare the check book register or
stubs to the bank statement to verify the date, check number, and payee of
the outstanding check and sequence of checks.
f. If the check book register (or check stub) is not available, verify
outstanding status of the check by:
(1) A signed, dated statement, DMA-5156, Statement of Outstanding
Checks, from the a/b (or the person who actually signed the check)
which includes: check number, date the check was mailed or hand-
delivered, amount of the check, and that the check is for payment
of a valid expense;
AND
(2) Written or verbal verification from the bank that a stop payment
against the check has not been requested.
5. Deduct Direct Deposit Social Security/Railroad Retirement Checks.
Deduct Social Security or Railroad Retirement payments directly deposited
into the bank account prior to the first day of the month from the first moment
balance of that month. Do not deduct any deposits on or after the first day of
the month until the first day of the next month.
6. Other Deposits
Do not deduct other income routinely deposited during the preceding month
from the first moment balance.
a. Count these funds as income in the month received, and
b. Count as a resource any amount remaining on the first moment of
subsequent months.
7. Interest which is accumulated or reinvested automatically is included in countable
resources the month following month of receipt.
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(X)
H. Retirement Plans, IRA’s, 401-K Plans
Retirement accounts can be with a company or privately held at a bank.
1. Determine Availability
Contact the administrator of the retirement fund or the financial institution
holding the funds to verify if the funds can be withdrawn, even if penalties
may be charged for early withdrawal.
2. Verify and Document
a. Gross value of the account, and
b. The type and amount of penalties.
3. Countable Benefits
a. A/B’s Account
If the retirement account/fund can be withdrawn, it is an available
resource. Count the value of the account if it were to be surrendered.
b. Spouse/Parent’s Account
(1) Do not deem/count this type of resource when owned by the
financially responsible spouse or the parent(s) in PLA budgeting.
See MA-2260., Financial Eligibility Regulations, II.B.2.b.
(2) Count available retirement funds in the assessment process for
spousal resource protection. (See MA-2231, Community Spouse
Resource Protection.)
c. There is a standard 10% IRS tax penalty for early withdrawal. Subtract
10% of the GROSS in addition to any other penalties if the beneficiary is
under age 59 ½ and is not disabled.
d. Count the remainder as an available resource as of the first month for
which assistance is requested, even if the account is not actually
withdrawn.
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(X)
I. Stocks, Mutual Funds
1. Definition
a. Stock is a “share” of the capital or assets of a corporation.
b. A mutual fund represents stock in multiple corporations and business
ventures.
2. Verify Shares
Verify the number of shares of stock in a corporation, or in the mutual fund,
by:
a. Viewing the last monthly or quarterly statement from the brokerage firm,
if available; or
b. Contact with the corporate office of a publicly held corporation.
c. The a/b’s statement. Copy the certificates if available. Document the
certificate numbers and compare to any certificates or numbers brought in
as verification in the future.
NOTE: The FRR report may be used as a “lead” but is not verification of
stock value.
3. Verify Value
Verify the current value of each share of the stock by the best of the following
alternatives:
a. The last monthly or quarterly statement from the brokerage firm;
b. Stock values listed in the newspaper. Most newspapers report on some
stock values in the New York, American, and NASDAQ Stock
Exchanges.
c. If not listed, contact a stock broker, or check the Wall Street Journal.
d. Contact the corporate office, or the accountant if the corporation is
privately held.
NOTE: Never use the original cost of stock or the face value on a stock
certificate to establish value.
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4. Verification date for stock value
a. The value on any day verified from the newspaper, stock brokerage firm,
or corporate office UNLESS:
b. The value of the stock is known to have changed and a lesser value could
establish eligibility in an earlier month or retroactively.
c. Verify lesser value from monthly or quarterly statements if available; or
d. If statements are not available, a/b has no documentation, and actual
retroactive value would benefit the a/b, sources are:
(1) NC Department of Revenue (can verify value as of December 31).
(2) Brokerages or corporate offices.
(3) Old issues of the Wall Street Journal (at a library).
5. Administrative Fees
a. Verify the cost of selling the shares (on any day you call) by contact with
a stock broker or financial institution.
b. Deduct this cost from the total value of the shares and count the remainder
in resources.
J. Bonds, Securities
1. Bonds
A bond is a certificate of debt. The issuing company or governmental body
promises to pay a specified amount of interest for a specified period of time,
and to repay the “loan” on the expiration date.
a. US Savings Bonds – A bond of the US government sold at a reduced
price, requiring the person to wait for a specified time to redeem at face
value. The value is greatly reduced if the bond is redeemed at an earlier
date. Any bank can verify the value of a US Savings Bond if given the
series and the date of issuance.
b. All other bonds – Contact the local bank or brokerage firm and if they
cannot determine value, contact your MPR for guidance.
b. Count the current market value of bonds.
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2. Security
Refers to, an obligation, mortgage, deposit, or lien given by a person to his
creditor as a guarantee against failure of the person to pay his principal
obligation. A non-marketable security is one that can only be redeemed by
the holder, such as certain government bonds.
a. Contact a local brokerage firm.
b. Count the current market value of bonds or securities in the resource total.
K. Promissory Note
Although technically a liquid asset, a promissory note is treated as real property
interest for verification and rebuttal purposes. A salable promissory note is a
countable resource. See Item VII.A.10., VII.B.7., and VII.E. above for procedures
for promissory notes. Refer to MA-2240, Transfer of Assets, IX.C., for transfer of an
asset regarding a promissory note, loan, mortgage, or other property agreement.
L. Countable Lump Sum Payments
A lump sum is generally a non-recurring payment which covers income/benefits due
for more than one month’s time. This frequently occurs with Social Security and SSI
benefits.
Count lump sum payments as an available resource in the month following receipt
except those specifically excluded in X.C.8. above. However, if a lump sum payment
is given away in the month of receipt, evaluate for transfer of assets according to MA-
2240, Transfer of Assets.
Note: Income routinely deposited other than monthly is not considered a lump sum
payment. See X.C.9. above.
M. Liquid Assets of a Business
1. Exclude liquid assets needed to operate a business currently in operation
(including period when the sole proprietor is unable to work but business has not
been discontinued), or assets associated with self-employment, a trade, or a
farming operation.
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2. Verify status of bank accounts used in the operation of a business, but held in
the name of a financially responsible person:
a. Doing Business As account—Verify with the bank and the records of the
DBA account that those funds are not used for personal bills.
b. Commingled with personal funds—If the bank account is used for
personal and business transactions, the business assets must be separately
identified to be excluded.
3. If a business account in the name of business or corporation is totally separate
from personal funds, exclude the account. Count the income of the business.
4. Count the liquid assets of a business or farming operation which has been
formally discontinued or sold.
5. If the business is incorporated, count the client’s share of the corporation (his
stock).
N. Proceeds of a Loan
1. When the a/b or financially responsible spouse/parent is the borrower, the
balance remaining on the first moment of the month following receipt is a
countable resource.
2. When the individual is granted a line of credit, only the amount of money he
actually receives is considered proceeds of a loan.
3. If the proceeds of a loan are given away in the month of receipt, apply transfer
of resources policy in MA-2240, Transfer of Assets.
O. Revocable Burial Contract
Count a revocable burial contract/trust which can be converted to cash. See
instructions in Item XIII., below, if the a/b has excess resources.
P. Reverse Mortgage Payments
A reverse mortgage is an agreement in which a lending company makes regular
payments to a homeowner during a specific period of time. The payment is based
upon the equity in the home. The homeowner is allowed to remain in the home until
death or a prearranged date. At that time the home is sold and the lender repaid.
Count as an available resource any proceeds from a reverse mortgage payment which
the a/b retains at the first of the month following receipt. If the proceeds of a reverse
mortgage are given away in the month of receipt, apply transfer of resource policy in
MA-2240, Transfer of Assets.
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Q. Continuing Care Retirement Community (CCRC) Entrance Fees
A CCRC provides a continuum of care, including independent living, assisted living,
and nursing facility care, under a contract for the life of an individual or for a period
longer than one year.
If the “entrance fees” are non refundable, do not determine fair market value. If
entrance fees are refundable count the portion of the fee that can be refunded.
Count the entire amount of the entrance fee at the time of application for institutional
services when all of the following conditions are met:
1. The entrance fee can be used to pay for care under the terms of the entrance
contract, either in portion or full lump-sum refunds, should other resources of
the individual be insufficient; and
It is unnecessary for CCRCs to provide a full lump sum refund of the entrance
fee to the a/b. If portions of the fee can be refunded or applied to pay for care
as required, the condition in 1 is met.
2. The entrance fee (or remaining portion) is refundable when the individual dies
or terminates the contract and leaves the CCRC or life care community; and
It is unnecessary for the a/b to actually receive a refund of the entrance fee or
deposit. This condition is met as long as the resident could receive a refund
were the contract to be terminated or if he dies.
3. The entrance fee does not confer an ownership interest in the community.
To verify the amount of the “entrance fees”, and to verify if the entrance fees
are an available resource, contact the center in which the a/b specifies he has
paid an entrance fee. The Department of Insurance website,
www.ncdoi.com/fed/se/documents/ccrc/ccrclist.pdf, contains a current list of
the Continuing Care Retirement Communities.
R. Total the Value of All Liquid Assets
Total the value of all countable liquid assets including cash value of life insurance
(when total face value owned by any financially responsible person is more than
$10,000 for that person), trust funds and revocable burial trusts.
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XI. TRUST FUNDS
A. Definitions
1. Grantor - An individual who uses his assets or funds to create a trust. The
grantor may also be the beneficiary.
2. Beneficiary - An individual(s) designated in the trust who benefits from the
trust. The beneficiary can also be called the grantee. The grantor and
beneficiary may be the same person.
3. Trustee - An individual(s) or entity (such as bank or insurance company) that
manages and administers the trust for the beneficiary.
4. Principal - The assets that make up the trust. The principal includes income
earned on the principal that has not been distributed. The principal is also
called the corpus.
5. Proceeds - The income earned on the principal of the trust. It is usually
interest, dividends, or rent. When the proceeds are not distributed, they
become part of the principal.
6. Disbursement/distribution - Any payment from the principal or proceeds to
the beneficiary or to someone on his behalf.
B. General Information
1. When the a/b or financially responsible person is the grantor of a revocable
trust created for himself or for the benefit of another individual(s), the entire
trust principal remains a countable resource to the a/b.
2. When the a/b or financially responsible person is the grantor of an irrevocable
trust created for himself or for the benefit of another individual(s), evaluate
for transfer of assets unless the trust meets criteria for a Special Needs or
Pooled Trust in XI.C., below. Refer to MA-2240, Transfer of Assets.
Note: This does not include trusts created by the will of a spouse. Refer to
XI.B.4 and XI.J. below.
3. When the a/b or financially responsible person is only the trustee of a trust,
the trust is not a countable asset. Count as income fees paid to the a/b for
management. Refer to MA-2250, Income.
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4. When the a/b or financially responsible person is the beneficiary of a trust, use
this section to evaluate the trust:
a. As a resource available to the a/b, and
b. As income countable to the a/b, and
c. As a transfer of resources.
C. Types of Trusts
1. Revocable Trust - A trust which can be revoked by the grantor or modified or
terminated by petitioning the court. A trust which is called irrevocable but
which terminates if some action is taken by the grantor is a revocable trust for
purposes of this section.
2. Irrevocable Trust - A trust whose terms and provisions cannot be revoked or
changed in any way by the grantor or any other party.
3. Special Needs Trust - A specific trust that meets all the following conditions:
a. It was created on or after April 1, 1994, and
b. It is created for the sole benefit of a disabled individual (as determined by
SSA) under age 65, and
Note: Sole benefit means that any real or personal property which is
capable of being titled and is purchased by the trust must be titled solely in
the name of the trust.
c. It contains only the disabled individual’s assets/income (no assets or
income of others may be commingled), and only after any Medicaid lien
on funds recovered from third parties has been paid in full. (See MA-
2400, Third Party Recovery regarding tort liability and assignment of
rights to third party payments), and
d. It is established for the disabled individual under age 65 by the parent,
grandparent, legal guardian, court, or by the disabled individual. The
disabled individual must establish the trust on and after December 13,
2016 to be a Special Needs Trust. Prior to the date, the trust will not be
considered as a Special Needs Trust.
e. It must contain a provision that states upon death of the individual or upon
the termination of the trust for other reasons the State receives all amounts
remaining in the Trust up to an amount equal to the total amount of
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medical assistance paid on behalf of the individual under the State
Medicaid Plan, and
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e.
If proceeds of a settlement on behalf of the Medicaid applicant/beneficiary
are used to purchase structured settlement payments, annuities, or other
forms of an income stream payable to the Trust over time, the Trust must
remain the designated payee. There must be no alternate designated payee
named in the contract for the payments until the Trust has been properly
wound up and the State has been reimbursed. This ensures that all
remaining Trust assets will be available to reimburse the Division of
Medical Assistance upon the death of the individual or termination of the
Trust for other reasons. The Special Needs trust resource exclusion
continues after the individual reaches age 65. Any additions to the trust
after the individual reaches age 65 must be evaluated for a transfer of
assets.
4. Pooled Trust - A type of trust that includes funds of more than one disabled
individual combined for investment and management purposes. A Pooled
Trust can be created for an individual of any age and is excluded from
resources. A Pooled Trust must meet all of the following requirements to be
excluded as a Transfer of Assets.
a. It was created on or after April 1, 1994, and
b. It was created for the sole benefit of a disabled individual (as determined
by SSA) and
c. It is established by the disabled individual, his parent, grandparent, legal
guardian, or by a court, and
d. It is managed by a non-profit association with a separate account
maintained for each beneficiary, and
e. It contains a provision that upon the death of the beneficiary the State will
receive all amounts remaining in the beneficiary’s account not retained by
the trust up to the total amount of Medicaid paid on behalf of the
individual.
The Pooled Trust resource exclusion continues after the individual reaches age
65. Any additions to the trust made after the individual reaches age 65 must
be evaluated for a Transfer of Assets.
If the Pooled Trust is created for an individual under age 65, and meets the
above requirements, do not evaluate for a Transfer of Assets. Pooled Trusts
created on or after November 1, 2008 for an individual over age 65 must be
evaluated for a Transfer of Assets.
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D. Terms of the Trust
The terms specify what portion of the principal is available and what disbursements
can be made from the trust. Common terms:
1. Discretion of the trustee - This term allows the trustee to decide what portion
(up to the entire amount) of the principal of the trust he will make available to
the beneficiary.
2. Full discretion - This term allows the trustee to disburse up to the entire
amount of the trust to the beneficiary.
3. Designated for medical expenses - This term allows the trustee to use the trust
to pay the medical expenses of the beneficiary. The amount of the trust that is
designated for medical expenses is considered an available asset to the
beneficiary. Payments are a third party resource. Refer to MA-2400, Third
Party Recovery, to report availability to DMA.
4. Income beneficiary - This term allows payments to the beneficiary from the
proceeds of the trust. The principal is not available for disbursement.
5. Ultimate beneficiary - This term means the entire principal of the trust will be
available at a specific point in time.
6. Exculpatory clause - Language in the trust that legally limits the authority of
the trustee to distribute funds from a trust if the distribution would jeopardize
eligibility for government programs, including Medicaid.
E. Procedures
1. Obtain a copy of the trust document and any supporting documentation
detailing investments and distributions from the a/b, the a/b’s legal
representative, trustee, or attorney.
2. Review the trust document to determine:
a. The type of trust,
b. The date the trust was established, and
c. Whose assets were used to create the trust, and
d. Who is the beneficiary, and
e. The value of the trust when it was created, and
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f. What disbursements can be made from the trust principal or proceeds, and
g. Any special provisions.
3. Contact the trustee to verify:
a. The current value of the trust, and
b. Actual disbursements paid from the trust in the base period, and
c. To whom the disbursements were made, and
d. The dates of disbursement.
4. Consult with your agency/county attorney for any questions regarding the
terms of the trust.
5. Contact your MPR for assistance in determining how the trust affects
Medicaid eligibility.
F. Determine Countable Income to the A/B (Also refer to MA-2250, Income)
1. Income from a trust which is countable to the beneficiary is determined the
same way no matter what type of trust, who created the trust, when it was
created, or any special requirements.
2. Count as income to the a/b in the month received the actual money disbursed
by the trustee from the trust principal or proceeds:
a. Directly to the a/b (spouse, legal representative), or
b. Directly to providers for food or shelter.
NOTE:Refer to MA-2250, Income, for policy on contributions of food and
shelter. Do not count as income money paid directly to a provider for any
items other than food or shelter. The value assigned to in-kind income
cannot exceed 1/3 of the SSI amount plus $20.
G. Whose Assets Are Used to Create a Trust
In determining whose assets (the grantor) are used to create the trust, consider the
following:
1. The a/b’s assets include assets owned by any budget unit member.
2. A settlement of an insurance claim or civil suit is considered the a/b’s asset.
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3. Assets contributed directly into a trust by individuals other than a budget unit
member or by a public organization are not considered the a/b’s assets.
EXAMPLE: Community fund raiser for a child in need of an organ transplant
contributes the money directly into a trust.
4. Assets used to form a trust created by a will from the estate of a deceased
person (including a deceased spouse) are not considered the a/b’s assets. This
is also known as a Testamentary Trust.
NOTE: Assets which are willed to an a/b and then used to establish a trust
are considered to be the assets of a/b.
H. Determine Countable Resources and Transfer of Resources
Use the following guide:
1. Revocable Trust - Refer to XI.I. below.
2. Irrevocable Trust where a/b is the beneficiary of trust established with the
funds of an individual other than the a/b or his spouse. This includes
testamentary trusts created by will. Refer to XI.J.1. below.
3. Irrevocable Trust where the a/b is grantor and beneficiary of trust established
prior to April 1, 1994. Refer to XI.J.2. below.
4. Irrevocable Trust where the a/b is grantor and beneficiary of trust established
on or after April 1, 1994. Refer to XI.J.3. below.
5. Special Needs or Pooled Trust where the a/b is the beneficiary established on
or after April 1, 1994. Refer to XI.J.4. below.
I. Revocable Trust
1. When the a/b or financially responsible person is the beneficiary of a
revocable trust created with the funds of an individual other than the a/b or
spouse, apply the following rules:
a. Countable Resources
Do not count the principal as an available resource to the a/b. The trust
principal is a resource to the grantor who created the trust and who has the
power to revoke the trust.
b. Transfer of Resources
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Do not apply transfer of resource policy to the a/b since his assets were not
used to create the trust.
2. When the a/b or financially responsible person is the grantor of a revocable
trust, apply the following rules:
a. Countable Resources
Count the current principal plus proceeds that have not been distributed.
b. Transfer of Resources
Apply transfer of resource policy to any disbursement from the trust
principal or proceeds to or for the benefit of an individual other than the
a/b. Refer to MA-2240, Transfer of Assets.
3. If a revocable trust is changed to an irrevocable trust, evaluate as a transfer
effective the date the irrevocable trust is established. Refer to XI.J., below.
J. Irrevocable Trusts
1. When the a/b or budget unit member is the beneficiary of an irrevocable trust
established with the assets of someone other than himself or spouse determine
if any portion of the trust is a countable resource as follows. This includes
testamentary trusts created by the will of any individual, including a spouse.
a. No Trustee Discretion
If the terms of the trust do not allow for trustee discretion, count the
portion of the trust principal and undistributed proceeds that could be
disbursed to the a/b based on the terms of the trust.
b. Trustee Discretion
Contact the trustee to verify what he will make available.
(1) Count the amount the trustee(s) agree to make available.
(2) If the trustee refuses to make any portion available, do not count
any portion as a resource.
c. Transfer of Resources
Do not apply transfer of resource policy to the a/b since his assets were not
used to create the trust.
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2. When the a/b is the grantor and beneficiary of an irrevocable trust established
prior to April 1, 1994 (formerly called a Medicaid Qualifying Trust or MQT),
apply the following rules:
a. Countable Resources
Count the maximum portion of the trust principal and undistributed
proceeds that could be disbursed to the a/b based on the terms of the trust.
(1) If the terms specify trustee discretion, assume the trustee exercises
full discretion and count the full amount that could be disbursed.
This applies regardless of whether or not the maximum payments
are actually made.
(2) If the terms of the trust limit discretion to disburse when Medicaid
eligibility will be affected (exculpatory clause) only count those
resources which can be disbursed according to the terms of the
trust.
b. Transfer of Resources
Apply transfer of resource policy to any portion of the trust that is
unavailable or made unavailable for the benefit of the a/b according to the
terms. Refer to MA-2240, Transfer of Assets.
3. When the a/b is the grantor and beneficiary of an irrevocable trust established
on or after April 1, 1994, apply the following rules:
a. Countable Resources
Count the maximum portion of the trust principal and undistributed
proceeds that could be disbursed to the a/b. In determining what is
available to be disbursed, DISREGARD:
(1) The purpose for which the trust was established,
(2) Whether the trustee has discretion,
(3) Any exculpatory clause restricting disbursements which affect
Medicaid eligibility.
(4) Any other restrictions on when disbursements can be made or the
use of the distributions.
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This means that if the terms allow ANY circumstances by which
all or a portion of the principal or proceeds can be disbursed to a/b,
that portion is considered an available resource to the a/b.
EXAMPLE: A trust contains $75,000. The terms stipulate that
the trustee can disburse up to $50,000 to the grantor. The $50,000
can be paid to the grantor only in the event he needs, for example,
a heart transplant. Count $50,000 in resources because it can be
paid under some circumstances, although remote. Or if the terms
stipulate $50,000 can be disbursed to the grantor on some date in
the future, count $50,000 in resources because there is a
circumstance where a disbursement can be made.
b. Transfer of Resources
Apply transfer of resource policy to any portion of the trust that is not
counted in resources for the a/b. In the above example, the $25,000 that
cannot be disbursed for any reason is a transfer of assets. Refer to MA-
2240, Transfer of Assets.
4. When the a/b is the beneficiary of a Special Needs or Pooled Trust (See
definitions in XI.C.3. & 4. above) established on or after April 1, 1994:
a. Countable Resources
Do not count the trust principal or undistributed proceeds.
b. Transfer of Assets
(1) A Special Needs Trust or Pooled Trust created for an individual
under age 65 does not need to be evaluated for a Transfer of Assets
unless additions are made to the trust after the beneficiary turns
age 65. Any addition to the trust after the individual turns age 65
is evaluated for a transfer of assets.
(2) A Special Needs Trust or Pooled Trust created for an individual
after he reaches age 65 must be evaluated for a Transfer of Assets.
(3) Any disbursement from a Special Needs Trust or Pooled Trust that
is not for the sole benefit of the individual must be evaluated for a
Transfer of Assets. Evaluate disbursements at application and each
redetermination.
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XII. LIFE INSURANCE AND ANNUITIES
A. Definitions
1. Face value of Life Insurance policy
Face Value is the amount of basic death benefit contracted for at the time the
life insurance policy is purchased.
2. Cash surrender value (CSV) of Life Insurance policy
The cash surrender value of a life insurance policy is a form of equity value
that a policy acquires over time. The policy owner can only obtain its CSV by
turning in the policy for cancellation before it matures or when the insured
dies. A loan against a policy reduces its cash surrender value.
3. Annuity
An annuity is a type of trust. An individual pays an entity a lump sum of
money in return for the right to receive fixed, periodic payments, either for
life or a term of years.
4. Long Term Care Partnership-Resource Disregard
Individuals who have a qualified Long Term Care partnership Program policy
may have resources disregarded at application for LTC/CAP Medicaid.
The resource disregard can be up to the amount of benefits paid by the policy
as of the date of application.
5. Long Term Care Partnership-Resource Protection at estate recovery
An amount equal to the resource disregard given to a Medicaid beneficiary
during the LTC/CAP Medicaid eligibility determination process.
B. Cash Surrender Value (CSV) of Life Insurance as a Resource
The cash surrender value (CSV) of life insurance policies is accessible and is a
countable resource when the face value of all policies which generate a CSV owned
by the individual exceeds $10,000.00. Evaluate each individual separately. Ask at
each application and redetermination for MAABD, MQB-Q, MQB-B, MQB-E, and
MWD, if the a/b or financially responsible spouse/parent own or have recently
purchased insurance. Only verify policies owned by the a/b or financially responsible
spouse/parent. Exclude as a resource the cash surrender value of life insurance
policies when the face value of all policies which generate a CSV equals $10,000 or
less.
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C. Whole Life Insurance
Whole life is a common type of insurance which generates a CSV.
1. Face Value/Cash Surrender Value
a. Use the original face value when the policy was issued to establish total
face value.
b. Count the CSV of whole life insurance owned by the a/b or financially
responsible person, when the total face value of all policies which generate
a CSV owned by each person exceeds $10,000
2. Participating Policy
a. A participating whole life policy pays dividends annually.
Dividends paid by a participating policy may be added to the face value,
increase the cash surrender value or be paid to the policy owner. Count
dividends even if the total face value is equal to or less than $10,000.
Verify how dividends are paid. Refer to XII.I.2. below.
b. Universal Life
Universal life policies are a type of participating whole life policy.
D. Long Term Care Partnership policy
A qualified Long Term Care Partnership policy provides the Medicaid a/b with a
resource disregard up to the amount of benefits paid out by the policy as of the date of
application for LTC Medicaid or CAP. The resource protection at estate recovery is
equal to the amount paid out from the qualified Long Term Care Partnership program
policy as of the date of application.
If the client has a community spouse, first apply the Community Spouse Resource
allowance. See MA-2231, Community Spouse Resource Protection for instructions.
If after completing the CRSA the client’s resources are above the limit, follow the
steps below for the client with a qualified Long Term Care Partnership policy.
To identify that a long term care policy is a qualified Long Term Care Partnership
policy, the policy must be accompanied by a Partnership Disclosure Notice which
explains the details of the Partnership program, resource disregard and protection at
estate recovery.
1. The qualified Long Term Care Partnership Policy includes:
a. An effective date of January 1, 2011 or later, unless the policy was
purchased in another state.
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b. The policy states that if the insured is already a beneficiary of long term
care Medicaid, the policy will not allow a resource disregard and
protection at estate recovery and,
c. A statement that the purchase of a partnership policy does not guarantee
qualification for Medicaid.
2. Only the available and countable assets owned by the individual Medicaid a/b
and his share of jointly owned assets may be considered when applying the
resource disregard. Only the assets of the individual may also be protected at
estate recovery.
3. The North Carolina Medicaid program may allow a resource disregard and
protection at estate recovery for an individual who purchased a qualified Long
Term Care Partnership policy in another state which has a reciprocal
agreement with the state of North Carolina.
To determine if the state and North Carolina have a reciprocity agreement,
visit the website State Partnership for Long Term Care.
4. If countable resources exceed the resource limit after the CSRA, and the client
has a qualified Long Term Care Partnership policy, take the following steps:
a. Obtain a copy of the qualified Long Term Care Partnership policy. Verify
the amount paid out on behalf of the insured as of the date of application
by contacting DMA Beneficiary Services at 919-855-4000.
(1) The amount paid out on behalf of the individual is the amount of
resource disregard and protected amount at estate recovery. Report
this amount to the estate recovery administrator at DMA.
(2) To determine the amount to deduct from excess resources see c.
below.
b. If the client is unable to locate a copy of the qualified Long Term Care
Partnership policy, request that the client provide the insurance company
name and address, policy number, name of the insured, original value and
amount paid out on behalf of the insured. Verify that the policy is a
qualified Long Term Care Partnership policy and verify the amount paid
out on behalf of the insured as of the date of application by contacting
DMA beneficiary services at 919-855-4000, once you have the above
information.
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c. Determine the amount to deduct from excess resources:
(1) STEP 1: Determine the amount paid out from the qualified Long
Term Care Partnership policy.
(2) STEP 2: Determine amount of countable assets which are solely
owned by the insured and his share of any jointly owned assets.
(3) If amount in STEP 1 < amount in STEP 2, subtract amount in
STEP 1 from excess resources.
(4) If amount in STEP 1 > amount in STEP 2, subtract the amount in
STEP 2 from excess resources.
(5) If the client still has excess resources, he is not eligible unless he
reduces or rebuts the excess resources.
Example 1: Mr. Magenta, a single 69 year old man, purchases a
qualified Long Term Care Partnership policy in North Carolina on
01/10/2011 with a lifetime maximum of $150,000. He applies for
LTC on June 1, 2014 and has used $148,000 in benefits under the
policy. The amount of resource disregard and estate recovery
protection is the $148,000. Report $148,000 to the estate recovery
administrator. His countable resources are $163,050. ($163,050 –
2,000 = 161,050 excess resources).
Step 1: $148,000
Step 2: $163,050 (amount of resources in his name)
The amount in STEP 1 < amount in STEP 2. Deduct $148,000
from the excess resources ($161,050 – 148,000= $13,050). Mr.
Magenta must reduce resources in order to be eligible.
Example 2: Mr. Salt, a 70 year old married man, purchases a
qualified Long Term Care Partnership policy in Virginia in 2009
with a lifetime maximum of $250,000. He enters a nursing home in
North Carolina a year later. His wife applies for LTC on May 3,
2014. The policy has paid out $248,500 as of this date. Total
countable resources (before CSRA) are $297,060. All property is
jointly owned by Mr. Salt and Mrs. Pepper. Countable resources
after CSRA are $187,500 – 2,000 = 185,500 excess resources.
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STEP 1: $248,000.
STEP 2: $297,060 /2 = $148,530 (his share of resources jointly
owned).
The amount in STEP 1 > amount in STEP 2. Deduct $148,530
from excess resources. ($185,500 – 148,530 = $36,970). Mr. Salt
must reduce or rebut excess resources in order to be eligible.
5. Reporting the amount of resources protected at estate recovery:
Send to the DMA- Estate Recovery Administrator the name of the insured and
the name and address of the insurance company. Include the amount protected
from estate recovery due to the client having a Long Term Care Partnership
policy and attach a copy of the policy, if one is available. Retain a copy of this
information in the case file.
6. Non-Participating policy
A non-participating whole life policy does not pay dividends. Verify the
original face value and current CSV.
E. Annuities
An annuity guarantees the annuitant (person who receives benefit from the annuity)
periodic payments of a fixed amount for a specified term of years, for life, or until
some specified event takes place in exchange for the payment of a fixed sum.
1. An annuity is usually purchased with a single premium or payment.
2. An annuity is a resource if one of the following criteria are met:
An annuity which is revocable or which can be sold or assigned is a countable
resource. Contact the issuer via the DMA-5111, Annuity Verification Form,
to determine the annuity’s status.
a. If it is revocable determine from the issuer what amount the a/b would
receive if he or she revoked the amount of the annuity. This amount is a
countable resource.
b. If the annuity can be sold, determine from the issuer the amount the a/b
would receive for selling the annuity. This amount is a countable
resource.
c. Determine from the issuer if the payments from the annuity can be
assigned to another person. If payments can be reassigned, then the
annuity is considered assignable and is a countable resource.
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3. Verification Sources
a. Request a copy of the terms of the annuity from the a/b.
b. Contact the issuer of the annuity. Send a DMA-5111, Annuity
Verification Form, at each application and redetermination for institutional
services.
4. Burial annuities pay the estate for burial costs and burial is the compensation,
like an irrevocable burial trust. If they are irrevocable and attached to an
irrevocable burial contract they are not a countable resource. If revocable,
only exclude up to the burial exclusion.
5. For each annuity evaluated during application or redetermination, send a copy
of the annuity, the a/b’s name, Medicaid ID number, case number, and short
explanation identifying the annuity as a resource or asset for the a/b to:
Division of Medical Assistance
Third Party Recovery Section
2508 Mail Service Center
Raleigh, NC 27699-2508
F. Annuities Purchased Prior to November 1, 2007
If an annuity purchased prior to November 1, 2007, is a resource, its purchase is not a
transfer of assets. Count the value of the annuity as a resource.
If the annuity is not a resource, evaluate for transfer of assets. Refer to MA-2240,
Transfer of Assets. If the annuity is actuarially sound according to the policy in effect
prior to November 1, 2007, the purchase of the annuity was an allowable transfer.
G. Annuities Purchased or Changed On or After November 1, 2007
If an annuity purchased or changed on or after November 1, 2007, is a resource, it
does not have to meet the transfer of asset requirements to be one of the acceptable
types of annuities or to be actuarially sound. Refer to MA-2240, Transfer of Assets.
Send a DMA-5110, Request for Medical Assistance Coverage For Institutional
Services and Disclosure Of Annuities, to the beneficiary and a
DMA-5097/DMA-5097S Request For Information. Send a DMA-5112,
Informational Notice Regarding Annuities and Medicaid Eligibility, to the issuer of
the annuity. The annuity that is a resource still must meet the requirement related to
the State of North Carolina Medicaid Program being named as a remainder
beneficiary. If it does not meet this requirement, it is a non-allowable transfer. Refer
to MA-2240, Transfer of Assets. However, it is likely that since the
annuity is a countable resource, the a/b or the a/b’s spouse will be ineligible due to
excess resources and transfer of assets sanction will not apply.
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If an annuity purchased on or after November 1, 2007, is not a resource, it must be
evaluated for transfer of assets under the rules in MA-2240, Transfer of Assets.
H. Term Life Policies (including burial insurance policies, accident policies with
death benefits)
1. Most term life policies do not generate a cash surrender value (CSV).
a. If a term life insurance policy generates a CSV, include the face value in
the total face value of policies which generate a CSV to determine if the
CSV is a countable resource. Refer to XII.B. above.
b. If the term life insurance does not generate a CSV, do not include the face
value of the policy in determining the total face value of all policies that
generate a CSV.
2. Verify any dividends paid by the policy. See XII.I.2.a. below for budgeting.
I. The Single Premium Pure Endowment
These policies pay a benefit in a balloon payment only to those persons who survive a
certain period of time. The endowment portion is similar to an annuity. The
purchase of a Single Premium Pure Endowment policy is an uncompensated transfer.
Refer to MA-2240, Transfer of Assets.
J. Verification
1. Examine life insurance policies (if available) and document:
a. The name of the Insurance Company
b. Policy number
c. Name of the insured (on whose life the policy is written)
d. Owner of the policy
(If the owner is not the a/b or financially responsible spouse/parent the
policy is not an available asset to the a/b.)
e. Whether the policy is participating or non-participating
If this information is not printed on the policy request verification from the
insurance company. This must be documented for all policies, regardless
of whether the total face value exceeds $10,000. If a/b states face value
does not exceed $10,000, do not hold up processing the application, but
request verification of whether the policy is participating or non-
participating from the insurance company.
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f. Face Value
Use the original death benefit or the graduated face value table on the
original policy when issued.
(1) Face value, death benefit:
The face value was printed on the original policy when it was
issued. If the IMC knows the policy is participating, verification
requests to the insurance company should ask for face value minus
any dividend additions to face value.
(2) Face value includes increases in the face value as part of original
policy contract. This is evidenced by a graduated face value table
printed on the original policy.
(3) Face value does not include:
(a) Additional Face Value purchased with dividend additions
(b) Accidental death (double indemnity) provisions
(c) Term life benefits (riders) on other family members
g. Cash Surrender Value (CSV)
Document and use the amount in the cash surrender value table printed
with the policy, if available, UNLESS
(1) The cash surrender value table is out of date; or
(2) It is printed on a policy that it is a participating policy.
h. If the actual paper policy issued by the life insurance company is NOT
available, contact the life insurance company to verify the items listed in a.
through g. above.
Use the DMA-5155, Verification of Cash Value of Life Insurance, and
address correspondence to: Manager, Policy Holder Service Division,
Company Name. If known, provide the following identifying information:
(1) Full name of the policy holder,
(2) Date of birth,
(3) Social Security number
(4) Policy number, and
(5) Date policy was issued
(6) Also request:
(a) Any other policies owned by the client; and
(b) Projected cash surrender value for future years.
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2. Verifying a Participating Policy
a. If the policy is participating and pays dividends verify how dividends are
paid as it may affect the cash surrender value of the policy or be a
countable resource.
(1) Dividend Additions
Dividend additions may be used to purchase additional face value
or increase the policy’s cash surrender value. Usually, the cash
surrender value table that is issued with the policy does not reflect
the value of dividend additions to cash surrender value.
(2) Dividend Accumulations
Dividend accumulations may be applied to premiums, or remain in
the “custody” of the insurance company for the purpose of
accumulating interest. Dividend accumulations which are not used
to pay a premium are treated the same as money in a savings
account. Dividend accumulations not applied to insurance
premiums count as a resource regardless of total face value of
policies which generate a CSV.
(3) Dividend payments to Owner
Dividends are not income in the month received, but are a
countable resource if retained until the following month
Refer to MA-2250, Income.
b. Verify Dividend Payments
Verify dividend payment by a copy of the annual premium notice, (the
owner receives this on the anniversary date of the policy, and it includes
an accumulation of all benefits, the amount of dividends, how dividends
are being used or paid) or contact with the insurance company.
c. Verify Cash Surrender Value With the Company if:
(1) The cash surrender value table has expired; or
(2) Total resources of the budget unit at application is $1200 or
greater; or
(3) The a/b disagrees with the value established by the table.
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K. Determine Countable Value of Insurance
1. Count the CSV of all policies owned by the a/b and the financially responsible
spouse/parent when the total face value of all policies which generate a cash
surrender value owned by each exceeds $10,000.
2. Cash Surrender Value of Non-participating Policy may be obtained from:
a. Cash surrender value table printed on the policy;
b. Direct contact with the company; or
c. For applications only, client’s statement.
3. Participating Policy
a. Always use the original face value (when the policy was issued) to
determine if CSV is countable (if total face value of all policies owned by
an individual is $10,000 or less the CSV is not countable). Ignore
additional face value purchased with dividend additions.
b. For “graded policies” (those with a graduated face value printed on the
original policy), use the face value for the year in which the eligibility is
being determined.
c. Dividend additions used to increase the CSV of a participating policy are
part of the CSV of the policy and are countable if face value of all policies
which generate a CSV exceeds $10,000.
d. Applications
If total face value of all policies which generate a CSV exceeds $10,000
for an individual, use the increased CSV if the amount is known by the a/b
(accept his statement if the total resources do not exceed $1200) or can be
verified by a copy of the annual premium notice or by contact with the
insurance company prior to disposition of the application.
(1) If third party verification is requested, do not pend the application
for verification of the increased CSV.
(2) When verification is received, if the additional CSV which was
available at application is still available and causes ineligibility,
propose termination and inform the beneficiary of possible ways to
reduce resources (i.e. purchase of burial contract, etc.)
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e. Redeterminations
(1) If total face value of all policies which generate a CSV exceeds
$10,000 for an individual, use the increased CSV if the policy has
not been designated for burial expenses and excluded through
application of the $1500 burial exclusion.
(2) After the policy has been designated for burial, ignore any
increases in CSV, including dividend additions, unless a new loan
or cash withdrawal occurs.
4. Burial Exclusion
Burial exclusion allows $1500 to be excluded from otherwise countable
resources. See Item XIII. to determine how to apply life insurance values to
the burial exclusion.
L. Actions Which Decrease the Cash Surrender Value (CSV)
1. Irrevocable assignment of CSV as payment of medical debt.
a. A hospital or other medical provider is “guaranteed” some payment
against the patient’s indebtedness prior to Medicaid authorization and the
CSV is eliminated from resources. This does not have to be offered as a
new way to reduce resources. Payment of legitimate debt has always been
an acceptable way to reduce resources.
b. The individual who “owns” the policy must pay premiums and can name a
beneficiary other than the holder of the lien on the cash surrender value.
c. The death benefit is still paid to the beneficiary, but it is reduced by the
amount of any valid liens against the cash surrender value on the date of
death. The amount of the lien would be paid to the lien holder.
d. For Medicaid resource calculations, insurance CSV is decreased beginning
with the date the papers are signed.
e. If the cash surrender value exceeds the amount of lien/debt, and the CSV
must be counted as a resource due to the total face value of all policies
which generate a CSV exceeding $10,000 for the individual, the amount
of the CSV in excess of the amount of the lien/debt would be a countable
resource.
f. If the medical charge was incurred prior to the current certification period,
the lien may reduce the unpaid balance of an “old bill” which could
otherwise be applied to the deductible. On the date the papers are signed,
the portion covered by a lien is ‘paid’. Do not apply this portion of the bill
to a deductible.
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g. If the medical charge was incurred during the current certification period,
it is allowable to apply to the deductible for that certification period.
2. Individual obtains Cash Surrender Value or a loan against CSV
When an a/b cashes in an insurance policy that generates a CSV, this is a
conversion of one type of resource to another. When the policy is surrendered
for cash, or a loan is taken out against the CSV, the money received is counted
as a resource until it is spent.
3. Irrevocable Change of Beneficiary
Irrevocable change of beneficiary means filing a rider to the policy that
irrevocably changes the beneficiary to a funeral home or to the person’s estate
for purposes of funeral expenses. This action must prevent the person from
obtaining the cash surrender value. Verify this with the insurance company.
Each insurance company will have its own forms and language. The key
points are:
a. Beneficiary is funeral home or estate for burial purposes
b. Verification from insurance company that they have processed the change
c. Designation of beneficiary is irrevocable
d. Verification from insurance company that the insured cannot get the cash
value
4. Change of Ownership/Absolute Assignment
A change in ownership of the policy to a third party is frequently referred to
as absolute assignment. Verify the change in ownership with the insurance
company. This could result in a sanction for a/b in long term care if equal
compensation was not received for the policy’s value. Compensation may be
verified by a copy of the contract.
XIII. BURIAL EXCLUSION
Burial exclusion is only used when the a/b has excess countable resources. It is a method
to exclude up to $1500 value of otherwise countable liquid assets for burial expenses for
each financially responsible person. This section contains rules and procedures for burial
exclusion.
A. Burial Exclusion Rules
1. Always ask the a/b if he or a financially responsible person has resources
which are intended to be used for burial purposes.
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2. Use the $1,500 burial exclusion to reduce countable resources when the a/b or
financially responsible person has excess liquid assets in:
a. A revocable burial contract for his burial expenses,
b. Cash surrender value of life insurance on his own life,
c. Cash/bank accounts/certificates of deposit, or
d. Stocks and bonds.
e. Revocable burial annuities.
3. Do not use the burial exclusion if the a/b or financially responsible
spouse/parent have irrevocable burial arrangements valued at $1,500 or more.
Irrevocable contracts are not a countable resource but they “use up” the burial
exclusion for an individual.
4. If excluding $1,500 (for each financially responsible person) of countable
assets listed above is sufficient to reduce countable resources to the limit for
the budget unit:
a. Inform the a/b that liquid assets (except life insurance) designated as a
burial asset cannot be excluded if commingled (held in the same account)
with non-burial assets. Request proof that the assets have been separated.
See MA-2303../../AppData/Local/Microsoft/Local
Settings/Temp/MA2303.pdf, Verification Requirements for Applications,
and MA-2304, Processing the Application, for time frames and
requirements.
b. When burial assets are not commingled, exclude $1,500 of the value of
liquid assets for the a/b and each financially responsible spouse/parent’s
burial expenses.
c. Begin the burial exclusion with any month assistance is requested,
including the retroactive period.
5. Burial exclusion applies to all financially responsible individuals, including:
a. An MAABD/MQB/MWD applicant/beneficiary of any age.
b. A legal spouse of the MAABD/MQB/MWD applicant/beneficiary,
including the community spouse of the institutionalized a/b.
c. Parents of the MAABD applicant/beneficiary, if the a/b has never been
married and is under age 18.
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6. If the burial exclusion ($1,500 of liquid assets per budget unit member) does
not reduce resources below the allowable resource limit, resources must be
reduced within the 45/90 day standard processing time for applications. The
individual is not eligible until the date the resources are reduced below the
allowable resource limit.
7. Follow the steps in B. - F. below to use the burial exclusion. Always deduct
the value of burial assets until the burial exclusion is depleted (you reach zero
dollars) or all assets have been deducted. Deduct assets in the following
order:
a. Irrevocable Burial Arrangements
b. Face Value of Life Insurance if total face value is $10,000 or less.
c. Revocable Burial Arrangements
d. Cash Surrender Value of Life Insurance if total Face Value Exceeds
$10,000
e. Dividend Accumulations or Cash/Funds in a Bank Account
Refer to G. below for instructions in applying the burial exclusion.
B. Irrevocable Burial Arrangements
Follow these steps for each individual to determine if there is an irrevocable
arrangement as specified in 1, 2, or 3 below. Deduct any irrevocable burial
arrangement from the person’s $1,500 burial exclusion.
1. Irrevocable trust/contract
A trust, contract, insurance policy or annuity with a funeral home, bank,
insurance company, etc. that lists the a/b or financially responsible
spouse/parent as the beneficiary.
a. Irrevocable means neither the depositor/purchaser nor the funeral
home/bank can withdraw the funds or change the contract.
NOTE: Even though a court, including a magistrate, can revoke an
irrevocable contract, the contract remains irrevocable and is excluded until
it is revoked.
b. View a copy of the contract to verify that it is irrevocable, the name of the
beneficiary and the face value received in exchange for funds.
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c. Do not require that the contract include a listing of goods and services to
be provided unless the information is needed for evaluation for transfer of
assets (MA-2240, Transfers of Assets) if it appears assets may have been
transferred without equal compensation.
2. Irrevocable designation of beneficiary
This is an irrevocable designation of an insurance policy making it payable to
a funeral home or to the estate of the deceased for purposes of funeral
expenses. This action must prevent the person from accessing the cash
surrender value. Irrevocable designation of beneficiary to the funeral home is
preferable to designation of the estate as beneficiary or absolute assignment.
a. The designation may be made when the policy is taken out, or
b. The beneficiary may be irrevocably changed by a rider filed with the
insurance company.
c. Verify with the insurance company that:
(1) The designation has been filed with the company,
(2) The designation is irrevocable, and
(3) The client cannot access the cash surrender value of the policy.
d. The services purchased do not have to be selected in advance.
3. Absolute assignment
Absolute assignment is a change in ownership. Absolute assignment of a
deferred or single premium annuity or other insurance policy to a funeral
home can be made in exchange for burial services.
4. Availability
An irrevocable burial asset is not available and is not a countable resource.
Exclude the entire value from countable resources, not just $1500.
a. If the total value of irrevocable burial assets equals or exceeds $1500, the
burial exclusion is used up. No additional assets can be excluded under
burial exclusion.
b. If there is any amount of exclusion left after deducting all irrevocable
burial arrangements from $1500, continue to the next excludable item,
XIII.C.
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C. Face Value of Life Insurance Which Generates a Cash Surrender Value
After deducting irrevocable burial arrangements, if the total face value of all life
insurance policies which generate a CSV owned by the a/b or a financially
responsible person does not exceed $10,000:
1. Deduct the face value of all life insurance policies that generate a CSV which
insure the life of that individual from the amount left in the individual’s
$1500 burial exclusion. Do not deduct the face value of life insurance policies
that insure the life of another individual.
2. Face value of life insurance policies that generate a CSV is not a countable
resource, but it must be applied to the burial exclusion.
3. If the total face value of all life insurance policies that generate a CSV equals
or exceeds the amount left in the $1500 burial exclusion, the burial exclusion
is used up.
4. If there is any amount of exclusion left, continue to the next excludable item,
XIII.D.
NOTE: Life insurance and burial insurance policies which do not accrue a
cash value are not deducted from burial exclusion and are not a countable
resource. See VII.I.2.a. for treatment of any dividends paid by a term life
policy.
D. Revocable Burial Arrangements
After deducting irrevocable burial arrangements and face value of life insurance
policies that do not exceed $10,000 which generate a cash value, deduct the value of a
revocable burial contract with a funeral home or other revocable trust or annuity
established for burial expenses from the amount left in the $1500 burial exclusion.
1. Revocable means the funds are available and can be withdrawn.
2. A revocable trust or annuity which is not limited to payment of burial
expenses within the body of the agreement cannot be excluded under burial
exclusion policy.
3. Deduct the value of the revocable burial arrangement from the amount left in
the $1500 burial exclusion.
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4. A revocable burial trust may appreciate in value or accumulate interest.
a. Verify the value at application. Once the application is approved, at
redeterminations ignore any subsequent increase in value due to
interest/accumulation of a revocable burial trust which has been excluded
through burial exclusion.
b. If the case is later terminated and a/b reapplies, count the full value of the
revocable trust in the verification month.
5. If the value of the revocable burial arrangement exceeds the amount left in the
$1500 burial exclusion at application:
a. Burial exclusion is used up; AND
b. Excess amount of the revocable arrangement counts in resources.
6. In the record, document the amount of the revocable arrangement which was
counted in resources at point of Medicaid approval and count this amount in
resources at review unless the revocable arrangement is changed to
irrevocable.
7. If there is any amount of exclusion left, continue to the next excludable item,
XIII.E.
E. Cash Surrender Value of Life Insurance
When total face value of all life insurance policies which generate a cash value owned
by the a/b or a financially responsible individual exceeds $10,000:
1. After deducting irrevocable burial arrangements and revocable burial
arrangements, deduct the cash value of life policies designated for burial on
the life of the individual from the amount remaining in that individual’s $1500
burial exclusion.
EXAMPLE: Mr. and Mrs. Blue applied for Medicaid. Mr. Blue has a whole
life policy on himself. The face value is $50,000 with a cash value of $2,500.
No assets have yet been applied to the burial exclusion. Only $1500 can be
applied to Mr. Blue’s burial exclusion and none to Mrs. Blue as she is not the
insured.
2. Accept the verbal statement of the policy owner or his representative that the
policy is designated for burial.
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3. If there is any amount of exclusion left, continue to the next item, XIII. F.
4. If burial exclusion is used up:
a. At application, cash surrender value of life insurance policies that exceeds
the $1500 burial exclusion limit of a designated policy is a countable
resource.
b. At redetermination, the original amount of cash surrender value of life
insurance policies when total face value exceeds $10,000 that exceeded
the $1500 burial exclusion (counted at application and not excluded as
part of the $1500 burial exclusion) continues to count in resources.
However, increases in cash surrender value are ignored as long as the
policy(s) is designated for burial.
EXAMPLE: Single a/b has one life insurance policy with face value of
$13,000. The cash surrender value at application was $3000. The a/b
stated it is intended and needed for burial expenses. He has no other
resources.
$3000
Cash surrender value of life insurance
- 1500
Burial exclusion (no other burial assets)
$1500
Excess counts in resources
At review the cash value has increased to $3,500. The a/b continues to
state that it is needed for burial and has acquired no other assets to be
applied to the burial exclusion. Continue to count only $1500 of cash
value as a countable resource. Increases in cash value after Medicaid
eligibility begins are disregarded if the policy remains designated for
burial expenses; continue to count the original $1500 excess cash value at
review.
c. After the disposition of the application, any action which reduces or
depletes the cash surrender value of a policy (except to pay the premium),
that is designated for burial expenses, revokes the burial designation. Stop
using the cash surrender value as a burial exclusion when:
(1) A loan has been taken against the cash surrender value subsequent
to designation; or
(2) The policy has been used as collateral subsequent to the exclusion.
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(3) A policy is “designated” and action is taken during the application
processing period to reduce the value. Do not consider the policy
as having been designated for any period of time for which
eligibility is being determined.
d. Always count the cash surrender value of policies owned by the a/b and
financially responsible spouse/parents which are on the life of someone
outside of the budget if the owner’s total life insurance face value exceeds
$10,000 for policies which generate a CSV. Examples:
(1) Mr. Brown owns whole life with a face value of $15,000 on
himself, whole life with a face value of $1500 on his grandson, and
a $1000 term life policy which has no CSV on himself. The total
face value of all life policies which generate a CSV owned by Mr.
Brown is over $10,000; so cash surrender value is countable.
Only the cash value of the $15,000 whole life policy on Mr. Brown
is deducted from his burial exclusion. Neither the $1500 whole
life on his grandson nor the $1000 term life is used to reduce the
burial exclusion for Mr. Brown.
2) Mrs. Green owns whole life policies with face value of $5,000 each on
herself, her spouse, and her granddaughter. Total face value of policies
which generate a CSV owned by Mrs. Green exceeds $10,000, so the
total cash surrender value of all policies
counts in resources. Current cash surrender value of each policy is
$650. No other burial resources are reported. Couple’s checking
account has $100 and savings is $1200. Total countable resources
including cash value of policies is $3250. This exceeds the
resource limit.
$650 cash value on Mrs. Green’s policy and $650 cash value on
policy on Mr. Green can be excluded by applying the $1,500 burial
exclusion for each spouse. ($1,500 - $650 = $850 remaining for
burial exclusion for each spouse.)
Total resources are reduced to $1,950 ($100 checking, $1,200
savings + $650 cash value from the policy on the granddaughter).
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(XIII)
e. A revocable change of beneficiary to a funeral home designates the policy
for burial expenses, but it does not make cash surrender value unavailable
to the a/b. After the $1,500 burial exclusion is used up, remaining cash
surrender value counts. Count the excess cash surrender value amount at
the point it is designated, but ignore increases.
EXAMPLE: Mr. Jones has a whole life policy with face value of
$15,000 and no other burial assets. The current cash surrender value on
the policy is $2,500. Mr. Jones has changed the beneficiary of the policy
to be the local funeral home. The change is revocable. $1,500 of the cash
surrender value of the designated policy can be excluded through burial
exclusion, but the remaining $1,000 cash surrender value counts in
resources.
5. Increases in Cash Surrender Value
Ignore increases in cash surrender value of a policy(s) designated for burial
unless:
a. A loan or withdrawal of cash surrender value occurs; or
b. At redetermination, the a/b has not designated the policy for burial; or
c. Client’s statement of cash surrender value was used to approve application
(this is follow up after approval);
6. Verify Outstanding Loans/Withdrawals from Cash Surrender Value.
a. An applicant may designate remaining cash surrender value for burial
even if there is an existing loan on the policy or it is collateral on an
outstanding loan.
b. If a new loan/cash withdrawal occurs after designation for burial,
designated status is lost. That policy cannot be re-designated for burial.
Any cash surrender value remaining on that policy counts in resources at
that time and in the future. Once the loan is paid off the policy can be re-
designated.
F. Dividend Accumulations or Cash/Funds Held in a Bank Account
1. These countable liquid assets may be used to:
a. Purchase burial assets to reduce resources in any amount within the 45/90
day processing time; BUT
b. May only be excluded under burial exclusion when $1,500 burial
exclusion will reduce resources and establish eligibility (amount of excess
resources is equal to or less than the amount of burial exclusion left after
deducting all other burial assets).
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(XIII.F)
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2. If exclusion of amount remaining in burial exclusion is enough to reduce
resources:
a. Inform a/b of amount of funds or dividend accumulations which can be
designated for burial.
b. Obtain a/b’s verbal statement as to whether he intends to use the funds for
burial expenses. This is a verbal designation.
c. Inform the a/b that cash funds intended for burial expenses must not be
commingled with other funds. Proof that the funds have been separated
within time limits is required to establish eligibility.
d. For an applicant, pend up to 45th or 90th day for documented proof that
the funds are not commingled. The applicant’s statement is not sufficient.
Refer to MA-2304, Processing the Application.
e. For a beneficiary, proof must be provided prior to the effective date of
termination.
(1) Send a DMA-5097 informing the beneficiary of the amount of
excess resources and that:
(a) A signed or verbal statement that the funds will be
designated and separated for burial expenses must be
received within the 12 calendar days of the date on the
DMA-5097, and
(b) Proof that action has been taken to separate the funds must
be provided within 30 calendar days of the date of the
DMA-5097.
(2) If the signed statement is not received within 12 calendar days or if
proof of separating is not received within 30 days, send a timely
notice and terminate the case.
(3) Proof must show, at a minimum that the necessary paper work was
submitted to the insurance company or funeral home, or funds held
in a bank are designated and separated.
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(XIII.F.2.e (3))
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REISSUED 11/01/11 – CHANGE NO. 17-11
EXAMPLE: Application on 6/5 for retro May and on-going.
Single applicant has one life insurance policy with face value of
$1,000 and a savings account with $2,500 which a/b states is
intended and needed for burial expenses.
$ 1,500
Burial exclusion
- 1,000
Face value of life insurance
500
Amount left for burial exclusion
$ 2,500
Liquid assets verbally designated for burial
- 500
Amount which can be excluded through burial exclusion
$ 2,000
No excess resources
The entire savings account is designated for burial. It is not
commingled with other non-burial assets. Therefore, the client
may continue to keep the excluded $500 in the savings account.
3. If the amount remaining in the burial exclusion is not enough to reduce
resources to allowable limit, inform a/b of:
a. The amount of excess resources; AND
b. Methods to reduce it, including purchase of an irrevocable burial asset.
c. Refer to MA-2303, Verification Requirements for Applications.
d. Refer to H. for methods to reduce resources through purchase of burial
expenditures.
EXAMPLE: Application taken 6/5 with request for retroactive Medicaid
for May and on going. Single applicant owns one policy with face value
of $1,000 and a savings account with $3000 which he states is intended
and needed for burial expenses.
$ 1,500
Burial exclusion
- 1,000
Face value of life insurance
$ 500
Amount left for burial exclusion
$ 3,000
Liquid assets intended for burial
- 500
Amount left for burial exclusion
$ 2,500
Countable resources – burial exclusion does not establish
eligibility
Applicant is not eligible through application of burial exclusion.
Resources must be reduced. One way to reduce resources is to use the
liquid assets to purchase a burial asset that is excluded from date of
purchase (this cannot be used to establish eligibility for May).
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(XIII. F)
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4. If the applicant dies before the application is made, or before it is disposed, the amount
of countable resources excluded for burial expenses is $1,500, regardless of the actual
costs of burial.
G. Burial Exclusion Guide
DEDUCT FROM $1,500 BURIAL
EXCLUSION (in the following sequence)
IF REMAINING VALUE IS MORE
THAN $1,500 (OR AMOUNT
REMAINING IN BURIAL EXCLUSION)
Value of Irrevocable Burial Arrangement
Do not count excess as a resource.
Face Value of Insurance which generates a
CSV ($10,000 or less total face value) If
total face value exceeds $10,000, go to next
step.
Reduces $1,500 exclusion
Value of Revocable Burial Contract
Count excess, ignore interest earned once
designated and excluded at application.
Cash Value of Life Insurance (total face
value over $10,000) If total face value is
$10,000 or less, go to next step.
Count excess at application, ignore increases
once designated for burial.
Cash or Funds in a Bank Account, CD,
stocks/bonds separately identifiable
Count excess. If result is excess resources,
a/b must reduce resources.
H. Reduction of Resources Through Burial Expenditures
An a/b with excess resources has the option to reduce resources by using excess liquid assets to
obtain a burial asset which does not count in resources. Depending on the type of liquid asset
the a/b must reduce, advise the a/b of the following methods to use excess liquid assets for
burial costs:
NOTE: The a/b must be expected to receive burial services equivalent to the dollar value of the
burial arrangement. Evaluate for transfer of assets if it appears that assets have been
transferred without equal compensation.
1. Purchase of an excluded burial asset, such as an irrevocable contract or single premium
annuity using cash or other liquid asset; or by adding to the value of an existing
irrevocable arrangement.
2. Changing a revocable contract to an irrevocable contract.
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(XIII. H)
FINANCIAL RESOURCES
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3. Filing a rider on an existing insurance policy, which irrevocably changes the
beneficiary to a funeral home, or to the estate of the client for purposes of funeral
expenses.
4. Absolutely assigning (change of ownership) whole life insurance to a funeral home in
exchange for burial services.
5. Also inform the a/b or the representative that resource eligibility cannot begin until the
day that resources are reduced to the resource limit for the budget unit.
EXAMPLE: Application on 6/4. Total reserve is $1500 face value of life insurance and
$2500 in savings. Applicant is ineligible until resources are reduced. An irrevocable
contract for $2500 is purchased on 6/11.
$ 1500 Burial exclusion
- 2500 Irrevocable burial arrangement 6/11
$ 0 Remaining in savings account
+ 0 Countable value of $1,500 face value
0 Resources
Resource total is reduced on 6/11, and if MN, this case is eligible 6/11.
If CN, case is not eligible until 7/1.
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XIV.
A/B IS A BENEFICIARY OF A TRUST
Use the following information as a Guide to Trust.
TYPE OF
TRUST
REVOCABLE I
RREVOCABLE
SPECIAL NEEDS
OR POOLED
ASSET
CREATED CREATED CREATED WITH
CREATED WITH
CREATED
CREATED WITH
SOURCE
WITH WITH ASSETS OF NON-A/B
ASSETS OF ASSETS OF
NON-A/B* A/B
ASSETS OF A/B
WITH
ASSETS OF
A/B
ASSETS OF A/B
OR NON-AR
DATE
CREATED
ANY D
ATE ANY DATE ANY DATE PRIOR TO 4-1-94 4-1-94 OR
LATER
4-1-94 OR LATER
RESERVE NO CURRENT AMOUNT OF
RESERVE PRINCIPAL PRINCIPAL THAT
VALUE CAN BE DISBURSED
BASED ON THE
TERMS OF THE
TRUST. IF THE
TERMS ALLOW
TRUSTEE
DISCRETION,
COUNT THE
AMOUNT HE
AGREES TO MAKE
AVAILABLE.
AMOUNT OF
PRINCIPAL THAT
CAN BE
DISBURSED
BASED ON THE
TERMS OF THE
TRUST (THIS
MEANS ALLOW
EXCULPATORY
CLAUSES).
IF THERE ARE NO
RESTRICTIONS,
COUNT TOTAL
PRINCIPAL THAT
CAN BE
DISBURSED.
TOTAL
AMOUNT
THAT
CAN BE
DISBURSED
UNDER
ANY
CIRCUMST
ANCES.
(DISREGAR
D
EXCULPAT
ORY
CLAUSES
AND ANY
RESTRICTI
ONS ON
TIME
OR USE OF
DISBURSE
MENTS)
NO RESERVE
VALUE
TRANSFER
NO TOTAL NO TRANSFER
TRANSFER AMOUNT
DISBURSED
TO ANYONE
OTHER THAN
THE A/B
AMOUNT THAT IS
UNAVAILABLE TO
THE A/B BASED
ON THE TERMS
PLUS AMOUNT
DISBURSED TO
ANYONE OTHER
THAN THE A/B
ANY
PORTION
OF
THE TRUST
THAT IS
NOT
COUNTED
IN
RESERVE
IS
CONSIDERE
D A
TRANSFER
NO TRANSFER
INCOME ACTUAL PAYMENTS TO THE A/B OR PAYMENTS TO A PROVIDER FOR FOOD,
CLOTHING OR SHELTER IN THE BASE PERIOD
* Any time a/b is used it means a/b or spouse
