Adult Medicaid Change Notices
G. Miscellaneous Changes
E. Exclusion of Non-Business Income-Producing Property While the Recipient Attempts to Sell
CHANGE NOTICE FOR MANUAL, NO. 15-03, Countable Resources and Transfers of Resources
Manual: Aged, Blind, and Disabled Medicaid
Change No.: 15-03
To: County Directors of Social Services
Effective: December 1, 2002
In order to reduce Medicaid program expenditures, the General Assembly authorized changes to Aged, Blind and Disabled Medicaid eligibility policy. Medicaid can no longer exclude the entire equity value of income-producing property for Medically Needy. Any equity over $6,000 is a countable resource. This change does not affect business property such as an active farm.
The change, to exclude only $6,000 of income-producing property for the Medically Needy, results in the potential ineligibility for current recipients. The General Assembly directed DMA to make every effort to mitigate the hardship caused by this change. The implementation instructions in item VII. of this change notice allow time for these individuals to take allowable actions, including the sale of their property. The property may be excluded for up to 6 months while the recipient attempts to sell the property. Refer recipients who have no one with legal authority to act on their behalf to the Services Unit in the county dss for assistance in disposing of their property. The opportunity to exclude property for 6 months while attempting to sell it is only for implementation purposes. It applies only for recipients on December 1, 2002. It does not apply to applicants pending on or applying on or after December 1, 2002.
The following Supplemental Security Income (SSI) methodologies concerning the homesite are adopted:
The statement must be accepted even if the doctor does not expect the a/r to ever return home. If the a/r cannot give a statement of intent, his representative may do so. The representative may be his guardian, power of attorney, spouse, or Medicaid representative (MA-2301, Conducting a Face-to-Face Interview, II.B).
The SSI methodology concerning property producing goods and services for home consumption is also adopted. For Medically Needy Aged, Blind, and Disabled cases, exclude up to $6,000 equity in property that produces goods and services for the home. This makes policy concerning this type of property the same for Medically Needy as it is for Categorically Needy.
Additionally, the General Assembly authorized sanctioning transfers of tenancy-in-common interest in real property. The uncompensated transfer of tenancy-in-common interest in real property will result in a sanction unless it is transferred to an allowable person. However, tenancy-in-common interest in real property remains an excluded resource if it is retained.
II. DESCRIPTION OF CHANGES
A. Income-Producing Real and Personal Property for the Medically Needy
1. If property cannot be excluded for any other reason, e.g. homesite, if it produces a net annual income of at least 6% of its equity, exclude up to $6,000 in equity value. Use the $6,000/6% policy for Medically Needy applicants/recipients as well as for Categorically Needy a/r’s. This means you will complete the following steps in determining resource eligibility when the a/r owns non-business income-producing property:
a. Determine the equity value of income-producing property, regardless of the amount of income produced.
b. Subtract $6,000 of the equity of the income-producing property. If the remaining equity value, combined with the value of other countable resources exceeds the resource limit, the a/r is ineligible due to excess resources.
c. If the equity value, after deducting $6,000 combined with the value of other countable resources, does not exceed the resource limit, determine if the property produces a net annual income of at least 6% of its equity.
(1) If the property does not produce a net annual income of at least 6% of its equity, count all of the equity in the property as a resource.
(2) If the property produces a net annual income of at least 6% of its equity, count the equity over $6,000 as a resource, and count the income.
2. Transfers of Income-Producing Property
2. This exclusion is separate and apart from the $6,000 exclusion of non-business income-producing property that produces a net annual income of at least 6% of its equity.
3. Transfer of property that produces goods and services for home consumption is based on uncompensated value of the full amount of the equity transferred. Do not deduct $6,000.
D. Transfer of Tenancy-in-Common Interest in Real Property
If a tenancy-in-common interest in real property is transferred on or after December 1, 2002, apply a sanction when:
1. The transfer is not allowed by policy. (Refer to the attached MA-2240, Transfer of Resources, VI. and VII.) and
2. Compensation equivalent to the equity in the property is not received.
Transfers of tenancy-in-common interest in real property prior to December 1, 2002 continue to be non-sanctionable due to policy in effect at that time.
Tenancy-in-common interest in real property remains a non-countable resource so long as the person continues to have an ownership interest in the property. It is non-countable even if financially responsible persons own the tenancy-in-common shares.
The federal transfer of assets law allows for transfer of the homesite to a sibling who is a co-owner and who has lived in the home for at least one year immediately prior to the applicant/recipient entering a nursing facility. Since the transfer of tenancy-in-common interest in real property was allowed, transfer to a sibling was not included in our policy. Now that sanction applies to transfers of tenancy-in-common interest in real property, this allowable transfer has been included in MA-2240, Transfer of Resources.
E. Termination for Excess Resources
Before a timely notice can be sent proposing termination for excess resources, the recipient must be notified of the excess resources and the opportunity to rebut the value of the resource or reduce his countable resources. Send a DMA-5097 and allow the recipient 12 calendar days to provide proof of rebuttal or reduction of resources.
F. Parental Financial Responsibility
MA-2230, Financial Resources, is revised to agree with MA-2260, Financial Eligibility Regulations – PLA, and MA-2270, Long Term Care Need and Budgeting, that parental financial responsibility ends for a child the month following the month the child leaves the home.
G. Miscellaneous Changes
1. MA-2230, Financial Resources, and in MA-2240, Transfer of Resources:
a. Changes were made to make the use of “current market value,” “equity,” tax value,” and “value” more consistent. No substantive changes were involved.
b. Additional examples were added to illustrate policy and existing transfer of resources examples were updated with new dates.
2. MA-2230, Financial Resources:
a. VI.D.1.a. is revised to agree with VI.C.1.b. If an incompetent person dies, he does not have to have been incompetent for 30 days prior to death for his resources to be excluded.
b. Policy on tobacco allotments was reorganized and reworded to clarify that a tobacco allotment used on an active farm and the land on the farm to which the allotment is tied, is business property and excluded regardless of the amount of income produced.
c. Policy on designation of dividend accumulations or money in a bank account for burial is revised to agree with notice policy.
3. MA-2240, Transfer of Resources:
a. An organizational change was made to place instructions for determining the sanction period prior to instructions for special non-allowable transfers.
b. Policy for notifying a recipient when he makes a non-allowable transfer of resources was revised to agree with notice policy.
4. Changes were made MA-2230, Financial Resources, and in MA-2220, State Residence, to state that a person can be a resident of North Carolina while having a homesite in another state to which he intends to return. The exclusion of a homesite for intent to return places no time limit for being out of the home with intent to return. A person is a resident of North Carolina if he lives here with an indefinite intent to remain or is here for employment purposes.
5. Changes were made in MA-2230, Financial Resources, and in MA-2270, Long Term Care Need and Budgeting, to make it clear that a doctor’s statement that a person is expected to return home from a nursing facility within 6 months is still required to deduct the Medically Needy Income limit from income when determining the patient monthly liability.
III. Effective Date
These changes are effective December 1, 2002.
IV. IMPLEMENTATION OF TRANSFER OF TENANCY-IN-COMMON INTEREST IN REAL PROPERTY.
For applications and ongoing cases, sanction transfers of tenancy-in-common interest in real property occurring on or after December 1, 2002. Transfers of tenancy-in-common interest in real property occurring prior to December 1, 2002 are not sanctionable.
V. IMPLEMENTATION OF CHANGES IN THE HOMESITE EXCLUSION
Changes in the homesite exclusion apply to all cases as of December 1, 2002, regardless of the date the individual left the home. Do not apply the policy to months prior to December 1, 2002.
VI. IMPLEMENTATION OF POLICY CHANGES FOR INCOME-PRODUCING PROPERTY AND FOR PROPERTY PRODUCING GOODS AND SERVICES FOR HOME CONSUMPTION FOR APPLICATIONS
Apply the changes to all applications in process or taken on or after December 1, 2002 when determining eligibility for December 2002 or later. Do not apply this policy to months prior to December 2002.
VII. IMPLEMENTATION OF POLICY CHANGES FOR INCOME-PRODUCING PROPERTY AND FOR PROPERTY PRODUCING GOODS AND SERVICES FOR HOME CONSUMPTION FOR ONGOING CASES
A. State-Wide Recipient Notification
1. On November 6, 2002, the Division of Medical Assistance sent a notice to all Medically Needy MAABD recipients advising them of these changes in policy.
The notice instructs recipients with income-producing property to contact their Medicaid worker no later than December 10, which is 10 calendar days following the effective date of the change in policy. A copy of this notice is attached.
A register of individuals who were sent the notices is available on NCXPTR. It is named DHREJ MN ABD REV INC PROD PRPTY. It contains an alphabetical listing of recipients, by county, with the EIS case number and address. The report indicates recipients in long-term care or receiving services under CAP.
2. If a notice is returned to you by the Post Office,
B. County Review of Ongoing Cases
1. Immediately begin to review all Medically Needy adult Medicaid case records shown on the report in NCXPTR (See A.1. above.) to determine which Medicaid recipients have excluded income-producing property.
a. Review long-term care and CAP cases first.
b. Complete the procedures in VII.C. – F. for all cases by January 15, 2003.
2. No action is needed on cases that have no income-producing property.
3. Document in the case record (recommend using the DMA-5030, Reserve History Sheet) that the review has been done.
C. Recipient or Financially Responsible Person Has Non-Business Income-Producing Property or Property Used to Produce Goods and Services for Home Consumption.
1. Exclude $6,000 of equity in property used to produce goods and services for home consumption. This property does not have to produce income for $6,000 of its equity to be excluded. Count the equity over $6,000 as a resource.
2. If the recipient or a financially responsible person has non-business income-producing property, determine the equity value to count in reserve following policy in MA-2230, Financial Resources, XI. and the Income-producing Property Guide, MA-2230, figure 8. Following is a summary of this process:
a. Determine the equity value of the income-producing property based on the current market value (tax value).
b. Subtract $6,000 from the equity based on the current market value (tax value).
(1) If the equity over $6,000 combined with other countable resources exceeds the resource limit, do not determine how much income the property produces. The equity value over $6,000 makes the recipient ineligible. Go to VII.D.
(2) If the equity over $6,000, combined with other countable resources does not exceed the resource limit, determine if the property produces a net annual income of 6% of its equity. Go to VII.C.2.c.
c. Determine the equity value of the property based on its current market value (CMV), unless the property has a present use value. If the property has been assigned a present use value the present use value to determine the equity. Multiply this equity by .06 to determine the 6% net annual income the property must produce.
d. Determine the net annual income produced by the property.
e. Compare 6% of the equity, determined in c., above, to the net annual income produced.
(1) If the net annual income is at least 6% of the property’s equity, exclude $6,000 in equity of the property. Count equity over $6,000 as a resource.
(2) If the net annual income is less than 6% of the property’s equity, count all the equity as a resource.
3. Add the countable value of the property as determined in VII.C.1. & 2.e. to the other countable resources.
a. If the total countable value of non-business income-producing property and other countable resources does not exceed the resource limit, the recipient meets the resource requirement. No further action is needed.
b. If the total countable value of non-business income-producing property and other countable resources exceeds the resource limit, go to VII.D.
D. Recipient Has Excess Resources
1. Notify the recipient and his representative, if he has a representative, via the DMA-5097 or DMA-5097S that he has excess resources due to equity in income-producing property or property used to produce goods and services for the home. Advise the recipient and his representative, if he has a representative, of his options for reducing his resources.
a. He may transfer the property to individuals listed in MA-2240, Transfer of Resources, VI. or to a trust for persons listed in MA-2240, VII.
b. He may rebut the value of the property by obtaining a statement of a lesser value from a knowledgeable source. See MA-2230, Financial Resources, II.G.
c. If the property is his former homesite (regardless of where he lives):
(1) He may state his intent to return home, according to MA-2230, VII.A.2., effective December 1, 2002.
(2) Check to see if a dependent relative is residing in the home, as described in MA-2230, VII.A.1.c.(2)., effective December 1, 2002.
Include a copy of the Statement to Return Home (MA-2230, fig. 12) and the Statement of Spouse or Dependent Relative in the Home (MA-2230, fig. 13) with the DMA-5097.
If the representative’s address is not the address to which the notice described in VII.A., was sent, include a copy of the recipient notice (attached to this change notice) with the DMA-5097.
d. He may sell the property even if it his former homesite, and use the proceeds to meet his expenses until he reduces resources to the resource limit. If the recipient intends to sell his property the property may be excluded up to 6 months to allow time for the sale.
2. Allow the recipient 12 calendar days to provide documentation that he:
a. Has reduced his countable resources,
b. Intends to return home,
c. Has a dependent relative who is living in the home, or
d. Intends to sell the property.
3. If at the end of the 12 calendar day period the recipient has not provided proof of one of the items in D.2., above, send a timely notice proposing termination for excess resources.
4. If the recipient states his intent to sell, follow instructions in VII.E.
5. When the recipient is in a nursing facility, notify his responsible relative, guardian, or power of attorney following instructions in 1. and 2., above. Refer recipients with no responsible relative, guardian, or power of attorney to the Services Unit in the county dss for assistance in disposing of the property.
E. Exclusion of Non-Business Income-Producing Property While the Recipient Attempts to Sell
If the recipient states his intent to sell the property, exclude the property up to six months following the month he states his intent to sell. If he states his intent to sell in December, the sixth month is June.
If an alternative basis for excluding a former homesite is verified, e.g. a dependent relative is in the home, immediately notify the recipient that sale of the property is no longer required, and exclude the property.
1. Allow him 30 calendar days from the date he states his intent to sell the property to provide proof of attempt to sell the resource.
Acceptable proof of attempt to sell the resource is one of the following:
a. Listing the property with an agent. The recipient must provide a copy of the contract.
b. Regular advertisement (at least weekly) in a local newspaper that is published at least weekly. The recipient must provide either:
(1) A copy of the contract with the paper to run the ad at least once a week. (If the contract has an expiration date prior to the end of the six-month period, flag the case to review at the expiration date to see if a new contract has been made or another acceptable attempt to sell has begun.)
(2) At least every other week, a dated copy of the advertisement.
c. Regular advertisements (at least weekly) in other media. The recipient must provide proof from the media outlet, e.g. a copy of a contract or receipt documenting the purchase of advertising space or time.
d. If the recipient has entered into negotiations with a potential buyer, the written statement of the potential buyer.
e. Other documentation that in the county’s opinion establishes the recipient’s attempt to sell the property.
Posting a “for sale” sign on the property is not acceptable proof unless it is coupled with one of the items in VII.E.1.a. – e.
2. If acceptable proof of the attempt to sell is not received within 30 calendar days, send timely notice of termination for excess resources.
3. If acceptable proof of the attempt to sell is received prior to the end of the timely notice period, exclude the property until it is sold or the end of the 6-month period, whichever is earlier, unless it becomes excludable on another basis within the six-month period.
Notify the recipient via the DMA-5097 to notify the agency immediately when property is sold.
Enter a Special Review Code “M.” Enter a review date of the sixth month. The message “Review for sale of property” will appear on the case management report for the sixth month.
4. At the beginning of the sixth month, contact the recipient to verify whether he has sold the property.
a. If he has sold the property, follow instructions in VII.F.
b. If he has not sold the property, determine if he has good cause for not selling the property.
Good cause may be one of the following:
(1) The recipient has a signed contract to sell the property with a closing date after the end of the 6-month period.
Continue to exclude the property through the closing. After closing, follow procedures in VII.F.
(2) The recipient becomes allegedly incompetent and there is no one with legal authority to act for him. Follow policy for excluding resources owned by persons alleged to be incompetent in MA-2230, Financial Resources, VI.
5. If the recipient provides proof of sale of the property prior to the last day of the sixth month, follow instructions in VII.F.
6. If the recipient does not provide proof of the sale of the property or of good cause until after the Medicaid termination becomes effective, do not reopen the case. (This does not meet the termination reasons for which an administrative reopen is allowed, including failure to cooperate.) He must reapply.
F. Recipient Sells Property
1. When the recipient sells the property, determine:
a. The amount he received from the sale,
b. The payoff amount for any outstanding lien, provided he paid the lien, and
c. The expenses he incurred in selling the resource. This could be the cost of advertising, agent’s commission, attorney’s fees, etc.
1. If the failure to identify the case in the review is county error (ownership of non-business income-producing producing property was known to the agency), when the error is discovered, follow instructions in VIII.C. – F., including allowing 6 months to sell the property.
2. If failure to identify the case was because the ownership of the property was not known to the agency, follow procedures outlined below.
a. If a recipient alleges that he never received the letter notifying him of these changes, review the register of notices in NCXPTR. (See VII.A.) If he does not appear on the report for your county, do a state-wide search of the report for the recipient’s name.
(1) If his name is not on the register, he was not notified. Follow the implementation instructions in VII.C. – F., including allowing 6 months to sell the property. The policy in 3. below does not apply.
(2) If his name is on the register, compare the address on the register to the recipient’s stated address on December 1, 2002.
(a) If the addresses are different and the notice was not returned to the county department of social services, assume he was not notified. Follow the implementation instructions in VII.C. - F., including allowing 6 months to sell the property. The policy in 3. below does not apply.
(b) If the addresses are the same and the notice was not returned to the county department of social services, assume that the recipient received the notice of the policy change and failed to report the property. Follow the instructions in 3. below.
3. If the recipient received the letter and did not respond, and the county did not know of the property:
a. Verify the countable value of the resource following policy in MA-2230, Financial Resources, effective December 1, 2002.
b, If the value results in excess resources, notify the recipient via the DMA-5097 of his excess resources and his right to rebut the value of these resources or reduce countable resources.
c. If after 12 calendar days, he has not provided proof rebutting the value or proof of reducing resources, send timely notice proposing termination.
d. Do not allow the recipient the 6-month exclusion to allow time to sell the resource, unless there was county error in failing to identify the case.
e. If the recipient failed to report timely the resource as instructed and if the value of the resource would have made him ineligible, there is a recipient responsible overpayment. Refer the case to the Program Integrity Unit.
VIII. Report impact of implementation of changes in non-business income-producing property and property used to provide goods and services for Home consumption
We want to know the impact on existing cases of excluding no more than $6,000 equity in non-business income-producing property and property used to provide goods and services for home consumption. No later than July 1, 2003, please report to us the following:
A. The total number of cases terminated as a result of the review of existing cases described in VII.
1. The number terminated for excess resources.
2. The number terminated for transfer of resources.
3. The number terminated for inability to locate.
4. The number terminated for failure to provide information.
B. As of June 30, 2003, the number being excluded while attempting to sell.
XI. MAINTENANCE OF MANUAL INSTRUCTIONS:
A. MA-500, Classification
B. MA-2120, Medically Needy Regulations
C. MA-2220, State Residence
D. MA-2230, Financial Resources
Insert attached MA-2230 (entire section).
Remove MA-2230, fig. 8A, Rental Property Guide, and fig. 8B, Rental/6% Worksheet.
Insert attached MA-2230, fig. 8, Income-Producing Property Worksheet.
Remove MA-2230, fig. 9, Definitions Related to Real Property.
Insert attached MA-2230, fig. 9, Definitions Related to Real Property.
Insert attached MA-2230, fig. 12, Statement of Intent to Return Home.
Insert attached MA-2230, fig. 13, Statement of Spouse or Dependent Relative in the Home.
E. MA-2240, Transfer of Resources
F. MA-2270, Long Term Care Need and Budgeting
Remove MA-2270, pages 11 – 12.
Insert attached MA-2270, pages 11 – 12 (V.D. – VI.A.8.b.).
If you have any questions, please contact your Medicaid Program Representative.
[This material was researched and written by Andy Wilson, Supervisor, Medicaid Eligibility Policy Unit.]
For questions or clarification on any of the policy contained in these manuals, please contact your local county office.