Excluded Assets 510-05-70-30

(Revised 4/1/04 ML #2912)

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(N.D.A.C. Section 75-02-02.1-28)

 

The following types of property interests will be excluded in determining if the available assets of an applicant or recipient exceed asset limits:

1. Property which is essential to earning a livelihood. Property which is essential to earning a livelihood means property that a member of a Medicaid unit owns, and which the Medicaid unit is actively engaged in using to earn income, and where the total benefit of such income is derived for the Medicaid units needs. A member of a Medicaid unit is actively engaged in using the property if a member of the unit contributes significant current personal labor in using the property for income-producing purposes. The payment of social security taxes on the income from such current personal labor is an indicator of the active use of the property.

1. Operating funds in self-employment business accounts may be excluded as follows:

1. For self-employment in which income is received other than monthly, the current years self-employment income, and the previous years self-employment income that has been prorated and not yet counted as income; and
2. For all other self-employment, two times the monthly gross earnings.

2. Grain or other produce retained for seed or feed is property essential to earning a livelihood. All other grain and produce is property essential to earning a livelihood in the year it is harvested. It is not excluded as property essential to earning a livelihood in the following year. For purposes of this provision, the year in which grain or other produce is harvested is the twelve-month period used by the farmer for tax purposes. For example, if a farmer’s tax year is March through February, grain and other produce harvested beginning in March of each year is excluded as property essential to earning a livelihood until March of the following year.
3. Livestock held for business purposes is property essential to earning a livelihood if a member of the Medicaid unit is actively engaged in raising the livestock to produce income. Livestock held for business purposes is not excluded under this provision if no one in the Medicaid unit is actively engaged in raising the livestock. The value of such livestock is a countable asset. Livestock raised only for personal use or pleasure is not considered business property and is excluded as an asset.
4. Property enrolled in the Conservation Reserve Program (CRP) is considered property essential to earning a livelihood. Any other property from which the Medicaid unit is merely receiving rental or lease income is not essential to earning a livelihood.
5. Such property may be excluded only during months in which a member of the Medicaid unit is actively engaged in using the asset to earn a livelihood or if not in current use, the property must have been in such use and there must be a reasonable expectation that the use will resume:

1. Within twelve months of the last use; or
2. If the nonuse is due to the disabling condition of a member of the Medicaid unit, within twenty-four months of the last use.

This nonuse exception allows the assets to be excluded, but does not affect income.

2. Property which is not saleable without working an undue hardship. Property which is not saleable without working an undue hardship means property which the owner has made a good faith effort to sell which has produced no buyer willing to pay an amount equaling or exceeding seventy-five percent of the property's fair market value, and which is continuously for sale. Property may not be included within this definition at any time earlier than the first day of the first month in which a good faith effort to sell is begun.

Refer to 05-05 for the definition of "good faith effort to sell" to determine the method and order in which an attempt to sell property must be made.

1. Persons seeking to establish retroactive eligibility must demonstrate that good faith efforts to sell were begun and continued in each of the months for which retroactive eligibility is sought.
2. Eligibility cannot be determined until the third month after the month in which the good faith effort began. Good faith efforts to sell must be repeated at least annually.
3. If a Medicaid unit claims that property should be excluded because it is not saleable without working an undue hardship, verification of the way in which the fair market value was established, the established value, and the good faith effort to sell must be made a part of the file. If the efforts to sell have produced no offers, the written statement of the applicant, recipient, or sales agent, stating that fact, must be made a part of the file. The county agency reviewing the efforts to sell should be alert for actions which reflect an applicant's or recipient's effort to comply with the technical requirements for exclusion without making a genuine and serious attempt to sell the excess asset.
4. In order to demonstrate that property is not saleable without working an undue hardship, an applicant or recipient must engage in sales efforts which are reasonably calculated to produce a sale. An applicant or recipient is not obliged to make a sale if a reasonable offer is received, but the property will not thereafter be excluded.
5. When offering property for sale by public advertisements, those containing substantially the following content are acceptable as a means of demonstrating a good faith effort to sell:

Example 1: Offered at 75% of value.

For Sale: An undivided 2 interest in W1/2 of Sec. 65, Township 130, Range 102, East of the 5th P.M., located 2 miles west of the junction of U.S. Hwy. 90 and Iron County Rd. 4. This land has a true and full value of $100,000. The minimum offer which will be considered for the undivided ½ interest is $37,500, payable upon sale. Call (701) 555-9999, or write Chaos Realty, Box 1, Tampa, ND 58990.

Example 2: Offered at 100% of value.

For Sale: An undivided 2 interest in W1/2 of Sec. 65, Township 130, Range 102, East of the 5th P.M., located 2 miles west of the junction of U.S. Hwy. 90 and Iron County Rd. 4. This land has a true and full value of $100,000. This undivided 2 interest is offered for $50,000, payable upon sale. Call (701) 555-9999, or write Chaos Realty, Box 1, Tampa, ND 58990.

6. It is expected that a "good faith effort to sell" will normally generate a sale. If no offer for at least 75% of the established fair market value has been received on the property as of the annual redetermination, the county agency must review the previous efforts and determine if they truly reflect a good faith effort to sell, and may require a re-evaluation of the property value, or other appropriate action likely to produce a sale.

3. Any prepayments or deposits, regardless of ownership, which total $3000 or less, which are designated by an applicant or recipient for their burial. An applicant or  recipient designates a prepayment or deposit for his or her burial by providing funds that are used for that purpose.

Earnings accrued on the total amount of the designated burial fund are excluded.

A burial plot for each family member (eligible or ineligible) will also be excluded. (Effective July 1, 1996.)

1. The value of an irrevocable burial arrangement must be considered towards the burial exclusion.
2. Any funds, insurance, or other property given to another person or entity in contemplation that its value will be used to meet the burial needs of the applicant or recipient must be considered towards the burial exclusion.  This includes any funds set aside in a separate account or used to purchase insurance or any other burial product.  Any amount in excess of the $3000 burial exclusion is a countable asset if the fund, insurance, or other property has a cash value, fair market value, or surrender value.

Example:   An individual with no burial plan living in a nursing facility gives his daughter $3945 per month for five months, and asks that the money be used for his funeral.  His daughter purchases a $20,000 single premium life insurance policy that designates a funeral home as beneficiary, to the extent necessary to pay for the individual's funeral and burial expenses, with the individual's children named as contingent beneficiaries. The individual applies for Medicaid in the fifth month. The insurance policy has a surrender value of $17,500 in the month of application.  The policy is designated for the individual's burial. $3000 of the value of the policy is excluded. The remaining $14,500 of the value of the policy is an asset held in trust, and is available to the extent provided in 05-70-50 (Trusts). To the extent that the $19,725 paid to the daughter is neither excluded nor available under 05-70-50, a disqualifying transfer has occurred.  

3. When a whole life insurance policy or an annuity are designated for burial, the prepayments on the life insurance policy or annuity are the premiums that have been paid. They are identified as the "cost basis." Premium payments made by insurance dividends or a disability insurance plan do not increase the cost basis.

If the life insurance policy or annuity has a cash surrender value that exceeds the cost basis, the excess cash surrender value is considered accrued earnings and are excluded. The following are two examples showing how cost basis and cash surrender value are applied to the burial provision:

Example 1: An applicant has a life insurance policy with a face value of $5000. The policy cost basis is $2400 and the cash surrender value is $2900. The $2400 cost basis is considered to be the designated burial. The excess cash surrender value of $500 is considered accrued earnings and is excluded.

Example 2: An applicant has an annuity with a face value of $5000. The annuity cost basis is $3200 and the surrender value is $3500. Only $3000 of the cost basis is excluded for burial. The remaining $200 is counted toward the asset limit. The excess surrender value of $300 is considered accrued earnings and is excluded.

In these two examples, if the cash surrender value had been less than the cost basis, there would be no earnings exclusion.

Withdrawals from life insurance policies that reduce the face value of the life insurance also reduce the cost basis and cash surrender value of the policy. Some applicants may make withdrawals to reduce the value of the insurance policy in order to qualify for Medicaid. Such withdrawals do not affect the designation of the insurance for burial.

Example: An applicant has a life insurance policy with a cost basis of $7500 and a cash surrender value of $9000. The applicant intended the policy for his burial expenses. When the applicant applied for Medicaid, he withdrew (not borrowed) $3000 from the policy, and spent it down, so he could be asset eligible. By withdrawing $3000, the policy’s face value was reduced, the cost basis was reduced to $4500, and the cash surrender value was reduced to $6000. The applicant’s current designated burial is $4500 with $1500 in earnings.

4. A fund is considered to be designated for burial if identified as such on the account or by the applicant or recipient's statement. A designated account can have more than one owner as long as the account is designated for only one person’s burial and, a burial account does not have to be in the applicant or recipient's name. Life insurance that is designated for burial, however, must cover the life of the person for whom it is designated.
5. The burial fund must be identifiable and cannot be commingled with other funds. Checking accounts are considered to be commingled.
6. An applicant or recipient may designate all or a portion of the $3000 asset limitation for funeral purposes. These additional assets designated for burials are not excluded for purposes of this provision, but any earnings accrued to these additional funds are excluded.
7. A burial fund, which is established at the time of application, can apply retroactively to the three month prior period, and the period in which the application is pending, if the value of all assets are within the Medicaid limits for each of the prior months. Future earnings on the newly established burial fund will be excluded.
8. Prepayments or deposits cannot be designated for an individual’s burial after the individual’s death.
9. At the time of application the value of a designated burial fund is determined by identifying the value of the prepayments which are subject to the burial exclusion and asset limit amounts.

Designated burial funds, other than life insurance, which have been decreased prior to application for Medicaid will be considered redesignated as of the date of last withdrawal. The balance at that point will be considered the prepayment amount and earnings from that date forward will be disregarded.

For example: A savings account of $3000 designated for burial has grown to $5000. The owner withdraws $1000 before application for Medicaid. All $4000 is now considered to be the principle amount designated.

$3000 would be excluded for burial and the remaining $1000 would be applied to the $3000 asset limit.

Reductions made in a designated burial fund, other than life insurance, after application for Medicaid will first reduce the amount of earnings.

For example: A savings account of $3000 designated for burial has grown to $5000. The owner withdraws $1000 after application for Medicaid. Of the remaining $4000, the designated burial remains at $3000, with $1000 considered as excluded interest.

10. Burial funds can be moved to different accounts or financial institutions without being considered redesignated if the applicant or recipient can demonstrate the amount that was principle from that which was earnings, and these amounts are consistent in the new account or financial institution.
11. Information regarding the burial fund of a deceased recipient must be released to funeral home personnel upon request.

4. Home replacement funds, derived from the sale of an excluded home, and if intended for the purchase of another excluded home, until the last day of the third month following the month in which the proceeds from the sale are received. This asset must be identifiable and not commingled with other assets.
5. Unspent assistance and interest earned on unspent assistance, received under the Disaster Relief and Emergency Assistance Act of 1974 or some other federal statute, or because of a presidentially declared major disaster. Comparable assistance received from a state or local government, or from disaster assistance organization is also excluded. These assets must be identifiable and not commingled with other assets.
6. Payments, interest earned on the payments, and in-kind items received for the repair or replacement of lost, damaged, or stolen exempt or excluded assets are excluded for nine months, and can be excluded for an additional twenty-one months if circumstances beyond the person's control prevent the repair or replacement of the lost, damaged, or stolen assets, and keep the person from contracting for such repair or replacement. This asset must be identifiable and not commingled with other assets.
7. For nine months beginning with the month of receipt, unspent assistance received from a fund established by a state to aid victims of crime, to the extent that the applicant or recipient demonstrates that such amount was paid in compensation for expenses incurred or losses suffered as a result of a crime. This asset must be identifiable and not commingled with other assets.
8. Payments from a fund established by a state as compensation for expenses incurred or losses suffered as a result of a crime. This asset must be identifiable and not commingled with other assets.
9. Payments made pursuant to the Confederate Tribes of the Colville Reservation Grand Coulee Dam Settlement Act, Public Law 103-436. This asset must be identifiable and not commingled with other assets.
10. Stock in regional or village corporations held by natives of Alaska pursuant to the Alaska Native Claims Settlement Act.
11. Unspent financial assistance provided for attendance costs to graduate and undergraduate students under programs in title IV of the Higher Education Act or for attendance costs under Bureau of Indian Affairs student assistance programs are excluded for the period of time they are intended to cover. This asset must be identifiable and not commingled with other assets.
12. For the month following the month of receipt, any earned income tax credit refund or any advance payments of earned income tax credit.
13. Assets set aside, by a blind or disabled (but not an aged) SSI recipient, as a part of a plan to achieve self-support (PASS) which has been approved by the Social Security Administration.
14. The value of a life estate.
15. Allowances paid to children of Vietnam veterans who are born with spina bifida, or to children of women Vietman veterans who are born with certain covered birth defects.  This asset must be identifiable and not commingled with other assets.
16. The value of mineral acres
17. Inheritances, other than from a spouse or from a parent who was providing support, until the earlier of:

1. The first day of the month after the month in which the inheritance is received; or
2. The first day of the month beginning at least six months after the person’s death.