Excluded Assets 510-05-70-30

(Revised 10/1/13 ML #3390)

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IM 5206

 

 

(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. The home occupied by the Medicaid unit, including trailer homes being used as living quarters.

The home occupied by the Medicaid unit includes the land on which it is located, provided that the acreage does not exceed one hundred sixty contiguous acres if rural or two acres if located within the established boundaries of a city.

The home is considered occupied by the Medicaid unit when it is the home the applicant, or the applicant's spouse or minor or disabled child is living in or, if temporarily absent from, possesses with an intention to return and the capability of returning within a reasonable length of time. Property is not occupied if the right to occupy has been given up through a rental or lease agreement, whether or not that rental or lease agreement is written. Property is not occupied by an individual in long-term care or the state hospital, with no spouse, or son or daughter who is under age twenty-one, or blind or disabled (any age), at home, unless a physician has certified that the individual is likely to return home within six months. (See 510-05-70-27 for home equity limit for excluded home during six-month period and for single HCBS applicants and recipients.)

When determining whether an individual is likely to return home within 6 months, the physician’s statement must include the date admitted to the facility, the date of the statement, wording showing that the individual is reasonably expected to return home within the 6 months, and it must be signed by the physician.  Statement language that indicates that an individual “may” return home, or “wants to” return home, is not sufficient. Following are examples of acceptable and non-acceptable physician statements regarding an individual’s stay in a long-term care facility.

 

Example:  Prepared within 30 days of admittance to facility.

(Recipient Name) entered the (Facility Name) on (Admit date).  She is reasonably expected to return home within 6 months.

(Signed by Physician)

This statement is acceptable as it includes all of the required information.

 

Example:  Prepared at time individual was admitted to facility.

(Date Written)

(Recipient Name) was admitted to the (Facility Name) on (Admit Date).  Anticipate that she may be able to return home within 6 months.

(Signed by Physician)

This statement is not acceptable.  “May” is indefinite.  It would be acceptable if it said she was expected (or likely) to return home within 6 months.

 

Example:

(Date Written)

(Recipient Name) is anticipated to return home in less than 6 months.  Patient will receive physical therapy for strengthening and to recover from pneumonia.

(Signed by Physician)

 

This statement is not acceptable as there is no admit date so the total length of stay cannot be determined.  

 

2. Personal effects, wearing apparel, household goods, and furniture.

 

3. One motor vehicle, if the primary use of the vehicle is to serve the needs of members of the Medicaid unit. If the vehicle is used primarily by someone who is not in the Medicaid unit, it does not meet this exclusion.

 

4. Indian trust or restricted lands.

 

5. Indian per capita funds and judgment funds awarded by either the Indian claims commission or the court of claims after October 19, 1973, interest and investment income accrued on such Indian per capita or judgment funds while held in trust, and purchases made using interest or investment income accrued on such funds while held in trust. The funds must be identifiable and distinguishable from other funds. Commingling of per capita funds, judgment funds, and interest and investment income earned on those funds, with other funds, results in loss of the exclusion.

 

The Bureau of Indian Affairs should be consulted, if necessary, to determine if the payment is the result of an award by either the Indian Claims Commission or the Court of Claims.

 

6. Property that is essential to earning a livelihood. Property that 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 unit's 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. Except for property enrolled in the Conservation Reserve Program (CRP), other property is not essential to earning a livelihood if the Medicaid unit is merely receiving rental or lease income.

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 year's 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.
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.

 

7. Property that is not saleable without working an undue hardship. Property that 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. If a reasonable offer has been received on the property, or the property has sold prior to eligibility determination, the property cannot be determined unsalable.
2. Good faith efforts to sell, other than for an annuity, must be repeated at least annually.
3. When making a good faith effort to sell real property or a mobile home, wait to determine that it is non-saleable until the third month after the month in which the good faith effort began. This provides a reasonable amount of time for offers to be received without loss of potential months of eligibility for an applicant. If the property is determined to be non-saleable without working an undue hardship, the property must remain continuously for sale, and any offers received must be reported. The three calendar months must include a good faith effort to sell through the regular market for the three calendar months. For purposes of this provision, an offer to the regular market for real estate is made by listing the property with a professional real estate agent when the property is located in an area serviced by a professional real estate agent.
4. When making a good faith effort to sell property other than real property, a mobile home, or an annuity, wait to determine eligibility until at least 30 days after the good faith effort has been made to determine if any offers are received. If the property is determined to be non-saleable without working an undue hardship, the property must remain continuously for sale, and any offers received must be reported.
5. When making a good faith effort to sell an annuity, there is a specific market, known as the factors market, to which the good faith effort must be made.  Eligibility may be determined after the good faith effort has been made and responses received from the factors that were contacted.  
6. 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.
7. 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.
8. 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 ½ interest in W½  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 ½ interest in W½  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 ½ interest is offered for $50,000, payable upon sale. Call (701) 555-9999, or write Chaos Realty, Box 1, Tampa, ND 58990.

9. 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 review, 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.

 

8. Any pre-need funeral service contracts, prepayments or deposits, regardless of ownership, which total $6000 or less, which are designated by an applicant or recipient for the applicant's or recipient's burial. An applicant or recipient designates a prepayment or deposit for his or her burial by providing funds that are used for that purpose. Only those prepayments paid by members of the Medicaid unit are considered as burial prepayments.

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. A burial plot is defined to include a grave site, crypt, or mausoleum. (Effective July 1, 1996.)

Markers, monuments, and vaults that have been pre-purchased separately from a pre-need funeral service contract are not considered part of a burial plot and are not considered as prepayments or deposits for burial. These items are countable assets for Medicaid, based on their current market value. A marker or monument that has already been engraved with some of the individual’s information will likely have a reduced value.  It may still have a market value, however, the value will be reduced by the cost to resurface the marker or monument. When a double marker has been purchased and one spouse has already passed away, it can be determined that there is no resale value for the marker.  

1. A purchaser of a pre-need funeral service may make a certain amount of the pre-need funds irrevocable. The irrevocable amount may not exceed the amount of the burial asset exclusion at the time the contract is entered, plus the portion of the $3,000 asset limitation the purchaser designates for funeral expenses. The value of an irrevocable burial arrangement must be considered towards the burial exclusion. Amounts that may be designated as irrevocable vary from state to state. When an individual moves to North Dakota from another state, North Dakota Medicaid will honor the other state’s limits on these burials.

 

Example: In 2013, the burial asset exclusion is $6,000 and, while it is not wise to do so, the individual may put the remaining $3,000 of their asset limit into burial funds. If the individual puts $9,000 into an irrevocable burial fund, the $9,000 is applied to the $6,000 burial exclusion and the $3000 that exceeds the burial exclusion is a countable asset. This individual may not have one cent in additional assets and be eligible for Medicaid.

 

Example: If the individual in the above example put $15,000 in an irrevocable burial fund, and requires Medicaid coverage for nursing care services within 5 years of doing so, amounts exceeding the $9,000 maximum would be a disqualifying transfer because the individual is taking available assets and making them unavailable.

 

Example: John Smith purchased a prepaid burial in the amount of $7500 with his local funeral home. The funeral home is the owner of the burial fund, and it is irrevocable. John has also designated $2500 in a CD for his burial. Because irrevocable burial funds must first be applied to the $6000 burial exclusion, $6000 is not a countable asset, but the excess $1,500 is. The $2500 CD designated for burial is also a countable asset which makes John exceed the asset test by $1000 and be ineligible for Medicaid.

 

Example: Jim Smith has an irrevocable burial account in the amount of $4,000. He also wishes to designate his savings account of $5,500.

Because the irrevocable burial MUST be applied towards the $6000 burial exclusion, only $2,000 of the savings account may be excluded. The remaining $3,500 in the savings, can still be designated for burial, but is a countable asset. If this individual is single or has other assets, he will fail the asset test.

 

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 $6000 burial exclusion is a countable asset if the fund, insurance, or other property has a cash value, fair market value, or surrender value.

Example:  A Medicaid recipient with an insurance policy that is designated for burial previously transferred ownership of the policy to his daughter. The policy has a current cost basis of $6400 and cash surrender value (CSV) of $7500. The insurance policy is considered to be transferred in trust to meet the burial needs of the recipient. $6000 is excluded under the burial exclusion and the additional $400 in cost basis is a countable asset to the recipient ($6400 - $6000 = $400). The extra $1100 in cash surrender value is earnings and is excluded ($7500 CSV - $6400 cost basis = $1100 earnings).

3. Normally a life insurance policy is a countable asset valued at its cash surrender value, however, when a whole life insurance policy or an annuity is designated for burial, the amount conisdered designated for burial is the lesser of the cost basis or the face value of the insurance policy. The prepayments on the life insurance policy or annuity are the total premiums that have been paid less amounts paid for any riders and less any withdrawals of premiums paid. They are identified as the "remaining cost basis." Only those prepayments (remaining cost basis) paid by members of the Medicaid unit are considered as burial prepayments. Premium payments made by insurance dividends or disability insurance plans do not increase the remaining cost basis. Loans on life insurance affect the net cash surrender value only and do not affect remaining cost basis.

If the life insurance policy or annuity has a cash surrender value that exceeds the remaining cost basis, the excess cash surrender value is considered accrued earnings and are excluded. The following are two examples showing how remaining 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 remaining cost basis is $2400 and the cash surrender value is $2900. The $2400 remaining 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 $7000. The annuity remaining cost basis is $6200 and the surrender value is $6500. Only $6000 of the remaining 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.

 

Example 3: An applicant has a life insurance policy with a face value of $6,000. The cost basis of the policy is $7,000 and the cash surrender value is $7,500. Because the $6,000 face value is less than the cost basis, if designated for burial, the prepaid burial would be $6,000. The difference between the cash surrender value and the face value is considered accrued earnings and is excluded.

In these three examples, if the cash surrender value had been less than the remaining 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 remaining 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 remaining 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 remaining 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's 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's 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 is 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 $5000 designated for burial has grown to $8000. The owner withdraws $1000 before application for Medicaid. All $7000 is now considered to be the principal amount designated.

$6000 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 principal 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.

 

9. 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.

 

10. 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 a disaster assistance organization is also excluded. These assets must be identifiable and not commingled with other assets.

 

11. Payments, interest earned on the payments, and in-kind items received for the repair or replacement of lost, damaged, or stolen 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.

 

12. For nine months beginning after 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.

 

13. 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.

 

14. Stock in regional or village corporations held by natives of Alaska pursuant to the Alaska Native Claims Settlement Act.

 

15. For nine months beginning after the month of receipt, any educational scholarship, grant, or award; and any fellowship or gift (or portion of a gift) used to pay the cost of tuition and fees at any educational institution. This asset must be identifiable and not commingled with other assets.

 

16. For twelve months beginning after the month of receipt, any federal income tax refund, any earned income tax credit refund or any advance payments of earned income tax credit. State income tax refunds are excluded for nine months beginning the month after the month of receipt. This asset must be identifiable and not commingled with other assets.

 

17. 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.

 

18. The value of a life estate.

 

19. Allowances paid to children of Vietnam veterans who are born with spina bifida, or to children of women Vietnam veterans who are born with certain covered birth defects.  This asset must be identifiable and not commingled with other assets.

 

20. The value of mineral acres.

 

21. An annuity that is excluded per annuity sections 05-70-45-20, 05-70-45-25, or 05-70-45-30.

 

22. Funds held in employer sponsored retirement plans that meet the qualified retirement criteria established by the Internal Revenue Service (IRS); but not private retirement plans. An Employer sponsored retirement plan is a benefit plan that an employer offers for the benefit of his/her employees at no or a relatively low cost to the employees. These include:

• SEP-IRA (Simplified employee pension) plans
• Employer or employee association retirement accounts
• Employer simple retirement accounts
• 401(k) retirement plans (which include independent (sole proprietorship) plans)
• 403(b) retirement plans
• 457 retirement plans

 

23. Property connected to the political relationship between Indian Tribes and the Federal government:

1. Any Indian trust or restricted land, or any other property under the supervision of the Secretary of the Interior located on a federally-recognized Indian reservation, including any federally-recognized Indian Tribe’s, pueblo, or colony, and including Indian allotments on or near a reservation as designated and approved by the Bureau of Indian Affairs of the Department of the Interior.  This exclusion includes Individual Indian Monies (IIM) accounts, which are under the supervision of the Secretary of the Interior.
2. Property located within the most recent boundaries of a prior Federal reservation, including former reservations in Oklahoma and Alaska Native regions established by the Alaska Native Claims Settlement Act.  The Tribe, through the Department of the Interior, can provide verification to identify such property.
3. Ownership interests in rents, leases, royalties, or usage rights related to natural resources (including extraction of natural resources or harvesting of timber, other plants and plant products, animals, fish, and shellfish) resulting from the exercise of federally-protected rights. Monies received from the lease or sale of these natural resources remain excluded while in an IIM account, however, if taken out of the account, they are considered as a countable asset.
4. Property with unique Indian significance such as ownership interests in or usage rights to items not covered by paragraphs (a) through (c) that have unique religious, spiritual, traditional, or cultural significance or rights that support subsistence or a traditional lifestyle according to applicable Tribal law or custom.

 

While the above identified assets are excluded in determining eligibility, if the assets are converted to a non-excluded asset, they become countable.  For instance, money in an IIM account is excluded, however, once the money is removed from the IIM account it becomes a countable asset. As a general rule, workers may not request IIM information.