Revision 19-2; Effective June 1, 2019
Revision 09-4; Effective December 1, 2009
The following is taken from Division 2, Resources, Subchapter C, Financial Requirements.
(a) The Texas Health and Human Services Commission (HHSC) follows §1613 of the Social Security Act (42 U.S.C. §1382b) and 20 CFR §416.1201 regarding the general treatment of resources.
(b) HHSC follows 20 CFR §416.1207 regarding the determination of resources. Resource determinations are made as of 12:01 a.m. on the first day of the month.
(c) If a person's countable resources exceed the resource limit as of 12:01 a.m. on the first day of the month, the person is not eligible for the entire month. Eligibility may be reestablished no sooner than the first day of the next month.
If a person converts one type of resource to another, the new resource is counted according to the policy governing that type of resource. Cash received from the sale of a resource is counted as a resource, not as income. This includes proceeds from the sale of a natural resource, such as cutting timber from the person's home property and selling it as firewood, except as follows:
(1) If the owner leases the land or resource rights, the income received from the lease is unearned income.
(2) If the sale of the natural resource is part of the person's trade or business, the income received is self-employment income.
A person or a couple meets resources eligibility criteria if the value of all countable resources does not exceed the resource limits in 20 CFR §416.1205.
(1) Individual resource limit. The individual resource limit applies to:
(A) an adult who is single, even if he or she lives with relatives;
(B) a child; and
(C) a person whose spouse lives in a different household.
(2) Couple resource limit. The couple resource limit applies to married adults who live in the same household.
(a) The Texas Health and Human Services Commission (HHSC) follows deeming of countable resources in accordance with 20 CFR §416.1202.
(b) If a parent is a caretaker or a recipient in the Temporary Assistance for Needy Families Program, the parent's resources are not counted when considering deeming to a child.
(c) If a member of a household is temporarily absent as defined in 20 CFR §416.1167, HHSC continues to consider the absent person a member of the household for the purposes of deeming during a temporary absence, in accordance with 20 CFR §416.1167.
The Texas Health and Human Services Commission (HHSC) follows 20 CFR §416.1201(a)(1) when considering whether a person has the right, authority, or power to liquidate a property or the person's share of the property.
If a person is unaware of the ownership of an asset, the asset is not counted as a resource for the period during which the person is unaware of the ownership. The asset is counted as income in the month that the person discovers the ownership. The asset is counted as a resource effective the first of the month after the month of discovery.
(a) An action by a fiduciary agent is the same as an action by the person for whom the fiduciary agent acts.
(1) An asset held by a fiduciary agent for another person is not a countable asset to the fiduciary agent.
(2) An asset held by a fiduciary agent for another person is a countable asset to the person for whom the fiduciary agent acts, unless otherwise excludable.
(b) A person's resources are available if the resources are being managed by a legal guardian, representative payee, power of attorney, or fiduciary agent. If, however, a court denies a guardian or fiduciary agent access to the person's resources, the resources are not considered available to the person.
(1) If a person's guardianship papers do not show that a legal guardian is prohibited access, and if the court has not subsequently ruled a prohibition, the resources are considered available.
(2) A guardian's routine need to petition the court for permission to dispose of a person's resources is not a prohibition.
(3) When the court rules on a petition to dispose of a person's resources, resources are considered available only to the extent to which the court has made the resources available for the person's benefit.
The Texas Health and Human Services Commission follows 20 CFR §416.1210 in determining what resources to exclude, and also excludes:
(1) patrimonial assets that are irrevocably turned over to a religious order following a vow of poverty, which are not considered a transfer of assets;
(2) reparation payments received under Sections 500 - 506 of the Austrian General Social Insurance Act;
(3) payments received under the Netherlands' Act on Benefits for Victims of Persecution 1940 - 1945; and
(4) payments made in the class settlement of the Susan Walker v. Bayer Corporation lawsuit.
(a) In this section:
(1) an employment-related annuity means an annuity that provides a return on prior services, as part of or in a similar manner to a pension or retirement plan; and
(2) a retirement-related annuity means an annuity purchased by or on behalf of an annuitant in an institutional setting.
(b) An employment-related annuity or a retirement-related annuity established before February 8, 2006, is not a countable resource. Income from such an annuity is treated in accordance with 20 CFR §§416.1120 - 416.1124.
(c) An employment-related annuity established or having a transaction on or after February 8, 2006, is not a countable resource. Income from such an annuity is treated in accordance with 20 CFR §§416.1120 - 416.1124.
(d) A retirement-related annuity with a purchase or transaction date on or after February 8, 2006, is not a countable resource, if the annuitant's income eligibility is determined under the special income limit. Income from such an annuity is treated in accordance with 20 CFR §§416.1120 - 416.1124, if the annuity:
(1) is an annuity described in subsection (b) or (q) of §408 of the Internal Revenue Code of 1986; or
(2) is purchased with proceeds from:
(A) an account or trust described in subsection (a), (c), or (p) of §408 of the Internal Revenue Code of 1986;
(B) a simplified employee pension (within the meaning of §408(k) of the Internal Revenue Code of 1986; or
(C) a Roth IRA described in §408A of the Internal Revenue Code of 1986.
(a) This section describes the Texas Health and Human Services Commission's (HHSC's) treatment of nonemployment-related annuities purchased or having a transaction date before February 8, 2006. In this section, a nonemployment-related annuity means a revocable or irrevocable annuity a person may purchase to provide income.
(b) A nonemployment-related annuity is not a countable resource if the annuity:
(1) is irrevocable;
(2) pays out principal in equal monthly installments and pays out interest in either equal monthly installments or in amounts that result in increases of the monthly installments at least annually;
(3) is guaranteed to return within the person's life expectancy at least the person's principal investment plus a reasonable amount of interest (based on prevailing market interest rates at the time of the annuity purchase, as determined by HHSC);
(4) names the state of Texas or HHSC as the residual beneficiary of amounts payable under the annuity contract, not to exceed any Medicaid funds expended on the person during the person's lifetime, except as described in subsection (c) of this section; and
(5) is issued by an insurance company licensed and approved to do business in the state of Texas.
(c) If a person in an institutional setting is married and the spousal impoverishment provisions of §358.413 of this subchapter (relating to Spousal Impoverishment Treatment of Income and Resources) apply, the requirement in subsection (b)(4) of this section does not apply to a nonemployment-related annuity purchased by or for a community spouse.
(d) A nonemployment-related annuity that does not meet the requirements of subsection (b) or (c) of this section is a countable resource.
(1) HHSC applies transfer-of-assets provisions in Division 4 of this subchapter (relating to Transfer of Assets) to an annuity that is a countable resource and does not meet the criterion in subsection (b)(3) of this section. The date of the transfer of assets is the date of the annuity purchase or, if applicable, the date the annuity contract was last amended in exchange for consideration. HHSC determines the amount of the transfer by assessing the difference between the life expectancy of the person and the number of years remaining until the annuity is paid out. The amount payable during that period is the amount of the transfer of assets.
(2) If the annuity is a countable resource and is revocable, HHSC:
(A) counts the amount refundable upon revocation of the annuity as the value of the resource; and
(B) applies transfer-of-assets provisions in Division 4 of this subchapter if the person sells the annuity for less than the amount refundable upon revocation.
(3) If the annuity is a countable resource and is irrevocable, HHSC:
(A) counts fair market value as the value of the resource and presumes fair market value is 80% of the annuity's total remaining payout;
(B) applies transfer-of-assets provisions in Division 4 of this subchapter if the annuity is sold for less than the purchase price minus the amount of principal already paid; and
(C) if the terms of the annuity contract are non-negotiable, applies transfer-of-assets provisions in Division 4 of this subchapter to the total remaining payout.
(e) Income from a nonemployment-related annuity that is not a countable resource under subsection (c) of this section is treated in accordance with 20 CFR §§416.1120 - 416.1124.
(a) This section describes the Texas Health and Human Services Commission's (HHSC's) treatment of nonemployment-related annuities purchased or having a transaction date on or after February 8, 2006. In this section, a nonemployment-related annuity means a revocable or irrevocable annuity a person may purchase to provide income.
(b) A nonemployment-related annuity is not a countable resource if the annuity:
(1) is irrevocable;
(2) is nonassignable;
(3) provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made;
(4) is guaranteed to return within the person's life expectancy at least the person's principal investment (that is, it is actuarially sound, as determined in accordance with actuarial publications of the Office of the Chief Actuary of the United States Department of Health and Human Services); and
(5) names the state of Texas as the remainder beneficiary in the first position for at least the total amount of Medicaid paid on behalf of a person in an institutionalized setting.
(c) If a person in an institutionalized setting is married and the spousal impoverishment provisions of §358.413 of this subchapter (relating to Spousal Impoverishment Treatment of Income and Resources) apply, a nonemployment-related annuity is not a countable resource if the annuity meets the requirements of subsection (b)(1) - (4) of this section and the annuity:
(1) names the state of Texas as the remainder beneficiary in the first position for at least the total amount of Medicaid paid on behalf of the person in an institutional setting; or
(2) names the state of Texas in the second position if the community spouse or a minor or disabled child is named in the first position.
(d) A nonemployment-related annuity that is revocable is a countable resource. For a revocable nonemployment-related annuity, HHSC:
(1) uses fair market value to determine the value of the resource; and
(2) applies transfer-of-assets provisions in Division 4 of this subchapter (relating to Transfer of Assets) based on the amount already paid out of the annuity.
(e) A nonemployment-related annuity that is irrevocable is not a countable resource. For an irrevocable nonemployment-related annuity, HHSC:
(1) applies transfer-of-assets provisions in Division 4 of this subchapter to the purchase price of the annuity; and
(2) for a transaction involving an existing annuity, applies transfer-of-assets provisions to the remaining payout value at the time of the transaction.
(f) Income from an annuity that is not a countable resource is treated in accordance with 20 CFR §§416.1120 - 416.1124.
(a) In this section, the following words have the following meanings, unless the context clearly indicates otherwise.
(1) Testamentary trust--A trust established by will.
(2) Inter vivos trust--A trust established while the person creating the trust is still living.
(b) Resources in a testamentary or inter vivos trust are countable to a person if the person is the trustee and has the legal right to revoke the trust and use the money for the person's own benefit.
(1) If a person does not have access to the trust, then the trust is not counted as a resource.
(2) If a person's access to a trust is restricted (that is, only the trustee (other than the person) or the court may withdraw the principal), then the value of the trust as a resource is not counted, even if:
(A) the person's legal guardian is the trustee;
(B) the trust provides a regular, specified payment to the person; or
(C) the trust provides for discretionary withdrawals by the trustee.
(3) If a trust is not counted as a resource, payments from the trust made to or for the benefit of the person may be counted as income only if the payments would ordinarily be counted as income in accordance with 20 CFR §416.1102.
(a) A Medicaid-qualifying trust (MQT) is a trust that a recipient, the recipient's spouse or guardian, or anyone holding the recipient's power of attorney establishes using the recipient's money. The recipient is the beneficiary of an MQT. A trust meeting this definition that was established between June 1, 1986, and August 10, 1993, is an MQT. A trust meeting this definition that was established before June 1, 1986, is treated as a standard inter vivos trust.
(b) Except as described in §358.338 of this division (relating to Treatment of a Trust Established with Zebley v. Sullivan Settlement Funds), the Texas Health and Human Services Commission (HHSC) counts potential distributions from an MQT as resources available to a person, whether or not distributions are actually made.
(1) The amount available to the person is the maximum amount the trustee could distribute under the terms of the trust.
(2) If distribution is not made, the maximum amount the trustee may distribute under terms of the trust is considered an available resource.
(3) If a trust does not specify an amount for distribution, and if the trustee has access to and use of the principal, then HHSC counts:
(A) the corpus of the trust as a resource; and
(B) payments from the trust to or for the benefit of the person as income only if the payments would ordinarily be counted as income in accordance with 20 CFR §416.1102.
(a) The Texas Health and Human Services Commission excludes a Medicaid-qualifying trust established for a minor child using a lump sum payment received in the settlement of Zebley v. Sullivan from countable resources under undue hardship provisions. Undue hardship exists because the minor child would otherwise be forced to spend the settlement funds on services now covered by Medicaid when the funds will be needed once the minor child reaches majority.
(b) A trust established using Zebley v. Sullivan settlement funds is excluded under undue hardship policy, even when the trust is set up on or after August 11, 1993.
(a) Introduction. The Texas Health and Human Services Commission (HHSC) follows §1917(d) of the Social Security Act (42 U.S.C. §1396p(d)) regarding the treatment of trusts established on or after August 11, 1993, using a person's assets. The trust provisions apply to a person receiving benefits under a Medicaid-funded program for the elderly and people with disabilities (MEPD), whether the person is in an institutional or a noninstitutional setting. However, transfer-of-assets provisions apply only to a person in an institutional setting.
(b) Limited partnerships.
(1) A limited partnership is a "similar legal device" to a trust. In accordance with the definition of a trust in §1917(d)(6) of the Social Security Act (42 U.S.C. §1396p(d)(6)), HHSC treats a limited partnership as a trust and applies the provisions of this section to a limited partnership. The general partners of a limited partnership act as trustee, and the limited partners are the equivalent of beneficiaries of an irrevocable trust. To the extent that the general partners can make each limited partner's ownership interest available to him, that interest is a countable resource and not a transfer of assets. However, a transfer of assets has occurred to the extent that:
(A) the value of the share of ownership purchased by the limited partner is less than the amount the limited partner invested; and
(B) the general partners cannot make the limited partner's share available to the limited partner.
(2) If transfer-of-assets provisions apply, a limited partnership is not considered a trust instrument when determining the look-back period.
(c) Qualified income trust (QIT).
(1) A QIT is an irrevocable trust established for the benefit of a person or the person's spouse, or both, the corpus of which is composed only of the person's or the couple's income (including accumulated income). The trust must include a provision that the State is designated as the residuary beneficiary to receive, at the person's death, funds remaining in the trust equal to the total amount of Medicaid paid on the person's behalf.
(2) Characteristics of a QIT are as follows:
(A) The trust must be irrevocable.
(B) The trust must contain only the person's income. If resources are placed in the trust, it is not a QIT. However, some banks may require nominal deposits to establish a financial account to fund the trust. Nominal amounts of the person's resources, or another party's funds, may be used to establish the account without invalidating the trust or being counted as gift income to the person. Once the trust account is established, however, only the person's income should be directed to the trust account.
(C) The person's income does not have to be directly deposited into the trust. However, the income for which the trust is established must be deposited into the trust during the month it is received by the person.
(D) A QIT may be established with any or all sources of a person's income, but the income source must be identified and the entire income source must be deposited. For example, the trust may be established for a person's private pension income, but not the person's Social Security income. If a trust is established with only half of the pension income, it is not a QIT.
(3) A QIT is not counted as a resource.
(4) Income directed to a QIT is not counted when testing eligibility for services in an institutional setting.
(A) Income must be directed to the trust account during the calendar month in which it is received. Any source of nonexempt or nonexcludable income that is not directed to the QIT account during the calendar month of receipt is countable income for that month. If countable income exceeds the income limit, the person is income-ineligible for the month. An applicant may not be certified for any calendar month in which the applicant is income-ineligible. For a recipient, HHSC requests restitution in the amount of the provider payment for any calendar month in which the person is income-ineligible.
(B) Income directed to the trust is counted in determining eligibility for a person in a noninstitutional setting and for a person applying for or receiving benefits from a Medicare Savings Program as described in Chapter 359 of this title (relating to Medicare Savings Program).
(C) Income paid from the trust for an institutional setting co-payment or to purchase other medical services for the person is not countable income for eligibility purposes. Income paid from the trust directly to the person or otherwise spent for the person's benefit is countable income for eligibility purposes.
(D) A person cannot use income from a QIT to purchase eligibility for a §1915(c) waiver program.
(E) If the trustee directs to the trust account different sources of income than those identified in the QIT, but directs entire sources and countable income remains within the special income limit, eligibility is not affected.
(5) If the trust instrument requires that the income placed in the trust must be paid out of the trust for the person's care in an institutional setting, transfer-of-assets provisions do not apply because the person receives fair market value for the income that was placed into the trust. However, if there is no such requirement or the income is not used for the person's care, transfer-of-assets provisions apply. The income must be paid out by the end of the month after the month funds were placed in the trust to avoid application of the transfer-of-assets provisions. Transfer-of-assets provisions do not apply when the QIT provisions allow payments to or for the benefit of the person's spouse.
(6) The institutional setting co-payment amount is based on the person's total income (income directed to the trust as well as income not directed to the trust), minus the standard co-payment deductions. Costs of trust administration are not budgeted in the co-payment calculation. Transfer-of-assets provisions do not apply when legal and accounting fees necessary to maintain the trust are paid from the trust.
(7) HHSC disregards the income placed in a QIT for eligibility purposes for the first month that the person has a valid signed trust and enough income is placed in the account to reduce the remaining income below the special income limit.
(d) Undue hardship.
(1) As provided under §1917(d) of the Social Security Act (42 U.S.C. §1396p(d)(5)), this section does not apply if application of the trust provisions in this section would work an undue hardship on the person. Undue hardship exists if application of the trust provisions would:
(A) deprive the person of medical care so that the person's health or his life would be endangered; or
(B) deprive the person of food, shelter, or other necessities of life.
(2) Undue hardship does not exist if a person is inconvenienced or must restrict his or her lifestyle but is not at risk of serious deprivation. Undue hardship relates to hardship to the person, not to relatives or authorized representatives of the person.
(3) Before requesting a waiver of the trust provisions on the grounds of undue hardship, a person must make reasonable efforts to recover assets placed in a trust, such as petitioning the court to dissolve the trust. HHSC determines undue hardship after receiving a request for a waiver of the trust provisions on the grounds of undue hardship. The person has the right to appeal HHSC's determination on undue hardship.
The Texas Health and Human Services Commission follows §1917(g) of the Social Security Act (42 U.S.C. §1396p(g)) regarding the treatment of entrance fees of a person residing in a continuous care retirement community.
The Texas Health and Human Services Commission follows 20 CFR §416.1208 regarding the treatment of funds held in financial institution accounts, except the balance of funds in a financial institution account as of 12:01 a.m. on the first day of the month is reduced by the amount of any funds encumbered before that time, including any checks written, that have not yet been processed by the financial institution.
The Texas Health and Human Services Commission follows 20 CFR §416.1201(c) regarding the definition and treatment of nonliquid resources, except with regard to the treatment of an automobile as described in §358.354 of this division (relating to Automobiles).
(a) The Texas Health and Human Services Commission follows 20 CFR §416.1212 regarding the treatment of a home, except HHSC does not count the equity value of a home that is the principal place of residence of an applicant or recipient or the applicant's or recipient's spouse:
(1) if the home is in Texas, and the applicant or recipient occupies or intends to return to the home; or
(2) if the home meets the criteria in §358.415(b) of this subchapter (relating to Calculation of the Spousal Protected Resource Amount).
(b) For a person or couple living in an institutional setting, if the person or couple transfers ownership of the home for less than market value while the home is excluded, the transfer automatically nullifies the exclusion.
(a) The Texas Health and Human Services Commission (HHSC) follows 20 CFR §416.1245 regarding the treatment of excess real property, except the property continues to be excluded for as long as:
(1) the person continues to make reasonable efforts to sell it; and
(2) including the property as a countable resource would result in a determination of excess resources.
(b) Once the property is sold, the equity value received is a countable resource in the month following the month of sale. If the sale was for less than the fair market value or current market value, the sale of the property is subject to the transfer-of-assets provisions in Division 4 of this subchapter (relating to Transfer of Assets).
The Texas Health and Human Services Commission (HHSC) counts both a life estate and a remainder interest in property as resources, except as described in paragraph (3) of this section.
(1) Life estates. A life estate provides a person, for the person's lifetime, certain rights in a property, while transferring ownership of the property to another person. The duration of a life estate is measured by the lifetime of the owner of the life estate, or by the occurrence of some event. The contract establishing a life estate, however, may restrict one or more rights of the owner of the life estate. The owner of a life estate does not have fee simple title to the property nor the right to sell the entire property. In most situations, the owner of a life estate has the right to:
(A) possess the property;
(B) use the property;
(C) get profits from the property; and
(D) sell his or her life estate interest.
(2) Remainder interest. A remainder interest, which is created when a life estate is established, gives a person owning a remainder interest the right to ownership of the property upon the death of the owner of the life estate. A person owning a remainder interest in the property has the right to sell his or her remainder interest unless the person is prohibited from doing so by a legal restriction.
(3) Exclusion for life estates and remainder interests. Life estates and remainder interests are not counted as resources if:
(A) the property is the person's home and can be excluded under §358.348 of this division (relating to Exclusion of a Home);
(B) a contract restriction prevents the person from disposing of the person's interest;
(C) the property is producing income and may be excluded under 20 CFR §§416.1220, 416.1222, and 416.1224; or
(D) the property is placed for sale and the person is in an institutional setting.
(4) Determination of value. If a person has a life estate or remainder interest that is not excludable under paragraph (3) of this section, HHSC determines the value of the resource according to the age of the owner of the life estate and the equity value of the property. The person has the right to rebut HHSC's determination of the value of the resource. To do so, the person must present a statement from a knowledgeable source.
(5) A purchase of a life estate before April 1, 2006, is not considered a transfer of assets, unless the purchase price of the life estate exceeds the fair market value (FMV) of the life estate. If the purchase price of the life estate exceeds the FMV of the life estate, the transfer-of-assets provisions in Division 4 of this subchapter (relating to Transfer of Assets) apply.
(6) A purchase of a life estate on or after April 1, 2006, is a transfer of assets, subject to the transfer-of-assets provisions in Division 4 of this subchapter, unless the person purchasing a life estate in another person's home resides in the home and continues to reside in the home for at least one year after the date of purchase.
(a) The Texas Health and Human Services Commission counts the equity value of a person's ownership of or interest in mineral rights as a resource, unless the mineral rights are:
(1) connected with property excluded as a home; or
(2) excluded as property essential to self-support under 20 CFR §§416.1220, 416.1222, and 416.1224.
(b) Ownership of mineral rights may or may not be associated with ownership of land. Surface rights are ownership interests in the exterior or upper boundary of land. Ownership of mineral rights does not automatically indicate ownership of surface rights.
The Texas Health and Human Services Commission follows 20 CFR §416.1231 regarding the definition, treatment, and exclusion of burial spaces, except that a burial space purchased by a person is:
(1) excluded from countable resources if it is held for the person, the person's spouse, or anyone of the person's choosing; and
(2) counted as a resource if the purchase was made for investment purposes.
The Texas Health and Human Services Commission does not count term insurance or burial insurance as a resource, except as described in paragraphs (3) and (4) of this section.
(1) Term insurance is a contract of temporary protection. The insured pays relatively small premiums for a limited number of years, and the company agrees to pay the face amount of the policy only if the insured dies within the time specified in the policy. It has no cash surrender value.
(2) Burial insurance is a form of term insurance. By its terms, burial insurance can only be used to pay the burial expenses of the insured.
(3) If a term insurance policy has been purchased by a life insurance company and premiums are used to purchase separate whole life coverage, the whole life coverage is subject to the provisions of 20 CFR §416.1230.
(4) If a term insurance policy is a participating life insurance policy, any dividend accumulation at interest is a countable resource.
(a) The Texas Health and Human Services Commission (HHSC) follows 20 CFR §416.1218 regarding the definition, treatment, and exclusion of automobiles.
(b) In addition to the one automobile HHSC excludes regardless of value, HHSC excludes a second automobile, in accordance with 20 CFR §416.1218(b)(1), if:
(1) the automobile has been modified to accommodate a person with a disability, and there is a household member (other than the applicant or recipient) who has a disability and must use the automobile; or
(2) the household is made up of more than one person and:
(A) a household member (other than the applicant or recipient) requires an additional automobile for transportation to and from work; and
(B) the applicant or recipient requires one automobile available for medical use at all times.
(a) This section describes the Long-Term Care Partnership Program under which a person's resources are disregarded in the eligibility determination equal to the amount of benefits paid to or on behalf of a person by a Long-Term Care Partnership policy.
(b) The Texas Health and Human Services Commission (HHSC) administers the Long-Term Care Partnership Program.
(c) In this section, the following words and terms have the following meanings, unless the context clearly indicates otherwise:
(1) "Long-Term Care Partnership Program" means the program established under the Texas Human Resources Code, Chapter 32, Subchapter C.
(2) "Qualified plan holder" means the beneficiary of a qualified long-term care benefit plan that meets the requirements set forth in subsection (d) of this section.
(3) "Resource disregard" means the total equity value of resources not exempt under rules governing Medicaid eligibility that are disregarded in determining eligibility for Medicaid.
(4) "Resource protection" means the extension to a plan holder of an approved plan of a dollar-for-dollar resource disregard in determining Medicaid eligibility.
(5) "Dollar-for-dollar resource disregard" means a resource disregard in which the amount of the disregard is equal to the sum of benefit payments made on behalf of the approved plan holder.
(d) A Long-Term Care Partnership Program policy is one that meets all of the following requirements:
(1) On the date the policy was issued, the state in which the insured resided had in place an approved Medicaid state plan amendment under 42 U.S.C. §1396p(b).
(2) The policy meets the requirements set forth by the Texas Department of Insurance under Title 28, Part 1, Chapter 3 of the Texas Administrative Code (relating to Life, Accident and Health Insurance and Annuities).
(e) At application for long-term care services, the qualified plan holder receives a dollar-for-dollar disregard of his or her resources.
(1) HHSC determines Medicaid eligibility in accordance with this chapter.
(2) A person may apply for Medicaid before exhausting the benefits of a Long-Term Care Partnership Program policy. If a person applies for and is eligible to receive Medicaid before the Long-Term Care Partnership Program policy is exhausted, the Long-Term Care Partnership Program insurer must make payment for medical assistance to the maximum extent of its liability before Medicaid funds may be used to pay providers for covered services as established in this chapter.
(3) If a person has applied for and been found eligible to receive Medicaid and subsequently receives additional resources, the person continues to be eligible for Medicaid if the total resources do not exceed the individual resource limit after applying the dollar-for-dollar resource disregard.
(f) If the Long-Term Care Partnership Program is discontinued, a person who purchased a Long-Term Care Partnership Program policy before the date the program is discontinued remains eligible to receive the dollar-for-dollar resource exclusion.
The Texas Health and Human Services Commission follows the federal regulations indicated in the table in this section regarding the treatment of resources not otherwise described in this division:
| Type of Resource | Section(s) in 20 CFR: |
|---|---|
| Assistance received due to a major disaster | 416.1237 |
| Certain housing assistance | 416.1238 |
| Crime-related compensation | 416.1229 |
| Earned income tax credit | 416.1235 |
| Funds in a dedicated account in a financial institution established and maintained in accordance with 20 CFR §416.640(e) | 416.1247 |
| Funds set aside for burial expenses for an applicant or recipient and the applicant's or recipient's spouse | 416.1231(b) |
| Gifts from a nonprofit organization to a child with life-threatening conditions | 416.1248 |
| Grants, scholarships, fellowships, and gifts | 416.1250 |
| Household goods and personal effects | 416.1216 |
| Indian lands | 416.1234 |
| Life insurance | 416.1230 |
| Liquid resources | 416.1201(b) |
| Property essential to self-support | 416.1220, 416.1222, 416.1224 |
| Payments or benefits provided under a federal statute, other than Title XVI of the Social Security Act, if required by federal statute | 416.1210(j) 416.1236 |
| Relocation assistance from a state or local government | 416.1239 |
| Replacement value of lost, damaged, or stolen excluded resources | 416.1232 |
| Resources in an approved plan to achieve self-support (PASS) for a person who is blind or disabled | 416.1225-416.1227 |
| Restitution for misuse of benefits for Title II, Title VIII, or Title XVI benefits by a representative payee | 416.1249 |
| Title II or Title XVI retroactive payments | 416.1233 |
Revision 11-3; Effective September 1, 2011
There is no resource test for the Medicaid Buy-In for Children (MBIC) program. However, the income from income-producing resources is considered. See Section N-4200, Income.
Revision 09-4; Effective December 1, 2009
Resources are cash, other liquid assets, or any real or personal property or other nonliquid assets that a person, a person’s spouse or parent could convert to cash to be used for his or her support and maintenance. Support and maintenance assistance not counted as income is not considered a resource.
Revision 09-4; Effective December 1, 2009
A person’s resource is property that:
If the person has the right, authority or power to liquidate the property or his share of it, the property is a resource.
Federal guidelines do not provide any leeway for hardship cases in determining the availability of resources. Unless a court has judged a person to be incompetent and a guardian or other agent is appointed to act for the person, the person has access to resources he owns.
Questions concerning ownership and accessibility may arise with respect to co-owned resources. In certain proceedings, such as divorce, the community property owned by the applicant/recipient and spouse may be divided by the court and ownership awarded to one or the other of the spouses. If the court documents indicate that there is division of marital property, only consider the property awarded to the applicant/recipient as owned and accessible to the applicant/recipient.
When dealing with legal documents, such as deeds, wills or trusts, always consult with the regional attorney to determine the type of asset and therefore the appropriate treatment. See Section F-1230, Guardians, Fiduciaries and Other Agents.
Revision 11-4; Effective December 1, 2011
Treatment of co-owned resources differs depending on the person’s marital status, living arrangement and program requested.
For a person who has an ineligible community spouse and that person is in an institutional setting when determining eligibility for the institutional setting program, do not use the following policy. Instead, use the policy in Chapter J, Spousal Impoverishment.
For determination of Medicare Savings Programs (MSP) eligibility on these spousal institutional setting cases, the following does apply.
For an individual who has a co-owned resource with a sibling, parent, etc., and lives in an institution, the following does apply.
Note: Institutional settings are any Medicaid-certified long-term care facility or any §1915(c) waiver program.
For a person in a noninstitutional setting, co-owned resources may also be counted in certain situations, as follows:
Texas law prohibits the sale of the Texas community homestead property without the consent of both spouses. If an ineligible spouse is unwilling to dispose of Texas community homestead property and the person does not live with the ineligible spouse, the Texas community homestead property is not an available resource for the person.
References:
Revision 09-4; Effective December 1, 2009
If a person has a co-owned resource, determine the amount of interest owned, accessibility and the value of the person's interest in the co-owned resource.
Determine accessibility according to whether the co-owner's consent is required for the person to dispose of his interest.
Verify and document ownership and the value of the resource according to the verification and documentation requirements for the type of resource involved.
After contacting a knowledgeable source to determine the equity value of an interest in property, provide the following information:
Verify and document accessibility from:
Revision 09-4; Effective December 1, 2009
Revision 16-3; Effective September 1, 2016
Guardian of the estate. Under Sections 1151.101 and 1151.151, Texas Estates Code, it is the duty of the guardian of the estate to take care of and manage the estate as a prudent individual would manage the individual's own property. The guardian of the estate collects all debts, rentals or claims due to the ward, enforces all obligations in favor of the ward, and brings and defends suits by or against the ward. Only the guardian of the estate can deal with resources.
Guardian of the person. Under Section 1151.051, Texas Estates Code, the guardian of the person has the:
For HHSC purposes, the guardian of the person can sign documents, represent the individual at hearings and deal with small amounts of money. The guardian of the person is like any other responsible party in that the guardian of the person has the authority to protect the interests of the ward.
Under Section 1151.004, Texas Estates Code, a court may appoint the same individual to be both guardian of the estate and guardian of the person. If there are two guardians, one of the estate and one of the person, then the eligibility specialist must examine the court orders establishing the guardianships to decide which is the most appropriate to represent the individual with HHSC.
Note: When a guardianship exists, only that person can act on the individual's behalf to sign applications and review forms.
An individual's resources are available to the individual if they are being managed by a legal guardian, representative payee, power of attorney or fiduciary agent. If, however, a court denies a guardian or agent access to the resources, HHSC does not consider the resources available to the individual.
If individual's guardianship papers do not show that the legal guardian is prohibited access, and if a court has not subsequently ruled a prohibition, the resources are considered available. A guardian's routine need to petition the court for permission to dispose of individual's resources is not a prohibition. When the court rules on a petition to dispose of individual's resources, resources are considered available only to the extent to which the court has made them available for the individual's benefit.
If a legal guardian exists, obtain a copy of the guardianship or power of attorney document.
Revision 09-4; Effective December 1, 2009
Situation 1: Louis Bennett has resources valued at $1,300, which are being managed by his son. The son claims that as the power-of-attorney he is the only one who has access to the funds.
Treatment 1: Because a power-of-attorney is given voluntarily, and management of the resources is with the person's consent and for his benefit, Louis Bennett's resources are available to him.
Situation 2: John Morgan's parents used their own funds to purchase a certificate of deposit (CD) for John. The CD was issued as "John Morgan, by Paul and Jean Morgan, Joint Representative Payees."
Treatment 2: The CD is an available resource to John Morgan because the designation indicates that the parents are acting in a fiduciary capacity in controlling funds belonging to John, regardless of the fact that Mr. and Mrs. Morgan paid the purchase price.
Situation 3: Amy Wilson recently left the hospital and entered a long-term care facility. She is in a coma, and there are no known living relatives or friends. After Ms. Wilson had a stroke, her landlady looked through Ms. Wilson's papers and found a $600 term life insurance policy and a checkbook showing a balance of $3,840.65. The bank balance verified by bank statements.
Treatment 3: Although court action to appoint a guardian would be necessary to allow disposal of Ms. Wilson's excess funds, the resources are available to her. Until a court judges Ms. Wilson to be incompetent and unable to handle her affairs, the eligibility specialist cannot assume that the court will prohibit an appointed guardian from disposing of any of the funds in the checking account. Ms. Wilson is ineligible because of excess resources.
Revision 09-4; Effective December 1, 2009
A fiduciary agent is a person or organization acting on behalf of and/or with the authorization of another person. The term applies to anyone who acts in a financial capacity, whether formal or informal, regardless of title, such as representative payee, guardian or conservator. In the case of a trustee, refer to the trust instrument.
An action by a fiduciary agent is the same as an action by the person for whom the fiduciary agent acts.
Assets held by a person in his/her capacity as fiduciary agent for someone else are not countable assets to the person. Assets held by a fiduciary agent for a person are considered as available to the person, unless otherwise excludable.
Identify a fiduciary relationship by the way in which a resource is styled. A bank account established in two names connected by "for" or "by" indicates a fiduciary relationship. Another indication is an account established in two names with the designation of "representative payee" next to one of the names, or an account with the designation "special."
A Medicaid recipient may receive a lump sum payment as the payee for an individual who is not a Medicaid recipient. Consider the Medicaid recipient a fiduciary agent for the individual. Do not consider the individual’s lump sum funds as an available countable asset to the Medicaid recipient when all of the following conditions are met:
Revision 09-4; Effective December 1, 2009
If the individual’s lump sum funds held in the Medicaid recipient’s bank account are not considered as an available asset to the Medicaid recipient, the Medicaid recipient, as fiduciary agent for the individual, must:
Do not use Form H1299, Request for Joint Bank Account Information, when the individual's lump sum funds have been deposited into the Medicaid recipient's account and the Medicaid recipient is allowed time to separate the individual’s funds and deposit them into a separate fiduciary account.
Revision 09-4; Effective December 1, 2009
If a person is unaware that he/she owns an asset, the asset is not counted as a resource for the period during which he/she is unaware of his ownership. For example, he/she may inherit property and not know about the inheritance for some time.
The asset is counted as income in the month that the person discovers his/her ownership.
Begin counting the asset as a resource effective the first of the month after the month of discovery.
Revision 09-4; Effective December 1, 2009
Patrimonial assets are assets irrevocably turned over to a religious order following a vow of poverty. The assets are not countable resources and the transfer of assets penalty does not apply.
Revision 09-4; Effective December 1, 2009
If a person converts one type of resource to another, HHSC considers the new resource according to the policy governing that type of resource.
Any cash received from the sale of a resource is considered a resource, not income. This includes proceeds from the sale of a natural resource, such as cutting timber from the person's home property and selling it as firewood. There are two exceptions:
See Section E-3333, Mineral and Timber Rights.
See Section F-4000, Liquid and Nonliquid Resources, for nonliquid resources converted to cash.
Revision 09-4; Effective December 1, 2009
If an excluded resource is lost, damaged or stolen, the cash, including interest earned on the cash, or the in-kind replacement that the person receives from any source to repair or replace the resource, is excluded. This exclusion applies if the cash and the interest are used to repair or replace the excluded resource within nine months of the date the person received the cash.
Any of the cash or interest that is not used to repair or replace the excluded resource is counted as a resource beginning with the month after the nine-month period expires.
The initial nine-month time period can be extended for a reasonable period up to an additional nine months when the person has good cause for not replacing or repairing the resource. Good cause exists when circumstances beyond the person's control prevent the repair or replacement or the contracting for the repair or replacement of the resource. The nine-month extension can only be granted if the person intends to use the cash or in-kind replacement items to repair or replace the lost, stolen or damaged excluded resource and has good cause for not having done so. If good cause is found, any unused cash and interest are counted as a resource beginning with the month after the good cause extension period expires.
When the president of the United States declares a catastrophe to be a major disaster, the extension period described above can be extended for a reasonable period up to an additional 12 months if:
If an extension of the time period is made for good cause and the person changes his/her intent to repair or replace the excluded resources, funds previously held for replacement or repair are counted as a resource effective with the month that the person reports this change of intent.
Determine the amount of the payment and the date of receipt. Schedule a special review to monitor for replacement or repair within the period allowed.
Sources for verifying the amount of money received are:
Sources for verifying replacement or repair of the excluded resources are:
Revision 11-4; Effective December 1, 2011
A person or a couple meet resources criteria if the value of all countable resources does not exceed the appropriate established limit.
Individual limit. This limit applies to adults who are single, even if the person lives with relatives. The individual limit also applies to children and to adults whose spouses live in different households. The individual limit also applies to the institutional spouse in spousal impoverishment policy. Use the individual limit for the following:
Couple limit. This limit applies to married adults who live in the same household with their spouses, even if the spouses are ineligible. Consider the combined resources of the person and spouse. Use the couple limit for the following:
The value of all countable resources must not exceed the following limits:
| Year | Individual | Couple |
|---|---|---|
| 1989 through present | $2000 | $3000 |
| 1988 | $1900 | $2850 |
| 1987 | $1800 | $2700 |
| 1986 | $1700 | $2550 |
| 1985 | $1600 | $2400 |
| 1984 | $1500 | $2250 |
See Section Q-2000, Qualified Medicare Beneficiaries (QMB) – MC-QMB, Medicare Savings Programs (MSP), where the resource limit is higher for certain MSP programs.
If the countable resources are within $100 of the resource limit, set a special review to monitor eligibility. See Section B-8430, Special Reviews.
Revision 19-2; Effective June 1, 2019
The resources in an account as of 12:01 a.m. on the first day of the month are considered a countable resource. Changes in the amount of resources after the first day of the month do not affect what is considered countable resources for that month.
If countable resources exceed the resource limit as of 12:01 a.m. on the first day of the month, a person or couple is not eligible for Medicaid for the entire month. Eligibility may be reestablished no sooner than the first day of the next month.
For applications that require full verification, verify resources as of 12:01 a.m. on the first day of the month for ongoing eligibility and for each of the three preceding months, if applicable.
For community based applications for which client statement is acceptable, verify resources as of 12:01 a.m. on the first day of any one month beginning with date of application through the month of certification. Do not verify resources for any months falling between the date of application and certification date unless there is a change in the total resources.
For all redeterminations, verify resources as of 12:01 a.m. on the first day of:
All resources must be verified as of 12:01 a.m. on the first day of the same month.
Related Policy
Appendix XVI
Applications, B-3000
Eligibility Determination, B-6000
Redeterminations, B-8000
Revision 19-1; Effective March 1, 2019
When determining countable resources, a bank account balance may be reduced by the amount of funds encumbered (legally obligated) before 12:01 a.m. on the first day of the month.
Encumbered funds should be explored if the case is going to be denied due to excess resources. The account balance as of 12:01 a.m. on the first day of the month should be reduced by the amount of any outstanding checks that have not been processed by the financial institution.
Eligibility staff must:
Payments for legally owed debts, such as health care expenses, or credit card charges and recurring monthly expenses consistent with routine banking activity are not a transfer of resources.
Payments made to reduce the 12:01 a.m. balance for items or services for which a person may not receive compensation, may be a transfer of assets. For example, an institution makes advance payments for future housing expenses made by a person in a nursing facility who is unlikely to return home during that time.
Related Policy
Missing Information Due Dates, B-6420
Failure to Furnish Missing Information, B-6510
Refunds for Payments Before Medicaid Eligibility Approval, F-1312.2
Compensation, I-4100
Revision 16-4; Effective December 1, 2016
Following an individual's approval for Medicaid, a Medicaid-contracted, long-term services and supports facility, such as a nursing facility, must refund any advance payments that exceed an individual's co-payment amount for periods covered by Medicaid. This refund policy also applies to advance payments made to home health agencies for Community Attendant Services recipients.
A Medicaid-contracted, long-term services and supports provider may charge a private pay rate that is different from the Medicaid rate, when Medicaid is not the payer of the bill. This private arrangement may occur:
A Medicaid-contracted, long-term services and supports facility may allow a resident's family or friends to use personal funds to pay an agreed-upon amount, in addition to the Medicaid rate, in order to have a private room. These payments in excess of an individual's co-payment do not need to be refunded. However, for Medicaid eligibility purposes, if the family or friends pay the difference, consider how it is being paid:
Revision 16-4; Effective December 1, 2016
During a transfer of assets or substantial home equity penalty, Medicaid does not pay the long-term services and supports provider. Payments for long-term services and supports are a private arrangement between the recipient and the provider. Private pay rates may be collected during a penalty. In these situations, the individual is not owed a refund when the transfer of assets penalty period ends or there is no longer a substantial home equity penalty.
Revision 19-1; Effective March 1, 2019
If a person paid a provider private pay rates or a deposit that exceeded the person's co-payment amount, once Medicaid eligibility is approved, and there is no penalty from a transfer of assets or substantial home equity, the excess amount must be refunded for those months Medicaid eligibility is established.
Consider the advance payment as encumbered funds in the resource test for the initial eligibility determination.
Do not consider the refund as income in the month of receipt.
Consider the refund or any remaining part of the refund as a resource as of 12:01 a.m. on the first day of the month after the month of receipt of the refund.
Related Policy
Encumbered Funds, F-1311
Special Reviews, B-8430
Revision 09-4; Effective December 1, 2009
The word "deeming," as used in this handbook, means counting all or part of the income or resources of another person (parent or spouse) as income or resources available to the person.
HHSC does not deem income or resources from an alien's sponsor.
Revision 11-4; Effective December 1, 2011
HHSC deems spouse's resources as follows:
If the person does not live in the same household as his ineligible spouse, HHSC does not apply deeming policies. In situations where an institutionalized person has an ineligible spouse also living in a facility, only the person's resources are counted against the individual resource limit. HHSC includes in the person's resources the total amount of checking and savings accounts to which he has access.
Note: Follow joint bank account policy and exclude any separate resources of the ineligible spouse.
Example: Wayne and Ethel Thomas live together in their own home. Wayne was receiving SSI and RSDI as a disabled person. His most recent cost-of-living increase in RSDI benefits made him ineligible for SSI.
The eligibility specialist received Mr. Thomas' application for ME-Pickle. The reported and verified resources were:
| Description | Amount |
|---|---|
| joint checking account with a balance of | $410.00 |
| ownership of the home in which the couple lives | Excluded |
| 1975 automobile | Excluded |
| savings account in Wayne's name with a balance of | $700.00 |
| savings account in Ethel's name with a balance of | $576.00 |
| The countable resources for Wayne Thomas are less than the couple's resource limit. | $1,686.00 |
Revision 11-3; Effective September 1, 2011
Note: Deeming from parents does not apply in certain §1915(c) waiver programs.
Deeming of resources does not apply to Medicaid Buy-In for Children (MBIC). There is no resource test for MBIC.
Regarding deeming for children, HHSC requirements are as follows:
If a disabled child under 18 lives with his parents in the same household, HHSC must deem to the child certain resources of the parents. If a parent is a TANF caretaker or a recipient, his resources are not counted.
An ineligible spouse or parent who is absent from a deeming household solely because of an active duty military assignment continues to be considered a member of the household for resources deeming purposes. If the absent service member's intent to continue living in the household changes, deeming stops beginning with the month following the month in which the intent changed.
To determine the amount of resources deemed to an eligible child, HHSC:
A parent is defined as a child's natural or adoptive parent or the spouse of the natural or adoptive parent.
Revision 16-4; Effective December 1, 2016
Revision 10-1; Effective March 1, 2010
Revision 09-4; Effective December 1, 2009
When a person receives a cash reimbursement of medical or social services expenses that the person has already paid, the cash received for the medical or social services is not considered income and is not a resource for the calendar month following the month of its receipt, if the unspent money is identifiable from other resources. The remainder of the cash reimbursement of medical or social services expenses retained until 12:01 a.m. on the first of the second calendar month following its receipt is a resource at that time.
If the money is commingled with other funds and is no longer separately identified, that amount will count toward the resource limit as of the 12:01 a.m. on the first of the month after receipt rather than 12:01 a.m. on the first of the second month after receipt.
Revision 11-4; Effective December 1, 2011
Death benefits, including gifts and inheritances received by a person, are not income in the month of receipt when they are to be spent on costs resulting from the last illness and burial of the deceased, and are not resources for the calendar month following the month of receipt. However, such death benefits retained until the 12:01 a.m. on the first of the second month following their receipt are resources at that time.
Death benefits exceeding the cost of the expenses for the last illness and burial of the deceased, or not used to pay these expenses, are countable income in the month of receipt and resources on the first day of the month following month of receipt.
If death benefits are not excluded as income, they also are not excluded as a resource.
Revision 09-4; Effective December 1, 2009
An EITC is a special tax credit that reduces the federal tax liability of certain low-income working taxpayers.
Relationship of income to resources. An unspent EITC payment is not counted as a resource for the month after the month the payment or refund is received.
Example: The EITC payment is received in May. The EITC payment is not income in May. The remaining funds from the EITC payment are not a resource as of June 1. Any remaining funds from the EITC payment are a resource as of the first of July.
Revision 09-4; Effective December 1, 2009
Any unspent hostile fire pay or imminent danger pay becomes a resource if retained into the following month and not otherwise excluded.
In a deeming situation, exclude from deemed resources for the nine-month period following the month of receipt the unspent portion of any retroactive payment of:
Revision 12-1; Effective March 1, 2012
SSI and RSDI retroactive lump sum payments are excluded from countable resources for nine months after the month of receipt. The exclusion applies only to the lump sum payments. If the recipient spends the payments, the exclusion does not apply to items purchased with the payments unless those items are otherwise excludable. This is true even if the exclusion period has not expired.
Otherwise, excludable funds must be identifiable in order to be excluded. Identifiability does not require that the excluded funds be kept physically apart from other funds (such as in a separate bank account).
HHSC assumes, when withdrawals are made from an account with commingled funds in it, that nonexcluded funds are withdrawn first, leaving as much of the excluded funds as possible in the account. If excluded funds are withdrawn, the excluded funds left in the account can be added to only by:
Interest earned on excluded lump sum payments from SSI and RSDI is exempt income in the month of receipt and a resource thereafter. See Section E-3331.2, Treatment of Interest/Dividends on Certain Excluded or Partially Excluded Resources.
Request the verification of the retroactive payment and all expenditures from it.
The eligibility specialist must document spend down of the lump sum payment and determine countable resources as of the first day of the 10th month after receipt of the lump sum payment.
Revision 09-4; Effective December 1, 2009
Revision 09-4; Effective December 1, 2009
Gifts from tax-exempt organizations, such as the Make-A-Wish Foundation, to children with life-threatening conditions are excluded as resources.
The exclusion applies to children under age 18. The gift must be from an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 and that is exempt from taxation under Section 501(c).
The eligibility specialist documents the case record with an oral or written statement from the organization that the gift was made based on the child having a life-threatening condition. No additional medical development is necessary.
The following gifts to or for the benefit of a child described above are excluded from resources:
Revision 09-4; Effective December 1, 2009
State or local relocation assistance payments are excluded from countable resources for nine months after the month of receipt.
Revision 10-1; Effective March 1, 2010
Revision 09-4; Effective December 1, 2009
Unspent payments received from a fund established by a state to aid victims of crime are excluded from resources for nine months. A person is not required to apply for benefits from a crime victims’ compensation fund.
Revision 09-4; Effective December 1, 2009
Public Law 104-193, Personal Responsibility and Work Opportunity Reconciliation Act of 1996, requires the representative payees of SSI recipients under age 18 to establish designated accounts when there are retroactive payments for more than six months payable to the recipients. These designated accounts, including accrued interest or other earnings produced by the accounts, are excluded from countable resources. This exclusion was effective Aug. 22, 1996.
Do not count in the eligibility budget or the budget to determine co-payment interest, or other earnings on any designated account established for SSI recipients under age 18 for retroactive benefits, as required by Public Law 104-193, effective Aug. 22, 1996.
Revision 10-1; Effective March 1, 2010
The following payments, regardless of when received, are not counted as income and are excluded from resources:
See Section E-2440, Certain Health-Related Payments.
Revision 09-4; Effective December 1, 2009
If a person or spouse is of Indian descent from a federally recognized Indian tribe, any interests of the person or the person's spouse in trust or restricted lands are excluded from resources.
Many federal statutes provide for the exclusion from income and resources of certain payments made to members of Indian tribes and groups. Some statutes pertain to specific tribes or Indian groups, while others apply to certain types of payments. See the following sections:
Revision 09-4; Effective December 1, 2009
HHSC excludes from countable resources the following payments:
See Section E-2150, Other – Exempt Income.
Revision 16-3; Effective September 1, 2016
Exclude as a resource funds from the following:
In order for payments and benefits to be excluded from resources, such funds must be segregated and not commingled with other countable resources so that the excludable funds are identifiable.
Revision 10-1; Effective March 1, 2010
If precipitated by an emergency or a major disaster, do not consider the following as a resource:
In order for payments and benefits to be excluded from resources, such funds must be segregated and not commingled with other countable resources so that the excludable funds are identifiable. Interest earned on disaster assistance is excluded from resources.
Government payments designated for the restoration of a home damaged in a disaster are excluded as income or resources in the month of receipt and as a resource in subsequent months, if the household is subject to a legal sanction if the funds are not used as intended.
For treatment of exempt income from disaster payments, see Section E-2360, Payment Treated Like Other Exemptions.
Revision 16-4; Effective December 1, 2016
Revision 16-4; Effective December 1, 2016
An Achieving a Better Life Experience (ABLE) program allows an individual with a disability or family members of the individual to establish a tax-free savings account to maintain health, independence and quality of life for the benefit of the individual with a disability. The individual must meet the criteria of the state's ABLE program in which the individual enrolls. The ABLE account funds can be used for the individual's disability-related expenses, which supplement, but do not replace, private insurance and/or public assistance.
Funds held in an ABLE account are excluded from countable resources when determining eligibility.
Note: For Supplemental Security Income (SSI), ABLE account balances over $100,000 are countable resources to the designated beneficiary and could result in suspension of SSI cash benefits. The individual retains Medicaid eligibility if the excess balance does not cause the individual to exceed the SSI resource limit. Due to the limitation on annual contributions, ABLE account balances will not result in SSI suspensions for several years.
Request information to verify an ABLE account. Verification must include the following information:
Verification documents may vary among states. Examples of acceptable documentation include participation agreements, ABLE account contracts, financial statements, and annual income tax filing documents.
Revision 16-4; Effective December 1, 2016
School-Based Savings Accounts are accounts set up by students or their parents at financial institutions that partner with school districts. Individuals may set up school-based savings programs through savings accounts, Certificates of Deposit (CDs), Series I savings bonds, and Tuition Savings Plans under IRS Code, Section 529 or U.S.C. Section 530.
Funds in School-Based Savings Accounts are excluded up to an amount set by the Texas Higher Education Coordinating Board (THECB) each year. The current excludable amount is $11,896. Any excess over the excluded amount counts as a resource.
Note: This amount will be updated annually.
Revision 21-1; Effective March 1, 2021
The value of a home that is a person's or the person's spouse's principal place of residence is not a resource of the person or the spouse.
A home is a structure in which a person lives (including mobile homes, houseboats and motor homes), other buildings and all adjacent land.
Note: The words home and homestead can be used interchangeably in this section.
A home is a structure in which the person or the person's spouse lives. All land adjacent to the home includes any land separated by roads, rivers or streams. Land is adjacent as long as it is not separated by intervening property owned by another person. This means all the land associated with the home, whether or not there is a business operated in connection with the home or property.
Adjacent property is a part of the home even if there is more than one document of ownership (for example, separate deeds), the home was obtained at a different time from the rest of the land or the holdings are assessed and taxed separately.
Home property may be jointly owned, or ownership may be in the form of a life estate or interest in an intestate estate.
For property to be considered a home for Medicaid eligibility purposes, the person or spouse must consider the property to be their home and:
Revision 10-1; Effective March 1, 2010
An exclusion to the home as a countable resource is possible if the person or spouse has ownership interest in the property and the property currently is the principal place of residence of either the person or the spouse. Exclude the property as a home even if the person leaves the home without the intent to return as long as a spouse or dependent relative of the person continues to live in the property.
If a non-institutionalized person is a victim of domestic abuse and is fleeing from an abusive situation, exclude the property as a home even if the person leaves the home without the intent to return but still maintains an ownership interest in an otherwise excluded home. Continue this exclusion until the non-institutionalized person establishes a new principal place of residence or takes other action rendering the home no longer excludable.
Revision 09-4; Effective December 1, 2009
An exclusion to the home as a countable resource is possible if the person or spouse has ownership interest in the property and the property currently is the principal place of residence of either the person or the spouse. Exclude the property as a home even if the person leaves the home without the intent to return as long as a spouse or dependent relative of the person continues to live in the property.
Revision 19-2; Effective June 1, 2019
Only one place may be established as a person's or couple’s principal place of residence. If the person or couple lives in more than one place or owns more than one residence, they must designate only one as their principal place of residence.
If the person or couple is unable to make this decision, and they have a guardian or authorized representative, make the determination based on the statements provided by the guardian or AR and:
The home can be real or personal property, fixed or mobile, and located on land or water.
The property ceases to be the principal place of residence and not excludable as the home as of the date the person or couple leaves the home if they do not intend to return to it.
Note: Form H1245, Statement of Intent to Return Home, should reflect the property the person or couple chooses to exclude as their homestead.
Related Policy
The Home and Resource Exclusion, F-3100
Principal Place of Residence, F-3110
Intent to Return Home, F-3120
Intent to return Home Policy, F-3121
Revision 09-4; Effective December 1, 2009
See also Section F-3500, Out-of-State Home Property.
If a person lives in a long-term care facility and his or her spouse or dependent relative lives in the person's principal place of residence, the home is not considered an available resource.
A relative is a son, daughter, grandson, granddaughter, stepson, stepdaughter, half sister, half brother, grandmother, grandfather, in-laws, mother, father, stepmother, stepfather, aunt, uncle, sister, brother, stepsister, stepbrother, nephew or niece. A dependent relative is one who was living in the person's home before the person's absence and who is unable to support himself/herself outside of the person's home due to medical, social or other reasons.
See Appendix XVI, Documentation and Verification Guide.
Revision 13-4; Effective December 1, 2013
An exclusion to the home as a countable resource is possible if the person or spouse has ownership interest in the property, the property was the principal place of residence of either the person or the spouse while having ownership interest, and the person and spouse no longer live there but intend to return to the home.
The primary evidence of intent to return home is the applicant's/recipient's statement, as documented on a signed Form H1245, Statement of Intent to Return Home, or a comparable written statement from the applicant's/recipient's spouse or authorized representative.
Revision 14-4; Effective December 1, 2014
Consider intent to return policy if the person:
The primary evidence of intent to return home is the applicant's/recipient's statement, as documented on a signed Form H1245, Statement of Intent to Return Home, or a comparable written statement from the applicant's/recipient's spouse or authorized representative.
The property cannot be excluded as a home with intent to return if the person:
Exception: If a home was excluded for intent to return and the individual purchases a replacement home, the replacement home retains that exclusion even if the individual has not physically occupied the new home.
Exclude the property as a home even if the person leaves the home without the intent to return, as long as a spouse or dependent relative of the person continues to live in the property.
See Section F-3400, Replacement of the Home; Section F-3500, Out-of-State Home Property; and Section F-3121.1, Temporary Absence from the Home.
Revision 09-4; Effective December 1, 2009
Absences from home for trips, visits and medical treatment do not affect the home exclusion as long as the person continues to consider the home to be his or her principal place of residence and intends to return home. If a person owns a residence but lives elsewhere, HHSC determines whether the person continues to consider the home to be his/her principal place of residence and whether he/she intends to return.
See Appendix XVI, Documentation and Verification Guide.
Revision 16-3; Effective September 1, 2016
The value of real property, including a home, life estates and remainder interests in the property, is exempt if the person places the property for sale. The exemption continues until the proceeds of the sale are available to the person.
Reasonable efforts to sell the property require the individual take all necessary steps to sell it. Reasonable efforts to sell property include:
An individual must accept an offer to buy the property that is at least two-thirds of the current market value of the property. If an offer is rejected, the individual must present evidence that proves the offer is unreasonable and that the individual is continuing to make reasonable efforts to sell the property.
The value of the resource is not counted until the proceeds of the sale are available. See Section F-1260, Conversion of Resources, for treatment from the proceeds of a sale of a resource. Determination of resources is completed as of 12:01 a.m. on the first day of the month. However, if the individual is purchasing a replacement home, the proceeds of the sale of the original home are not countable resources for three full months following the month of receipt.
See Section F-3400, Replacement of the Home.
Note: This policy also applies to out-of-state home property. See Section F-3500, Out-of-State Home Property.
Revision 09-4; Effective December 1, 2009
If the home property is in an irrevocable or revocable trust ("Living Trust"), see Section F-3300, The Home as a Countable Resource.
Revision 09-4; Effective December 1, 2009
A home placed in a revocable or living trust (or similar type trust) loses the exclusion as a homestead and becomes a countable resource based on trust policy found in Section F-6400, Revocable Trusts.
Note: If the home is in an irrevocable trust, see Section F-6500, Irrevocable Trusts. Seek agency legal evaluation of the trusts and their treatment.
Presume the tax value as the countable value of the property in a revocable trust when making a determination of countable resources. The person has a right to rebut the presumed value and provide verification of the equity value.
Note: The fair market value (FMV) of a resource is the going price for which it can reasonably be expected to sell on the open market in the particular geographic area involved. Equity value (EV) is the FMV of a resource minus any encumbrance on it. An encumbrance is a legally binding debt against a specific property. Such a debt reduces the value of the encumbered property, but does not have to prevent the property owner from transferring ownership (selling) to a third party. However, if the owner of encumbered property does sell it, the creditor will nearly always require debt satisfaction from the proceeds of sale.
If the homestead property is removed from the revocable trust (or the trust is dissolved), the person may be able to re-establish the property as a homestead. Also see Section F-3121.1, Temporary Absence from the Home.
Revision 09-4; Effective December 1, 2009
Intent to return home must be re-established if the homestead property is removed from the revocable trust (or the trust is dissolved). A completed Form H1245, Statement of Intent to Return Home, or the response on the application is used to establish and designate the homestead property.
If the property is designated as homestead property, determine the home equity value of the property and follow policy in Section F-3600, Substantial Home Equity.
If the person takes action to remove the home property from the trust, the medical effective date cannot precede the first of the month after the date the home was officially removed from the trust.
Example: Due to the countable home property in a revocable trust, Mr. Jones has excess resources January of this year and is not eligible. Mr. Jones removes the home from the living trust on March 10 of this year. Mr. Jones re-applies for Medicaid on March 15 of this year. Due to the countable home property in a revocable trust, Mr. Jones has excess resources as of 12:01 a.m. on the first day of January, February and March. The medical effective date can be no earlier than April 1 of this year.
Revision 09-4; Effective December 1, 2009
Count the equity value in the reported home property if the home property:
See also Section F-3500, Out-of-State Home Property.
Note: If the home is in an irrevocable trust, see Section F-6500, Irrevocable Trusts. Follow regional procedures to request assistance from HHSC Legal regarding the terms and conditions of trusts. See Appendix XVI, Documentation and Verification Guide.
Revision 14-4; Effective December 1, 2014
If a person is purchasing a replacement home, the proceeds of the sale of the original home are not countable resources for three full months following the month of receipt. For example, if the person received the proceeds on Jan. 13, the exclusion period ends April 30. There are no extensions.
Expenses related to selling the original home and purchasing and occupying the replacement home are deducted from the proceeds. Allowable costs for selling the home include broker fees; commissions; legal fees; mortgage-related fees, such as "points" paid by the seller; inspection and settlement fees; and transfer and other accrued taxes paid by the seller. The person does not have to have paid allowable costs for purchasing and occupying the replacement home by the end of the exclusion period, but the person must have obligated himself to pay them. Allowable costs include down payments; settlement costs; loan processing fees and points; moving expenses; costs of necessary repairs or replacements to the replacement home's existing structure or fixtures, such as furnace, plumbing and built-in appliances; and mortgage payments on the replacement home for periods before occupancy.
Any proceeds in excess of the cost of replacing and occupying the home are countable resources.
If the original home was excluded for intent to return, the replacement home retains that exclusion even if the individual has not physically occupied the new home.
See Section F-3121, Intent to Return Policy.
Revision 09-4; Effective December 1, 2009
With the following exceptions, a person who applies for and receives Medicaid benefits in Texas is not allowed to exclude a home in another state. Otherwise, if the person considers his home in another state to be his principal place of residence, he is not a Texas resident, and he must apply for assistance in his home state.
If the community spouse lives in another state in a house that the person claims is not his homestead, to determine the protected resource amount and initial eligibility, HHSC excludes the out-of-state property as a part of resources totally excluded regardless of value. If the person still has an ownership interest in the property at the first annual redetermination, HHSC considers the value of the property a countable resource that is real property. This situation does not affect residency requirements. As long as the institutionalized spouse intends to remain in the state where he is institutionalized, he is considered a resident.
If the community spouse lives in another state in a house that is the person's homestead, the home is excluded in the resource assessment and throughout the initial eligibility period of 12 months. If the person still has an ownership interest in the property at the first annual redetermination, the home is a countable resource. If the community spouse is not living in the out-of-state home, the community spouse must sign a statement of intent to return for the home to be excluded for the resource assessment and initial eligibility period of 12 months.
If there is no community spouse, the out-of-state home property is a countable resource unless it is placed for sale. If there is no community spouse, the home is not placed for sale, and the person considers his home in another state to be his principal place of residence, the person is not a Texas resident; he must apply for Medicaid in his home state. If the person does not consider the out-of-state home as his principal place of residence, it is a countable resource.
See Section F-3130, Home Placed for Sale.
Revision 21-1; Effective March 1, 2021
As part of Public Law 109-171, Deficit Reduction Act of 2005 (DRA), a person with a home whose equity interest in the home exceeds the established limit is not eligible for vendor payment in an institution or for Home and Community-Based Services (HCBS) waiver services.
Exception: If the person's spouse, child or adult child with a disability is living in the home, substantial home equity policy does not apply.
Treatment of a homestead as a resource in Section F-3000, Home, continues but does not impact the disqualification determination for vendor payment in an institutional setting, or denial of HCBS waiver services or services in a state supported living center or a state center due to substantial home equity.
Once eligibility for services in an institutional setting is determined, consider if the equity value of the home disqualifies the person for vendor payment in a Medicaid-certified long-term care facility. When eligibility for HCBS waiver services or services in a state supported living center or a state center is requested, consider if the equity value in the home results in denial.
Home Equity Treatment
For a person who is determined eligible for Medicaid in an institutional setting based on an application filed on or after Jan. 1, 2006, the person is not eligible for Medicaid for services in an institutional setting if the equity interest in their home exceeds $603,000 (this dollar amount may increase from year to year based on the percentage increase in the consumer price index (CPI) for all urban consumers (all items; United States city average), rounded to the nearest $1,000).
Substantial home equity policy does not apply if either of the following lawfully resides in the person's home:
This policy does not prevent a person from using a reverse mortgage or home equity loan to reduce the total equity interest in their home.
The secretary of the U.S. Department of Health and Human Services shall establish a process to waive this policy in the case of a demonstrated hardship.
Revision 21-1; Effective March 1, 2021
Substantial home equity disqualification policy impacts any person who is:
Notes:
The substantial home equity limit is:
| Effective Date | Limit |
| Jan. 1, 2021 to present | $603,000 |
| Jan. 1, 2020 to Dec. 31, 2020 | $595,000 |
| Jan. 1, 2019 to Dec. 31, 2019 | $585,000 |
| Jan. 1, 2017 to Dec. 31, 2018 | $572,000 |
| Jan. 1, 2017 to Dec. 31, 2017 | $560,000 |
| Jan. 1, 2016 to Dec. 31, 2016 | $552,000 |
| Jan. 1, 2015 to Dec. 31, 2015 | $552,000 |
| Jan. 1, 2014 to Dec. 31, 2014 | $543,000 |
| Jan. 1, 2013 to Dec. 31, 2013 | $536,000 |
| Jan. 1, 2012 to Dec. 31, 2012 | $525,000 |
| Jan. 1, 2011 to Dec. 31, 2011 | $506,000 |
| Jan. 1, 2006 to Dec. 31, 2010 | $500,000 |
Revision 09-4; Effective December 1, 2009
Any person who has a date of application or program transfer request date for Medicaid in an institutional setting before Jan. 1, 2006, and who has continued to receive services with no break in coverage will not be impacted by the value of the home equity.
Regardless of the date of application or program transfer request date, any person who has either a spouse, minor child or disabled adult child residing in the home will not be impacted.
Revision 09-4; Effective December 1, 2009
If an institutionalized person has a home with equity value greater than the limit, follow notice and procedures in Appendix XXIII, Procedure for Designated Vendor Number to Withhold Vendor Payment, and indicate on Form H3618-A, Resident Transaction Notice for Designated Vendor Numbers, the vendor number 5988 for the Home Equity Manor. Unlike a transfer of assets penalty period, there is no end date for Home Equity Manor unless the home equity value changes to be less than or equal to the limit. When the person's home equity value is less than or equal to the limit, do not impose this penalty.
A person applying for waiver services or requesting a program transfer to waiver services, who has home equity greater than the limit and does not have a spouse, child or disabled adult child living in the home, is not eligible for waiver services. A person must receive waiver services to be eligible for a waiver program. Follow current denial procedures for the applicable Home and Community-Based Services waiver program. Determine if the person is eligible for Medicaid programs other than Home and Community-Based Services waiver services.
Revision 09-4; Effective December 1, 2009
A person may use a reverse mortgage or home equity loan to reduce the person's total equity interest in the home. If the person has a reverse mortgage or home equity loan, consider this in determining countable home equity.
Based on conversion of a resource policy (see Section F-1260, Conversion of Resources), do not consider funds from the reverse mortgage or home equity loan as a countable resource or income in the month of receipt. Any remaining funds from a reverse mortgage or home equity loan become a countable resource as of 12:01 a.m. on the first day of the month after the month of receipt.
Although the funds are not considered a countable resource or income during the month of receipt, consider transfer of assets policy if the funds from a reverse mortgage or home equity loan are transferred during the month of receipt.
The money received is a countable resource the month after receipt. See Section F-4150, Promissory Notes, Loans and Property Agreements. Consider transfer of assets policy if the funds from a reverse mortgage or home equity loan are transferred after the month of receipt.
Follow regional procedures to request assistance from HHSC Legal regarding the terms and conditions of reverse mortgage or home equity loan information to assist in determining the appropriate amount of the reduction in home equity value.
Revision 09-4; Effective December 1, 2009
Obtain verification of home equity value, including a copy of the reverse mortgage or home equity loan, for the case record. Thoroughly document in case comments the home equity value and information about the reverse mortgage or home equity loan, if applicable.
Revision 09-4; Effective December 1, 2009
Undue hardship may be considered when a person is impacted by the substantial home equity policy. Use the transfer of asset hardship criteria for undue hardship consideration due to substantial home equity policy. See Chapter I, Transfer of Assets, for undue hardship.
Revision 10-1; Effective March 1, 2010
A continuing care retirement community (CCRC) offers life care to a person in one setting. For example, the facility may accommodate independent living, assisted living and nursing care as a person's needs change. A person may be required to pay a substantial entrance fee as a prerequisite to admission to a CCRC.
For purposes of determining a person's eligibility for, or amount of, benefits under the State Plan, this policy applies to persons residing in CCRCs or life care communities that collect an entrance fee on admission from such persons.
A person's entrance fee in a CCRC or life care community is considered a resource available to the person to the extent that:
Treat an entrance fee to a CCRC as a countable resource of a person applying for Medicaid in an institutional setting on or after Oct. 1, 2006, if the entrance fee meets all of the following requirements:
The countable amount of the resource is the entrance fee value, minus the amount of the entrance fee spent on care.
If there is a community spouse, consider the countable entrance fee amount in the computation of the spousal share.
If an applicant for Medicaid in an institutional setting has a CCRC contract, obtain a copy for the case record and document the following elements in case comments:
See Section E-3331, Interest and Dividends.
Revision 09-4; Effective December 1, 2009
For treatment of all transfers of assets, consider common elements to transfer, including but not limited to, the following:
See policy beginning in Chapter I, Transfer of Assets.
Revision 09-4; Effective December 1, 2009
If a person who is not living in the home transfers ownership of his/her home for less than market value while it is excluded because of his intent to return, the transfer automatically nullifies the exclusion.
Ownership of property is evaluated as of 12:01 a.m. on the first day of the month. Changes related to resources after the first day of the month become effective as of 12:01 a.m. on the first day of the following month.
Example: Mr. Holmes owns a home. The value of the home is excluded from countable resources because of intent to return. During the middle of this month, Mr. Holmes transfers full ownership in his home to his grandson. Resource value of the home for this month is $0 because as of 12:01 a.m. the home was an excluded resource. Resource value of the home for next month is $0 because Mr. Holmes no longer has ownership in the home. After evaluating the transfer of the home to the grandson, this transfer does not meet any of the exceptions for a transfer outlined in Chapter I, Transfer of Assets, for exceptions to the transfer of assets. First, consider Mr. Holmes' equity value in the home as of 12:01 a.m. this month. Next, consider the amount of compensation Mr. Holmes received. The difference is the uncompensated value of the transfer on which the penalty would be based.
Revision 09-4; Effective December 1, 2009
Because ownership of property may be in whole or in part, if the person owns a home and gives it away during the look-back period, but retains an undivided partial interest or life estate in the property, evaluate the transaction for transfer of assets.
First, consider the person's equity value in the home as of 12:01 a.m. during the month of transfer. Next, consider the value of the retained undivided partial interest or life estate effective as of 12:01 a.m. during the month of transfer. The difference between the equity value and the value of the retained undivided partial interest or life estate is the presumed uncompensated transfer.
To determine the value of the retained undivided partial interest or life estate, take the following steps:
Example: Mr. House's equity value in the home as of 12:01 a.m. during the month of transfer was $200,000. Mr. House was age 72 during the month of the transfer. The corresponding life estate interest factor is .57261. The value of the life estate at the time of transfer is $200,000 × .57261 = $114,522. The difference between the equity value and the life estate is $200,000 − $114,522 = $85,478 presumed uncompensated transfer.
A person has a right to rebut the determination of the value of the retained undivided partial interest or the life estate as well as the presumed uncompensated transfer.
If the person owns a home and gave it away before the look-back period, but retained an undivided partial interest or life estate in the property, the person may be able to exclude the life estate based on the exclusions allowable for a home discussed in Section F-3100, The Home and Resource Exclusions.
See Appendix XVI, Documentation and Verification Guide.
Revision 20-1; Effective March 1, 2020
Resources generally are categorized as either "liquid" or "nonliquid." The difference between the two types of resources is important when determining if a resource can be excluded as non-business property essential to self-support. See Section F-4300, Resources Essential to Self-Support.
Liquid resources are cash or other assets, which can be converted to cash within 20 workdays.
Nonliquid resources consist of real and personal property, as well as financial instruments that cannot be converted to cash within 20 workdays (excluding holidays).
Ownership of real or personal property can include either sole possession or a partial interest.
Real property includes, but is not limited to:
Personal property includes, but is not limited to:
Equity is the fair market value of the resource minus all money owed on it. Evaluate nonliquid resources, with the exception of some automobiles, according to their equity value.
Revision 10-3; Effective September 1, 2010
Liquid resources are cash or other assets, which can be converted to cash within 20 workdays.
Examples of resources that are ordinarily liquid are:
Presume that these assets (and similar financial accounts and instruments) can be converted to cash within 20 workdays and are countable as resources. However, some liquid resources are not convertible to cash within 20 working days due to prevailing conditions of the assets. For example, the liquidity of U.S. savings bonds occurs after a minimum of one year. You can redeem them anytime after that time period.
Revision 09-4; Effective December 1, 2009
Cash is a countable resource. Accept the person’s word for the amount of cash on hand.
See Appendix XVI, Documentation and Verification Guide
Revision 20-1; Effective March 1, 2020
A person’s bank balance, as of 12:01 a.m. on the first day of the month for which eligibility is being tested, is a countable resource.
Reduce the bank account balance by the amount of any funds encumbered before 12:01 a.m. on the first day of the month. See Section F-1311, Encumbered Funds.
Verify the bank account balance with:
The verification must include all of the following:
If the verification provided does not include the required information listed above, send Form H1020, Request for Information or Action to request the missing information.
Note: An account reported as closed by the applicant or recipient must be verified as having a $0 balance for the appropriate test month(s).
Related Policy
Documentation and Verification Guide, Appendix XVI
Failure to Provide Missing Information, B-6510
Points in Time for Establishing Resources Values, F-1310
Encumbered Funds, F-1311
Nursing Facility Payments and Refunds, F-1312
Administrative Procedures of Transfers of Nominal Amounts, I-3600
Consideration of AVS Information, R-3744
Revision 09-4; Effective December 1, 2009
If a person has a joint bank account and can legally withdraw funds from it, all the funds in the account are considered a resource to the person.
If two or more eligible persons have a joint account with unrestricted access, the department considers that each owns an equal share of the funds. Eligible persons include any Qualified Medicare Beneficiaries (QMB) and Medicaid persons.
This equal ownership [principle] also applies when income is being diverted from the eligible spouse to the ineligible spouse and when income is deemed from an ineligible spouse or parent. In spousal diversion cases after the initial 12-month eligibility period, if the account has not been separated, the funds in the account are divided equally between the spouses for resource eligibility purposes beginning with the 13th month.
If a person is determined ineligible because of excess funds in a joint account, the person must be allowed an opportunity to disprove the presumed ownership of all or part of the funds. He must also be allowed to disprove ownership of joint accounts that do not currently affect his eligibility but may in the future.
Transfer-of-resources policy does not apply when a person changes a joint bank account to establish separate accounts in order to reflect correct ownership of and access to the funds.
In determining whether a person has successfully disproved ownership of funds, the department considers the following information.
An example of an acceptable rebuttal of ownership of funds is when an account reflects a fiduciary relationship. See Section F-1232, Fiduciary Agent.
Note: Disproval of ownership policy applies to accounts in which there is no co-owner, but the person can show he does not own all of the funds, provided the funds are duly separated.
See Section E-3332, Income from Joint Bank Accounts, regarding treatment of income in these cases.
If a person wishes to disprove full or partial ownership, send him a form specifying the documentation needed and the date by which he is expected to provide it. Keep a copy of the form in the case record. Allow the person up to 30 days to provide:
Notes:
Reference: Refer to Section E-3332, Income from Joint Bank Accounts, regarding interest and deposits by co-holders of a joint account.
See Appendix XVI, Documentation and Verification Guide; Appendix XXV, Accessibility to Income and Resources in Joint Bank Accounts; and Section E-3331, Interest and Dividends, for treatment of income.
Revision 09-4; Effective December 1, 2009
The resource value of a time deposit is the net amount due after penalties are imposed for early withdrawal. If the funds cannot be withdrawn before maturity, the time deposit is not a resource until it matures. Time deposits include, but are not limited to, certificates of deposit, savings certificates and individual retirement accounts (IRAs).
A time deposit is a contract between an individual and a financial institution whereby the individual deposits funds for a specified period. In return, the financial institution agrees to pay an interest rate higher than the passbook rate.
The availability of funds is the controlling factor in determining whether a time deposit is a resource. Examine the person's time deposit certificate to determine when the funds can be withdrawn and which penalties to impose. Subtract the amount of the penalties from the total value to determine resource value.
If the person is a co-owner of a time deposit, use the procedures for jointly-owned resources.
The following information must be included in the case record documentation:
For applications, verify the account balance for the appropriate month(s). For redeterminations, use the most recent monthly bank statement, unless something indicates that the person may have exceeded the resource limit on the first day of the review month. Verify balance, name of financial institution and account number.
Note: If the statements are not received monthly and the statement does not cover the appropriate month, use other verification. There may be a penalty for early withdrawal.
A time deposit that is closed does not have to be reverified at subsequent redeterminations.
Sources of verification include:
If a person cannot make an early withdrawal of the funds, verify and document the restriction. Also document the date that the time deposit matures. If maturity occurs before the next periodic review, schedule a special review.
Revision 18-1; Effective March 1, 2018
A person may authorize a long-term care facility to manage his funds. The facility then acts as a fiduciary agent, using the funds only for the person's personal needs. The money in a patient trust fund is a countable resource.
See Appendix XVI, Documentation and Verification Guide.
Some facilities call the patient trust fund a "petty cash fund" and do not keep a ledger. In this case, check with a bookkeeper or other nursing home staff to determine if any funds are being held for a person.
Note: If a facility does not keep patient funds, record the fact that no patient trust fund exists. Use discretion to verify at applications or redeterminations that the facility does not maintain patient funds.
See Section F-1312, Nursing Facility Refunds.
Revision 13-4; Effective December 1, 2013
A debit card allows individuals electronic access to their personal funds. Debit cards can be attached to a bank account or can be preloaded with an individual user’s funds. Prepaid or preloaded debit cards can also be established with direct deposit of an individual’s wages.
Government benefits payments may be direct deposited to a debit card.
The most common prepaid debit cards used for deposit of government benefits, which do not have a separate account attached, include:
Wage payments may also be direct deposited to a debit card.
Some prepaid debit cards used for deposit of wage payments, which do not require a separate account, include:
This list is not intended to be all inclusive as more agencies and businesses move toward the use of debit cards to issue benefits.
These types of cards function like prepaid debit cards and are not attached to a checking/savings account, so the requirement to provide the complete account number is not applicable. The number on the front of the debit card is not considered an account number. Do not copy or image the actual debit card.
The remaining cash value of the debit card as of 12:01 a.m. on the first day of the month following the month of the income deposit is a countable resource.
Account inquiry is accessible to:
* Some states do not use the EPPICard for child support payments.
Verify the debit card balance with:
When it involves a Social Security recipient, the specialist must also verify and document whether the person has a Direct Express® debit card or similar debit card that does not have a bank account number attached, or an Electronic Transfer Account (ETA) that is attached to a bank account and has an account number that must be verified. Follow policy in Section F-4120, Bank Accounts, when a person has an ETA.
For a debit card, the following information must be in the case record:
If the verification that the person provides does not meet the three criteria listed, ask explicitly for the information that is missing.
Note: Direct Express® does not allow other income to be deposited, does not pay interest, and does not require a checking/savings account. It does allow one card for multiple beneficiaries, if the payee desires it.
Revision 10-2; Effective June 1, 2010
The resource value of a share of stock is the closing price on the last business day of the month before the month of redetermination or the last business day of the month before an appropriate “trial” month. For example:
Shares of stock represent ownership in a corporation. The value of a stock fluctuates from day to day.
Determine the person's ownership of or interest in the stock. Also determine the current market value as of 12:01 a.m. for the appropriate date.
Note: Brokerage fees for selling a person's stocks are not allowable deductions when determining the value of the stocks.
See Section E-3331, Interest and Dividends, for treatment of income.
See Appendix XVI, Documentation and Verification Guide.
Revision 09-4; Effective December 1, 2009
The cash value of a bond is a countable resource. If a person can convert his bond into cash within 20 workdays, the bond is considered a liquid resource.
A bond is a written obligation to pay a sum of money at a future date.
Municipal and corporate bonds are negotiable instruments and they are transferable. U.S. savings bonds are not transferable, but they may be sold back to the government.
It generally takes seven to 10 days to sell a municipal or corporate bond. Certain U.S. savings bonds, however, must be held for a minimum period from the date of issue before they can be converted into cash. These bonds are not a countable resource during the period they cannot be converted into cash. Once the minimum period is passed, the bonds can be converted within one or two days.
Treat a municipal, corporate or government (other than U.S. savings bond) in the same way that stocks are treated. Depending on demand, the cash value may be more or less than the face value.
Determine ownership and cash value of a U.S. savings bond. (The value depends on the type of bond and the issue date.) Also determine whether the bond is a liquid or nonliquid resource. If the bond is a nonliquid resource, follow up with appropriate action when the minimum retention period has passed.
Certain additional conditions may prevail. For example, Series HH Bonds (for which interest is paid to the owner twice a year) may be cashed only after six months and after the first interest check is received. If the bond is cashed before maturity, there is a penalty.
See Section E-3331, Interest and Dividends, for treatment of income. See Appendix XVI, Documentation and Verification Guide.
Revision 17-4 ; Effective December 1, 2017
This policy applies to an individual who is a creditor and owns an agreement such as a promissory note or a property agreement. A creditor is a seller of property.
A promissory note is a written or oral, unconditional agreement by the purchaser to pay the seller a specific sum of money at a specified time or on demand.
A loan is a transaction whereby one party advances money to another party who promises to repay the debt in full, with or without interest. The terms of the loan may be in writing or they may be an informal oral agreement. A formal written loan agreement is a type of promissory note. A reverse mortgage is treated as a loan. See F-3640 Reverse Mortgage or Home Equity Loan. The money received is not income. It is a resource the month after receipt. See Section E-1750, Proceeds of a Loan.
A property agreement is a pledge or security of a particular property or properties for the payment of a debt or the performance of some other obligation within a specified time. Property agreements on real estate (land and buildings) are generally referred to as mortgages, but may also be called land contracts, contracts for deed or deeds of trust.
Discounting is the advancement of money on a negotiable note or agreement and the deduction of interest or a premium in advance.
For example, a bank may be willing to pay $450 for a $500 promissory note due in one year's time. For a true discounting situation to exist, ownership of the note or agreement must transfer to the discounting agent.
A negotiable, secured promissory note or property agreement is a countable resource. Negotiable means that the owner (lender) has the legal right to sell the instrument (for valuable consideration, such as cash) to anyone. Secured means the instrument identifies a particular asset of at least equal value to the face value of the instrument that can be reclaimed by the seller, should the instrument fall into default. The owner also possesses a transferable interest in the instrument that can be converted to cash and could be subject to a transfer of assets penalty if not retained or spent down properly. The terms of the agreement may be in writing or may be an oral agreement. If the agreement is oral, the person is responsible for furnishing a statement of facts of the agreement signed by the second party. Real property, sold or exchanged for a negotiable note, is not a transfer for less than fair market value if the note is secured by the original property or by another redeemable resource of equal or greater value. A formal written loan agreement is a form of promissory note.
A negotiable non-secured promissory note or property agreement is a countable resource and a potential transfer of assets. Non-secured means the seller has no recourse to reclaim the original or like resource should the purchaser cease payments. By not securing the note, the seller has purposefully reduced the value of the note. The actual fair market value of the note should be determined and the difference between the actual market value of the note and the value of the original resource is a transfer of assets for less than fair market value. The actual fair market value of the note remains a countable resource. Normal transfer of assets rebuttal policy applies.
See Section E-3331, Interest and Dividends, for the treatment of the interest.
Payment on the principal reduces the transfer penalty. The transfer penalty period is recalculated at each annual review until the expiration of the penalty period falls before the next scheduled annual review. Then a special review should be scheduled accordingly.
A non-negotiable promissory note, loan or property agreement is not a countable resource because it has no marketable value. Non-negotiable means the seller cannot sell or transfer ownership interest in the note, causing the note to have no market value. Therefore, the dollar value of the original resource is considered to be transferred for less than fair market value, subject to normal transfer of asset penalties, if the instrument was created within the look-back period. If payments are being received, the transfer penalty must be reduced based on the amount of principal received. Both the principal and interest are considered as income in the month received. The transfer penalty period is recalculated at each annual review, until the expiration of the penalty period falls before the next scheduled annual review. Then a special review should be scheduled accordingly. Normal transfer of assets rebuttal policy applies.
Note: This transaction is considered a transfer of assets for less than fair market value because the person/authorized representative knew or should have known that transferring ownership of the asset in exchange for a non-marketable note severely lessened the value of the note and in effect automatically reduced the countable assets of the person.
When determining the value of a negotiable promissory note, loan or property agreement, the outstanding principal balance is the countable value unless the person furnishes reliable evidence from a knowledgeable source that the instrument cannot be sold for the amount of the outstanding principal balance. A knowledgeable source is someone recognized as being in the business of purchasing notes.
If a person furnishes evidence to establish a lesser value on a note, the market value established by the knowledgeable source is the countable value of the resource. However, if the person/authorized representative placed any restrictions/encumbrances (such as creating a note with interest due of less than the market value at the time the note was made or the note becomes paid in full at the time of the person's death), then the difference in the current market value and the outstanding principal balance is a transfer of assets for less than fair market value.
Although the seller/person keeps title to the original property until the promissory note, loan or property agreement is paid in full, the original property is not counted as a resource (the value of the negotiable instrument is the resource). The property is not available while the buyer is making a good faith effort (making scheduled payments) in fulfilling the contractual obligation.
A note cannot be excluded under the $6,000/6% policy. This exclusion applies only to real property, or a degree of interest in real property, such as mineral rights.
See Appendix XVI, Documentation and Verification Guide.
Revision 09-4; Effective December 1, 2009
A prepaid (or preneed) burial contract is an agreement in which a person prepays his burial expenses and the seller agrees to furnish the burial.
Burial space items can be excluded only when the contract has been paid in full, or the contract specifies that burial space items are paid before funeral service items, and the refund value equals or exceeds the value of burial space items specified in the contract.
Otherwise, the amount paid toward the contract is treated as burial funds. If the contract has been paid in full or if the contract specifies that burial space items are paid first, burial space items must be separately itemized in the contract for the exclusion to apply.
Note: Paid in full means that the person owes no more payments.
The refund value is the amount that a person would receive upon revocation or liquidation of his burial contract.
A refund value is considered an available resource.
A refund penalty, often 10%, may be assessed for cancellation of a contract.
Note: Effective Sept. 1, 1993, under HB 2499 passed by the 73rd Texas Legislature, a person can irrevocably waive the right to cancel a prepaid burial contract. In these situations, there is no refund value. The prepaid contract is not a countable resource, but its value reduces the $1,500 burial fund exclusion dollar for dollar.
An irrevocable prepaid burial contract owned by the person, but not paid in full, reduces the $1,500 maximum burial fund exclusion by the face value of the contract, with no deduction for the value of burial spaces itemized in the contract.
If a prepaid burial contract is made irrevocable before an application is certified, the contract is considered irrevocable for the month of application and the three prior months.
Use the following procedure to calculate the exclusion for burial space items in a burial contract that contains separately identifiable burial space items/services:
Revision 09-4; Effective December 1, 2009
Revision 09-4; Effective December 1, 2009
Exclude the total value of the burial space items, which must be itemized in the contract.
Revision 09-4; Effective December 1, 2009
Burial space items must be itemized in the contract.
| Step | Procedure |
|---|---|
| 1 | Divide the total value of burial space items in the contract by the face value of the contract. This is the percentage of the burial space value. |
| 2 | Multiply the refund value of the contract by the percentage from Step 1. This is the dollar amount of excludable burial space items. |
| 3 | Subtract the excludable amount from Step 2 from the refund value. This is the countable value of the contract. |
Revision 09-4; Effective December 1, 2009
Example 1:
The prepaid burial contract has a face value of $3,000. There was a 10% refund penalty, giving a refund value of $2,700. The value of burial space items is $1,500.
Step 1.
$1,500 ÷ $3,000 = 50%
Step 2.
| Amount | Description |
|---|---|
| $2,700 | refund value |
| x .500 | percentage from Step 1 (round to third decimal place) |
| $1,350 | value of excludable burial space items |
Step 3.
| Amount | Description |
|---|---|
| $2,700 | refund value |
| –1,350 | excludable value from Step 2 |
| $1,350 | countable value of prepaid contract |
Example 2:
The prepaid burial contract has a face value of $2,405. There was a 10% refund penalty, giving a refund value of $2,164.50. The value of burial space items is $1,255.
Step 1.
$1,255 ÷ $2,405 = .5218
Step 2.
| Amount | Description |
|---|---|
| $2,164.50 | refund value |
| x .522 | percentage from Step 1 (round to third decimal place) |
| $1,129.87 | value of excludable burial space items |
Step 3.
| Amount | Description |
|---|---|
| $2,164.50 | refund value |
| –1,129.87 | excludable value from Step 2 |
| $1,034.63 | countable value of prepaid contract |
Note: If there is a refund penalty, but the terms of the contract specify that the burial space items are paid first, exclude the total value of the burial space items that are itemized in the contract. The countable value is the refund amount minus the total value of the itemized burial space items.
The following information must be included in the case record documentation:
Verify purchaser, company name, contract number and beneficiary of contract.
Verify current refund value. If a prepaid burial contract is reported as owned by someone other than the person, verify ownership.
If a prepaid burial contract is owned by someone other than the person, determine whose money was used to purchase the contract and availability of funds to the person.
Sources of verification include the following:
Although this procedure may be used to complete the case if near the delinquency deadline, immediately follow up with verification by obtaining a copy of the contract or a letter from the funeral home.
Sources for verifying the refund value of a prepaid burial contract are the same as those in the preceding paragraph. In addition to the information required for verifying ownership and accessibility, the actual refund value after penalty involved in liquidation must be indicated on the contract or statement.
Revision 12-3; Effective September 1, 2012
If life insurance is used to fund a burial contract, the person owns a life insurance policy. The contract has no value and is merely an instrument that explains the burial arrangement. Because the person purchased insurance and not the actual funeral service or merchandise items that may be listed in a burial arrangement, the person does not own the funeral service or merchandise items. The burial space items are treated differently based on the assignment of a burial contract funded by life insurance.
Some burial arrangements funded with life insurance have the life insurance ownership or proceeds assigned to a funeral director or home or a trust-type instrument. These assignments may be either revocable or irrevocable.
Ownership of a life insurance policy can be transferred or assigned to a funeral home without a transfer penalty if a prearranged contract provides burial services to the person. If a prearranged contract does not exist at the time of transfer, consider the cash value as a transfer of assets and explore a transfer penalty. See Chapter I, Transfer of Assets.
Revision 09-4; Effective December 1, 2009
If the assignment is revocable, the life insurance cash value is an accessible resource. Therefore, if the face value exceeds $1,500, the cash value is a countable resource. The burial space items are not excluded, but the $1,500 designated burial fund exclusion may apply.
Example: A person purchases a $3,000 face-value life insurance policy to fund a burial arrangement. The life insurance policy has a cash value of $1,800. The proceeds of the life insurance policy are revocably assigned to Sleepyhollow funeral director. The burial arrangement includes a casket for $1,200, a vault for $500, grave opening and closing costs for $100 and service items (transportation, flowers, clothing, use of chapel) for $1,200.
The burial space items are not excluded. The face value of the life insurance policy exceeds $1,500; therefore, the cash value is a countable resource that is accessible because the assignment is revocable. The $1,800 cash value is designated for burial and $1,500 is excluded. The remaining $300 is a countable resource.
Revision 09-4; Effective December 1, 2009
If assignment of ownership is irrevocable, the life insurance is not a resource because it is no longer owned by the person. The prepaid burial contract also is not a resource because it has no value independent of the life insurance policy. If the terms of the contract itemize the burial space items that have been purchased, the value of those items is disregarded in determining the amount of the irrevocable arrangement that reduces the $1,500 allowable burial fund exclusion.
If an irrevocably assigned, insurance-funded, prepaid burial contract is paid in full, HHSC automatically assumes that burial space items would be provided to the person, and the value of those items is disregarded in determining the amount of the irrevocable arrangement that reduces the $1,500 allowable burial fund exclusion.
Irrevocable assignment of life insurance policy ownership to the funeral home or director or to a trust-type instrument is not a transfer of resources.
An irrevocable prepaid burial contract for the person's burial, which is in force and which is owned by someone other than the person, whether paid in full or not, reduces the $1,500 maximum burial fund exclusion by the face value of the contract, with no deduction for the value of burial spaces itemized in the contract.
If a prepaid burial contract is made irrevocable before an application is certified, the contract is considered irrevocable for the month of application and the three prior months.
Example: Taking the above situation, the ownership is irrevocably assigned. The insurance-funded prepaid burial contract is paid in full or the terms of the contract indicate that the burial space items are actually owned by the person and that the provider is obligated to provide the items to the person upon request rather than only at the time of death.
The $1,200-casket + $500 vault + $100 grave opening and closing total $1,800. The $1,500 allowable for a designated burial fund is reduced by the $1,200 irrevocable funeral service arrangement. Up to $300 in additional designated burial funds is allowed for exclusion.
| Amount | Description |
|---|---|
| $3,000 | face value |
| –1,800 | excludable burial space items |
| $1,200 | irrevocable funeral arrangement |
Example: If the terms of the above contract do not obligate the provider to immediately make the burial space items available, the entire $3,000 irrevocable arrangement would be considered as a burial fund and no other funds allowed for exclusion as a designated burial fund.
Revision 09-4; Effective December 1, 2009
There are two types of nonliquid resources:
Revision 09-4; Effective December 1, 2009
Real property is the land and houses or immovable objects attached to the land. The terms real estate, realty and real property are synonymous, and for eligibility purposes, these terms designate real property in which an individual has ownership rights and interests. An individual also may have ownership of only the right to the use of the real property such as life estates or mineral rights. Real property also includes burial spaces.
The equity value of a person's ownership or part ownership in real property other than the home is a resource.
Determine ownership, current market value and equity value of non-home real property.
Revision 16-3; Effective September 1, 2016
HHSC excludes the value of excess real property if the individual has put the property up for sale. The exclusion continues for as long as:
Once the individual sells the property, the equity value the individual receives is a countable resource in the month following the month of sale. If the sale was for less than the fair market value or current market value, the sale of the property is subject to transfer-of-assets policy.
If the property rights involved are a life estate or if the individual has a remainder interest in the property, follow the procedures in Section F-4212, Life Estates and Remainder Interests. If the non-home real property produces income, follow the procedures in Section F-4300, Resources Essential to Self-Support.
See Appendix XVI, Documentation and Verification Guide.
If an individual's real property is producing income, use the procedures in Section F-4300.
Revision 09-4; Effective December 1, 2009
When evaluating the life estate or remainder interest, determine when the interest was established.
If established before the look-back period, do not consider transfer of assets policy.
If established during the look-back period, consider transfer of assets policy:
The life estate or remainder interest may be excluded as follows.
A person may, without affecting his eligibility, maintain his life estate or remainder interest in property if:
If a life estate is excluded because of a person's intent to return to the property in which the person holds a life estate or remainder interest, and if that property is the person's principal place of residence, use the procedures in Section F-3000.
References:
Revision 10-1; Effective March 1, 2010
When the life estate or remainder interest cannot be excluded, determine the value of the life estate or remainder interest as follows:
If the person has a life estate or remainder interest that is not excludable, determine the value of the resource according to the life estate holder's age and the equity value of the property. The person has the right to rebut this determination. To do so, he must present a statement from a knowledgeable source.
Note: Also see Appendix X, Life Estate and Remainder Interest Tables.
If the value given by the knowledgeable source is less than the value determined by the tables, use the rebuttal value.
For an individual's lifetime, a life estate transfers to the individual certain rights in property. The duration of the life estate is measured by the lifetime of the tenant, or by the occurrence of some event, such as remarriage of the tenant. In most situations, the owner of a life estate has the right to:
The contract establishing the life estate, however, may restrict one or more rights of the individual. The individual does not have fee simple title to the property nor the right to sell the entire property.
A remainder interest, which is created at the same time that a life estate is established, gives the "remainderman" (or remaindermen) the right to ownership of the property when the life estate holder dies.
An individual holding a remainder interest in property has the right to sell the remainder interest, unless prohibited from doing so by a legal restriction.
Use the following steps to determine the value of a life estate or remainder interest that cannot be excluded.
| Step | Procedure |
|---|---|
| 1 | Obtain the current market value of the property. |
| 2 | Obtain the equity value of the property by subtracting any amount owed on the property. |
| 3 | Select the table in Appendix X, Life Estate and Remainder Interest Tables, for life estate or remainder interest. |
| 4 | Find the line for the life estate holder's age as of the holder's last birthday. |
| 5 | Multiply the figure in the appropriate life estate column or remainder interest column by the current equity value of the property. |
Revision 10-1; Effective March 1, 2010
Mineral rights are the ownership interests in natural resources such as coal, oil or natural gas, which normally are extracted from the ground.
The value of a person's ownership of or interest in mineral rights is a resource.
In many instances, owners of mineral interests may lease their rights to an oil or mining company for exploration and development. Terms of leases may vary from one to five years or more, although five is most common. Besides a yearly rental fee for each acre, it is customary for a company to pay a one-time bonus to an individual for signing the lease. The specific amounts are stated in the lease agreements. If minerals are produced from the property, the company may suspend yearly rental payments.
Although under lease, the owner may sell his mineral rights at any time. Their value is based on the probability of oil, gas or minerals being present if the land is not in production. If minerals are being produced, value is decided by the size of the interest, length of time the minerals have been produced, quality of the product (oil or gas) being produced and many other factors.
Determine the person's ownership share of the mineral rights and the equity value.
Reference: If the mineral rights cannot be excluded under the $6,000/6% rule, count the individual's equity together with his other countable resources.
See Appendix XVI, Documentation and Verification Guide.
Revision 17-4; Effective December 1, 2017
A burial space, or an agreement that represents the purchase of a burial space held for the burial of the person, the person’s spouse or any other member of the person’s immediate family, is an excluded resource, regardless of value. The person or a family member whose resources are deemed to the person must own the burial space or purchase agreement.
Burial Space — A burial space is a burial cemetery plot, gravesite, crypt or mausoleum.
Burial space items are a casket, urn, niche or other repository customarily and traditionally used for the deceased's bodily remains. The term also includes necessary and reasonable improvements or additions to these spaces, including but not limited to: vaults, headstones, markers or plaques; burial containers (for example, liners or concrete liners for caskets); arrangements for the opening and closing of the gravesite and contracts for care and maintenance of the gravesite. Contracts for care and maintenance are sometimes referred to as endowment or perpetual care.
For items that serve the same purpose, exclude only one per person. For example, a cemetery plot and a casket for the same person can be excluded, but not a casket and an urn.
Immediate family includes the person's spouse, minor and adult children, stepchildren, adopted children, brothers, sisters, parents, adoptive parents and the spouses of those individuals. It does not include grandchildren or the immediate family of the person’s spouse.
If a person owns a burial space that is not excludable, count the equity value of the space as a resource.
Until the purchase price is paid in full, a burial space is not "held for" a person under an installment sales contract or similar device if the:
Until the contract is paid in full, the amount already paid is considered as burial funds.
Accumulated interest earned on the value of a burial space agreement is excluded from income and resources.
See Appendix XVI, Documentation and Verification Guide.
Exclude all burial cemetery plots that are fully paid, regardless of designation. However, if the individual acknowledges that the cemetery plots are purchased as an investment, count the equity value.
Ownership of a burial cemetery plot in another state does not affect residency requirements or excludability.
Revision 09-4; Effective December 1, 2009
If a person owns or has an interest in property outside the state, equity in that property is a resource if it is available to him. The exclusion provision for a person's home does not apply when the home property is located outside the state.
Reference: See Section F-3000, Home, and Section F-4211, Real Property in Excess of the Limit.
Determine the type of property and its location. Also determine ownership and availability, current market value and equity value. If legal questions about the availability of the person's property or other states' property laws occur, consult the regional attorney.
Follow this handbook's verification and documentation procedures for the particular resource owned by the person.
Revision 09-4; Effective December 1, 2009
The following items cover nonliquid resources other than real property.
Revision 15-4; Effective December 1, 2015
As used in this section, the term automobile includes, in addition to passenger cars, other automobiles used to provide necessary transportation.
Document the year, make and model of all automobiles.
Exclude one automobile, regardless of value.
Exclude a second automobile when the household is made up of more than one individual and:
For all other automobiles, use the current market value. If the applicant/person still owes on the automobile, consider the current market value and equity value. If the equity value is less than the market value, document the formula used to determine the countable value. Indicate the source used to verify the current market value and equity value.
Verify the market value of an automobile in any of the following situations:
Sources for verifying the value of an automobile include:
Note: If the automobile is being declared as "junk" (not running or fixable), a $0 default value may be assigned.
For additional information about automobiles, see Appendix XVI, Documentation and Verification Guide.
Examples:
The eligibility specialist reviewed the case and excluded the first automobile. The eligibility specialist excluded the third automobile because the spouse was using the automobile for transportation to and from work.
The eligibility specialist will need to develop the current equity value of the second automobile that has mechanical difficulties to determine the countable resource value for this non-excluded automobile.
Revision 12-4; Effective December 1, 2012
Do not count household goods as a resource to an individual (and spouse, if any) if they are:
Such items include, but are not limited to, furniture, appliances, electronic equipment such as personal computers and television sets, carpets, cooking and eating utensils, and dishes.
Do not count personal effects as resources to an individual (and spouse, if any) if they are:
Such items include, but are not limited to, personal jewelry (including wedding and engagement rings), personal care items, prosthetic devices, and educational or recreational items such as books or musical instruments.
Do count items that were acquired or are held for their value or as an investment These items are:
See F-4222.1, Other Personal Property, for more information.
Revision 12-4; Effective December 1, 2012
Items that were acquired or held for their value or as investments are considered other personal property and are countable resources unless excluded under normal resource exclusions.
Other personal property can include, but is not limited to gems, animals purchased for breeding, re-sale or investment, or collectibles such as coin, stamp or doll collections.
Example: A coin collection is considered other personal property (nonliquid personal property) and the countable resource amount is based on the collector's value. The individual coins in the collection are not liquid resources based on their face value.
Other personal property may be contained in a safe deposit box. If the person's application shows that he has a safe deposit box, question him about its contents.
The following information must be included in the case record documentation:
To develop the value of other personal property, obtain the market value of the items and determine whether the person has clear ownership. If any encumbrances exist, such as payments due, deduct the unpaid portions to arrive at the equity value of the items.
Sources for verifying the value of other personal property are:
Sources for verifying a person's equity value in other personal property are:
Revision 12-3; Effective September 1, 2012
Reference: See also Section F-4170, Burial Contracts Funded by Life Insurance.
If the total face value of life insurance policies owned by a person (or spouse, if any) is $1,500 or less per person, HHSC does not consider as a resource the value of the life insurance.
If the total face value of all life insurance policies owned by a person, eligible spouse or ineligible spouse whose resources are deemed to the person are more than $1,500 per insured person, the cash surrender values of the policies are resources.
This also includes policies owned on other individuals. HHSC does not include dividend additions with the face value of a life insurance policy to determine if the policy is excluded as a resource. A life insurance policy is a resource available only to the owner of the policy, regardless of whom it insures.
The following terms are used in connection with life insurance policies: The insured is the individual upon whose life a whole life or straight life policy is affected.
Note: Ownership of a life insurance policy can be transferred or assigned to a funeral home without a transfer penalty if a prearranged contract provides burial services to the person. If a prearranged contract does not exist at the time of transfer, consider the cash value as a transfer of assets and explore a transfer penalty. See Chapter I, Transfer of Assets.
Revision 15-4; Effective December 1, 2015
A life insurance policy is a resource if it generates a cash surrender value (CSV). The life insurance contract’s value as a resource is the amount of the CSV. In this case, the term contract refers to an insurance policy. An insurance policy is considered to be a contract between the insurance company and the policyholder.
Ordinary life insurance (also known as whole life or straight life) has a CSV usually after the second year. The policy is flexible in premium payments if the dividends are used to pay off the contract at an earlier date, or the premium payment period can be limited to suit the financial resources of the insured. In a situation of this type, the policy is a limited payment life insurance policy.
This resource has a limited exclusion. A life insurance policy is an excluded resource if its face value (FV) and the FV of any other life insurance policies the person owns on the same insured person total $1,500 or less. The family relationship between the person who owns the policy and the insured does not affect this exclusion.
FV is the amount of basic death benefit contracted for at the time the policy is purchased. The face page of the policy may show it as such, or as the:
A policy's FV does not include:
In determining whether the total FV of the life insurance policies a person owns on a given insured person is $1,500 or less, the FV of the following are not taken into account:
Do not include the FV of dividend additions in determining whether a policy is a countable or excludable resource. If the policy is a countable resource, include the CSV of dividend additions in determining the resource value of the policy.
Example: A person and his spouse each own a $1,500 whole life policy. The person also owns a $1,000 policy on each of his three children and a nephew. Although the total FV of the insurance owned by the person exceeds $1,500, none of the cash value is countable because the FV per insured individual does not exceed $1,500.
Relation to Burial Fund Exclusion — The maximum of $1,500 that can be excluded and set aside for the burial fund expenses of the person must be reduced by the FV of:
This includes the FV of a life insurance policy for which a funeral provider has been made the irrevocable beneficiary, if the policy owner has irrevocably waived his or her right to, and cannot obtain, any CSV that the policy may generate. The burial fund exclusion is based on family relationship. The maximum of $1,500 that can be excluded as set aside for burial expenses is only allowed for the recipient and the recipient’s spouse unless deeming of assets is involved. See Section F-4227, Burial Funds, for more details on the burial fund exclusion.
Revision 09-4; Effective December 1, 2009
The following information must be included in the case record documentation:
Sources of verification include:
If a person owns any life insurance policies, determine the:
Verify with the insurance company whether there is a policy in force if the person reports any whole life insurance policies that are now lapsed due to non-payment.
To determine the approximate cash value of a whole life policy, use the table of values on all whole life insurance policies.
Obtain the actual cash surrender value from the insurance company when:
To verify the actual cash surrender value, send Form H1238 and Form H0003, Agreement to Release Your Facts, to the insurance company or contact the insurance company by telephone and follow up with these forms.
Determine if a policy is paying dividends to the insured by looking for the words participating or non-participating on the document. If unable to locate these identifying words, send a letter to the insurance company.
If a policy is non-participating and verification substantiates an exclusion of the policy, no further verification is necessary.
If a policy is participating, obtain the following information from the insurance company:
If a person has a participating policy, determine whether dividends are used to:
If the dividends are left to accumulate, treat them as a savings account. The dividends are not considered as part of the cash value. The person can withdraw them without touching the cash value.
Note: Separate accumulation of funds that draw interest. These funds are always a countable resource, even if the face value is less than $1,500. These funds may be designated for burial.
See Appendix XVI, Documentation and Verification Guide.
Revision 10-1; Effective March 1, 2010
Periodically (annually, as a rule), the life insurance company may pay a share of any surplus company earnings to the policy owner as a dividend. Depending on the life insurance company and type of policy involved, dividends can be applied to premiums due or paid by check or by an addition or accumulation to an existing policy. When dividends are used to increase cash value (CV) but they do not increase face value (FV) of the policy, exclude the dividends if the FV of all whole life polices per individual is no greater than $1,500 and count the cash surrender values of the policies as resources if the FV of all whole life policies per insured person is greater than $1,500.
See Appendix XXXV, Treatment of Insurance Dividends.
Revision 09-4; Effective December 1, 2009
Additions — Dividend additions are amounts of insurance purchased with dividends and added to the policy, increasing its death benefit and cash surrender value (CSV). The table of CSVs that comes with a policy does not reflect the added CSV of any dividend additions.
Do not include the face value (FV) of dividend additions in determining whether a policy is a countable or excluded resource. If the policy is:
Accumulations — Dividend accumulations are dividends that the policy owner has constructively received but left in the custody of the life insurance company to accumulate interest, like money in a bank account. They are not a value of the policy, but the owner can obtain them at any time without affecting the policy's FV or CSV.
Dividend accumulations cannot be excluded from resources under the life insurance exclusion, even if the policy that pays the accumulations is excluded from resources.
Unless dividend accumulations can be excluded under another provision (for example, as set aside for burial under the burial fund exclusion), they are a countable resource.
Do not exclude dividend accumulations under the life insurance provision, even if the policy that pays the accumulations is excluded. Unless the accumulations are excludable under another provision (for example, because they have been set aside for burial), count the accumulations as resources, even if the policy itself is excluded because the policy's FV is $1,500 or less.
Revision 09-4; Effective December 1, 2009
Other insurance issues can occur, such as accelerated life insurance payments.
Accelerated life insurance payments are proceeds paid to a policyholder before death. Although accelerated payment plans vary from company to company, all of the plans involve early payout of some or all of the proceeds of the policy. Most accelerated payment plans fall into three basic types, depending on the circumstances that cause or “trigger” the payments to be accelerated. These are the:
Some companies refer to these types of payments as “living needs” or “accelerated death” payments.
Depending on the type of accelerated payment plan, receipt of accelerated payments may reduce the policy's face value (FV) by the amount of the payments and may reduce the cash surrender value (CSV) in a manner proportionate to the reduction in FV. In some cases, a lien may be attached to the policy in the amount of the accelerated payments and a proportionate reduction in CSV results. Since accelerated payments can be used to meet food or shelter needs, the payments are income in the month received and a resource if retained into the following month and not otherwise excludable. The receipt of an accelerated payment is not treated as a conversion of a resource for Medicaid purposes. This is because, under an accelerated arrangement, a person receives proceeds from the policy, not the policy's resource value, which is its CSV.
Revision 14-3; Effective September 1, 2014
A life settlement allows an individual to sell a life insurance policy for a lump-sum payment that is less than the expected death benefit but more than the available cash value. The Texas Department of Insurance regulates life settlements. An individual may place proceeds from a life settlement contract into an irrevocable life settlement account. The irrevocable life settlement account can be designated to pay for the individual’s long-term services and supports (LTSS), including, but not limited to, home health, assisted living and nursing home services.
A life settlement contract is an agreement between the owner of a life insurance policy and the life settlement provider or investor that is purchasing the life insurance policy.
A life settlement account is a bank account established with proceeds from a life settlement contract, which can be used to pay for the individual's long-term care services.
In order to be excluded for eligibility purposes, a life settlement contract must:
In order to be excluded for eligibility purposes, a life settlement account must:
If a life settlement account does not meet all of the above requirements:
Note: Consider any payments made from the life settlement account, such as bank fees, legal fees or other administrative costs, as income to the individual in the month the payment is made.
Revision 10-1; Effective March 1, 2010
Term insurance and burial insurance are not resources.
Burial insurance is a form of term insurance. By its terms, burial insurance can only be used to pay the burial expenses of the insured.
Term insurance is a contract of temporary protection. The insured pays relatively small premiums for a limited number of years, and the company agrees to pay the face amount of the policy only if the insured dies within the time specified in the policy. It has no cash surrender value.
If a term insurance policy has been purchased by a life insurance company and premiums are used to purchase separate whole life coverage, the whole life coverage is subject to the policy as described in Section F-4223, Life Insurance.
If the term insurance policy is a participating life insurance policy, any dividend accumulation at interest is a countable resource.
Appendix XXXV, Treatment of Insurance Dividends, indicates that dividends are used to purchase term insurance; disregard the dividends as income or a resource.
Revision 09-4; Effective December 1, 2009
Term Life Insurance — Life insurance with no cash or loan value or no potential for cash or loan value. The term life insurance policy is for temporary protection. The insured pays relatively small premiums for a limited number of years and the company agrees to pay the face amount of the policy only if the insured dies within the time specified in the policy. Term life insurance with HHSC while employed is an example of this type of life insurance. Some companies sell term insurance with the premiums to be paid for the insured's whole lifetime. If Form H1238, Verification of Insurance Policies, indicates that there is no potential for cash value and the Form H1238 indicates whole life, contact with the company will be needed to clarify this discrepancy.
Burial Insurance — A form of term insurance. By the terms of the burial insurance policy, burial insurance can only be used to pay the burial expenses of the insured.
The dividend accumulation is a countable resource, like the balance of a savings account.
The interest accrued on the dividends would be excluded from income when paid. Interest left to accumulate becomes part of the countable resource.
The following information must be included in the case record documentation:
Sources of verification include:
Revision 13-4; Effective December 1, 2013
HHSC excludes up to $1,500 per person for funds that have been set aside and designated for the burial expenses of:
The burial fund exclusion allows a person to designate up to $1,500 of various kinds of resources as burial funds. The burial fund exclusion works in conjunction with the life insurance exclusion described in Section F-4223, Life Insurance, because the $1,500 set aside for burial must be reduced by the face value (FV) of:
To be excluded, the person's funds must be:
Burial funds may be designated as such by:
A signed statement designating resources as set aside for burial must show the:
Use Form H1252, Designation of Burial Funds, for resources owned by the applicant, recipient or spouse (or parent in a minor child deeming budget) for a signed statement of designation.
Accept the person's allegation as to the date the person first considered the funds set aside for burial (even prior to application) unless there is evidence that the funds were used and replaced after that date.
Once the date that burial funds were considered set aside for burial has been established, the first month for which the exclusion affects the first-of-the-month resources determination is the latest of:
Note: The "separately identifiable" criteria above must be met before burial funds can be excluded. If the requirement is not met as of 12:01 a.m. on the first day of the "test" month, the exclusion cannot apply until the following month, even if the funds were considered as set aside for burial prior to the "test" month (see Section F-4227.3, Effective Date of Designation).
When designating a countable life insurance policy as a burial fund, the individual typically designates the policy itself rather than the CSV. This is the case because the CSV of a policy is payable only during the lifetime of the individual and thus cannot be used to bury the individual. However, since the CSV is the current resource value of the policy, it is the CSV which is applied toward the burial fund limit when determining countable resources.
When designating life insurance as a burial fund, the individual can also designate any dividend accumulations on the life insurance policy (see Section F-4224.1, Dividend Additions and Accumulations) as a burial fund. Dividend accumulations are a separate resource (that is, not considered as an increase in the value of the CSV) and must be designated as burial funds separate from the life insurance policy itself.
Note: A verbal designation is acceptable when the applicant/recipient or authorized representative is designating life insurance insuring the applicant/recipient (or spouse) and the case is due. A follow-up with a written statement from the recipient/authorized representative is required to continue the burial fund designation. The case also must reflect a special review to follow up for the written statement of designation.
Written documentation of the verbal statement from the applicant/recipient or authorized representative must contain the same information requested on Form H1252 for life insurance designation and must be in the case record documentation.
Burial funds are:
These funds must be clearly designated for the person's or spouse's burial, cremation or other burial-related expenses. Property other than that listed in this section is not considered burial funds and may not be excluded under the burial funds provision. For example, a car, real property, livestock, etc., are not burial funds.
Expenses for Burial Funds Exclusion Purposes
Expenses Included — Generally, expenses related to preparing a body for burial and any services prior to burial. Examples: transportation of the body, embalming, cremation, flowers, clothing, services of the funeral director and staff, etc.
Expenses Not Included — Usually, expenses for items used for interment of the deceased's remains. Such items may be subject to the burial space exclusion (see Section F-4214, Burial Spaces). However, items that do not qualify for the burial space exclusion (for example, a space being purchased by installment contract) may be excluded under the burial fund exclusion.
The originally designated amount of a burial fund is the amount set aside for burial, including excluded and non-excluded funds, but exclusive of interest and appreciation at the time of the most recent designation. Any amount can be designated for burial, but only the amount established in Section F-4228, Burial Fund Calculation, Step 3, can be excluded.
Note: The person or his authorized representative meets requirements for excluding burial funds by:
Use Form H1276, Burial Fund Designation Worksheet, which provides a step-by-step worksheet for calculating the amount of excluded burial funds.
Revision 10-4; Effective December 1, 2010
From the $1,500-per person (for the person, spouse or deemor) allowance for burial fund exclusions:
Note: If the amount of the burial exclusion reduces the total countable resource amount below the resource limit, the person is resource eligible. If the amount of the exclusion is insufficient, the person is not eligible. If joint funds are being designated for more than one individual, calculate each individual's designation separately. For example, a couple with a $1,000 joint savings account could designate $500 for each spouse or $750 for one spouse and $250 for the other. Their statement of designation or Form H1252, Designation of Burial Funds, must be specific.
An exclusion of burial funds does not continue from one period of eligibility to another across a period of ineligibility. If a person reapplies after he has been denied, and there is a break in coverage, HHSC applies the burial fund exclusion as if it had never existed before. The exclusion is subject to the $1,500 maximum and the provisions of this item.
If a person designates a whole life policy (or policies) for burial expenses, he must designate the total cash value of each policy.
If an ineligible spouse/parent has designated funds for burial and then applies for benefits, it is not necessary to redesignate fund for burial.
Revision 09-4; Effective December 1, 2009
If a person's resources exceed program limits, HHSC does not deny the case before determining if excess resources can be designated as burial funds and allowing the person the opportunity to do so. Use Form H1277, Notice of Opportunity to Designate Funds for Burial. A person may designate funds for burial at any time, not just at the point of ineligibility.
Revision 10-3; Effective September 1, 2010
HHSC accepts the person's statement about the date he considered the funds set aside for burial, unless there is evidence of tampering. The effective date of designation can be retroactive to the month of application, or prior months, if all criteria for designation are met at that time. Once designated, the funds remain burial funds until eligibility terminates or until the funds are tampered with.
When an ineligible spouse/parent has designated funds for burial and then applies for benefits, the following applies:
In spousal cases:
Notes:
Revision 10-4; Effective December 1, 2010
Based on policy in Section F-4227, Burial Funds, Section F-4227.1, Calculation of Available Burial Fund Exclusion, Section F-4227.2, Opportunity to Designate, and Section F-4227.3, Effective Date of Designation, use the following for determination of the burial fund calculation.
| Step | Procedure |
|---|---|
| 1 | Subtract from the $1,500 maximum burial fund exclusion the value of any irrevocable burial arrangement (for example, trust, contract, burial insurance) on the person whether the person owns it or not. |
| 2 | Also subtract from the $1,500-maximum burial fund exclusion the total face value of all excluded whole life insurance policies owned by the person. |
| 3 | The amount remaining is the amount available for burial fund exclusion. |
| 4 | Subtract the amount in Step 3 from the amount of burial funds designated by the person. |
| 5 | The remainder is a countable resource. If the remainder is a negative number, that amount can be designated as burial funds at a later date. |
Examples:
| Amount | Description |
|---|---|
|
$ 1,500 |
Maximum allowable designation |
|
– 1,200 |
Cash value of designated whole life insurance policy |
|
$ 300 |
Remaining available for burial fund designation |
|
$ 500 |
Savings account designated for burial |
|
$ 300 |
Available for burial fund designation |
|
$ 200 |
Counted toward resource limit |
|
$ 200 |
Countable value of designated savings account |
|
+ 1,700 |
Original savings account |
|
$ 1,900 |
Total Countable Resources as of 12:01 a.m. on February 1 of this year. |
Revision 09-4; Effective December 1, 2009
HHSC excludes from income and resource determinations interest that accumulates and becomes a part of excludable burial funds or appreciation in the value of an excludable burial fund. Interest/appreciation on excluded burial funds is not included in determining if the $1,500-maximum has been reached. Also excluded is the increased cash value of life insurance policies excluded under this policy, but payments made on a prepaid burial contact that increases the value of the contract are not excluded as appreciation.
Revision 09-4; Effective December 1, 2009
Example: The person became eligible in May 1988 with an original balance of $1,000 in the excluded burial fund account. The current balance is $1,166.40 in the designated savings account. The person now wants to increase the excludable burial fund balance by adding more money to this account. The person is not covered by any irrevocable trust and does not have any excluded whole life insurance. The person can add $500 to the burial fund without affecting resources. The $166.40 should be excluded as a resource. Any interest earned on this burial fund account is excluded.
Revision 10-3; Effective September 1, 2010
If a designated resource exceeded $1,500 at the initial designation and that resource has increased in value at the next annual review from accrued interest, dividends or inflation, calculate the countable amount of the burial fund as follows:
At the next annual review (if designated funds increase in value again), multiply the total value at the review by the percent determined at the initial designation. The percentage used at each review remains the same unless major changes, such as tampering to the fund, occur.
Example: At the initial application, the person designated a $2,000 savings account for burial:
| Amount | Description |
|---|---|
| $2,000 | Savings designated for burial |
| –1,500 | Designated burial fund allowance |
| $ 500 | Countable resource |
$500 ÷ $2,000 = 25% countable of the designated resource
At the annual review the following year:
| Amount | Description |
|---|---|
| $2,100 | Balance of designated savings (earned $100 in interest the first year) |
| × .250 | Countable of the designated resource |
| $ 525 | Total countable resources of the savings account |
Twenty-five percent of the total interest earned is considered for income in the eligibility and co-payment budgets.
At the annual review the following year:
| Amount | Description |
|---|---|
| Amount | Description |
| $ 2,225 | Balance of designated savings (earned $100 in interest the first year and $125 the second year) |
| × .250 | Twenty-five percent of the total interest earned |
| $556.25 | Total countable resources of the savings account |
Twenty-five percent of the total interest earned is considered for income in the eligibility and co-payment budgets.
Revision 09-4; Effective December 1, 2009
If the value of a resource previously excluded under burial designation fund exclusion was less than or equal to the allowable $1,500 at the time of designation, and the amount designated increased because of person action, such as additional payments, the increased amount which exceeds $1,500 is a countable resource.
If the amount designated exceeded $1,500 and increased in value due to person action, such as making monthly payments on a prepaid burial contract, the amount in excess of $1,500 is a countable resource.
Revision 09-4; Effective December 1, 2009
HHSC excludes from income and resource determinations interest that accumulates and becomes part of excludable burial funds.
If the amount designated for burial funds increased to over $1,500 because of person action plus accrued interest, dividends or inflation, HHSC must first determine the date of the additional payment and the date interest or dividends were paid.
If the person made the additional payment before the interest was paid, determine the countable amount using the following steps:
At the next review, if additional payments are made before interest is paid, the percentage changes again. Therefore, repeat the steps.
Example: At the initial application, Bill Brooks designated a $2,000 savings account for his burial. $1,500 (or 75.0%) was excluded and $500 (or 25.0%) was countable.
At the annual review, the savings account record shows:
| Amount | Description |
|---|---|
| $ 2,000 | Previous balance 12/31 |
| 100 | Additional payment on 1/5 |
| 25 | Interest on 3/1 |
| 25 | Interest on 6/1 |
| 25 | Interest on 9/1 |
| 25 | Interest on 12/1 |
| $ 2,200 | Current value of account |
Determine the countable value using the following steps:
Step 1.
| Amount | Description |
|---|---|
| $ 500 | Countable at prior designation |
| + 100 | Additional payment |
| $ 600 | Total |
Step 2.
$600 + $2,100 (value after payment, but before interest) = .286 or 28.6%
Step 3.
| Amount | Description |
|---|---|
| $ 2,200 | Current value of account |
| × .286 | Percentage countable |
| $ 629.20 | Countable resource of the designated savings account |
If the person made the additional payment after the interest was paid:
At the next review, if additional payments are made after interest was paid, repeat the steps.
Example: At the initial application, Tom Taylor designated a $2,000 savings account for his burial. $1,500 (or 75.0%) was excluded and $500 (or 25.0%) was countable.
At the annual review, the savings account record shows the following:
| Amount | Description |
|---|---|
| $ 2,000 | Previous balance 12/31 |
| 100 | Additional payment on 1/5 |
| 25 | Interest on 3/1 |
| 25 | Interest on 6/1 |
| 25 | Interest on 9/1 |
| 25 | Interest on 12/1 |
| 100 | Additional payment on 12/5 |
| $ 2,200 | Current value of account |
The eligibility specialist determined the countable value using the following steps:
Step 1:
| Amount | Description |
|---|---|
| $2,000 | Balance on savings |
| + 100 | Interest payments |
| $2,100 | Total Savings |
| ×. 250 | % previously determined |
| $ 525 | Countable portion of the resource prior to additional payments |
Step 2.
| Amount | Description |
|---|---|
| $ 525 | Countable portion of the resource prior to additional payments (total from Step 1) |
| + 100 | Additional Payment |
| $ 625 | Countable resource value |
Step 3.
| Amount | Description |
|---|---|
| $625 | Countable resource value (from Step 2) |
| + $2,200 | Current value of account |
| .284 or 28.4% | Total |
Revision 09-4; Effective December 1, 2009
If a person designates funds for burial, he is establishing that the funds will not be used for any other purpose. Therefore, if the designated funds are used for purposes other than the person's burial, they are really not designated for burial. The asset becomes a countable resource as of 12:01 a.m. of the first day of the month following the month the funds were used for other purposes.
HHSC does not consider that a person tampered with burial funds if he:
If funds are tampered with, they may be redesignated. Request restitution for months in which the designation was broken and the person's resources exceeded the appropriate resource limit. Redesignating may mean a different amount in the designated burial fund and possibly a new percentage of exclusion. It always means a new effective date of the designation.
Revision 09-4; Effective December 1, 2009
If a person's application or redetermination form shows that he has a safe deposit box, ask him about its contents. If the contents indicate ownership of resources, refer to the appropriate handbook sections for handling these resources.
The following information must be included in the case record documentation:
Sources of verification include:
Revision 09-4; Effective December 1, 2009
Livestock maintained as part of a trade or business or exclusively for home consumption is not counted; otherwise, the livestock's current market value is a countable resource.
If the livestock meets the equity value and rate of return criteria for nonbusiness property, the livestock used to produce income may also be excluded.
If animals are maintained as part of a trade or business or exclusively for home consumption, do not verify the value. If the person's statement appears to be reasonable and the actual value could not affect eligibility, verification is also unnecessary. In all other cases, verify the current market value for the number and kind of animals reported.
The following information must be included in the case record documentation:
Sources of verification include:
Revision 09-4; Effective December 1, 2009
See Section F-1260, Conversion of Resources.
If a person converts nonliquid resources to cash, subtract expenses from the gross amount for which the person sold the resource and count the net value of resources resulting from the sale. Examples of expenses are cost of advertising, legal fees and cost of repairs to make the resource salable.
Determine the type of resource sold and whether the person received the current market value. If he did not, use the transfer-of-resources policy.
Determine whether the person is eligible based on his total countable resources, including the net amount received from the sale.
If two or more resources are sold and the person incurs a loss in the sale of one of them, the person may not use this loss to lower the net proceeds from the sale of the other resources(s).
If the net value of all countable resources exceeds the applicable resource limitation, the person is not eligible unless the property can be excluded for another reason.
See Chapter J, Spousal Impoverishment; Section F-2000, Resource Exclusions – Limited and Related to Exempt Income; Section F-3000, Home; and Section F-5000, Potential Resource Exclusions.
If a person converts nonliquid resources to cash, subtract expenses from the gross amount for which the person sold the resource and count the net value of resources resulting from the sale. Examples of expenses are cost of advertising, legal fees and cost of repairs to make the resource salable.
Determine the type of resource sold and whether the person received the current market value. If he did not, use the transfer-of-resources policy.
Determine whether the person is eligible based on his total countable resources, including the net amount received from the sale.
Verify and document the gross amount that the person received from the sale of his resources and any expenses relating to the sale. Also verify the current market value of the resource.
Sources for verifying the amount received from the sale of a resource are:
Sources for verifying expenses related to the sale of a resource are:
Sources for verifying the current market value of the resource are:
Revision 09-4; Effective December 1, 2009
HHSC may exclude as a resource property essential to self-support, but count the income that the property produces.
Liquid resources do not qualify for exclusion as property essential to self-support unless they represent necessary assets of a trade or business. See Section F-4330, Business Property.
Revision 09-4; Effective December 1, 2009
A person (and spouse, if any) is allowed to have nonbusiness property that is producing income necessary to self-support, if the:
If a person's equity in income-producing nonbusiness property exceeds $6,000, and the property is producing a net annual rate of return of at least 6%, the excess equity value is a countable resource. For example, total equity value minus $6,000 equals the amount to be counted, together with any other resources.
If the net annual rate of return is less than 6% of the equity value, the total equity value is a countable resource.
In some instances, a person may own more than one income-producing nonbusiness property. To be excludable, each property must separately produce a 6% rate of return. A maximum of $6,000 may be excluded from the combined equity value of all properties producing a 6% net annual rate of return. The combined equity value in excess of $6,000 is a resource.
Note: This exclusion does not apply to liquid assets. For example, a note cannot be excluded under the $6,000/6% policy.
Nonbusiness property that is essential to self-support includes, for example, rental property, leased farm property and income-producing mineral rights.
Confirm that the equity value of the resource does not exceed $6,000, and that the resource produces a net annual rate of return of at least 6% of the equity value. In determining equity value, deduct any encumbrances such as mortgages or liens.
Sources for verifying ownership include:
Sources for verifying income include:
Sources for verifying the current market value include:
Reference: Verification procedures for mineral rights are explained in Section F-4213, Mineral Rights.
Revision 10-3; Effective September 1, 2010
Vernon Underwood owns farmland with a verified equity value of $4,500. Mr. Underwood has leased the land for $800 a year. Because the equity value of the property is less than $6,000, and the net annual rate of return exceeds the required minimum of 6%, Mr. Underwood's farmland is excluded as a resource.
George Best owns three lots, none of which is home property. A billboard company rents the lots from Mr. Best to use for advertising. The verified equity value of the lots and the amounts of rent received are:
| Property | Equity Value | Annual Rent |
|---|---|---|
| Lot A | $ 800 | $ 60 |
| Lot B | 600 | 50 |
| Lot C | + 5,000 | + 500 |
| Total | $ 6,400 | $ 610 |
Although each lot is worth less than $6,000, and each is producing a net annual rate of return of more than 6% of the equity value, the combined value of the three lots exceeds $6,000. Count the excess equity value of $400 as an available resource.
Ruby Markham has mineral rights with a verified equity value of $7,000. Her net annual income from the mineral rights at the time of redetermination was $450. She had no other countable resources.
| Amount | Description |
|---|---|
| $7,000 | Total equity value |
| –6,000 | Excluded |
| 1,000 | Excess equity value |
| 0 | Other resources |
| $1,000 | Total countable resources |
Ms. Markham remained eligible because she was receiving more than 6% of the equity value of the mineral rights, and the excess equity, combined with any other resources, did not exceed the resource limit.
At a subsequent redetermination, verification received indicated that Ms. Markham's equity in the mineral rights remained at $7,000. The net annual rate of return, however, had changed to $280. An officer of the oil exploration company verified that production would continue to decrease during the next two years. Because the net annual rate of return was less than 6% of the equity value of $7,000, the mineral rights are a countable resource and Ms. Markham is no longer eligible for assistance.
Revision 09-4; Effective December 1, 2009
A person's non-business property that is valued at $6,000 or less can be excluded even if it produces less than a 6% annual rate of return, if all of the following conditions are met:
The person must send a convincing written explanation to exclude the property temporarily. Information from other knowledgeable sources may also be appropriate. Supervisory concurrence with the decision is recommended.
If granting an exclusion, review the case at each redetermination and again near the end of the time allowed (18 months from the end of the calendar year of the unusual incident).
Document in the case record the reason for the exclusion. Also show the rate of return that is temporarily being received.
Revision 09-4; Effective December 1, 2009
HHSC excludes personal property that a person uses in connection with his employment. Also excluded is any resource that a person uses exclusively to produce items for home consumption and is a significant factor in his support and maintenance.
Resources used to produce items for home consumption include, but are not limited to:
At application and at each redetermination, determine whether a resource used for producing items for home consumption is essential to the person's self support. If the resource, or the person's use of it for self-support, is questionable, obtain supervisory concurrence.
On the worksheet, record information about the resource owned and the reason for exclusion or nonexclusion.
Revision 09-4; Effective December 1, 2009
Property essential to self-support that is used in a person's trade or business is excluded from resources regardless of value or rate of return. Excludable business property is tangible business assets, including, but not limited to, land and buildings, equipment and supplies, inventory, livestock, motor vehicles and all liquid assets needed for the business.
Personal property used in a person's trade or business is also excluded from resources. Excluded personal property includes, but is not limited to, tools, safety equipment and uniforms.
To be considered as an excludable resource, business property (including personal, business-related property) must be in current use in the person's trade, business or employment. If the property is not in current use, HHSC excludes the property only if it has been previously used by the person, and if it is reasonable to expect that it will be used again.
When a person alleges owning trade or business property, determine if a valid trade or business exists and if it is in current use. Obtain the following documentation:
Revision 09-4; Effective December 1, 2009
If a blind or disabled person has an approved plan for achieving self-support (PASS), the MEPD Policy Section must approve the plan.
If the plan is approved, do not count the resources and income that are essential for accomplishing the objectives of the plan.
A counselor in the state agency for vocational rehabilitation formulates the majority of plans. However, the Veterans Administration, public or private social agencies or groups, anyone assisting the person, or the person himself may formulate plans.
Because an approved PASS is limited in duration, be sure to check the status of the plan at each redetermination and review the case again before the plan's termination date.
Keep in the case record a copy of the PASS. Record in the case record any additional information pertaining to the plan.
Revision 09-4; Effective December 1, 2009
See Section F-1000, General Principles of Resources, for consideration of ownership, accessibility and other treatment aspects of resources.
See Section F-1410, Deeming for Spouses, and Section F-1420, Deeming for Children, for exclusion of pensions when deeming resources from a spouse or parent.
See Section F-2000, Resource Exclusions – Limited and Related to Exempt Income.
See Section F-2100, Resources Exclusions – Limited, for treatment of certain resources that have a time limit on the exclusion or a dollar limit to the exclusion.
See Section F-2200, Resources Exclusions Related to Exempt Income, for treatment of certain resources that are associated with exempt income in Section Section E-2000, Exempt Income.
In Section F-4000, Liquid and Nonliquid Resources, the significance of distinction between liquid and nonliquid is necessary for the use of the exclusion for property essential to self-support. Liquid resources do not qualify for exclusion as property essential to self-support unless they represent necessary assets of a trade or business.
Revision 09-4; Effective December 1, 2009
A list of common resource exclusions follows. However, other exclusions, depending on the situation or on new federal regulations, could exist:
| Exclusion | Section No. | No Limit on Value and /or Length of Time | Limit on Value and /or Length of Time |
|---|---|---|---|
| Home Serving as the principal place of residence, including the land on which the home stands and other buildings on that land |
F-3000 | X F-3600 |
|
| Funds from the sale of a home if reinvested timely in a replacement home | F-3400 | X | |
| Jointly-owned real property which cannot be sold without undue hardship (due to loss of housing) to the other owner(s) | F-1221 | X | |
| Real property that was previously the home for so long as the owner's reasonable efforts to sell it are unsuccessful | F-4211 F-3130 F-3500 |
X | |
| Restricted, allotted Indian land if the Indian/owner cannot dispose of the land without permission of other individuals, his/her tribe or an agency of the federal government | F-2240 F-1220 |
X | |
| Automobile serving for transportation for medical | F-4221 | ||
| Life insurance, depending on its face value | F-4223 | X | |
| Burial space or plot | F-4214 | X | |
| Burial funds for an applicant/recipient and/or his/her spouse | F-4227 | X | |
| Certain prepaid burial contracts | F-4160 | X | |
| Household goods and personal effects | F-4222 | X | |
| Property essential to self-support | F-4300 | X | |
| Resources of a blind or disabled person which are necessary to fulfill an approved plan for achieving self-support | F-4400 | X | |
| Retained retroactive SSI or RSDI benefits | F-2150 | X | |
| Radiation Exposure Compensation Trust Fund payments | F-2200 | X | |
| German reparation payments made to World War II Holocaust survivors | F-2200 | X | |
| Austrian social insurance payments | F-2200 | X | |
| Japanese-American and Aleutian restitution payments | F-2200 | X | |
| Federal disaster assistance received on account of a presidentially declared major disaster, including interest accumulated thereon | F-2200 | X | |
| Cash (including accrued interest) and in-kind replacement received from any source at any time to replace or repair lost, damaged or stolen excluded resources | F-1270 | X | |
| Certain items excluded from both income and resources by other federal statutes | F-2260 | Varies | |
| Agent Orange settlement payments to qualifying veterans and survivors | F-2260 | X | |
| Victims' compensation payments | F-2210 | X | |
| State or local relocation assistance payments | F-2170 | X | |
| Tax refunds related to Earned Income Tax Credits | F-2130 | X |
Revision 20-3; Effective September 1, 2020
The trusts covered in this section are:
Revision 09-4; Effective December 1, 2009
A trust acts as an "account" created to hold assets. For example, trusts may hold assets for minors or adults who have been determined to be incompetent. Trusts also may be used to hold and distribute assets in such a way as to reduce income or estate taxes.
A trust includes any legal instrument, device or arrangement that may not be called a trust under state law, but that is similar to a trust. The characteristics of all trusts are primarily the same.
Elements such as trustees, trustors, beneficiaries, funding of the trust and whether or not the trust is revocable mean the same thing in any trust.
Resource and income eligibility treatment of trusts are different based on the terms of the trust.
The trustee, also known as the grantee, can be anyone — spouse, guardian, a financial institution or an individual holding a power of attorney.
If the person is the trustee and has the legal right to use the trust for the person’s own benefit, then the trust is just like a bank account — all income and resources are available to that person.
A testamentary trust is established by will.
An inter vivos trust is established while the person creating the trust is still living.
There is a possibility that a person is a beneficiary of one of the above types of trusts when the person is a beneficiary of the trust, but his assets were not used to form the corpus of the trust.
Omnibus Budget Reconciliation Act (OBRA) of 1993 (Public Law 103-F-6F-6) made no changes in policy for testamentary and inter vivos trusts.
For trusts established using the person's assets, see Section F-6200, Medicaid-Qualifying Trust, and Section F-6300, Trusts (Aug. 11, 1993, and After).
Resources in a testamentary or inter vivos trust are countable if the person is the trustee and has the legal right to revoke the trust and use the money for his own benefit. If he does not have access to the trust, the trust is not counted as a resource. If a trust is not counted as a resource, payments (disbursements) from the trust made to or on behalf of the person are considered income (except payments [disbursements] used to purchase medical or social services for the person). If the person's access to a trust is restricted, that is, only the trustee (other than the person) or the court may withdraw the principal, then the value of the trust as a resource is not counted. This is true even if:
Request the following:
A legal review of the trust document (or will) is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. Ask the attorney to review the documents and determine if the trust:
Based on the regional legal review, count the value of the corpus of the trust as an available resource if the:
Based on the regional legal review, do not count the value of the corpus of the trust as an available resource if the:
In addition, the corpus of the trust is not counted as an available resource when the person is not the trustee, even if the:
See Section E-3312, Testamentary and Inter Vivos Trusts Payments.
See Appendix XVI, Documentation and Verification Guide.
Note: Contact the regional attorney for help interpreting legal documents.
Revision 09-4; Effective December 1, 2009
A Medicaid-qualifying trust (MQT) is one that the person, his spouse, guardian or anyone holding his power of attorney establishes using the person's money. The person is the beneficiary of a Medicaid-qualifying trust. A Medicaid-qualifying trust is one that was established between June 1, 1986, and Aug. 10, 1993. Trusts which meet the MQT definition and were established prior to June 1, 1986, are treated as standard inter vivos trusts.
Note: Public Law 103-66 (OBRA '93) revised policy for trusts established using the person's money on or after Aug. 11, 1993.
For Medicaid-qualifying trusts established before that date, continue using the policy in this section. If provisions for a change in the trust were included in the document before Aug. 11, 1993, use the policy governing Medicaid-qualifying trusts for the change. If the trust was amended on or after Aug. 11, 1993, apply the policy in Section F-6300, Trusts (Aug. 11, 1993, and After).
Public Law 99-272 states that distributions from Medicaid-qualifying trusts are considered available to the person whether or not distributions are actually made. The amount available is the maximum amount the trustee could disburse if he used his full discretion under terms of the trust. If distribution is not made, the maximum amount the trustee may distribute if he used his full discretion under terms of the trust is considered an available resource. If trusts do not specify an amount for distribution, and if the trustee has access to and use of the principal or the income from the trust, then the entire amount is considered an available resource that may be used for the person's benefit.
Examples:
Revision 09-4; Effective December 1, 2009
A Medicaid-qualifying trust established for a minor child using the lump sum payment received in settlement of Zebley vs. Sullivan is excluded from all consideration of eligibility under undue hardship provisions. Undue hardship exists because the person would otherwise be forced to spend the settlement funds on services now covered by Medicaid when the funds will be needed once the person reaches majority. A trust established using Zebley settlement funds is excluded under undue hardship policy, even when the trust is set up on or after Aug. 11, 1993.
Zebley funds may be used to establish pooled trusts detailed in Section F-6700, Exception Trusts.
Revision 09-4; Effective December 1, 2009
The Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66) revised policy concerning trusts established on or after Aug. 11, 1993, using the person's assets. The trust provisions apply to all MEPD applicants/recipients, whether in an institutionalized setting or not. However, the penalty period for transfers of assets into irrevocable trusts applies only to a person in an institutional setting.
A trust includes any legal instrument, device or arrangement which may not be called a trust under state law, but which is similar to a trust. That is, it involves a grantor who transfers property to an individual or entity with fiduciary obligations with the intention that it be held, managed or administered by the individual or entity for the benefit of the grantor or others. This can include (but is not limited to) escrow accounts, investment accounts, pension funds, irrevocable burial trusts, limited partnerships and other similar entities managed by an individual or entity with the fiduciary obligations.
Note: A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
The characteristics of the trust include the following:
If the person's assets comprise only part of the corpus, the trust policies apply to that portion of corpus consisting of the person's former assets.
Example: The person established a trust on Aug. 15, 1993, with a corpus of $20,000. The person contributed $8,000 to the corpus and her adult children contributed $12,000. The trust policies apply to the $8,000 placed by the person into trust.
Revision 12-2; Effective June 1, 2012
A limited partnership is an investment arrangement often used as an estate-planning device. A limited partnership must be filed with the Secretary of State. There are general partners and limited partners. General partners manage and make all decisions pertaining to the partnership. Limited partners own a percentage of the partnership, but they are not active partners and have no voice in management. The ownership interest held by limited partners is not business property, but represents only an investment, much like stock shares in any corporation. As investors, they receive a share of the profits and losses. A "family limited partnership" is simply one that is restricted to family members.
A limited partnership is "similar legal device" to a trust.
Trust provisions of the Omnibus Budget Reconciliation Act of 1993 direct that the term "trust" includes any legal device similar to a trust.
The general partners act as trustee, and the limited partners are the equivalent of beneficiaries of an irrevocable trust. To the extent that the general partners can make each limited partner's ownership interest available to him, that interest is a countable resource and not a transfer of assets. However, a transfer of assets has occurred to the extent that:
If transfer-of-assets provisions apply, the look-back period is 60 months.
Limited partnership agreements should be referred to the regional attorney. Medicaid eligibility specialists apply the appropriate policy based on the regional attorney's evaluation of the terms of the agreement.
See Chapter E, General Income, for treatment of income.
Revision 09-4; Effective December 1, 2009
A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
The corpus is an available resource.
Example: On Aug. 11, 1993, the person transferred $50,000 into a revocable trust. Terms of the trust do not permit the trustee to pay any portion of the corpus to or for the benefit of the person, but the person can revoke the trust. Since the trust is revocable, the entire $50,000 corpus is a countable resource.
Payments from the corpus or income generated by the corpus, to or for the benefit of the person, excluding payments for medical/social services, are income.
Payments from the corpus or income generated by the corpus for any other purpose are a transfer of assets.
Examples:
When the home is in an irrevocable or revocable trust ("Living Trust"), see Section F-3300, The Home as a Countable Resource.
Revision 09-4; Effective December 1, 2009
A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
If there are any circumstances under which payment from an irrevocable trust could be made to or for the benefit of the person, then:
Although termed irrevocable, a trust which provides that the trust can only be modified or terminated by a court is a revocable trust because the person or his responsible party can petition the court to amend or terminate the trust.
Although termed irrevocable, a trust that will terminate if a certain circumstance occurs during the lifetime of the person, such as the person leaving the nursing facility and returning home, is a revocable trust.
If there are no circumstances under which payments from some portion or all of an irrevocable trust, or income generated by the trust, could be made available to a person, then the corpus, or portion of the corpus, and the generated income are considered a transfer of assets.
The date of transfer is the date the trust was established, or if terms of the trust foreclose payment to the person at a later date, the date payment is foreclosed to the person. The value of the trust, for calculating the penalty period, includes any payments made from the trust for whatever purpose after the date the trust was established or, if later, the date payment to the person was foreclosed. If funds were added to that portion of the trust after these dates, including interest earned by the trust, the addition of those funds is considered to be a new transfer of assets, effective on the date the funds are added to the trust. Thus, in treating portions of a trust which cannot be paid to a person, the value of the transferred amount is no less than its value on the date of establishment or foreclosure, and may be greater if funds were added to the trust after that date.
Revision 09-4; Effective December 1, 2009
A legal review of the instrument, device or arrangement that establishes the trust is required. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
The following policy applies to trusts without regard to:
This means that any trust which meets the basic requirements outlined in previous sections can be counted in determining eligibility for Medicaid. No clause or requirement in the trust, no matter how specifically it applies to Medicaid, or other federal or state programs (that is, an exculpatory clause), precludes a trust from being considered under the rules of this section. While exculpatory clauses, use clauses, trustee discretion or restrictions on distributions do not affect a trust's countability, they do have an impact on how the various components of specific trusts are treated.
Revision 09-4; Effective December 1, 2009
A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
Payments to or on behalf of the person:
Payments are considered to be made to the person when any amount from the trust, including an amount from the corpus or income produced by the corpus, is paid directly to the person, or to someone acting on his behalf, such as a guardian or legal representative.
Payments made for the benefit of the person are payments of any sort, including an amount from the corpus or income produced by the corpus, paid to another entity so that the person derives some benefit from the payment. For example, such payments could include purchase of clothing or other items, such as a radio or television for the person. Such payments could also include payment for services the person may require, or care, whether medical or personal, that the person may need. Payments to maintain a home would also be payments for the benefit of the person.
A payment to or for the benefit of the person is counted under trust provisions only if such a payment is ordinarily counted as income. For example, payments made on behalf of a person for medical care are not counted in determining income eligibility. Thus, such payments are not counted as income under the trust provision.
Circumstances under which payments can or cannot be made:
In determining whether payments can or cannot be made from a trust, any restrictions on payments, such as use restrictions, exculpatory clauses or limits on trustee discretion that may be included in the trust, must be considered.
Example: If the trust provides that the trustee can disburse only $1,000 out of a $20,000 trust, only the $1,000 would be treated as a payment (disbursement) that could be made. The remaining $19,000 would be treated as an amount that cannot, under any circumstances, be paid to or for the benefit of the person.
When a trust provides, in some manner, that a payment (disbursement) can be made, even though that payment (disbursement) may be sometime in the future, the trust is treated as providing that the payment (disbursement) can be made from the trust.
Example: If a trust contains $50,000 that the trustee can pay to the person only in the event that the person needs, for example, a heart transplant, the full amount would be considered as payment (disbursement) that could be made under some circumstances, even though the likelihood of payment (disbursement) is remote.
Revision 09-4; Effective December 1, 2009
A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
The Omnibus Budget Reconciliation Act of 1993 identifies several types of trusts which are exceptions to the trust provisions stated in Section F-6300, Trusts (Aug. 11, 1993, and After). These exceptions apply only to trusts established on or after Aug. 11, 1993.
Revision 20-3; Effective September 1, 2020
A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review.
Special needs trust:
A special needs trust is a revocable or irrevocable trust established with the assets (income or resources) of a person under age 65 who meets the SSI program's disability criteria. The trust must be established for the person’s benefit by a parent, grandparent, legal guardian, a court or the person. Beginning Dec. 13, 2016, people under age 65 who meet the SSI program's disability criteria may establish a special needs trust for their own benefit. The trust must include a provision that the state is designated as the residuary beneficiary to receive, at the person's death, funds remaining in the trust equal to the total amount of Medicaid paid on their behalf.
Use Form H1210, Subrogation (Trusts/Annuities/Court Settlements), to report to the Provider Claims Payment Section any potential paybacks to the state as the residuary beneficiary of special needs trusts.
This trust exception continues even after a person becomes age 65 if the individual continues to meet the disability criteria for the SSI program. However, additions or augmentations to the trust after the person becomes age 65 are a transfer of assets.
If a person is receiving disability benefits from SSI, RSDI or Railroad Retirement (RR), their disability is automatically established. Verify that the SSI, RSDI or RR benefit is a disability benefit. Otherwise, disability must be established.
Related Policy
Documentation and Verification Guide, Appendix XVI
Revision 09-4; Effective December 1, 2009
The trust is not counted as a resource.
Revision 18-1; Effective March 1, 2018
Any distribution paid directly from a trust to the individual or to a third party for the benefit of the individual is unearned income to the individual in the month of receipt, except:
A payment to or for the benefit of the individual is counted under trust provisions only if such payment is ordinarily counted as income.
Revision 09-4; Effective December 1, 2009
Transfer-of-assets provisions do not apply when such a trust is established. However, if assets are transferred to another party from the corpus or income generated by the corpus, then the policy in Chapter I, Transfer of Assets, applies.
Revision 09-4; Effective December 1, 2009
A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
Pooled trust:
Note: Zebley funds may be used to establish pooled trusts.
A pooled trust is a revocable or irrevocable trust containing the assets of a person who meets SSI's definition of disability and which satisfies the following conditions:
Note: Use Form H1210 to report to the Provider Claims Payment Section any potential paybacks to the state as the residuary beneficiary of pooled trusts.
Examples of pooled trusts are:
Revision 09-4; Effective December 1, 2009
The trust is not counted as a resource.
Revision 18-1; Effective March 1, 2018
Any distribution to or for the benefit of the person from corpus or income generated by the trust is countable income, except the following distributions:
A payment to or for the benefit of the person is counted under trust provisions only if such payment is ordinarily counted as income.
Revision 09-4; Effective December 1, 2009
Transfer-of-assets provisions do not apply when a pooled trust is established for the benefit of a person under age 65. If the person is age 65 or older, or if the person's portion of the assets in the trust are transferred to another party, then the policy in Chapter I, Transfer of Assets, applies.
Revision 16-4; Effective December 1, 2016
When an applicant is income ineligible in an institutional setting, see Section B-2500, Explaining Policy vs. Giving Advice, to determine the appropriate actions to take and the actions to avoid. See Appendix XXXVI, Qualified Income Trusts (QITs) and Medicaid for the Elderly and People with Disabilities (MEPD), for more information concerning a QIT and a sample QIT document.
Although the use of a QIT can overcome the special income limit for MEPD eligibility for institutional or Home and Community-Based Services waiver programs, it is not available to individuals in Community Attendant Services (CAS) who are income ineligible.
If a QIT is received, a legal review of the instrument, device, or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the QIT documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
Qualified income trust (QIT):
A QIT is an irrevocable trust established for the benefit of an individual and/or the individual's spouse, the corpus of which is composed only of the individual's income (including accumulated income). The trust must include a provision that the state is designated as the residuary beneficiary to receive, at the individual's death, funds remaining in the trust equal to the total amount of funds Medicaid paid on the individual's behalf. Use Form H1210, Subrogation (Trusts/Annuities/Court Settlements), to report to the Provider Holds and Recoupment Unit any potential paybacks to the state as the residuary beneficiary of QITs.
The following lists the characteristics of a QIT.
Revision 09-4; Effective December 1, 2009
The trust is not counted as a resource.
Revision 16-4; Effective December 1, 2016
Income directed to the trust is disregarded from countable income when testing eligibility for institutional or Home and Community-Based Services (HCBS) waiver programs. Income must be directed to the trust account during the calendar month in which it is received. Any source of non-exempt/non-excludable income which is not directed to the QIT account during the calendar month of receipt is countable income for that month.
For the initial month that a QIT is established, a partial deposit of the income for which the trust is established will not invalidate the trust and the entire amount of the income source(s) will be disregarded from countable income for that month. An individual may have used some of the monthly income to pay expenses prior to the date the QIT is established so the entire source(s) may not be available to open the QIT account. If only a partial deposit is made in the initial month, prior to certification, staff must verify that the entire amount of the income source(s) for which the QIT is established is being deposited into the QIT account subsequent month or the QIT is considered invalidated.
If countable income exceeds the institutional income limit, the individual is income-ineligible for the month. Applicants may not be certified for any calendar month(s) in which they are income-ineligible. For active individuals, restitution is requested in the amount of the vendor payment for any calendar month(s) in which they are income-ineligible.
Notes:
Examples:
The individual was certified for Medicaid in September. The QIT calls for all income (totaling $3,600) to be directed to the trust account. During the redetermination in August of the following year, the eligibility specialist learns that income checks for June were not deposited to the trust account until July. Because the person was ineligible for June, the eligibility specialist requests restitution for that month in the amount of the vendor payment.
Income directed to the trust is not disregarded in determining eligibility for SSI or non-institutional medical assistance programs: Qualified Medicare Beneficiaries, Special Low-Income Medicare Beneficiaries, or Community Attendant Services.
Income paid from the trust for co-payment for institutional or Home and Community-Based Services waiver services or to purchase other medical services for the person is not countable income for eligibility purposes. Income paid from the trust directly to the person or otherwise spent for his benefit is countable income for eligibility purposes.
Examples of countable income include cash distributions directly to the individual and direct payments (disbursements) from the trust for the individual's hair salon services. These distributions do not invalidate the trust; however, they are countable income in the month of distribution. If countable income exceeds the institutional limit, the individual is income ineligible for that month. Eligibility specialists may not certify applicants for any month(s) in which they are income ineligible. For active individuals, the eligibility specialist requests restitution for any month(s) in which the individual was ineligible. The eligibility specialist must test for ongoing eligibility.
The individual cannot use income from the trust to purchase eligibility for any HCBS waiver program. If the trustee directs to the trust account different sources of income other than those identified in the QIT document, but the entire income source(s) is deposited and countable income remains within the institutional income limit, eligibility is not affected.
Example: The individual's income totals $3,600, consisting of $600 Social Security and $3,000 private pension. The QIT calls for all income to be directed to the trust account. At redetermination, the eligibility specialist learns that the trustee is directing only the private pension to the trust account. Since the individual's countable income totals $600, the individual remains income-eligible.
If the trust instrument requires that the income placed in the trust must be paid out of the trust for institutional or HCBS waiver services provided to the individual, there is no transfer of assets because the individual receives fair market value for the income that was placed into the trust. However, if there is no such requirement or the income is not used for the individual's care, transfer of assets provisions apply. The income must be paid out by the end of the month following the month funds were placed in the trust to avoid transfer provisions. Because transfer of assets is not imposed for transfers of assets between spouses, QIT provisions that allow payments to or for the benefit of the individual's spouse do not result in a transfer of assets penalty.
Institutional care co-payment and community-based care co-payment calculations are based on the individual's total income (income directed to the trust as well as income not directed to the trust), less the standard co-payment deductions. Costs of trust administration are not deducted in the co-payment calculation; however, legal and accounting fees necessary to maintain the trust can be paid from the trust without incurring a transfer penalty.
VA aid-and-attendance benefits, housebound allowances and reimbursements for unusual or continuing medical expenses are exempt from both eligibility and co-payment calculations. However, if an individual deposits these payments into a QIT account, they are countable for co-payment calculations. If an individual receives a VA pension that includes aid-and-attendance benefits, housebound allowances or reimbursements for unusual or continuing medical expenses, the individual may separate the aid-and-attendance benefits, household allowances or reimbursements for unusual or continuing medical expenses from the VA pension before depositing the VA pension into the QIT account. Aid-and-attendance benefits, housebound allowances or reimbursements for unusual or continuing medical expenses are not income for Medicaid eligibility determinations.
The income placed in a QIT will be disregarded for eligibility purposes for the first month that the individual has a valid signed trust and enough income is placed in the account to reduce the remaining income below the eligibility limit. For the initial month that a QIT is established, even if only a partial payment of the income for which the trust is established is deposited, the entire income source is disregarded for that month.
Revision 09-4; Effective December 1, 2009
When application of the trust provisions would create an undue hardship, those provisions do not apply. Undue hardship exists when application of the trust provisions would deprive the person of medical care so that his health or his life would be endangered. Undue hardship also exists when application of the trust provisions would deprive the person of food, clothing, shelter or other necessities of life.
Undue hardship does not exist if a person is inconvenienced or must restrict his lifestyle, but is not at risk of serious deprivation. Undue hardship relates to hardship to the person, not relatives or responsible parties of the person.
Before requesting a waiver of the trust provisions on the grounds of undue hardship, the person must make reasonable efforts to recover assets placed in trust, such as petitioning the court to dissolve the trust. If a person claims undue hardship, HHSC must make a decision on the situation as soon as possible, but within 30 days of receipt of the request for a waiver of the trust policy. The person has the right to appeal an adverse decision on undue hardship.
Minimum case documentation includes a written statement explaining the person's or grantor's reasons for establishing the trust, why the person's needs cannot be met and why there is undue hardship for the person.
The supervisor must sign off on all undue hardship cases.
Revision 13-2; Effective June 1, 2013
(a) In this section:
(1) an employment-related annuity means an annuity that provides a return on prior services, as part of or in a similar manner to a pension or retirement plan; and
(2) a retirement-related annuity means an annuity purchased by or on behalf of an annuitant in an institutional setting.
(b) An employment-related annuity or a retirement-related annuity established before February 8, 2006, is not a countable resource. Income from such an annuity is treated in accordance with 20 CFR §§416.1120-416.1124.
(c) An employment-related annuity established or having a transaction on or after February 8, 2006, is not a countable resource. Income from such an annuity is treated in accordance with 20 CFR §§416.1120-416.1124.
(d) A retirement-related annuity with a purchase or transaction date on or after February 8, 2006, is not a countable resource, if the annuitant's income eligibility is determined under the special income limit. Income from such an annuity is treated in accordance with 20 CFR §§416.1120-416.1124, if the annuity:
(1) is an annuity described in subsection (b) or (q) of §408 of the Internal Revenue Code of 1986; or
(2) is purchased with proceeds from:
(A) an account or trust described in subsection (a), (c), or (p) of §408 of the Internal Revenue Code of 1986;
(B) a simplified employee pension (within the meaning of §408(k) of the Internal Revenue Code of 1986; or
(C) a Roth IRA described in §408A of the Internal Revenue Code of 1986.
(a) This section describes the Texas Health and Human Services Commission's (HHSC's) treatment of nonemployment-related annuities purchased or having a transaction date before February 8, 2006. In this section, a nonemployment-related annuity means a revocable or irrevocable annuity a person may purchase to provide income.
(b) A nonemployment-related annuity is not a countable resource if the annuity:
(1) is irrevocable;
(2) pays out principal in equal monthly installments and pays out interest in either equal monthly installments or in amounts that result in increases of the monthly installments at least annually;
(3) is guaranteed to return within the person's life expectancy at least the person's principal investment plus a reasonable amount of interest (based on prevailing market interest rates at the time of the annuity purchase, as determined by HHSC);
(4) names the state of Texas or HHSC as the residual beneficiary of amounts payable under the annuity contract, not to exceed any Medicaid funds expended on the person during the person's lifetime, except as described in subsection (c) of this section; and
(5) is issued by an insurance company licensed and approved to do business in the state of Texas.
(c) If a person in an institutional setting is married and the spousal impoverishment provisions of §358.413 of this subchapter (relating to Spousal Impoverishment Treatment of Income and Resources) apply, the requirement in subsection (b)(4) of this section does not apply to a nonemployment-related annuity purchased by or for a community spouse.
(d) A nonemployment-related annuity that does not meet the requirements of subsection (b) or (c) of this section is a countable resource.
(1) HHSC applies transfer-of-assets provisions in Division 4 of this subchapter (relating to Transfer of Assets) to an annuity that is a countable resource and does not meet the criterion in subsection (b)(3) of this section. The date of the transfer of assets is the date of the annuity purchase or, if applicable, the date the annuity contract was last amended in exchange for consideration. HHSC determines the amount of the transfer by assessing the difference between the life expectancy of the person and the number of years remaining until the annuity is paid out. The amount payable during that period is the amount of the transfer of assets.
(2) If the annuity is a countable resource and is revocable, HHSC:
(A) counts the amount refundable upon revocation of the annuity as the value of the resource; and
(B) applies transfer-of-assets provisions in Division 4 of this subchapter if the person sells the annuity for less than the amount refundable upon revocation.
(3) If the annuity is a countable resource and is irrevocable, HHSC:
(A) counts fair market value as the value of the resource and presumes fair market value is 80% of the annuity's total remaining payout;
(B) applies transfer-of-assets provisions in Division 4 of this subchapter if the annuity is sold for less than the purchase price minus the amount of principal already paid; and
(C) if the terms of the annuity contract are non-negotiable, applies transfer-of-assets provisions in Division 4 of this subchapter to the total remaining payout.
(e) Income from a nonemployment-related annuity that is not a countable resource under subsection (c) of this section is treated in accordance with 20 CFR §§416.1120-416.1124.
(a) This section describes the Texas Health and Human Services Commission's (HHSC's) treatment of nonemployment-related annuities purchased or having a transaction date on or after February 8, 2006. In this section, a nonemployment-related annuity means a revocable or irrevocable annuity a person may purchase to provide income.
(b) A nonemployment-related annuity is not a countable resource if the annuity:
(1) is irrevocable;
(2) is nonassignable;
(3) provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made;
(4) is guaranteed to return within the person's life expectancy at least the person's principal investment (that is, it is actuarially sound, as determined in accordance with actuarial publications of the Office of the Chief Actuary of the United States Department of Health and Human Services); and
(5) names the state of Texas as the remainder beneficiary in the first position for at least the total amount of Medicaid paid on behalf of a person in an institutionalized setting.
(c) If a person in an institutionalized setting is married and the spousal impoverishment provisions of §358.413 of this subchapter (relating to Spousal Impoverishment Treatment of Income and Resources) apply, a nonemployment-related annuity is not a countable resource if the annuity meets the requirements of subsection (b)(1) - (4) of this section and the annuity:
(1) names the state of Texas as the remainder beneficiary in the first position for at least the total amount of Medicaid paid on behalf of the person in an institutional setting; or
(2) names the state of Texas in the second position if the community spouse or a minor or disabled child is named in the first position.
(d) A nonemployment-related annuity that is revocable is a countable resource. For a revocable nonemployment-related annuity, HHSC:
(1) uses fair market value to determine the value of the resource; and
(2) applies transfer-of-assets provisions in Division 4 of this subchapter (relating to Transfer of Assets) based on the amount already paid out of the annuity.
(e) A nonemployment-related annuity that is irrevocable is not a countable resource. For an irrevocable nonemployment-related annuity, HHSC:
(1) applies transfer-of-assets provisions in Division 4 of this subchapter to the purchase price of the annuity; and
(2) for a transaction involving an existing annuity, applies transfer-of-assets provisions to the remaining payout value at the time of the transaction.
(f) Income from an annuity that is not a countable resource is treated in accordance with 20 CFR §§416.1120 - 416.1124.
Revision 09-4; Effective December 1, 2009
Revision 09-4; Effective December 1, 2009
Post-DRA annuity policy impacts any person who applies for Medicaid in an institutional setting on or after Oct. 1, 2006. Post-DRA annuity policy would also impact any person who is Medicaid eligible in the community and requests a program transfer to a Medicaid program in an institutional setting on or after Oct. 1, 2006. This includes:
Note: Neither pre-DRA or post-DRA transfer of asset policies regarding annuities apply to a person who has had continuous Medicaid coverage before March 1, 1981. This includes any person who is Medicaid eligible in the community and requests a program transfer to an institutional program or waiver services and who has had continuous Medicaid coverage before March 1, 1981.
Revision 09-4; Effective December 1, 2009
The application file date is the date the application is received. The program transfer request date from any Medicaid program to an institutional program is the date of admission to an institution. The program transfer request date from any Medicaid program to waiver services is the date a written notice is received from a DADS case manager or a contracted provider.
If the application file date or program transfer request date is:
A Medicaid recipient in the community that is not receiving waiver services may transfer assets without penalty. However, if the recipient becomes institutionalized or applies for waiver services, the recipient is subject to transfer of assets. Treat the program transfer request date for an institutional program or a request for waiver services the same as the application file date when assessing annuities.
Revision 09-4; Effective December 1, 2009
Transactions other than purchases that would make an annuity subject to the DRA policy include any action taken by the person that changes the course of payment from the annuity or that changes the treatment of the income or principal of the annuity. These transactions include additions of principal, elective withdrawals, requests to change the distribution of the annuity, elections to annuitize the contract and similar actions.
Revision 09-4; Effective December 1, 2009
If the annuity purchase or transaction date is:
Revision 09-4; Effective December 1, 2009
Revision 09-4; Effective December 1, 2009
An annuity that meets the following guidelines is not a resource or transfer of asset:
Revision 09-4; Effective December 1, 2009
When an annuity meets the post-DRA terms and conditions:
Revision 13-2; Effective June 1, 2013
The annuity meets the post-DRA terms and conditions if the annuity is irrevocable and non-assignable. The irrevocable and non-assignable annuity must also:
The annuity meets the post-DRA terms and conditions when the institutionalized person is married and the annuity:
The annuity meets the post-DRA terms and conditions when the institutionalized person is married and the annuity:
Revision 09-4; Effective December 1, 2009
When an annuity does not meet the post-DRA terms and conditions, first determine if the annuity is either revocable or irrevocable.
If the annuity is revocable:
Example:
| Annuity | Amount | Consideration |
|---|---|---|
| Purchase Price | $ 60,000 | |
| Refund Value | $ 40,000 | Countable Resource |
| Paid Out | +$10,000 | Person Received |
| $ 50,000 | ||
| Purchase Price | $ 60,000 | |
| –$50,000 | ||
| Difference | $ 10,000 | Transfer of asset |
If the annuity is irrevocable:
When considering transfer of assets policy, refer to the look-back period policy for penalty start date and the calculation of penalty period.
Note: Annuities purchased on or after Oct. 1, 2006, are not subject to interest payout comparison with another company's products.
Follow regional procedures to request assistance from HHSC Legal regarding the terms and conditions of an annuity and in determining the appropriate treatment of the annuity.
Revision 09-4; Effective December 1, 2009
To meet post-DRA annuity requirements, revised Form H1200, Application for Assistance – Your Texas Benefits; Form H1200-EZ, Application for Assistance – Aged and Disabled; Form H1200-PFS, Medicaid Application for Assistance (for Residents of State Facilities) Property and Financial Statement; Form H1200-A, Medical Assistance Only (MAO) Recertification; and Form H1010, Integrated Application, include the following statement:
"You must disclose if you and/or your spouse have an interest in an annuity or similar instrument. If you are determined eligible for Medicaid, the state becomes the remainder beneficiary of the instrument."
In addition, if using a streamline redetermination process, notices sent to the recipient must include the following statement:
"The DRA requires that the issuer (company) of an annuity owned by a recipient must be notified that the state is the remainder beneficiary."
Revision 09-4; Effective December 1, 2009
Revision 09-4; Effective December 1, 2009
When the annuity meets the five criteria in §358.334, Treatment of a Nonemployment-Related Annuity with a Purchase or Transaction Date before Feb. 8, 2006:
When an annuity does not meet the criteria:
Use the life expectancy table to determine the amount payable during the client's life expectancy. The remaining payout is the amount of the transfer. Example: If the life expectancy is six years and the payout is eight years, the amount payable the last two years is the amount of the transfer.
To determine life expectancy, use the available online actuarial publication from the Social Security Administration's Period Life Table.
Revision 09-4; Effective December 1, 2009
Revision 09-4; Effective December 1, 2009
If the annuity in question is guaranteed to pay out only the principal investment within the annuitant's life expectancy, then it does not meet the requirement to return a reasonable amount of interest. If this is the case, then the annuity is a countable resource.
HHSC presumes that the fair market value of such an annuity is 80% of its total remaining payout. This presumption may be overcome only if the client provides credible evidence to the contrary. This may be done only by providing a written appraisal of the annuity's value obtained from at least two reputable companies that are in the business of purchasing annuities.
If the countable value of the annuity does not render the client resource ineligible, determine whether there is any penalty resulting from a transfer of assets. Transfer of asset policy applies because, by purchasing an annuity that pays out no interest, the purchaser does not receive fair market value on the principal investment. To determine the amount of the transfer, first determine the interest percentage that a one-year CD in the local marketplace was paying at the time of the annuity purchase. Obtain this information from a local bank or financial institution. After obtaining this information, use the following formula:
Example: If the purchase price of the annuity in question is $10,000 and the one-year CD rate is 3%, the amount of the uncompensated transfer is $300 ($10,000 x .03 = $300). The date of the transfer is the date of the annuity purchase. Follow current policy to determine if the uncompensated transfer results in any penalty.
Revision 09-4; Effective December 1, 2009
If the annuity in question is guaranteed to pay out the principal investment, plus at least some interest within the annuitant's life expectancy, the following standard applies for determining whether the interest is reasonable: the interest returned is comparable to at least two similar annuities.
The client must furnish these comparisons, which the client may obtain from the person who sold the client the annuity or from any other reputable source. Each market comparison provided must be a similar product from a company licensed to sell annuities in Texas. For example, if the annuity in question is a single premium annuity with a five-year payout, the comparisons provided must be for a single premium annuity with a five-year payout based on the same principal investment as the annuity in question. Copies of the market comparisons must be filed in the case record. The annuity being reviewed must pay out interest in an amount at least equal to or greater than the furnished comparisons.
If the client does not provide comparisons or the comparisons do not meet the standard, the annuity in question does not return a reasonable amount of interest, so it is a countable resource.
HHSC presumes that the fair market value of such an annuity is 80% of its total remaining payout. This presumption may be overcome only if the client provides credible evidence to the contrary. This may be done only by providing a written appraisal of the annuity's value obtained from at least two reputable companies that are in the business of purchasing annuities.
If the countable value of the annuity does not render the client resource ineligible, determine whether there is any penalty resulting from a transfer of assets. To determine the amount of the transfer, first determine the interest percentage that a one-year CD in the local marketplace was paying at the time of the annuity purchase. Obtain this information from a local bank or financial institution. After obtaining this information, use the following formula:
Example: If the purchase price of the annuity in question is $10,000 and the one-year CD rate is 3%, the amount transferred is $300 ($10,000 x .03 = $300). If the actual guaranteed interest payout of the annuity in question is $200, the uncompensated transfer is $100 ($300 - $200 = $100). The date of the transfer is the date of the annuity purchase. Follow current policy to determine if the uncompensated transfer results in any penalty.
Note: All annuity documents must be referred to agency legal counsel. Legal counsel will provide a written opinion on terms and conditions that impact eligibility.
Use Form H1210, Subrogation (Trusts/Annuities/Court Settlements), to report to the Provider Claims area any potential paybacks to the state as the residuary beneficiary of irrevocable annuities.
Revision 16-4; Effective December 1, 2016
Revision 13-3; Effective September 1, 2013
Educational assistance may be provided in many forms including:
Revision 13-3; Effective September 1,2013
Revision 13-3; Effective September 1, 2013
All financial assistance received under HEA or BIA is excluded from income and resources regardless of use. Interest and dividends earned on any unspent educational assistance under Title IV of HEA or under BIA also are excluded from income.
Examples of HEA Title IV Programs:
NOTE: State educational assistance programs, including work-study, funded by LEAP or SLEAP are programs under Title IV of HEA.
Revision 13-3; Effective September 1, 2013
Payments made by VA to pay for tuition, books, fees, tutorial services or any other necessary educational expenses are excluded from income.
Revision 13-3; Effective September 1, 2013
Effective with benefits payable on or after Sept. 1, 2008, cash or in-kind payments provided by AmeriCorps State and National or AmeriCorps NCCC are excluded from income, even if they meet the definition of wages.
Such payments include, but are not limited to:
Revision 13-3; Effective September 1, 2013
Tuition savings programs allow individuals to prepay or contribute to an account established for paying a designated beneficiary’s education expenses beyond high school. Prepaid tuition plans and higher education savings plans authorized under Chapter 54, Subchapter G, H, or I of the Texas Education Code will be collectively called tuition savings programs.
Tuition savings programs include:
Note: The Texas Guaranteed Tuition Plan (formerly the Texas Tomorrow Fund) is closed to new enrollment but contracts will continue to be honored by the state.
Revision 13-3; Effective September 1, 2013
Whether the applicant/recipient is the account holder, contributor, or beneficiary, exclude any funds used to establish a tuition savings program from countable resources if the tuition savings program was established:
Note: The designated beneficiary can be changed to another member of the contributor’s family as long as the new beneficiary meets the above criteria at the time of the change.
Funds used to establish a tuition savings program are not considered a transfer of resources.
Revision 16-4; Effective December 1, 2016
Payments made from or interest earned on a tuition savings program are excluded from countable income.
This exclusion does not apply to groups whose eligibility is determined using the Special Income Limit. The Special Income Limit groups are as follows:
This exclusion does not apply if a withdrawal from the tuition savings program is made for any purpose other than paying the qualified educational expenses of the beneficiary or if the tuition savings program is cancelled. Distributions from the account not used for the educational expenses of the beneficiary are considered income to the individual receiving the funds in the month received. If the individual is the account owner, distributions from the account to the beneficiary which are not used to pay educational expenses should be explored as a possible transfer of resources.
Note: A prepaid tuition contract terminates on the 10th anniversary of the date the beneficiary is projected to graduate from high school.
Revision 13-3; Effective September 1, 2013
Under the Uniform Transfers to Minors Act (UTMA), a person may establish a qualifying UTMA account in the name of a minor child. To set up the account, the person irrevocably gifts cash or other resources, such as stocks and bonds, to the account. The person names a custodian to the account, who frequently is the person who set up the account. The person does not incur a transfer of asset penalty by setting up a UTMA account.
The custodian on the account has a fiduciary duty to manage the account on behalf of the minor child. The custodian of the UTMA account may use UTMA account funds to purchase an education fund somewhat similar to the Texas Tomorrow Fund for a minor child who is qualified under state law.
The minor child must be under age 21 at the time the education fund is purchased. The qualified minor child would have to remain the named beneficiary of the education fund and the education fund must remain part of the holdings of the UTMA account.
State laws regulating the UTMA account establish appropriate expenditures of the education fund on behalf of the beneficiary, the minor child. The beneficiary takes control of the education fund from the custodian once the beneficiary obtains majority.
Consult with your regional attorney regarding state law governing UTMA accounts.
Revision 13-3; Effective September 1, 2013
Coverdell Educational Savings Accounts (ESAs) are trusts or custodial accounts created by a donor for the benefit of a child under age 18 or someone with special needs. The funds put into the ESA are for educational use only. The ESAs are authorized and governed by Section 530 of the Internal Revenue Code. They are similar to college savings plans, commonly called 529 plans, authorized and governed by Section 529 of the Internal Revenue Code. ESAs differ from 529 plans in several ways, but the most important difference is that, unlike a 529 plan, once the person gives the money to set up the ESA, the donor may not withdraw the funds for personal use. The funds may only be used for the beneficiary, a student, and then only for expenses that meet the ESA guidelines. Consult with your regional attorney regarding an ESA.