Chapter F, Resources

Year	Individual	Couple
1989 through present	$2000	$3000
1988	$1900	$2850
1987	$1800	$2700
1986	$1700	$2550
1985	$1600	$2400
1984	$1500	$2250

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

F-2000, Resource Exclusions – Limited and Related to Exempt Income

F-2100, Resource Exclusions – Limited

F-2110 Cash Reimbursement of Medical or Social Services Expenses

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.

F-2120 Death Benefits

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.

F-2130 Earned Income Tax Credits (EITC)

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.

F-2140 Hazardous Duty Pay

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:

hostile fire and imminent danger pay (pursuant to 37 U.S.C. 310) received by the ineligible spouse or parent from one of the uniformed services; and
family separation allowance (pursuant to 37 U.S.C. 427) received by the ineligible spouse or parent from one of the uniformed services as a result of deployment to or while serving in a combat zone.

F-2150 SSI and RSDI Retroactive Lump Sum Payments

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:

deposits of subsequently received funds that are excluded under the same provision; and
excluded interest.

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.

F-2151 Examples of SSI and RSDI Retroactive Lump Sum Payments

Revision 09-4; Effective December 1, 2009

One-time receipt and deposit of excluded funds

A recipient deposits a $1,000 RSDI check ($800 for the preceding four months and $200 for the current month) in a checking account. The account already contains $300 in nonexcluded funds.
- Of the new $1,300 balance, $800 is excluded as retroactive RSDI benefits.
- The recipient withdraws $300. The remaining $1,000 balance still contains the excluded $800.
- The recipient withdraws another $300, leaving a balance of $700. All $700 is excluded.
- The recipient deposits $500, creating a new balance of $1,200. Only $700 of the new balance is excluded.
Periodic receipt and deposit of excluded funds

A recipient deposits $200 in excluded funds in a non-interest bearing checking account that already contains $300 in nonexcluded funds.
- The recipient withdraws $400. The remaining $100 is excluded.
- The recipient then deposits $100 in nonexcluded funds. Of the resulting $200 balance, $100 is excluded.
- The recipient next deposits $100 in excludable funds. Of the new $300 balance, $200 is excluded.
Interest

A $1,000 savings account includes $800 in excluded disaster assistance when a $10 interest payment is posted. Since 80% of the account balance is excluded at the time the interest is posted, 80% of the interest ($8) is excluded. The amount of excluded funds now in the account is $808.

F-2160 Gifts to Children with Life-Threatening Conditions

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:

Any in-kind gift, not converted to cash.
A cash gift to the extent that the cash excluded does not exceed $2,000 in any calendar year. Retained cash in excess of $2,000 received in a calendar year is subject to regular resource counting rules.
If an in-kind gift is converted to cash, any cash remaining in the month following the month converted is a resource. For purposes of this exclusion, an in-kind gift is any gift other than cash, including gifts of food, clothing or shelter.
The exclusion also applies to a deeming situation if the gift is made to a parent for the benefit of a child with a life-threatening condition.

F-2170 Exclusion of State or Local Relocation Assistance Payments

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.

F-2200, Resource Exclusions Related to Exempt Income

F-2210 Crime Victims' Compensation

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.

F-2220 Certain Designated Accounts

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.

F-2230 Certain Health-Related Payments

Revision 10-1; Effective March 1, 2010

The following payments, regardless of when received, are not counted as income and are excluded from resources:

Payments from the Ricky Ray Hemophilia Relief Fund.
Payments made from any fund established pursuant to a class settlement in the case of Susan Walker v. Bayer Corporation, as required by Public Law 105-33, effective Aug. 5, 1997.
Payments to Vietnam veterans' children with spina bifida.
Payments from the Energy Employees Occupational Illness Compensation Act (EEOICA) (Public Law 106-398, October 2000) for medical benefits and compensation.

See Section E-2440, Certain Health-Related Payments.

F-2240 Indian-Related Exclusions

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:

Section E-2140, Native Americans – Exempt Income
Section E-2141, Types of Payments Excluded Without Regard to Specific Tribes or Groups
Section E-2142, Payments to Members of Specific Indian Tribes and Groups
Section E-2143, Receipts from Lands Held in Trust for Certain Tribes or Groups

F-2250 Reparations and Compensation

Revision 09-4; Effective December 1, 2009

HHSC excludes from countable resources the following payments:

Payments made under Section 6 of the Radiation Exposure Compensation Act, Public Law 101-426 (104 Stat. 925, 42 U.S.C. 2210).
Payments made to individuals because of their status as victims of Nazi persecution excluded pursuant to Section 1(a) of the Victims of Nazi Persecution Act of 1994, Public Law 103-286 (108 Stat. 1450). This provision supersedes previous provisions for the exclusion of certain payments made by the governments of Germany, Austria and the Netherlands, insofar as they are made to victims of Nazi persecution.

See Section E-2150, Other – Exempt Income.

F-2260 Exclusions from Resources Provided by Other Statutes

Revision 22-4; Effective Dec. 1, 2022

Exclude the following funds as a resource:

Payments made under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (84 Stat. 1902, 42 U.S.C. 4636).
Indian judgment funds held in trust by the secretary of the interior or distributed per capita pursuant to a plan prepared by the secretary of the interior and not disapproved by a joint resolution of the Congress under Public Law 93-134, as amended by Public Law 97-458 (25 U.S.C. 1407). Indian judgment funds include interest and investment income accrued while the funds are held in trust. This exclusion extends to initial purchases made with Indian judgment funds. This exclusion will not apply to proceeds from sales or conversions of initial purchases or to subsequent purchases.
The value of the coupon allotment more than the amount paid for the coupons under the Food Stamp Act of 1964 (78 Stat. 705, as amended, 7 U.S.C. 2016(c)).
The value of assistance to children under the National School Lunch Act (60 Stat. 230, 42 U.S.C. 1751 et seq.) as amended by Public Law 90-302 (82 Stat. 117, 42 U.S.C. 1761(h)(3)).
The value of assistance to children under the Child Nutrition Act of 1966 (80 Stat. 889, 42 U.S.C. 1780(b)).
Any grant or loan to any undergraduate student for educational purposes made or insured under any program administered by the commissioner of education, as provided by Section 507 of the Higher Education Amendments of 1968, Public Law 90-575 (82 Stat. 1063).
Incentive allowances received under Title I of the Comprehensive Employment and Training Act of 1973 (87 Stat. 849, 29 U.S.C. 821(a)).
Compensation provided to volunteers by the Corporation for National and Community Service (CNCS), unless determined by the CNCS to constitute the minimum wage in effect under the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.), or applicable state law, pursuant to 42 U.S.C. 5044(f)(1).
Distributions received by an Alaska native or descendant of an Alaska native from an Alaska Native Regional and Village Corporation pursuant to Section 15 of the Alaska Native Claims Settlement Act, Amendments of 1987, Public Law 100-241 (43 U.S.C. 1626(c)), effective Feb. 3, 1988, as follows:
- cash, including cash dividends on stock received from a native corporation, is disregarded to the extent that it does not, in the aggregate, exceed $2,000 per person each year (the $2,000 limit is applied separately each year, and cash distributions up to $2,000, which a person received in a prior year and retained into subsequent years will not be counted as resources in those years);
- stock, including stock issued or distributed by a native corporation as a dividend or distribution on stock;
- a partnership interest;
- land or an interest in land, including land or an interest in land received from a native corporation as a dividend or distribution on stock; and
- an interest in a settlement trust.
Value of federally donated foods distributed pursuant to Section 32 of Public Law 74-320 or Section 416 of the Agriculture Act of 1949 (7 CFR 250.6(e)(9), as authorized by 5 U.S.C. 301).
All funds held in trust by the secretary of the interior for an Indian tribe and distributed per capita to a member of that tribe under Public Law 98-64. Funds held by Alaska Native Regional, and Village Corporations (ANRVC) are not held in trust by the Secretary of the Interior and therefore ANRVC dividend distributions are not excluded from resources under this exclusion. For the treatment of ANRVC dividend distributions, see paragraph (a)(10) of this section.
Home energy assistance payments or allowances under the Low-Income Home Energy Assistance Act of 1981, as added by Title XXVI of the Omnibus Budget Reconciliation Act of 1981, Public Law 97-35 (42 U.S.C. 8624(f)).
Student financial assistance for attendance costs received from a program funded in whole or in part under Title IV of the Higher Education Act of 1965, as amended, or under Bureau of Indian Affairs student assistance programs if it is made available for tuition and fees normally assessed a student carrying the same academic workload, as determined by the institution. This is including costs for rental or purchase of any equipment, materials or supplies required of all students in the same course of study and an allowance for books, supplies, transportation and miscellaneous personal expenses for a student attending the institution on at least a half-time basis, as determined by the institution, under Section 14(27) of Public Law 100-50, the Higher Education Technical Amendments Act of 1987 (20 U.S.C. 1087uu), or under Bureau of Indian Affairs student assistance programs.
Amounts paid as restitution to certain people of Japanese ancestry and Aleuts under the Civil Liberties Act of 1988 and the Aleutian and Pribilof Islands Restitution Act, Sections 105(f) and 206(d) of Public Law 100-383 (50 U.S.C. app. 1989 b and c).
Payments made on or after Jan. 1, 1989, from the Agent Orange Settlement Fund or any other fund established pursuant to the settlement in the In Re Agent Orange product liability litigation, M.D.L. No. 381 (E.D.N.Y.) under Public Law 101-201 (103 Stat. 1795) and Section 10405 of Public Law 101-239 (103 Stat. 2489).
Payments made under Section 6 of the Radiation Exposure Compensation Act, Public Law 101-426 (104 Stat. 925, 42 U.S.C. 2210).
Payments made to people because of their status as victims of Nazi persecution excluded pursuant to Section 1(a) of the Victims of Nazi Persecution Act of 1994, Public Law 103-286 (108 Stat. 1450). This provision supersedes previous provisions for the exclusion of certain payments made by the governments of Germany, Austria and the Netherlands, insofar as they are made to victims of Nazi persecution. Payments from:
- Germany are identified with the acronym ZRBG;
- the Netherlands are identified with the acronym WUV; and
- Austria that are exempt are identified as DIE BEGUENSTIGUNGSVORSCHRIFTEN FUER GESCHAEDIGTE AUS POLITISCHEN ODER RELIGIOESEN GRUENDEN ODER AUS GRUENDEN DER ABSTAMMUNG WURDEN ANGEWENDET (§500FF ASVG), which translates to “The regulations which give preferential treatment for persons who suffered because of political or religious reasons or reasons of origin were applied (§500ff ASVG).”
Any matching funds and interest earned on matching funds from a demonstration project authorized by Public Law 105-285 that are retained in an Individual Development Account, pursuant to Section 415 of Public Law 105-285 (112 Stat. 2771).
Any earnings, Temporary Assistance for Needy Families matching funds, and accrued interest retained in an Individual Development Account, pursuant to Section 103 of Public Law 104-193 (42 U.S.C. 604(h)(4)).
Payments made to people who were captured and interned by the Democratic Republic of Vietnam because of participation in certain military operations, pursuant to Section 606 of Public Law 105-78 and Section 657 of Public Law 104-201 (110 Stat. 2584).
Payments made to certain Vietnam veterans' children with spina bifida, pursuant to Section 421 of Public Law 104-204 (38 U.S.C. 1805(d)).
Payments made to the children of women Vietnam veterans who suffer from certain birth defects, pursuant to Section 401 of Public Law 106-419 (38 U.S.C. 1833(c)).
Any unspent portion of federal income tax refunds for the 12 months following the month of receipt.

To exclude payments and benefits from resources, funds must remain segregated, not commingled with other countable resources, and identifiable as excludable funds.

F-2270 Exclusions from Resources Related to Disaster Payments

Revision 10-1; Effective March 1, 2010

If precipitated by an emergency or a major disaster, do not consider the following as a resource:

Payments received under the Disaster Relief Act of 1974 (P.L. 93-288, Section 312(d)), as amended by the Disaster Relief and Emergency Assistance Amendments of 1988 (P.L. 100-707, Section 105(i)) and disaster assistance comparable to these payments provided by states, local governments and disaster assistance organizations.
Payments from the Federal Emergency Management Agency (FEMA), Individual and Family Grant Assistance program (IFG), grants or loans by the Small Business Administration (SBA), voluntary disaster assistance organizations, such as the Red Cross, or private insurance payments for losses due to a major disaster such as flood, wind, land movement.
Each payment made to farmers under the Disaster Assistance Act of 1988 (P.L. 100-387) for crop losses or failure in a disaster.
Income received from public and private organizations by individuals working in disaster relief efforts and funded under a National Emergency Grant by WIA, Title 1 (P.L. 105-220).
Disaster Unemployment Assistance.
Payments for flood mitigation received by a homeowner under the National Flood Insurance Act of 1968, as amended by P.L. 109-64.

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.

F-2300, Additional Resource Exclusions

F-2310 Achieving a Better Life Experience (ABLE)

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:

name of the designated beneficiary;
state ABLE program administering the account;
name of the person who has signature authority (if different from the designated beneficiary);
name of the financial institution; and
ABLE account number.

Verification documents may vary among states. Examples of acceptable documentation include participation agreements, ABLE account contracts, financial statements, and annual income tax filing documents.

F-2320 School-Based Savings Accounts

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.

F-3000, Home

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:

have ownership interest in the property; and
reside in the property while having ownership interest.

F-3100, The Home and Resource Exclusions

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.

F-3110 Principal Place of Residence

Revision 09-4; Effective December 1, 2009

F-3111 The Home as the Principal Place of Residence

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 address the person or couple uses on their voter registration, federal benefits, federal income tax returns; or
the home that’s listed in the appraisal district property records as the homestead.

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

F-3112 Spouse or Dependent Relative Living in the Home

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.

F-3120 Intent to Return Home

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.

F-3121 Intent to Return Policy

Revision 14-4; Effective December 1, 2014

Consider intent to return policy if the person:

has ownership interest in the property, and
previously resided in the property while having ownership interest.

The property cannot be excluded as a home with intent to return if the person:

has ownership interest in the property, but
has not resided in the property while having ownership interest.

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.

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.

F-3130 Home and Other Real Property Placed for Sale

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:

listing the property with a local real estate agent; or
advertising in local media, placing a "For Sale" sign on the property, conducting open houses, and showing the property to interested parties.

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.

F-3200, The Home and Resources in a Trust

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.

F-3210 Treatment of a Home in a Revocable or Living Trust

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.

F-3211 Re-established Intent to Return 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.

F-3300, The Home as a Countable Resource

Revision 09-4; Effective December 1, 2009

Count the equity value in the reported home property if the home property:

does not meet homestead criteria (see Section F-3100, The Home and Resource Exclusions);
is in a revocable trust; or
meets homestead criteria, but cannot be excluded as a resource based on any of the following exclusion reasons:
- principal place of residence (see Section F-3111, The Home as the Principal Place of Residence);
- intent to return home (see Section F-3120, Intent to Return Home); or
- home is placed for sale (see Section F-3130, Home Placed for Sale)

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.

F-3400, Replacement of the Home

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.

F-3500, Out-of-State Home Property

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.

F-3600, Substantial Home Equity

Revision 22-1; Effective March 1, 2022

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 Service(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 F-3000, Home, continues but does not impact:

the disqualification determination for vendor payment in an institutional setting due to substantial home equity; 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 eligible for Medicaid in an institutional setting based on an application filed on or after Jan. 1, 2006, they are not eligible for Medicaid for services in an institutional setting if the equity interest in their home exceeds the substantial home equity amount. This dollar amount may increase from year to year based on the percentage increase in the consumer price index (CPI).

Substantial home equity policy does not apply if either of the following lawfully resides in the person's home:

the person's spouse; and
the person's child, if the child is under 21, or is blind or permanently and totally disabled as defined by SSA.

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 will establish a process to waive this policy in the case of a demonstrated hardship.

Related Policy

Persons Impacted by Substantial Home Equity Disqualification, F-3610

F-3610 Persons Impacted by Substantial Home Equity Disqualification

Revision 25-1; Effective March 1, 2025

Substantial home equity disqualification policy impacts any person who is:

Medicaid-eligible in the community and requests a program transfer for Medicaid in an institutional setting or Medicaid for Home and Community-Based Services (HCBS) waiver services;
living in an institutional setting and applying for Medicaid; or
applying for HCBS waiver services.

This includes:

Applications — Consider substantial home equity disqualification policy for the first determination of eligibility.
Program transfer requests — For program transfer requests from any Medicaid program to Medicaid in an institutional setting, consider substantial home equity disqualification policy for the determination of eligibility.
Redeterminations — Consider substantial home equity disqualification policy at all redeterminations.
Reported changes in homestead status — For reported changes in homestead status, consider substantial home equity disqualification policy.

Notes:

Substantial home equity disqualification affects eligibility for HCBS waiver services, and payments for Medicaid-certified long-term care facility services. Long-term care services include nursing facility care, ICF/IID vendor services, care in a state supported living center or a state center, and care in institutions for mental diseases.
People who are getting Medicaid-certified long-term care facility services, such as nursing facility care, ICF/IID vendor services, care in institutions for mental diseases, stay eligible for all other Medicaid benefits. They continue to get Medicaid benefits other than vendor payments for as long as the equity value of the home exceeds the limit. People in a state supported living center or a state center or who get HCBS waiver services are not eligible for benefits.
For people in a state supported living center or a state center, Medicaid eligibility is denied for any period when the equity value of the home exceeds the limit. This is because the only benefit the person receives is vendor payments.
If the HCBS waiver program requires receipt of waiver services, the HCBS waiver person is ineligible for all Medicaid benefits. Based on substantial home equity disqualification policy, an HCBS waiver applicant is ineligible as long as the equity value of the home exceeds the limit.
Denial based on substantial home equity disqualification does not disqualify a person for Qualified Medicare Beneficiary (QMB) or Specified Low-Income Medicare Beneficiary (SLMB) benefits. If the person meets all eligibility criteria for QMB or SLMB, certify for the appropriate program.
Evaluate substantial home equity at all complete redeterminations for all people in an institutional setting. The appreciation of home equity could result in disqualification or denial if the home equity value exceeds the limit at redetermination.

Refer to the chart below for current and historical substantial home equity limits.

Effective Date	Limit
Jan. 1, 2025 to Present	$730,000
Jan. 1, 2024 to Dec. 31, 2024	$713,000
Jan. 1, 2023 to Dec. 31, 2023	$688,000
Jan. 1, 2022 to Dec. 31, 2022	$636,000
Jan. 1, 2021 to Dec. 31, 2021	$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

F-3620 Persons Not Impacted by Substantial Home Equity Disqualification

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.

F-3630 When the Equity Value is Greater Than the Limit

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.

F-3640 Reverse Mortgage or Home Equity Loan

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 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 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.

F-3650 Documentation

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.

F-3660 Undue Hardship

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.

F-3700, Continuing Care Retirement Communities

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:

the person has the ability to use the entrance fee, or the contract provides that the entrance fee may be used, to pay for care should other resources or income of the person be insufficient to pay for such care;
the person is eligible for a refund of any remaining entrance fee when the person dies or terminates the CCRC or life care community contract and leaves the community; and
the entrance fee does not confer an ownership interest in the CCRC or life care community.

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:

Person can use the fee to pay for care.
Person is eligible for a refund of any remaining fee upon death or leaving the CCRC.
Entrance fee does not confer an ownership interest in the CCRC.

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:

CCRC contract date;
CCRC facility name;
CCRC entry date;
resource accessible (yes/no);
contract specifies fee be used to pay for care (yes/no);
eligible for refund on termination of contract or departure from the CCRC (yes/no);
CCRC entrance fee value;
amount of entrance fee spent on care; and
refundable amount.

See Section E-3331, Interest and Dividends.

F-3800, The Home and Transfer of Assets

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:

Look-back period
Person participation in transfers
Exceptions to the transfer of assets
Spouse-to-spouse transfers under spousal impoverishment provisions
Rebuttal of the presumption
Compensation
Undue hardship
Return of transferred asset

See policy beginning in Chapter I, Transfer of Assets.

F-3810 Transfer of an Excluded Home Cancels the Exclusion

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.

F-3811 Person Retains Some Interest

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:

Use the age of the person at the time of transfer.
Use Appendix X, Life Estate and Remainder Interest Tables, to find the corresponding life estate interest factor.
Multiply the corresponding life estate interest factor by the person's equity value in the home as of 12:01 a.m. during the month of transfer.
The result is the value of the life estate.
Subtract the equity value from the life estate value for the presumed uncompensated amount of transfer.

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.

F-4000, Liquid and Nonliquid Resources

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:

land;
houses or immovable objects permanently attached to the land, whether associated with the home or separate from the home;
mineral rights;
burial spaces; and
life estates.

Personal property includes, but is not limited to:

automobiles and other motor vehicles,
household goods and personal effects, and
insurance.

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.

F-4100, Types of Liquid Resources

F-4100 Types of Liquid Resources

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:

Annuities (see F-7000 , Annuities)
Bonds
Cash
Financial institutions accounts (including savings, checking and time deposits, also known as certificates of deposit)
Life insurance policies
Loans
Mortgages
Mutual fund shares
Promissory notes
Retirement accounts (including individual retirement accounts and 401(k) accounts)
Stocks
Trusts, including revocable trusts and trusts in which the person can direct the use of the funds

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.

F-4110 Cash

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

F-4120 Bank Accounts

Revision 24-4; Effective Dec. 1, 2024

A person’s bank balance as of 12:01 a.m. on the first day of the month that 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.

Verify the bank account balance with:

bank statement reflecting balance as of 12:01 a.m. for the first day of the appropriate month;
Form H1239, Request for Verification of Bank Accounts. Note: HHSC does not pay financial institutions to complete the form;
a letter from the financial institution that provides the balance as of 12:01 a.m. for the first day of the appropriate month;
phone contact with an employee of the financial institution. Note: phone contact must be documented appropriately in the case record;
bank balance from asset verification system (AVS).

The verification must include the:

name of the financial institution;
complete account number(s); and
balance as of 12:01 a.m. for the appropriate test month.

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 person must be verified as having a $0 balance for the appropriate test month.

Related Policy

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
Documentation and Verification Guide, Appendix XVI

F-4121 Joint Bank Accounts

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.

If the source of the funds and all deposits are the person's money, but withdrawals are not made or used for the person's benefit, the department considers that the account is owned by the person.
If the source of the funds and deposits are from all the joint owners, but withdrawals are not made or used to benefit all joint owners, the department evaluates deposits and withdrawals to determine the amount owned by the person.
If the source of the funds and deposits are from individuals other than the person, and the withdrawals are used to benefit individuals other than the person, the department considers the disproval of ownership successful. In the same situation for source and deposit of funds, if withdrawals are used for the person's benefit, ownership of the funds may still be successfully disproved. However, the department considers any cash contributions as a potential source of income.

An example of an acceptable rebuttal of ownership of funds is when an account reflects a fiduciary relationship. See 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 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:

completed, signed and dated Form H1299 , Request for Joint Bank Account Information; and
evidence of a change in the account designation to remove the person's name from the account, restrict the person's access to the funds or establish separate accounts.

Notes:

If eligibility is affected, the items must be received prior to certification. If eligibility is not affected, do not delay certification pending receipt of the items.
If the person has been given time to disprove ownership and redesignate an account, monitor for compliance within the period specified.
If either the person or the co-holder is mentally incompetent or a minor, obtain the statement from a knowledgeable third party.

Reference: Refer to 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 E-3331 , Interest and Dividends, for treatment of income.

F-4122 Time Deposits

Revision 24-4; Effective Dec. 1, 2024

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 a person and a financial institution where the person deposits funds for a specified period. In return, the financial institution agrees to pay a higher interest rate.

The availability of funds is the primary factor in determining if 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, follow the policy for jointly owned resources.

The following information must be included in the case record documentation:

name of financial institution and account number;
account accessibility by the person;
cash value as of 12:01 a.m. on the first day of the appropriate month; and
source of verification.

For applications, verify the account balance for the appropriate month(s). For redeterminations verify resources as of 12:01 a.m. on the first day of:

the month the redetermination form was received;
either of the two months before the redetermination form was received; or
any month between the month the redetermination was received and the month the redetermination is completed.

Verify balance, name of financial institution and account number.

Note: Use other verification if the statements are not received monthly, and the statement does not cover the appropriate month. There may be a penalty for early withdrawal.

Do not re-verify a closed time deposit at subsequent renewals.

Sources of verification include:

bank statements;
completed Form H1239 , Request for Verification of Bank Accounts;
letter from the financial institution;
documented phone contact with a knowledgeable source at the financial institution; and
AVS response.

If a person cannot make an early withdrawal of the funds, verify and document the restriction and the date the time deposit matures. Set a special review if maturity occurs before the next periodic review.

F-4123 Patient Trust Funds

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 F-1312 , Nursing Facility Refunds.

F-4124 Debit Accounts

Revision 24-4; Effective Dec. 1, 2024

A debit card allows people 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 a person’s wages.

Government benefit 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:

electronic benefit transfer (EBT) card accounts for TANF cash benefits;
TWC UI Visa® Debit Card issued by US Bank for unemployment insurance benefits (UIB);
Texas Debit Card issued by Wells Fargo® Bank, N.A. for child support payments through the Office of Attorney General (OAG);
debit cards for direct deposit of child support payments from other states; and
Direct Express® Debit MasterCard® issued by Comerica Bank exclusively for direct deposit of Social Security, Retirement, Survivors and Disability Insurance (RSDI) or Supplemental Security Income (SSI) benefit payments.

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:

ACE Elite Visa® Prepaid Debit Card
Green Dot Prepaid Debit Card
NetSpend® Prepaid Debit Card
Prepaid Visa® RushCard
Walmart MoneyCard

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 cards function like prepaid debit cards and are not attached to a checking or 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:

TANF recipients, by calling the Lone Star Help Desk automated voice response system at 800-777-7328 (800-777-7EBT);
UIB recipients, online at the USA Bank ReliaCard webpage or at any automated teller machine (ATM) free of charge;
child support recipients in some states, online at the eppicard webpage *; and
Social Security recipients, online at the US DirectExpress webpage, or by calling 888-741-1115, or balance information may be obtained free of charge at any ATM that displays the MasterCard® logo.

* Some states do not use the EPPI Card for child support payments.

Verify the debit card balance with:

debit card statements, including a printout from a website;
appropriately documented phone contact with an employee of the financial institution;
clients statement when client declaration is allowed; or
balance from AVS report.

When the person is a Social Security recipient, verify and document:

if they have 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 F-4120 , Bank Accounts, when a person has an ETA.

For a debit card, the following information must be in the case record:

Name and address of the financial institution that issued the debit card
Last four digits of the debit card number
Balance as of 12:01 a.m. for the appropriate month(s)

If the verification provided does not have all of the information listed above, specifically request the missing information.

Note: Direct Express® does not allow other income to be deposited, does not pay interest and does not require a checking or savings account. It does allow one card for multiple beneficiaries, if the payee requests it.

F-4130 Stocks

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:

SPRA month
Application month
Prior month
First eligible month

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 E-3331 , Interest and Dividends, for treatment of income.

See Appendix XVI , Documentation and Verification Guide.

F-4140 Bonds

Revision 24-4; Effective Dec. 1, 2024

A bond is a written obligation to pay a sum of money at a future date.

The cash value of a bond is a countable resource. If a person can convert the bond into cash within 20 workdays, the bond is a liquid resource.

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 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 has passed, the bonds can be converted within one or two days.

Follow policy for stocks for municipal, corporate or government bonds, other than U.S. savings bonds. Depending on demand, the cash value may be more or less than the face value.

Convertible bonds are a type of corporate bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value. AVS response includes information on convertible bonds and is an acceptable source of verification.

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 if 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.

A bond may have other conditions. For example, the interest for Series HH Bonds is paid to the owner twice a year, and these bonds may only be cashed out if six months have passed and the first interest check has been received. If the bond is cashed before maturity, there is a penalty.

Related Policy

Interest and Dividends, E-3331
Documentation and Verification Guide, Appendix XVI.

F-4150 Promissory Notes, Loans and Property Agreements

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 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 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.

F-4160 Prepaid Burial Contracts

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.

F-4161 Treatment of Refund Penalty

Revision 09-4; Effective December 1, 2009

F-4161.1 No Refund Penalty

Revision 09-4; Effective December 1, 2009

Exclude the total value of the burial space items, which must be itemized in the contract.

F-4161.2 Refund Penalty

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.

F-4161.3 Examples of Refund Penalty

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:

name of funeral home or insurance company, and contract number;
face value of contract and who owns it;
current cash value, if owned by the person;
reason for exclusion, if excluded; and
source of verification.

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:

copy of contract,
letter from funeral home, and
contact with funeral home representative.

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.

F-4170 Burial Contracts Funded by Life Insurance

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.

F-4171 Revocable Assignment

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.

F-4172 Irrevocable Assignment

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.

F-4173, Convertible Virtual Currency and Other Digital Tokens

Revision 24-4; Effective Dec. 1, 2024

Convertible virtual currency is a digital currency with an equivalent value in traditional currency. Convertible virtual currency, also known as cryptocurrency, is very similar to cash. It can be traded between people, used to purchase goods and services, or exchanged into either traditional currency or another virtual currency. Bitcoin is an example of a convertible virtual currency.

Digital tokens represent ownership of digital items. Digital tokens are divided into two categories, fungible, meaning interchangeable, or non-fungible, meaning non-interchangeable.

Fungible digital tokens can be exchanged for other digital tokens or broken down into smaller tokens. Convertible virtual currency is an example of a fungible digital token.
Non-fungible tokens (NFTs) represent ownership of a specific, unique or scarce item that is not interchangeable with another token. The person that owns the NFT usually does not own the item itself, and the item can be digital or not digital. Ownership rights to artwork, music, stamps or videos are examples of NFTs.

Note: Virtual currencies and digital tokens that can only be exchanged for virtual goods and services are not countable resources. Examples include in-game currency and non-transferable digital content in games and other applications.

Convertible virtual currencies are considered a liquid resource and are countable the month after receipt. The countable value is the U.S. dollar exchange value. To determine the countable value, request records showing the balances in the person's virtual account or wallet as of 12:01 a.m. on the first day of the test month. If account records do not provide the balance converted to U.S. dollars, use a currency converter that offers historical information to get the necessary balances and document the conversion.

NFTs are considered a non-liquid resource and are countable if they can be sold or exchanged for either convertible virtual currency or currency with legal tender status. The countable value is the U.S. dollar value of the NFT. To determine the countable value, request records showing the date of purchase, purchase price, and value of the NFT. If the NFT is purchased with virtual currency or the value is given in virtual currency, use a currency converter to determine the U.S. dollar value.

For the current month, use the current best offer price or the listing price. If a current price is not available, use the following in order of priority:
- historical values and past sale prices;
- 30-day average values; or
- current floor price or active listing price.
For a month in which NFT was purchased or transferred, also known as a transaction month, use the historical values and past sale prices. If that information is not available, use the following in order of priority:
- current best offer or listing price;
- 30-day average values; or
- current floor price or lowest active listing price.
For months other than the current month or transaction month, use the following in order of priority:
- current best offer price or listing price;
- historical values and past sale prices;
- 30-day average values; or
- current floor price or lowest active listing price.

Note: If owner of the NFT is also the creator of the NFT, explore potential self-employment or royalty income.

Related Policy:

Income Treatment of Virtual Currencies, E-1330

F-4200, Nonliquid Resources

Revision 09-4; Effective December 1, 2009

There are two types of nonliquid resources:

Real property
Personal property

F-4210 Real Property

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.

F-4211 Real Property in Excess of the Limit

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:

the individual continues to make reasonable efforts to sell the property (reference Section F-3130); and
including the property as a countable resource would result in a determination of excess resources.

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.

F-4212 Life Estates and Remainder Interests

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:

If the individual retains an undivided partial interest or life estate in the property during the look-back period, see Section F-3100, The Home and Resource Exclusions.
If the purchase price of a life estate exceeds the fair market value of the life estate or a life estate is purchased on or after April 1, 2006, see Section I-6100, Purchase of a Life Estate, for evaluation of a transfer of assets.

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:

the property is his home and can be excluded under Section F-3000, Home;
a contract restriction exists that prevents the person from disposing of his interest;
the property is producing income and may be excluded under the exclusion rule for income-producing property; or
the property is placed for sale. See Section F-3130, Home Placed for Sale.

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:

Use the procedures in Section F-3000, Home, when a spouse or dependent relative is living in the home property in which the person has a life estate or remainder interest.
If a person's life estate or remainder interest property is producing income, use the procedures in Section F-5000, Potential Resource Exclusions.
If the purchase price of a life estate exceeds the fair market value of the life estate or a life estate is purchased on or after April 1, 2006, see Section I-6100, Purchase of a Life Estate, for evaluation of a transfer of assets.
See Appendix XVI, Documentation and Verification Guide.

F-4212.1 Calculation of Value of Life Estate or Remainder Interest

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:

possess the property,
use the property,
get profits from the property, and
sell his life estate interest.

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.

F-4213 Mineral Rights

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.

A person's mineral rights do not affect his eligibility if his equity in them does not exceed $6,000 and he receives a net annual rate of return of at least 6% of the equity value. See Section F-4310, Nonbusiness Property – $6000/6%.
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 in one does not automatically indicate ownership in the other.
If the person owns the land to which the mineral rights pertain, the value of the land can be assumed to include the value of the mineral rights. Additional development is unnecessary.

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.

F-4214 Burial Spaces

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:

person does not currently own the space;
person does not currently have the right to use the space; and
seller is not currently obligated to provide the space.

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.

F-4215 Nonliquid Resources Located Outside the State

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.

F-4220 Personal Property

Revision 09-4; Effective December 1, 2009

The following items cover nonliquid resources other than real property.

F-4221 Automobile

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:

the additional member of the household requires an additional automobile for transportation to and from work because the original individual needs one automobile for medical use at all times; or
the additional member of the household requires a vehicle modified for someone with a disability for transportation, and the automobile is specially equipped for that additional household member.

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:

The applicant's/person's statement is not reasonable.
The applicant/person owns more than one automobile.

Sources for verifying the value of an automobile include:

Kelley Blue Book or NADA guidebook (trade-in wholesale value),
Hearst Corporation Black Book,
statement from an automobile dealer,
newspaper ads, or
a source knowledgeable about antique automobiles. (In the Texas Integrated Eligibility Redesign System [TIERS], use "other acceptable" and document in case comments.)

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:

A person and the person's ineligible spouse owned an automobile that had a current market value of $5,800. They still owed $2,000 toward the total price. The eligibility specialist did not count the automobile as a resource. (The equity value is irrelevant for the first automobile.)
The person's spouse later obtained a job and purchased a second automobile. The eligibility specialist reviewed the person's case. It was discovered that a family member stays with the person while the spouse works. The family member used the first automobile to transport the person to the doctor and to therapy. The spouse was using the second automobile for transportation to and from the job. The eligibility specialist excluded the total value of the second automobile since the spouse used it to go back and forth to work and the first automobile was being used to take the person for medical treatment at the same time.
The following year, the spouse encountered mechanical difficulties with the second automobile and decided to buy another used automobile that was in better condition for $6,000. No automobiles were traded in as part of the purchase. The spouse made a down payment of $400 on the third automobile and made two monthly payments of $200 each.

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.

F-4222 Household Goods and Personal Effects

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:

items of personal property, found in or near the home, that are used on a regular basis; or
items needed by the householder for maintenance, use and occupancy of the premises as a home.

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:

items of personal property ordinarily worn or carried by the individual;
items having an intimate relation to the individual;
items of cultural or religious significance to the individual; or
items required because of the individual's impairment.

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:

countable resources (unless excluded under a different resource exclusion);
not considered a household good or personal effect for the purposes of this exclusion; and
treated as other personal property.

See F-4222.1, Other Personal Property, for more information.

F-4222.1 Other Personal Property

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:

description of property and person's estimate of value;
reason for exclusion, if excludable; and
equity value and source of verification, if not excludable.

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:

retailers;
antique dealers;
collectors (for example, stamp or coin collectors/dealers); and
newspaper ads.

Sources for verifying a person's equity value in other personal property are:

copy of the purchase contract;
statement from the creditor showing the amount paid for an item and the amount still due; and
payment schedule.

F-4223 Life Insurance

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.

The beneficiary is the individual (or entity) named in the contract to receive the proceeds of the policy upon the death of the insured.
The owner is the individual with the right to change the policy as he may see fit. The owner is the only individual who can receive the cash surrender amount of the policy.
The insurer-assurer is the company that contracts with the owner.
The face value amount is the basic death benefit or maturity amount, which is specified on the policy's face. The face value does not include dividends, additional amounts payable because of accidental death or other special provisions.
The cash surrender value is the amount that the insurer pays if the policy is cancelled before death or before it has matured. The cash surrender value usually increases with the age of the policy.
A participating life insurance policy is one in which dividends are distributed to the policy holder.
A nonparticipating life insurance policy means that dividends are not distributed to the policy holders.
Default is the failure to pay the insurance premiums. There may be conditions in the policy relating to default.
Ordinary life insurance (also known as whole life or straight life) is a contract for which the owner pays premiums and the insurer pays the face amount of the policy to the beneficiary upon the death of the insured.
An individual policy is a policy that is paid for entirely by the owner.
A group policy is usually issued through an employer or organization. The premiums may include some contribution from the employer. Group insurance is usually term insurance.
Dividends are shares of surplus funds allocated to the policy holders of participating insurance policies. They generally represent a previous overpayment of premiums. Dividends may be received as cash payments; used to reduce future premium payments; applied to the existing insurance to increase coverage; or left as a separate accumulation of funds that draw interest.

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.

F-4223.1 Policy and Procedure

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:

amount of insurance,
amount of this policy,
sum insured, etc.

A policy's FV does not include:

the FV of any dividend addition, which is added after the policy is issued (see Section 4224.1, Dividend Additions and Accumulations);
additional sums payable in the event of accidental death or because of other special provisions; or
the amount(s) of term insurance, when a policy provides whole life coverage for one family member and term coverage for the other(s).

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:

burial insurance policies, and
term insurance policies that do not generate a CSV.

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:

any excluded insurance policy covering the life of the person (or spouse, if applicable) that is excluded under this provision; and
any amount held in an irrevocable trust, burial contract or other irrevocable arrangement for the individual's (or spouse's) burial expenses, except to the extent that it represents excludable burial spaces.

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.

F-4223.2 Documentation and Verification

Revision 09-4; Effective December 1, 2009

The following information must be included in the case record documentation:

name of insurance company, policy number and face value(s);
type of insurance coverage (whole, term or burial insurance); and
source of verification.

Sources of verification include:

copy of policy;
letter from insurance company or organization, as appropriate;
completed Form H1238, Verification of Insurance Policies; and
documented telephone contact with representative of issuing company or organization.

If a person owns any life insurance policies, determine the:

FV of each policy,
type of insurance,
insured per policy, and
cash surrender value if not excluded.

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:

the person cannot provide a copy of the insurance policy;
the person's total resources, including the approximate cash value of whole life insurance policies, is approaching maximum resource limits. Request cash value as of 12:01 a.m. first day of the month;
prior to denial of assistance because of excess resources; and
the person reports any outstanding loans against the policy.

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:

how dividends are paid,
the amount of dividends paid, and
how often the dividends are paid.

If a person has a participating policy, determine whether dividends are used to:

purchase additional insurance,
increase the value of existing insurance policy coverage,
apply toward the payment of premiums, or
pay cash to the policyholders.

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.

F-4224 Life Insurance Dividends

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.

F-4224.1 Dividend Additions and Accumulations

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:

a countable resource, include the CSV of dividend additions in determining the resource value of the policy.
an excluded resource, do not include the CSV of dividend additions in determining the individual's countable resources.

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.

F-4225 Accelerated Life Insurance Payments

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:

long-term care model, which allows policyholders to access their death benefits should they require extended confinement in a care facility or, in some instances, health care services at home;
dread disease or catastrophic illness model, which allows policyholders to access their death benefits if they contract or acquire one of a number of specified covered conditions; and
terminal illness model, which allows policyholders to access their death benefits following a diagnosis of terminal illness where death is likely to occur within a specified number of months.

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.

F-4225.1 Life Settlement

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:

direct the proceeds from the transaction into an irrevocable, state or federally insured account;
specify that the proceeds be used for payment of LTSS expenses;
specify the total amount payable for LTSS expenses; and
indicate the amount of the reserved death benefit and the irrevocable beneficiary.

In order to be excluded for eligibility purposes, a life settlement account must:

be irrevocable,
be state or federally insured,
allow payments for LTSS and/or medical expenses, and
indicate the total amount payable for LTSS expenses.

If a life settlement account does not meet all of the above requirements:

consider the proceeds from the transaction a countable resource; or
if the proceeds are no longer accessible to the individual, explore transfer of assets.

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.

F-4226 Term and Burial Insurance

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.

F-4226.1 Policy and Procedure

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:

name of insurance company, policy number and face value(s);
type of insurance coverage (that is, term or burial insurance); and
source of verification.

Sources of verification include:

copy of policy;
letter from insurance company or organization, as appropriate;
completed Form H1238; and
documented telephone contact with representative of issuing company or organization.

F-4227 Burial Funds

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:

an applicant or recipient;
an applicant's or recipient's eligible or ineligible spouse; or
the parent or parent's spouse when resources are deemed to a minor child (see Section F-1420, Deeming for Children).

Reductions in Maximum Exclusion

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:

any life insurance policy that is already being excluded by the life insurance exclusion (see Section F-4223);
any burial insurance policy for the burial expenses of the individual (see Section F-4226, Term and Burial Insurance);
any amount held in an irrevocable trust, burial contract or other irrevocable arrangement for the individual's burial expenses, except to the extent that it represents excludable burial spaces (see Section F-4160, Prepaid Burial Contracts); or
any life insurance policy for which a funeral provider has been made the irrevocable beneficiary, if the life insurance policy owner has irrevocably waived his right to, and cannot obtain, any cash surrender value (CSV) the life insurance policy may generate (see Section F-4170, Burial Contracts Funded by Life Insurance, and Section F-4172, Irrevocable Assignment).

To be excluded, the person's funds must be:

liquid resources (see below),
separately identifiable and not combined with other funds, and
specifically designated for burial expenses.

How a Designation May Be Made

Burial funds may be designated as such by:

an indication on the burial fund document (for example, the title on a bank account); or
a signed statement.

Signed Statement Designating Burial Funds

A signed statement designating resources as set aside for burial must show the:

value and owner of the resources;
person for whose burial the resources are set aside;
form(s) in which the resources are held (for example, burial contract, bank account, etc.); and
date the individual first considered the funds set aside for the burial of the person specified.

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.

Date of Intent

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.

Effective Date of Exclusion

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:

the month following the month in which the funds were considered to have been set aside, subject to the rules of administrative finality; or
the actual or effective month of filing if the funds were considered set aside before that month.

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).

Designating Life Insurance as a Burial Fund

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

Burial funds are:

revocable burial contracts;
revocable burial trusts;
other revocable burial arrangements (including the value of certain installment sales contracts for burial spaces);
cash;
financial accounts (for example, savings or checking accounts); or
other financial instruments with a definite cash value (for example, stocks, bonds, certificates of deposit and life insurance, including the cash value of life insurance the person owns on someone else).

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.

Originally Designated Amount

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:

including a specific statement about the designation on a financial institution's records or on other ownership documents, or
providing a written statement (or Form H1252) that the resource is designated for burial expenses. The person or his authorized representative must include in this statement the following information:
- Type of resource set aside and designated
- Name of the financial institution or company
- Account or policy number
- Amount of money in or value of the resource
- Effective date of designation

Use Form H1276, Burial Fund Designation Worksheet, which provides a step-by-step worksheet for calculating the amount of excluded burial funds.

F-4227.1 Calculation of Available Burial Fund Exclusion

Revision 10-4; Effective December 1, 2010

From the $1,500-per person (for the person, spouse or deemor) allowance for burial fund exclusions:

deduct irrevocable arrangements owned by the person or someone else (for the person, spouse or deemor). This includes a revocable/irrevocable burial contract for the person's burial purchased by someone other than the person, including the spouse after the initial eligibility period in spousal cases (see Section F-4160, Prepaid Burial Contracts, Section F-4170, Burial Contracts Funded by Life Insurance, and Section F-4172, Irrevocable Assignment);

Note: Burial insurance policies, generally ranging from $100 to $200, were issued by some funeral homes before 1965. These policies are not countable resources. However, they are considered irrevocable burial arrangements, which reduce the $1,500 maximum burial fund exclusion. If the policies have been purchased by life insurance companies and converted to term life insurance, they are treated as any other term life policy (see Section F-4226, Term and Burial Insurance).
deduct the face value of excluded life insurance on the individual (see Section F-4223, Life Insurance); and
use the remaining amount to reduce the countable amount of any liquid resource (see Section F-4100, Types of Liquid Resources) designated by the person (see Section F-4227.2, Opportunity to Designate).

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.

F-4227.2 Opportunity to Designate

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.

F-4227.3 Effective Date of Designation

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:

If resources have been deemed to the person from the ineligible spouse/parent, HHSC uses the value of the designated burial funds as of the original designation date.
If resources have not been deemed to the person from the ineligible spouse/parent, HHSC uses the value of the designated burial fund as of the ineligible spouse's/parent's medical effective date (MED).

In spousal cases:

If the ineligible spouse applies during the initial eligibility period, HHSC uses the value of the designated burial fund as of the original designation date.
If the ineligible spouse applies after the initial eligibility period, HHSC uses the value of the designated burial fund as of the ineligible spouse's MED.

Notes:

The 12:01 a.m. rule applies to the assessment of all resources. Use the value of the designated burial funds as of 12:01 a.m. for the month of the medical effective date in the calculation.
The burial fund exclusion is only allowable for the person, the person's spouse (eligible or ineligible) or the parents of the person when the person is a minor child and deeming occurs.
The burial fund exclusion is not allowed for the person's minor or adult children or any other individual. If the person purchases an asset that is a burial fund for a minor child or an adult child who is not disabled, treat as a transfer of assets. Deduct the value of the burial space items before calculating the penalty. If the person's child meets Social Security Administration disability criteria, regardless of age, treat as an exception to transfer.

F-4228 Burial Fund Calculation

Revision 10-4; Effective December 1, 2010

Procedure

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:

As of 12:01 a.m. on January 1 of this year, Carol Caswell owned the following resources:

$2,200 – Savings account
$1,200 – Cash value of a whole life insurance policy with a face value of $1,700
The full $1,500 burial fund designation exclusion was available for designation.
Ms. Caswell designated the cash value of the life insurance policy for burial effective 12:01 a.m. on January 1 of this year, but did not wish to designate the total savings account for burial. Therefore, she was ineligible January of this year.
On January 1 of this year, Ms. Caswell withdrew $500 from her savings account and deposited the $500 into another savings account designated for burial. She provided a statement on Form H1252, Designation of Burial Funds, indicating that this account was designated for burial effective January 25 of this year. Funds that were not separately identifiable on the date of application but are subsequently separated and designated for burial are excluded effective at 12:01 a.m. of the first day of the following month.

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.

The person has two life insurance policies with a total face value of $7,000 and total cash value of $1,100. The person also has an irrevocable, fully-paid burial arrangement which is owned by the community spouse. The face value is $3,770, which reduces the $1,500 burial fund designation dollar for dollar. Therefore, the $1,100 cash value of the life insurance is a countable resource.

F-4229 Annual Burial Fund Calculation

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.

F-4229.1 Designated Amount is Less Than $1,500

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.

F-4229.2 Designated Amount Exceeds $1,500

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:

Determine the percentage of total funds that were countable at the prior designation by dividing the countable amount of the designated resource by the total value of the designated resource.
Apply that percentage to the current total value of the designated resource. If a decimal number is used rather than a percent, take the decimal to three places. For example, 25.5 percent would be .255 in a decimal number.

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.

F-4229.3 Increased Value from Person Action

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.

F-4229.4 Increased Value from Person Action and Interest/Dividends

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:

Add the amount of the additional payment to the amount that was countable at the prior designation.
Divide this total by the value of the designated account after the additional payment was made (before the interest was paid). This yields the percentage of the fund that is now countable.
Multiply the current value of the designated fund (including interest) by the percentage from #2. This yields the countable value of the fund.

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:

Multiply the value of the resource after interest paid (before additional deposits) by the percent counted as determined at the previous designation. This yields the countable portion of the resource before the additional payments.
Add to the above figure the amount of the additional payments. The sum is the total countable resource value of the fund. Divide the countable amount by the total amount of the fund to determine the percentage to carry over to the next review.

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

F-4230 Treatment of Burial Fund Tampering

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:

adds funds to a resource that is designated for burial, or
converts the total amount in a designated burial fund to another designated burial fund (for example, the person uses a savings account designated for burial expenses to purchase a prepaid funeral contract).

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.

F-4240 Safe Deposit Box

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:

location of safe deposit box, and
inventory of contents.

Sources of verification include:

contact with financial institution, and
statement by person or responsible person.

F-4250 Livestock

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:

kind and number of animals owned by person;
whether animals are excluded as a resource;
reason for exclusion, if excluded;
current market value, if countable; and
source of information or verification.

Sources of verification include:

local knowledgeable source (for example, auction barn employee); and
newspaper.

F-4260 Nonliquid Resources Converted to Cash

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.

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:

sales receipt or contract,
note, and
bank deposit slip.

Sources for verifying expenses related to the sale of a resource are:

bill for repairs or services, and
copy of a lien or note that had to be paid to effect the sale. The copy should show final settlement.

Sources for verifying the current market value of the resource are:

statement from a knowledgeable source, depending on the type of resource;
newspaper ads for the sale of similar items; and
assessment or tax notices.

F-4300, Resources Essential to Self-Support

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.

F-4310 Nonbusiness Property – $6000/6%

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:

equity value does not exceed $6,000; and
person receives a net annual rate of return of at least 6% of the equity value.

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:

copy of the deed,
copy of the will, and
copy of a current tax statement or assessment.

Sources for verifying income include:

lease agreement;
rent receipts;
bank deposit slips;
canceled checks and receipts from expense (to determine net income); and
recent income tax return.

Sources for verifying the current market value include:

copy of a mortgage or lien,
copies of bills for repairs or services, and
recent income tax return.

Reference: Verification procedures for mineral rights are explained in Section F-4213, Mineral Rights.

F-4311 Examples of $6000/6%

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.

F-4312 Rate of Return Less Than Reasonable

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:

Unusual or adverse circumstances cause a temporary reduction in the rate of return.
The property is used in an income-producing activity.
The property usually has net annual rate of return of at least 6% of the equity value of the property.
The person expects the property to resume producing a reasonable return within 18 months of the end of the calendar year in which the unusual incident caused the reduction in the rate of return. If, by the end of the time allowed, the property is not producing a net annual rate of return of at least 6% of the equity value, the resource cannot be excluded.

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.

F-4320 Employment-Related Personal Property

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:

cows supplying milk,
chickens supplying eggs, and
garden plots for growing vegetables.

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.

F-4330 Business Property

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:

a description of the trade or business,
a description of its assets,
the number of years it has been operating,
the identity of any co-owners, and
the estimated gross and net earnings for the current tax year. Business tax returns (IRS Form 1040 and appropriate schedules) can be used to determine earnings and the validity of the trade or business.

F-4400, Plan for Achieving Self-Support

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.

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 F-3600		X
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

F-6000, Types of Trusts

F-6100, Testamentary and Inter Vivos Trusts

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 F-6200, Medicaid-Qualifying Trust, and 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:

the legal guardian is the trustee;
the trust provides a regular, specified payment (disbursement) to the person; or
the trust provides for discretionary withdrawals by the trustee.

Verification for a Testamentary or Inter Vivos Trust

Request the following:

copy of the trust agreement;
copy of the will, if the trust is a testamentary trust; and
statement(s) from the financial institution, trust management company and attorney as to the following:
- value of trust corpus (12:01 a.m. on the first day of the month(s)),
- amount and frequency of income produced by the trust, and
- amount of corpus and income available to the applicant/person.

Required Regional Legal Review and Documentation

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:

is a testamentary or inter vivos trust;
is revocable or irrevocable;
was established by someone other than the person such as a spouse, parent, grandparent, etc.;
was established with someone else's money other than the person's money;
restricts the person's access; or
names the person as the trustee.

Resource Treatment

Based on the regional legal review, count the value of the corpus of the trust as an available resource if the:

trust is a testamentary or inter vivos trust;
trust is revocable; and
person is named as the trustee and can use the money for the person's own benefit.

Based on the regional legal review, do not count the value of the corpus of the trust as an available resource if the:

trust is a testamentary or inter vivos trust;
person is not the trustee of the trust; and
person's access to the trust is restricted — that is, only the trustee (other than the person) or the court may withdraw the principal.

In addition, the corpus of the trust is not counted as an available resource when the person is not the trustee, even if the:

legal guardian is the trustee;
trust provides a regular, specified payment/disbursement to the person; or
trust provides for discretionary withdrawals by the trustee.

See 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.

F-6200, Medicaid-Qualifying Trust

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 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:

The trustee has the discretion to distribute the corpus of the trust, which is property worth $6,000. The corpus, therefore, is a $6,000 countable resource.
The person established an irrevocable Medicaid-qualifying trust before Aug. 11, 1993. The trustee has discretion only to distribute $100 monthly from the income earned by the trust but chooses not to do so. The corpus is not a countable resource; however, the person's other countable resources are increased by $100 every month. If necessary, schedule a special review to monitor eligibility.

F-6210 Zebley Cases

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 F-6700, Exception Trusts.

F-6300, Trusts (August 11, 1993 and After)

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:

The trust was established on or after Aug. 11, 1993.
The person's assets were used to form all or part of the corpus of the trust. The policy in this section does not apply to trusts established by a will in which the person is the beneficiary.
The trust was established by:
- the person;
- the person's spouse;
- any person, including a court or administrative body, with legal authority to act on behalf of or in place of the person or person's spouse; or
- any person, including a court or administrative body, acting upon the direction or the request of the person or the person's spouse.

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.

F-6310 Limited Partnerships

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:

The value of the share of ownership purchased by the limited partner is less than the amount he invested.

Example: The individual originally owned 100% of the assets comprising the partnership. This 100% interest is exchanged for a 95% interest in the partnership. This represents a transfer of 5% of those assets.
The general partners cannot make the limited partner's share available to him.

Example: The limited partnership imposes restrictions on the sale of its property or the individual's interest in the partnership. A transfer of assets has occurred to the extent that the individual's right to sell his interest is restricted.

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.

F-6400, Revocable Trusts

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:

A withdrawal from a trust account that is given to the person's brother is a transfer of assets.
A withdrawal from a trust account that is given to a spouse does not incur a transfer of assets penalty because interspousal transfers are permitted.

When the home is in an irrevocable or revocable trust ("Living Trust"), see Section F-3300, The Home as a Countable Resource.

F-6500, Irrevocable Trusts

Revision 09-4; Effective December 1, 2009

If there are any circumstances under which payment from an irrevocable trust could be made to or for the benefit of the person, then:

the portion of the corpus, or income generated by the corpus, from which payment could be made is a countable resource;
payments made to or for the benefit of the person, except medical and social services, are countable income; and
payments for any other purpose are a transfer of assets.

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.

F-6600, Treatment of Trusts

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:

the purpose for which the trust is established;
whether the trustee, or similar person or entity, has or exercises any discretion under the trust;
any restrictions on when or whether distributions can be made from the trust; or
any restrictions on the use of distributions from the trust.

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.

F-6610 Payments from a Trust

Revision 09-4; Effective December 1, 2009

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.

F-6700, Exception Trusts

Revision 09-4; Effective December 1, 2009

The Omnibus Budget Reconciliation Act of 1993 identifies several types of trusts which are exceptions to the trust provisions stated in F-6300, Trusts (Aug. 11, 1993, and After). These exceptions apply only to trusts established on or after Aug. 11, 1993.

F-6710 Special Needs Trust

Revision 25-1; Effective March 1, 2025

A special needs trust is a revocable or irrevocable trust established with the assets, including income or resources, of a person under 65 who meets the Supplemental Security Income (SSI) program's disability criteria. The trust must be established for the person’s benefit by a parent, grandparent, legal guardian, court or the person. Beginning Dec. 13, 2016, people under 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 for Trusts, Annuities and Court Settlements, to report to the Texas Medicaid and Healthcare Partnership (TMHP) any potential paybacks to the state as the residuary beneficiary of special needs trusts.

This trust exception continues even after a person turns 65 if the person continues to meet the disability criteria for the SSI program. However, additions or augmentations to the trust after the person turns 65 are a transfer of assets.

If a person is receiving disability benefits from SSI, Retirement, Survivors, and Disability Insurance (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.

Additional Information

A legal review of the instrument, device or arrangement that establishes the special needs trust is necessary. Send the special needs trust documents to legal staff following established procedures.

Related Policy

Documentation and Verification Guide, Appendix XVI

F-6711 Treatment as Resource

Revision 09-4; Effective December 1, 2009

The trust is not counted as a resource.

F-6712 Treatment as Income

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:

payments for medical or social services for the trust beneficiary (E-1000, General Income, for an explanation of medical and social services); and
payments to the trust beneficiary’s Achieving a Better Life Experience account (E-3331.4, Treatment of Interest and Dividends Earned on an Achieving a Better Life Experience (ABLE) Account).

A payment to or for the benefit of the individual is counted under trust provisions only if such payment is ordinarily counted as income.

F-6713 Transfer of Assets

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.

F-6720 Pooled Trust

Revision 25-1; Effective March 1, 2025

A pooled trust is an irrevocable trust containing the assets of a person who meets Supplemental Security Income (SSI)'s definition of disability. A pooled trust must satisfy the following conditions:

The trust is established and managed by a non-profit association.
A separate account is maintained for each beneficiary, although the accounts may be pooled for investment and management purposes.
Accounts in the trust are established solely for the benefit of people who meet SSI's disability criteria. The accounts are established by the disabled person themselves or a parent, grandparent or court-ordered legal guardian of the disabled person.
The trust must include a provision so that amounts remaining in a person's account at their death are not kept by the trust, and the state is reimbursed in an amount equal to the total amount Medicaid paid on the person's behalf.

Note: Zebley funds may be used to establish pooled trusts.

Use Form H1210, Subrogation for Trusts, Annuities and Court Settlements, to report to the Texas Medicaid and Healthcare Partnership (TMHP) any potential paybacks to the state as the residuary beneficiary of pooled trusts.

Examples of pooled trusts are:

The ARC of Texas Master Pooled Trust, established in 1997.
Declaration of Trust for the Travis County Master Trust; Founders Trust Company, Trustee, adopted by decree of the District Court of Travis County, Texas, 201st Judicial District, effective Aug. 1, 1993.
Declaration of Trust for Children for Whom the Texas Department of Protective and Regulatory Services is Managing Conservator or Who Are or Have Been Under its Jurisdiction;
Boatmen's National Bank of Austin, Trustee, adopted by decree of the District Court of Travis County, Texas, 98th Judicial District, effective June 1, 1993.

Additional Information

A legal review of the instrument, device or arrangement that establishes the pooled trust is necessary. Send the pooled trust documents to legal staff following established procedures.

Related Policy

Documentation and Verification Guide, Appendix XVI

F-6721 Treatment as Resource

Revision 09-4; Effective December 1, 2009

The trust is not counted as a resource.

F-6722 Treatment as Income

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:

payments for medical or social services (See E-1000, General Income, for an explanation of medical and social services); and
payments to an Achieving a Better Life Experience account (E-3331.4, Treatment of Interest and Dividends Earned on an Achieving a Better Life Experience (ABLE) Account.).

A payment to or for the benefit of the person is counted under trust provisions only if such payment is ordinarily counted as income.

F-6723 Transfer of Assets

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.

F-6800, Qualified Income Trust

Revision 25-1; Effective March 1, 2025

A qualified income trust (QIT) is an irrevocable trust established for the benefit of a person, the person’s spouse or both. The corpus of the trust is composed only of the person’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 funds Medicaid paid for the person. Use Form H1210 , Subrogation for Trusts, Annuities and Court Settlements, to report to the Texas Medicaid and Healthcare Partnership (TMHP) Third Party Liability (TPL) Tort department any potential paybacks to the state as the residuary beneficiary of a QIT.

Additional characteristics of a QIT include:

The trust must be irrevocable.
The trust must contain only the person’s income.
- If resources are placed in the trust, it is not a QIT.
- Some banks may require nominal deposits, $10 to $20, to establish a financial account to fund the trust. Nominal amounts of a 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. However, once the trust account is established, only the person’s income can be directed to the trust account.
The income does not have to be directly deposited into the trust.
The income the trust is established for must be deposited into the trust during the month it is received by the person.
The trust may be established with any or all sources of a person’s income, but 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 the trust document indicates only half of the pension income must be deposited, it is not a valid QIT.

Additional Information

When an applicant is income ineligible in an institutional setting, refer to B-2500 , Explaining Policy vs. Giving Advice, to review the appropriate actions to take and the actions to avoid.

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 people in Community Attendant Services (CAS) who are income ineligible.

A legal review of the instrument, device or arrangement that establishes the QIT is necessary. Send the QIT documents to legal staff following established procedures.

F-6810 Treatment as Resource

Revision 09-4; Effective December 1, 2009

The trust is not counted as a resource.

F-6820 Treatment as Income

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:

When an individual does not pay a full month's co-payment due to hospitalization or because Medicare covered 100% of the cost of a partial month, the accumulated funds in the QIT trust are not a countable resource, and transfer of assets is not involved.
An individual receiving HCBS waiver services who establishes a QIT covering all waiver costs is not denied. In a waiver program, the applicant with a QIT is receiving the benefit of the contracted Medicaid rates for waiver services as opposed to the private rates.

Examples:

The applicant entered the nursing facility and applied for Medicaid in July. Income totals $3,600. The QIT calls for all income to be directed to the trust account. However, the trustee did not deposit the July income checks to the trust account until August 23. The entire $3,600 is countable income for July, and the applicant is ineligible for that month.
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.

F-6900, Undue Hardship

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.

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

Medicaid for the Elderly and People with Disabilities Handbook

F-1210 Definition

F-1220 Ownership and Accessibility

F-1221 Co-owned Resources

F-1221.1 Co-owned Resource Examples

F-1230 Guardians, Fiduciaries and Other Agents

F-1231 Guardians and Other Agents

F-1231.1 Examples of Treatment of Resources

F-1232 Fiduciary Agent

F-1232.1 Medicaid Recipient Responsibilities as Fiduciary Agent

F-1240 Ownership of Unknown Assets

F-1250 Patrimonial Assets

F-1260 Conversion of Resources

F-1270 Replacement Value of Excluded Resources

F-1310 Points in Time for Establishing Resource Values

Related Policy

F-1311 Encumbered Funds

Related Policy

F-1312 Nursing Facility Payments and Refunds

F-1312.1 Payment During a Penalty

F-1312.2 Refunds for Payments Before Medicaid Eligibility Approval

Related Policy

F-1410 Deeming for Spouses

F-1420 Deeming for Children

F-2110 Cash Reimbursement of Medical or Social Services Expenses

F-2120 Death Benefits

F-2130 Earned Income Tax Credits (EITC)

F-2140 Hazardous Duty Pay

F-2150 SSI and RSDI Retroactive Lump Sum Payments

F-2151 Examples of SSI and RSDI Retroactive Lump Sum Payments

F-2160 Gifts to Children with Life-Threatening Conditions

F-2170 Exclusion of State or Local Relocation Assistance Payments

F-2210 Crime Victims' Compensation

F-2220 Certain Designated Accounts

F-2230 Certain Health-Related Payments

F-2240 Indian-Related Exclusions

F-2250 Reparations and Compensation

F-2260 Exclusions from Resources Provided by Other Statutes

F-2270 Exclusions from Resources Related to Disaster Payments

F-2310 Achieving a Better Life Experience (ABLE)

F-2320 School-Based Savings Accounts

F-3110 Principal Place of Residence

F-3111 The Home as the Principal Place of Residence

Related Policy

F-3112 Spouse or Dependent Relative Living in the Home

F-3120 Intent to Return Home

F-3121 Intent to Return Policy

F-3121.1 Temporary Absence from the Home

F-3130 Home and Other Real Property Placed for Sale

F-3210 Treatment of a Home in a Revocable or Living Trust

F-3211 Re-established Intent to Return Home

Home Equity Treatment

Related Policy

F-3610 Persons Impacted by Substantial Home Equity Disqualification

F-3620 Persons Not Impacted by Substantial Home Equity Disqualification

F-3630 When the Equity Value is Greater Than the Limit

F-3640 Reverse Mortgage or Home Equity Loan

F-3650 Documentation

F-3660 Undue Hardship

F-3810 Transfer of an Excluded Home Cancels the Exclusion

F-3811 Person Retains Some Interest

F-4100 Types of Liquid Resources

F-4110 Cash

F-4120 Bank Accounts

Related Policy

F-4121 Joint Bank Accounts

F-4122 Time Deposits

F-4123 Patient Trust Funds

F-4124 Debit Accounts

F-4130 Stocks

F-4140 Bonds

Related Policy

F-4150 Promissory Notes, Loans and Property Agreements

F-4160 Prepaid Burial Contracts

F-4161 Treatment of Refund Penalty

F-4161.1 No Refund Penalty

F-4161.2 Refund Penalty

F-4161.3 Examples of Refund Penalty

F-4170 Burial Contracts Funded by Life Insurance

F-4171 Revocable Assignment