PMN18420440 Treatment of retroactive VA Aid and Attendance benefits - March 31, 2017
Personal property includes, but is not limited to:
Cash on hand.
Bank and credit union accounts, including vacation and Christmas clubs, checking and savings accounts, savings certificates of deposit (CDs), money market funds, patient accounts that an LTC facility establishes and handles, and Direct Express accounts. Direct Express accounts allow individuals to receive their federal benefits such as Supplemental Security Income (SSI) payments on a debit card.
Stocks, bonds, and mutual funds.
Trust accounts that are legally available to the person.
Burial reserves and prepaid funeral agreements. See Section 440.6, Burial Resources.
Individual Retirement Accounts (IRAs) and Keogh funds.
NOTE: An early withdrawal penalty does not mean the CAO may exclude a resource. The CAO will deduct the penalty amount from the total before counting the resource value. If the account is restricted and the principal cannot be withdrawn, the fund is not an available resource. Count pension plan payments as unearned income.
Exception: Do not count as an available resource pension funds including IRAs, 401Ks, and other deferred compensation funds owned by the spouse in the community (CS). If the spouse is receiving payments from the funds, count the payments as income.
Educational Savings Plans.
Achieving a Better Life Experience (ABLE) accounts. See 440.38 ABLE Accounts.
Lump sum payments such as, but not limited to, tax or rent rebates, insurance benefits, and inheritances. See Chapter 457 Lump Sum.
NOTE: In the month of receipt, the person may choose to count a lump sum payment as income or as a resource, whichever is better. If the lump sum counts as income, count any remaining balance of the lump sum as a resource after the first month of receipt.
55 Pa. Code § 181.31(d) 55 Pa. Code § 178.1(g)
Motor vehicles. See Section 440.34, Motor Vehicles.
Other types of vehicles such as boats, ATVs and snowmobiles, etc. See Section 440.34, Motor Vehicles.
Household goods.
Personal effects, including recreational items such as books, musical instruments or hobby items.
55 Pa. Code § 178.66 20 CFR § 416.1216(a)
Money from the sale of an item, even if the item itself was excluded as a resource. See Section 440.8, Disposition of Assets and Fair Consideration.
Life Insurance. See Section 440.33, Life Insurance.
Promissory Notes, Loans and Mortgages.
The CAO will verify ownership and equity value of all countable personal property.
Commissions or early withdrawal penalties may reduce the equity of a resource. The CAO will verify and record any deductions.
The individual, applicant, representative payee, guardian, or trustee will give proof of the balance or value of countable personal property at application and at each renewal. The person must verify personal property value using acceptable proof for the property type.
Examples of acceptable proof are:
Cash on hand – Statement from the individual.
Bank, credit union, Christmas and vacation club accounts, savings certificate or certificate of deposit – A passbook showing a current balance, a current bank statement, or written verification from the financial institution.
NOTE: To protect the financial account information, the request to the financial institution should include only the last four digits of the account number.
REMINDER: When the individual cannot provide a Direct Express account statement, the CAO will follow the guidance in the Medical Assistance Eligibility Handbook Section 378.3, County Assistance Office Responsibility.
Burial reserves – A statement from a financial institution or funeral director verifying that funds held for burial cannot be withdrawn before the death of the beneficiary (irrevocable) or are clearly designated for burial but not restricted for withdrawal (revocable).
Stocks/bonds – A statement from a stock broker or statement from the company or authority issuing the stock or bonds.
IRA/Keough – A statement from the financial institution.
Mutual funds – A statement from the company managing the fund.
Savings bonds – A statement from a bank.
Trust fund – The trust document and a statement from the financial institution managing the trust, the decision of the Office of General Counsel as to how the CAO should consider the trust, and an accounting of the trust’s activity for the entire look-back period.
Inheritance – A statement from the attorney, if the estate is represented by an attorney. If no attorney is handling the estate, the executor or administrator of the estate must give the proof. Proof includes, but is not limited to, bank statements, tax returns, a document verifying the amount, settlement agreements, etc.
Motor Vehicle – The title of ownership, written estimate of the value from a dealer, blue book value, red book value or acceptable websites. See the Supplemental Nutritional Assistance Program (SNAP) Handbook, Chapter 540.353 for a list of acceptable websites.
The CAO will exclude household goods and personal effects. They are not counted when determining resources of an individual applying for or receiving MA LTC.
Household goods are:
Items of personal property found in or near the home that are regularly used, and
Items needed by the household for maintenance, use and occupancy of the home.
Household goods include, but are not limited to:
Furniture, appliances, electronic equipment such as personal computers, televisions, carpets, cooking and eating utensils and dishes.
Personal Effects are:
Items of personal property that the individual ordinarily wears or carries.
Personal Effects include, but are not limited to:
Clothing, jewelry, items of personal care, educational or recreational equipment, musical instruments, hobby items, books.
Items required because of an individual’s physical or mental impairment, prosthetic devices, dialysis machines, motorized wheel chairs, and hospital beds.
Items of cultural or religious significance to a person, such as ceremonial attire.
The CAO will identify and verify life insurance.
The CAO will determine the countable value of life insurance for the individual, and if married, the CS as follows:
1. Disregard all life insurance policies that have no cash value, such as term insurance policies.
2. Add together the face value of all remaining policies.
NOTE: The face value is the basic death benefit of the policy contract, not counting dividends or additional amount payable because of accidental death or under other special provisions.
If the total face value of all policies is equal to or less than $1,500, disregard all policies regardless of their cash value.
If the total face value of all policies is more than $1,500, determine the Cash Surrender Value (CSV). The CSV is the amount the insurer will pay, usually to the owner, when the policy is cancelled. If the total CSV is more than $1,000, count the amount over $1,000 as an available resource.
The individual and, if married, the CS, may each exclude life insurance policies with a total face value of $1,500 or less. Each spouse receives a $1,000 disregard if the total face value of their individual policies is over the $1,500 limit.
Example: Mrs. D owns five life insurance policies. One is a term policy with a face value of $5,000. This policy has no cash value. One is a $2,000 policy with a $1,300 CSV. The other two are old $100 policies with a CSV of $525 each. The total face value of the policies that have any cash value is $2,200. The total CSV is $2,350 and the countable resource is $1,350.
55 Pa. Code § 178.69 20 CFR § 416.1230
NOTE: Treat a pre-planned funeral insurance policy with an irrevocable agreement as an irrevocable burial reserve rather than as an insurance policy.
An individual who is ineligible because of an insurance policy may reduce the cash value to establish eligibility. The conversion must meet fair consideration requirements when determining eligibility for LTC services.
An individual may reduce the cash value of a life insurance policy by assigning ownership of the policy to a funeral home for a burial reserve. The assignment must be irrevocable.
NOTE: Life insurance is considered a legally unavailable burial reserve if it is clearly designated for burial, the person does not have legal access to the life insurance policy, and the owner is a financial institution or funeral director. Naming the funeral home as beneficiary does not reduce the countable value of the policy. See Section 440.51, Irrevocable Burial Reserve.
Surrender the policy and use the proceeds to set up a revocable burial reserve of up to $1,500 or an irrevocable burial reserve. See Section 440.71, Excess Resources at Application.
55 Pa. Code § 178.72 55 Pa. Code § 178.73
Surrender the policy and use the proceeds to buy personal items. Keep receipts. The individual must receive FMV for any purchases.
Borrow on the CSV to reduce the amount to below the resource limit and use the proceeds to buy personal items. The person must receive FMV for any purchases.
NOTE: The loan reduces the CSV value of the policy. The CAO will subtract the amount borrowed from the CSV to determine how much to count.
If the individual spends the amount borrowed to buy personal items in the month the money was received, the CAO will consider the borrowed money a resource until total countable resources are reduced below the appropriate resource limit.
If the individual spends the amount borrowed for an irrevocable burial or on medical expenses, including LTC services, the CAO will treat the amount borrowed as if it never existed. The person must receive FMV.
Example: Mrs. B is applying for LTC services. She has a life insurance policy with a face value of $7,000 and a cash value of $5,100. The CAO excludes $1,000, and tells Mrs. B that her resources of $4,100 are over the limit when added to her other countable resources. Mrs. B converts the insurance to an irrevocable form so it will be entirely excluded as an irrevocable burial reserve. See 440.71, Excess Resources at Application, for treatment of the eligibility date. Mrs. B could also have established an irrevocable burial reserve with the cash proceeds from the policy.
It is not necessary to verify the Cash Surrender Value (CSV) if the total face value (FV) of countable life insurance owned by each insured person is less than $1,500. The CAO will record the information, including the owner, company, policy number, face value, and name of the person insured. The CSV of these policies and the face value of these policies do not count as a resource.
Example: Mr. S has three life insurance policies:
One $5,000 face value term life insurance.
One $500 face value whole life policy.
One $800 face value whole life policy.
Exclude the term life insurance policy with the $5,000 face value as a resource. The CAO will total the face value of Mr. S’s whole life insurance policies. Mr. S’s whole life policies have a total face value of $1,300. Because the face value is below $1,500, the CAO will exclude the CSV as a resource. The CAO will not verify the policies’ CSV.
If the total face value of the countable life insurance policies is more than $1,500 per person, the CAO will determine the CSV for each policy by contacting the insurance agent or company. The CAO can verify the CSV of life insurance using current documentation from the insurance company given by the applicant or recipient.
NOTE: The CAO cannot use the life insurance policy cash value charts to verify the current CSV if the policy has accumulated dividends, outstanding loans, or unpaid premiums.
Example: Mrs. P has three life insurance policies:
One $5,000 face value term life policy.
One $1,000 face value whole life policy with a CSV of $650.
One $1,000 face value whole life policy with a CSV of $650.
Exclude the term life insurance policy with the $5,000 face value as a resource. The CAO will add together the face value of Mrs. P’s whole life insurance policies. Mrs. P’s whole life policies have a total face value of $2,000. Because the face value is greater than $1,500, the CSV of the policies is a countable resource.
If the insurance company will not give the person current documentation of the CSV, the CAO may verify the cash surrender value by sending the insurance company a Request for Insurance Data (PA 83-Z).
The CAO will record the identifying information for each policy.
55 Pa. Code § 178.3(8) 55 Pa. Code § 178.69
“Demutualization” or “going public” is when a mutual life insurance company owned by policyholders converts into a life insurance company owned by shareholders. Only the policyholders’ ownership rights in the company change. The contract between company and policyholders does not change. Eligible policyholders may receive cash, additional insurance or shares of stock in exchange for changes in ownership rights in the company.
When reviewing an individual’s resource and income eligibility, the CAO must determine if a policyholder’s insurance company has demutualized. The CAO will ask whether an applicant/recipient received stocks, additional insurance or lump sum payments in exchange for changes to ownership rights in the company at demutualization. The applicant/recipient must give proof of the cash value of any resources from the demutualization of a life insurance company.
For applicants holding insurance policies that went public:
Determine the face and cash value of the policy to verify the countable resource value. See Section 440.331.
Count any stock received as a result of demutualization as an available resource. The number of shares multiplied by the dollar amount per share equals the resource amount. For persons asking for MA LTC coverage, determine the value of the stock on the date of requested coverage for MA LTC. When calculating a resource assessment, determine the stock value as of the date of admittance to the LTC facility or the date the person is assessed functionally eligible for HCBS.
Example: 3 shares at $50 per share = $150 amount of countable resource
If the stock was traded in for cash at the time of demutualization, treat the amount of cash received as a lump sum and apply lump sum policy as in Chapter 457.
For recipients holding insurance policies that went public:
Verify the date the recipient received notice of number of stock shares received.
If the recipient received notice of stock shares received and reported the change within 10 days, determine the value of the stocks as of the date the recipient was notified of ownership of the stock (number of stocks x $ per share). Combine the value of the stocks with other countable resources.
If the total resources are above the appropriate MA LTC limit, send an advance notice to end MA LTC eligibility.
If the total resources are less than or equal to the appropriate MA LTC limit, note the information in the case record.
If the stock was traded in for cash at the time of demutualization, treat the cash received as a lump sum and apply lump sum policy according to Chapter 457.
A motor vehicle is a passenger car, truck, motorcycle, or other vehicle that is permitted to travel on Pennsylvania highways. The CAO will consider all vehicles whether they are inspected, licensed, unlicensed, or inoperable.
Exception: A motor home is considered real property if it is the individual’s primary residence. See Section 440.4 Real Property.
The owner of a vehicle is the individual whose name appears on the title or the owner’s card. The CAO will exclude only one motor vehicle owned by an individual and/or spouse. The CAO will record the information about the motor vehicle, but take no further action.
If more than one motor vehicle is owned by the individual and/or spouse, the CAO will determine the equity value of each vehicle using these steps:
1. Determine the fair market value.
Verify the fair market value of a vehicle by getting a written statement from a car dealer or by using a published car valuation book such as the blue book or red book or acceptable websites. See the Supplemental Nutritional Assistance Program (SNAP) Handbook, Chapter 540.353 for a list of acceptable websites. Use the average current market value when determining fair market value (FMV).
If using the book value, give the individual an opportunity to disagree with the value determination. A vehicle that has a lot of mileage, body damage, or other defect may be worth less than the book value. If the owner thinks the vehicle is worth less than the book price, tell the person to get proof of its fair market value.
The individual may get a written estimate from a car dealer as proof. Use this documentation and record the facts in the case record. Keep the verification for three years from the date of the decision.
2. Determine if there are any outstanding loans or legal encumbrances for the vehicle. Subtract the outstanding loan or legal encumbrance from the fair market value (FMV) of the vehicle. The result is the equity value of the vehicle. Get proof of the amount owed from the financial institution that issued the loan. Use only the principal portion of the loan, not the interest.
NOTE: Deduct the amount owed even if the loan for a motor vehicle is in another person’s name.
After determining the equity value, the CAO will:
1. Record the identifying information for each vehicle in the case record.
2. Verify the equity value for all vehicles that are not excluded.
3. Exclude the vehicle with the greatest equity value.
4. County the total equity value of all other vehicles as a resource.
Example: Mr. M applies for LTC services. He and his wife have two motor vehicles. One has an equity value of $10,000. The second has an equity value of $1,600. Count the total equity value of the second motor vehicle.
55 Pa. Code § 178.67 20 CFR § 416.1218
An annuity is:
A contract, and
A lump sum of money that is paid to a financial institution in return for the right to receive fixed, periodic payments, and
An individual and the individual’s spouse must disclose any interest the individual has in an annuity and provide copies of the contract and any riders or addendum to the annuity.
There are two types of annuities:
A qualified annuity is part of or together with an employer-established account or individual retirement plan such as an Individual Retirement Account (IRA), Roth IRA, or Keogh fund.
A non-qualified annuity is one that an individual has bought outright. It is not part of a retirement plan.
A qualified or non-qualified annuity may be irrevocable or revocable.
A qualified or non-qualified annuity belonging to an individual will be counted as either income or a resource in determining MA LTC eligibility. A qualified annuity owned by a community spouse (CS) is not considered an available resource.
DHS will not recognize any provision in an annuity (or similar contract for the payment of money owned by a individual or individual’s spouse) that limits the right to sell, transfer or assign the right to receive payments or that restricts the right to change the beneficiary. DHS will presume that any annuity or similar contract to receive money is marketable.
62 P.S. § 441.6
A qualified annuity belonging to an individual will be counted as either income or a resource in determining MA LTC eligibility. A qualified annuity includes an IRA or an annuity bought with the proceeds from a traditional IRA (rollover), a simplified retirement account, an employee pension, or Roth IRA. The CAO will continue to review it for availability as a resource.
The qualified annuity (IRA, 401K, etc) of the CS is not counted as an available resource. Count the payments as income if the CS is receiving payments from the annuity.
A non-qualified annuity owned by an individual must meet all of these conditions:
It is irrevocable and non-assignable.
It is actuarially sound (see Appendix D, (Life Expectancy Tables).
NOTE: Use the figures from the life expectancy table to determine whether the purchase of an annuity is actuarially sound. The table will give the life expectancy of the person based on the individual’s age when the annuity was bought. Annuities are considered actuarially sound if the annuity payment term is either shorter than, or equal to, the owner’s life expectancy.
It is paid out in equal monthly payments, with no deferral or balloon payments.
It names DHS as the beneficiary in the first position for the total amount of medical assistance paid on behalf of the applicant/recipient including both LTC services and HCBS, or
It names DHS as beneficiary in the second position after the CS, the minor child, or the disabled child, for the total amount of medical expenses paid on behalf of the applicant/recipient. This includes both LTC facility services and HCBS.
If the individual’s annuity does meet all of these requirements, the CAO will treat the annuity as a transfer of assets for FMV. The CAO will include the income from the annuity in calculating the individual’s payment toward cost of care of LTC services.
If the individual’s irrevocable annuity fails to meet all of these requirements, the CAO will treat the annuity as a transfer of assets for less than FMV. Determine the period of ineligibility for payment of LTC services. See 440.881, Annuity Transfers.
The CAO will treat a revocable annuity as an available resource.
NOTE: The CAO will give the individual an opportunity to amend (change) an annuity in order to meet all of the DRA requirements. If the annuity is amended, the CAO will not treat the annuity as a transfer of assets for less than FMV.
Treat as income a non-qualified annuity owned by the CS that satisfies the requirements above and gives the CS monthly income equal to or less than the Community Spouse Monthly Maintenance Needs Allowance (CSMMNA) when combined with all other available income to the CS.
Treat as an available resource a non-qualified annuity owned by the CS that satisfies the requirements above and gives the CS with monthly income greater than the CSMMNA when combined with all other available income to the CS.
Send all annuities that name DHS as beneficiary to:
Bureau of Program Integrity
Division of Third Party Liability
Attn: Annuity Depository
P.O. Box 8486
Harrisburg, PA 17105
Or fax to: 717-772-6598
The Deficit Reduction Act of 2005 includes certain requirements for a transfer of assets in exchange for a promissory note, loan or a mortgage. If these specific requirements are not met, the exchange is treated as transfers of assets for less than FMV. An exchange of assets for a promissory note, loan, or a mortgage on or after February 8, 2006, must meet these conditions:
The repayment terms must be actuarially sound.
NOTE: Actuarially sound means the repayment terms are designed to pay off the entire amount of the promissory note, loan or mortgage within the actual or expected lifetime of the applicant, recipient or spouse of applicant who transferred the asset.
The repayment terms must provide for payments in equal amounts throughout the term, with no deferral and no balloon payment, and
The promissory note, loan or mortgage must not permit cancellation of the balance upon the lender’s death.
If the CAO determines that the promissory note, loan or mortgage does not meet all of the defined conditions, the CAO will apply a period of ineligibility for payment of LTC services. See Section 440.8, Disposition of Assets and Fair Consideration.
Example: Linda loaned her son $30,000 on March 3. The daughter gave her mother a promissory note for $30,000. The promissory note meets all of the requirements. It does not have a clause prohibiting the lender’s right to assign. The ABC Company bought the promissory note, which has an outstanding balance of $26,000. The CAO will consider the $26,000 as an available resource.
NOTE: This policy does not apply to an individual and his or her spouse who owe an outstanding balance on a promissory note, loan or mortgage.
A reverse mortgage is a loan available to individuals aged 62 or over. The individual may take a portion of their home’s equity either in a lump sum or in monthly payments while deferring repayment.
If an applicant or recipient reports they have taken a reverse mortgage loan on their property, the CAO will:
Not count the payment as income or a resource in the month it is received, and
Count any monies remaining as resource in the following month.
Reverse mortgage monies may not be gifted, transferred or given away. Any monies that do not receive fair consideration are a transfer for less than FMV. A period of ineligibility for payment of LTC services will be imposed.
ABLE accounts are tax-advantaged savings accounts that allow individuals to retain additional assets for qualified disability expenses while maintaining eligibility for benefits. The balance of the ABLE savings account is excluded from resource eligibility determinations for most federal means-tested benefits, including the Supplemental Nutrition Assistance Program (SNAP), Medical Assistance (MA), Long-Term Care (LTC), Home and Community-Based Services (HCBS), and Temporary Assistance for Needy Families (TANF).
In certain circumstances, withdrawals from ABLE accounts may be countable resources subject to resource reporting requirements. Please see LTCH 440.381, Withdrawals from ABLE Accounts for more information.
When an applicant or recipient states that they own an ABLE savings account, he or she must provide an account statement. Ways to distinguish an ABLE account in Pennsylvania from a regular checking or savings account include:
· ABLE account statements will say “ABLE” on the statement.
· An individual cannot walk into a bank and open an ABLE account. The ABLE account must be opened through www.PAABLE.gov.
· An individual cannot convert a regular checking or savings account into an ABLE account.
The designated beneficiary of the ABLE account is the account owner.
Although the full balance of the ABLE account is excluded for SNAP, MA, LTC, HCBS, and TANF, the federal law includes a $100,000 limit on the resource exclusion for Supplemental Security Income (SSI) recipients with ABLE accounts. If an SSI recipient with an ABLE account has a balance that exceeds $100,000, the excess funds above $100,000 count toward the SSI resource limit of $2,000 for a single individual. While the Social Security Administration (SSA) may suspend the individual’s SSI benefits due to exceeding the SSI resource limit, the individual maintains eligibility for MA.
Increases in the value of the ABLE account due to interest or dividends received must not be counted as income.
440.381 Withdrawals from ABLE Accounts
Withdrawals from ABLE accounts must be spent on qualified disability expenses (QDE) to be excluded from resources. When an individual states that a withdrawal or expenditure is for a QDE, no additional documentation of how the money was spent is required. When the source of funds for a QDE expenditure is questionable, a worker must request account statements to verify that funds originated from an ABLE account. QDE are any expenses related to the individual’s disability which are made for the benefit of the beneficiary of the ABLE account and include:
· Education
· Transportation
· Employment training and support
· Assistive technology and personal support services
· Health
· Prevention and wellness
· Financial management and administrative services
· Legal fees
· Expenses for oversight and monitoring
· Funeral and burial expenses
· Housing
· Mortgage
· Property taxes
· Rent
· Heating fuel
· Gas
· Electricity
· Water
· Sewer
· Garbage removal
Any other expenditure is a non-qualified disability expense (non-QDE).
Any unused funds withdrawn for a QDE continue to be excluded from eligibility determinations as long as:
· The designated beneficiary on the account remains the same.
· The withdrawal is unspent and identifiable.
· The individual intends to use the withdrawal for a QDE.
If the individual does not use the funds for a QDE, the remaining withdrawn funds count as a resource that is subject to resource reporting requirements.
Example: In November, Sally withdraws $6,000 from her ABLE account to pay her college tuition—a QDE. Her tuition payment is due in January. In December, Sally gets a job offer and decides not to return to school. Since she no longer intends to use the funds for tuition, the $6,000 becomes a countable resource in January. The funds could be excluded if Sally designates it for another QDE or returns the funds to her ABLE account before January.
NOTE: Withdrawals for non-QDE count as resources under federal and state law.
Updated December 4, 2023, Replacing March 30, 2023