10717 Types of SSI-Related Resources

A. The following SSI-related resources are considered in determining eligibility for Medicaid coverage.

1. Annuities

a. Any annuity purchases must adhere to the following requirements or the annuity will be considered an available countable resource.

i. The annuity must contain a statement that names the state of Louisiana as the remainder beneficiary in the first position for the total amount of Medicaid assistance paid on behalf of the annuitant unless there is a community spouse and/or a minor or disabled child.

ii. If there is a community spouse and/or a minor or disabled child, the state may be named in the next position after those individuals. If the state has been named after a community spouse and/or minor or disabled child and any of those individuals or their representatives dispose of any of the remainder of the annuity for less than fair market value, the state may then be named in the first position.

iii. If the state is not named as a remainder beneficiary in the correct position, the purchase of the annuity will be considered a transfer for less than fair market value. The full purchase value of the annuity will be considered the amount transferred.

b. In addition to purchases of annuities, certain related transactions which occur to annuities are subject to these provisions. If any action taken by the individual changes the course of payment to be made by the annuity, then the treatment of the income or principal of the annuity is subject to these provisions. This includes additions of principal, elective withdrawals, requests to change the distribution of the annuity, elections to annuitize the contract and similar actions taken by the individual.

i. Routine changes and automatic events that do not require any action or decision after the effective date of the enactment are not considered transactions that would subject the annuity to treatment under these provisions.

c. Refusal to disclose sufficient information related to any annuity will result in denial or termination of Medicaid based on the applicant's failure to cooperate. When an unreported annuity is discovered after eligibility has been established and after payment for long-term care services has been made, appropriate steps to terminate payment for services will be taken, including appropriate notice to the individual of the adverse action.

d. Annuities purchased by or on behalf of an annuitant who has applied for medical assistance will not be treated as a transfer of assets if the annuity meets any of the following conditions:

i. the annuity is considered to be:

(a). an individual retirement annuity; or

(b). a deemed individual retirement account (IRA) under a qualified employer plan; or

ii. the annuity is purchased with proceeds from one of the following:

(a). a traditional IRA;

(b). certain accounts or trusts which are treated as IRAs;

(c). a simplified retirement account; or

(d). a simplified employee pension; or

iii. the annuity:

(a). is irrevocable and non-assignable;

(b). is actuarially sound; and

(c). provides payments in approximately equal amounts with no deferred or balloon payments.

e. Applicants or their authorized representatives shall be responsible for providing documentation from the financial institution verifying qualifying IRS annuities. Absent such documentation, the purchase of the annuity will be considered a transfer for less than fair market value which is subject to penalty. The full purchase value of the annuity will be considered the amount transferred.

f. If an annuity or the income stream from an annuity is transferred, except to or for the spouse's sole benefit, to their child or a trust, the transfer may be subject to penalty.

2. Continuing Care Retirement Community Entrance Fees

a. Continuing care retirement communities (CCRC's) are entities which provide a range of living arrangements from independent living through skilled nursing care. An entrance contract for admission to a continuing care retirement center or life care community must take into account the required allocation of resources or income to the community spouse before determining the amount of resources that a resident must spend on his or her own care.

b. A CCRC entrance fee shall be treated as a resource for the purposes of determining Medicaid eligibility under the following conditions if the entrance fee:

i. can be used to pay for care under the terms of the entrance contract should other resources of the individual be insufficient;

NOTE: It is not necessary for CCRC's or life care communities to provide a full, lump-sum refund of the entrance fee to the resident. If portions of the fee can be refunded or applied to pay for care as required, this condition would be met.

ii. or a remaining portion is refundable when the individual dies or terminates the contract and leaves the CCRC or life care community; and

NOTE: It is not necessary for the resident to actually receive a refund of the entrance fee for deposit. This condition is met as long as the resident could receive a refund were the contract to be terminated, or if the resident dies.

iii. does not confer an ownership interest in the community.

3. Life Estates

a. The purchase of a life estate in another individual's home is considered a countable resource and subject to examination under transfer of asset provisions unless the purchaser resides in the home for a period of at least one year after the date of purchase.

b. The life estate value will be determined using the life estate tables published by the Social Security Administration for the SSI program.

c. For transfer of assets determinations, the amount of the transfer is the entire amount used to purchase the life estate.

i. The amount shall not be reduced or prorated to reflect an individual's residency for a period of time less than one year.

d. If payment for a life estate exceeds the fair market value (FMV) of the life estate, the difference between the amount paid and the FMV will be treated as a transfer of assets.

e. If an individual makes a gift or transfer of a life estate, the value of the life estate will be treated as a transfer of assets.

f. These provisions apply only to the purchase of life estates. They do not apply in situations where an individual transfers real property but retains the life estate and the value of the remainder interest (not the life estate) is used to determine whether a transfer has occurred and to calculate the period of ineligibility.

g. For the purposes of determining eligibility for Medicaid coverage, the terms “life estate” and “usufruct” have the same meaning.

4. Loans, Mortgages, Promissory Notes and Other Property Agreements

a. Countable assets include funds used to purchase a promissory note, or funds used to make a loan or mortgage. These resources are subject to transfer of assets provisions unless the repayment terms are actuarially sound.

b. Loans, mortgages, promissory notes, property agreements or property assignments are countable resources regardless of any non-assignability, non-negotiability or non-transferability provisions contained therein.

c. Instruments containing any of the following provisions are a countable resource and shall be evaluated as a transfer of assets:

i. repayment terms that exceed the holder's life expectancy;

ii. provisions for interest only payments or principal payments that are not to be made in equal amounts during the term of the loan;

iii. deferral or balloon payments; or

iv. cancellation or forgiveness clauses that cancel the balance upon some occurrence such as death of the lender.

d. If there is evidence that there is not a good faith agreement to repay the entire principal of a note, loan or mortgage, the instrument shall not be considered bona fide and shall be evaluated as a transfer of resources.

5. Substantial Home Equity

a. Substantial home equity above the state's established limit is a countable resource which causes ineligibility for long-term care services. If an individual's equity interest in their home exceeds $500,000, that individual is not eligible for Medicaid payment of nursing facility services or other long-term care services.

b. Home equity limitations do not apply if the individual's spouse, the individual's child under the age of 21, or the individual's blind or disabled child is residing in the home.

i. A child is considered disabled if he or she meets the definition of disability as defined by Section 1614(a)(3) of the Social Security Act.

AUTHORITY NOTE: Promulgated in accordance with R.S. 36:254 and Title XIX of the Social Security Act.

HISTORICAL NOTE: Promulgated by the Department of Health and Hospitals, Office of the Secretary, Bureau of Health Services Financing, LR 34:1410 (July 2008).