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MISSISSIPPI DIVISION OF MEDICAID Eligibility Policy and Procedures Manual CHAPTER 200A – Income: ABD Categories Page |22 Effective Month: July 2025 A promissory note is a written, unconditional agreement where one person promises to pay another party a specific amount at a specific time (or on demand). It can be repayment for goods, money loaned or services rendered. A property agreement, also known as a mortgage, deed of trust, real estate contract, etc., exists when a piece of property is used to secure payment of a debt or performance of services within a specified period of time. A bona fide agreement is on which is legally valid and made in good faith. An agreement is assumed to be negotiable if there is no legal bar to its sale. SSI Policy – Medicaid Client is Lender Under SSI policy, a bona fide, negotiable promissory note or property agreement is a resource. The goods or money represented in the agreement are not a resource because they are not accessible. The interest portion of the payment on a bona fide, negotiable agreement received by the Medicaid client who is the lender is unearned income. If the agreement is non-bona fide or non-negotiable, both principal and interest paid to the lender are income. Liberalized Policy – Medicaid Client is Lender For coverage groups subject to liberalized resource policy, a bona fide, non-negotiable promissory note or agreement can be excluded as a resource if it produces at least a 6% net annual return of the principal balance. For this exclusion to apply to the non- institutionalized client, the income must be received by the client/spouse and counted as income. For all institutionalized individuals in either SSI or liberalized programs, the agreement may be excluded as a resource if it produces at least a 6% net annual return of the principal balance and meets all of the following criteria: • The repayment terms of the note or agreement are actuarially sound; the institutional client must reasonably expect to receive full payoff of the note or agreement during his lifetime. The average number of years of life expectancy remaining based on the Annuity Life Expectancy charts must coincide with the payout of the note or agreement • Principal and interest portions of payments are of uniform rate, with no deferred or balloon payments and • The agreement must not state the debt is cancelled upon death of the lender.