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(b) The interest portion of the payment on a bona fide, negotiable agreement received by the Medicaid client who is the lender is unearned income.

2) If the agreement is non-bona fide or non-negotiable, both principal and interest paid to the lender are income.

c) For coverage groups subject to liberalized resource policy, treatment for the lender is as follows:

1) 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.

(a) For this exclusion to apply to the non-institutionalized client, the income must be received by the client/spouse and counted as income.

(b) 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:

(i) The repayment terms of the note or agreement are actuarially sound;

(ii) 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, compiled by the Office of Actuary of the Social Security Administration and applicable to the decision, must coincide with the payout of the note or agreement;

(iii) Principal and interest portions of payments are of uniform rate, with no deferred or balloon payments and

(iv) The agreement prohibits cancellation of the debt upon death of the lender.

16. Fund Raising Proceeds. Benefits received through fund raising are a potential third party liability source. The applicant/recipient must report all sources of income from fund raising to the regional office. The regional office will inform the Third Party Liability unit of the availability of any source of payment for medical services.

a) Donated funds for the purpose of payment of medical services are considered a third party source. In order for donated funds to be excluded as income, the following criteria must be met: