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admission. Accordingly, for beneficiaries who were residing in such institutions on the date the application was filed, liability toward the cost of care begins on the eligibility date – the first (1st) day of the month in which an application is filed – irrespective of the date eligibility is actually determined by the State. Thus, beneficiary liability does accrue retroactively for LTSS beneficiaries residing in health care institutions. c. Reductions. In instances in which the LTSS applicant has no spouse or dependents and has incurred LTSS costs during the period an application is pending, liability for the cost of care may be reduced for the first (1st) month to take these additional costs into consideration. d. Adjustments. In general beneficiary liability must be recalculated at any time there is a change in a factor that was used as the basis for an allowance including, but not limited to, the death of the non- LTSS spouse, sale of a home, change in living arrangement, income, or scope of benefits. Beneficiary liability is also adjusted prospectively, even in situations in which a beneficiary did not make a timely report of such a change. The only exceptions to prospective adjustments are as follows: (1) Partial month eligibility. Beneficiary liability is adjusted when a LTSS beneficiary receives services for less than a full month due to death, discharge, or change in LTSS living arrangement, such as nursing facility to home. (2) Beneficiary Overpayments. Retroactive adjustments are made when an agency system error resulted in an overpayment liability by a beneficiary for one (1) month or more. The adjustments date back to the first (1st) of the month when the error was made. Retroactive adjustments are NOT made when beneficiary liability is understated. e. Notice. Beneficiary liability may not be imposed without first providing prior notice to the beneficiary indicating the amount of the monthly payment and appeal rights. This requirement applies at the time of the initial eligibility determination in the benefit decision notice and Medicaid LTSS renewals as well as at any time there is reassessment of need indicating a change in living arrangement is required, such as the beneficiary no longer has the highest need for a NF level of care. f. Provider notification. Notification is provided to the health care institution or HCBS provider if there are any changes to beneficiary liability.