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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

ABD CITIZENSHIP AND IMMIGRATION

Legal Authority: 42 CFR 435.406; 42 CFR 435.407; 42 CFR 435.956; 8 USCA § 1431; Tenn. Comp. R. & Regs. 1200-13-20

1. Policy Statement

In order to be eligible for TennCare Medicaid or CoverKids, an individual must be a:

a. United States (U.S.) citizen; b. U.S. national; or c. Qualified non-citizen who meets the eligibility conditions associated with specific immigration statuses. See the Qualified Non-Citizens policy.

Individuals declaring U.S. citizenship or immigration status must have such declarations verified by TennCare in order to receive TennCare Medicaid or CoverKids. Individuals who are not U.S. citizens, but have been granted the right to reside in the U.S. will have an immigration status. If TennCare is unable to verify a declaration of U.S. citizenship or immigration status using an electronic data source, the individual must provide satisfactory documentary evidence of citizenship or immigration.

Declarations of citizenship or immigration status must be made by either the individual, an adult member of the individual’s household, an authorized representative, or if the individual is a minor or incapacitated, someone acting responsibly for the applicant provided that such individual attests to having knowledge of the individual’s status.

2. Definitions

a. U.S. Citizen: An individual who was born in:

i. The U.S.; ii. Puerto Rico; iii. Guam; iv. The U.S. Virgin Islands; or v. The Commonwealth of the Northern Mariana Islands.

b. U.S. National: An individual who was born in the:

i. American Samoa; or ii. Swains Island.

c. Naturalized Citizen: An individual who becomes a U.S. citizen after birth. Non-citizens do not automatically become citizens by marrying a U.S. citizen. Spouses, however, may apply for

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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

naturalization and, if eligible, become citizens through the court.

d. Derived Citizen: An individual who was adopted by or born abroad to at least one U.S. citizen parent. Citizenship may be conveyed to children through the naturalization of parents, to foreign- born children adopted by U.S. parents, or through birth abroad to at least one U.S. citizen parent.

e. Child Citizenship Act of 2000: According to the Child Citizenship Act of 2000, a child born outside of the U.S. to a citizen parent or adopted from abroad by a U.S. citizen parent automatically becomes a citizen of the U.S. when all of the following have been met on or after February 27, 2001:

i. At least one parent of the child is a U.S. citizen, whether by birth or naturalization; ii. The child is under 18 years of age; iii. The child is lawfully admitted for permanent residence to the U.S. and is residing in the legal and physical custody of the citizen parent. The child will have either a permanent resident card (i.e., green card) or an I-551 stamp on her passport. The child may or may not have a certificate of citizenship; and iv. If adopted, the adoption is final.

f. Qualified Non-Citizen: An individual whose immigration status is included in one of the following groups (see Qualified Non-Citizens policy):

i. Qualified non-citizens, as defined by the Personal Responsibility and Work Opportunity Act of 1996 (8 USC 1641); ii. Certain American Indians born outside of the U.S.; or iii. Non-citizens granted a certain humanitarian immigration status.

3. Exempt Groups

TennCare accepts declarations of U.S. citizenship from the following individuals without verification:

a. Individuals receiving Supplemental Security Income (SSI) benefits; b. Individuals entitled to or enrolled in any part of Medicare; c. Individuals receiving Social Security benefits based on their disability; d. Individuals to whom child welfare services are made available based on the child being in foster care, or receiving adoption assistance or foster care assistance; and e. Newborns who are eligible for Medicaid on the basis of being born to a mother who was eligible for and receiving TennCare Medicaid at the time of birth. A newborn who is deemed eligible and enrolled in Medicaid is exempt from citizenship verification requirements for the rest of her life. This exemption applies to individuals enrolled as deemed newborns in other states.

Note: Pregnant women eligible for the CoverKids maternity benefits and pregnancy related services are not required to attest to citizenship or immigration status.

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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

4. Verification of U.S. Citizenship and Immigration Status

a. Overview

Declarations of U.S. citizenship and immigration status must be accepted and then verified using an electronic data match with the Social Security Administration (SSA) or U.S. Department of Homeland Security. Federal law requires that the state first attempt to electronically verify citizenship and immigration status using the Federal Data Services Hub (the Hub). When unable to electronically verify citizenship or immigration status of an individual, the individual must provide satisfactory documentary evidence to TennCare.

Verification of U.S. citizenship is a one-time requirement. Once U.S. citizenship has been verified, it will be recorded in the individual’s case and the state cannot request verification again, even if there is a break in coverage. Verification of immigration status is also a one-time requirement, unless the individual attests to, or TennCare receives information indicating, a change in status.

b. Electronic Verification of U.S. Citizenship and Immigration Status

i. Federal Data Services Hub

1. Applicant Attesting to U.S. Citizenship (Citizenship by Birth)

Confirmation of citizenship status by the SSA via the Hub is considered stand-alone evidence of citizenship. Applicants whose citizenship is confirmed via the Hub are not required to submit additional documentation of citizenship status.

2. Applicant Attesting to U.S. Citizenship (Naturalized and Derived Citizens)

Naturalized or derived citizens will have their citizenship status verified by the U.S. Department of Homeland Security via the Hub, if available. Applicants must provide their Alien Registration Number and information from their Naturalization Certificate or Certificate of Citizenship. Verification of citizenship status by the U.S. Department of Homeland Security via the Hub is considered stand-alone evidence of citizenship. Applicants whose citizenship is confirmed via the Hub are not required to submit additional documentation of citizenship status.

3. Applicant Attesting to Eligible Immigration Status

Applicants who are able to provide a U.S. Department of Homeland Security Alien Registration Number and/or other immigrant documentation numbers may have their immigration status verified by the U.S. Department of Homeland Security via the Hub. Electronic verification of immigration status by the U.S. Department of

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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

Homeland Security is considered stand-alone evidence. Applicants whose immigration status is verified via the Hub are not required to submit additional information.

c. Documentary Evidence of Citizenship

When unable to verify citizenship or immigration status using electronic data sources, the individual must promptly provide satisfactory documentary evidence of citizenship status. Section 1903(x) of the Social Security Act requires that specific documentation be used to verify citizenship status, according to the reliability of the document (42 USC 1396b(x)).

Stand-alone evidence of citizenship is documentary evidence that must be accepted without any additional evidence of identity. If stand-alone evidence of citizenship cannot be provided, the second level of citizenship evidence must be accepted if the applicant also provides sufficient evidence of identity.

A photocopy, facsimile, scanned, or other copy of a document must be accepted to the same extent as an original document under this section, unless information on the submitted document is inconsistent with other information available or there is reason to question the validity of the document or information on the document.

i. Stand-alone Evidence of Citizenship

The following must be accepted as sufficient evidence of citizenship:

1. A U.S. passport, including a U.S. passport card issued by the U.S. Department of State, without regard to any expiration date as long as such passport or card was issued without limitation; 2. A Certificate of Naturalization; 3. A Certificate of U.S. Citizenship; 4. An enhanced driver’s license issued by Michigan, Minnesota, New York, Vermont, or Washington; 5. A data match with the SSA; and 6. Documentary evidence issued by a federally recognized Indian Tribe, as published by the Bureau of Indian Affairs within the U.S. Department of the Interior, and including Tribes located in a state that has an international border, which:

a. Identifies the federally recognized Indian Tribe that issued the document; b. Identifies the individual by name; and c. Confirms the individual’s membership, enrollment, or affiliation with the Tribe.

Documents described in this subsection include, but are not limited to: a tribal enrollment card, Certificate of Degree of Indian Blood, Tribal Census Document, and documents on tribal letterhead, issued under the signature of the appropriate tribal

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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

official that provide the required information.

ii. Evidence of Citizenship

If an applicant does not provide stand-alone documentary evidence, the following must be accepted as satisfactory evidence to establish citizenship if also accompanied by acceptable evidence of identity:

1. A U.S. public birth certificate showing birth in one of the 50 states, the District of Columbia, Puerto Rico (if born on or after January 13, 1941), Guam, the Virgin Islands of the U.S., American Samoa, Swains Island, or the Commonwealth of the Northern Mariana Islands (CNMI) (after November 4, 1986). The birth record document may be issued by a state, commonwealth, territory, or local jurisdiction. If the document shows the individual was born in Puerto Rico or the CNMI before these areas became part of the U.S., the individual may be a collectively naturalized citizen. The following will establish U.S. citizenship for collectively naturalized individuals: a. Puerto Rico: i. Evidence of birth in Puerto Rico and the applicant’s statement that he was residing in the U.S., a U.S. possession, or Puerto Rico on January 13, 1941. b. Northern Mariana Islands (NMI) (formerly part of the Trust Territory of the Pacific Islands (TTPI)): i. Evidence of birth in the NMI, TTPI citizenship, and residence in the NMI, the U.S., or a U.S. territory or possession on November 3, 1986, (NMI local time) and the applicant’s statement that he did not owe allegiance to a foreign state on November 4, 1986 (NMI local time); ii. Evidence of TTPI citizenship, continuous residence in the NMI since before November 3, 1981 (NMI local time), voter registration before January 1, 1975, and the applicant’s statement that he did not owe allegiance to a foreign state on November 4, 1986 (NMI local time); iii. Evidence of continuous domicile in the NMI since before January 1, 1974 and the applicant’s statement that he did not owe allegiance to a foreign state on November 4, 1986 (NMI local time). Note: If a person entered the NMI as a nonimmigrant and lived in the NMI since January 1, 1974, this does not constitute continuous domicile and the individual is not a U.S. citizen. 2. A cross match with a state Vital Statistics agency documenting a record of birth; 3. A Certification of Report of Birth, issued to U.S. citizens who were born outside the U.S.; 4. A Report of Birth Abroad of a U.S. Citizen; 5. A Certification of Birth in the U.S.; 6. A U.S. Citizen I.D. card; 7. A Northern Marianas Identification Card issued by the U.S. Department of Homeland Security (or predecessor agency); 8. A final adoption decree showing the child’s name and U.S. place of birth, or if an adoption is not final, a statement from a state-approved adoption agency that

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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

shows the child’s name and U.S. place of birth; 9. Evidence of U.S. Civil Service employment before June 1, 1976; 10. U.S. Military Record showing a U.S. place of birth; 11. A data match with the SAVE program or any other process established by the U.S. Department of Homeland Security to verify that an individual is a citizen; 12. The following documentation demonstrating that a child meets the requirements of Section 101 of the Child Citizenship Act of 2000 as amended (8 USC 1431): a. The child’s birth certificate or record; b. Marriage certificate of child’s parents (if applicable); c. If the child’s parents were married before their marriage to each other, proof of termination of any previous marriage of each parent (e.g., death certificate or divorce decree); d. Evidence of U.S. citizenship of parent, (i.e., birth certificate; naturalization certificate; FS-240, Report of Birth Abroad; a valid unexpired U.S. passport; or certificate of citizenship); e. If the child was born out of wedlock, documents verifying legitimation according to the laws of the child’s residence or domicile or father’s residence or domicile (if applicable); f. In case of divorce, legal separation, or adoption, documentation of legal custody; g. Copy of Permanent Resident Card/Alien Registration Receipt Card or other evidence of lawful permanent resident status (e.g. I-551 stamp in a valid foreign passport or Service-issued travel document); h. If adopted, a copy of the full, final adoption decree and, if the adoption was outside of the U.S. and the child immigrated as an IR-3 (orphan adopted abroad by U.S. citizen parent(s)), evidence that the foreign adoption is recognized by the state where the child is permanently residing; and i. Evidence of all legal name changes, if applicable, for the child and U.S. citizen parent; 13. Medical records, including, but not limited to, hospital, clinic, or doctor records or admission papers from a nursing facility, skilled care facility, or other institution that indicate a U.S. place of birth; 14. Life, health, or other insurance record that indicates a U.S. place of birth; 15. Official religious record recorded in the U.S. showing that birth occurred in the U.S.; 16. School records, including pre-school, Head Start and daycare, showing the child’s name and U.S. place of birth; 17. Federal or state census record showing U.S. citizenship or a U.S. place of birth; and 18. If the applicant does not have one of the documents listed in 1-17 of this section, she may submit an affidavit signed by another individual under penalty of perjury who can reasonably attest to the applicant’s citizenship, and that contains the applicant’s name, date of birth, and place of U.S. birth. The affidavit does not have to be notarized.

iii. Evidence of Identity

1. TennCare must accept the following as proof of identity, provided such document

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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

has a photograph or other identifying information including, but not limited to, name, age, sex, race, height, weight, eye color, or address: a. A driver’s license issued by a state or territory; b. A school identification card; c. A voter’s registration card; d. A U.S. military card or draft record; e. An identification card issued by the federal, state or local government; f. A military dependent’s identification card; g. A U.S. Coast Guard Merchant Mariner card; h. For children under age 19, a clinic, doctor, hospital, or school record, including preschool or day care records; and i. Two documents containing consistent information that corroborates an applicant’s identity. Such documents include, but are not limited to, employer identification cards, high school and college diplomas (including high school equivalency diplomas), marriage certificates, divorce decrees, and property deed or titles.

2. Finding of identity from a federal or state governmental agency. TennCare may accept as proof of identity a finding of identity from a federal agency or another state agency, including, but not limited to, a public assistance, law enforcement, internal revenue or tax bureau, or corrections agency, if the agency has verified and certified the identity of the individual.

3. If the applicant does not have any documents listed in this section and identity is not verified by another agency, the applicant may submit an affidavit signed, under penalty of perjury, by another person who can reasonably attest to the applicant’s identity. Such affidavit must contain the applicant’s name and other identifying information. The affidavit does not have to be notarized.

iv. Verification of citizenship by a federal agency or another state

TennCare may rely, without further documentation of citizenship or identity, on a verification of citizenship made by a federal agency or another state agency, if such verification was done on or after July 1, 2006.

v. Assistance with obtaining documentation

The state must provide assistance to applicants who need assistance in securing satisfactory documentary evidence of citizenship in a timely manner.

d. Documentary Evidence of Immigration Status

When unable to verify immigration status using electronic data sources, the applicant must promptly provide satisfactory documentary evidence of immigration status. The United States

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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

Citizenship and Immigration Services (USCIS) has several types of documents that a non-citizen might have to verify her status. These documents include, but are not limited to, the following:

i. A Permanent Resident Card (I-551) or “Green Card” - Issued to eligible immigrants who enter the U.S. to permanently live; ii. A Permanent Resident Re-entry Permit (I-327) - Allows permanent residents to leave and re-enter the U.S.; iii. A Refugee Travel Document (I-571) - Issued to refugees and asylees for travel purposes; iv. A Temporary I-551 Stamp (on passport or I-94, I-94A) - A temporary I-551 stamp will have a handwritten or stamped issue date and a “valid until” date. Temporary I-551 stamps can be used to attest to permanent resident status; v. A foreign passport stamped by the U.S. Government indicating that the holder has been “Processed for I-551”; vi. A machine readable immigrant visa (with temporary I-551 language) - Indicates permanent resident status; vii. An Arrival/Departure Record (I-94, I-94A) Form I-94 stamped with one of the following statuses: Asylee, Parolee or Parole, Refugee, Asylum, humanitarian parolee, or public interest parolee; viii. A court order stating that deportation has been withheld pursuant to Section 243(h) of the Immigration and Nationality Act (8 USC 1253); ix. A Notice of Action (I-797) - A form of communication from USCIS about immigration benefits; x. Document indicating membership in a federally recognized Indian tribe or American Indian born in Canada; xi. Certification from U.S. Department of Health and Human Services (HHS) Office of Refugee Resettlement (ORR); and xii. Office of Refugee Resettlement (ORR) eligibility letter (if under 18).

A non-citizen may contact USCIS or otherwise obtain the necessary verification.

5. Reasonable Opportunity for Verification of Citizenship and Immigration

a. Overview

When an applicant makes a declaration of U.S. citizenship or satisfactory immigration status and the applicant’s citizenship or immigration status cannot be promptly verified using an electronic data source or acceptable documentary evidence, TennCare will grant the applicant a period of reasonable opportunity to secure valid verification. The Reasonable Opportunity Period (ROP) begins on the date of application and extends 90 days from the date the applicant receives notice of the reasonable opportunity. The date on which the applicant receives notice is considered to be 5 days after the date on the notice, unless the individual shows that he did not receive the notice within the 5-day period.

Current enrollees may be granted an ROP to secure documentary evidence of citizenship or

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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

satisfactory immigration status. An enrollee is not required to re-verify citizenship or immigration status unless he reports a change or TennCare becomes aware of a change in the individual’s status, and the enrollee’s citizenship or immigration status cannot be verified using an electronic data source or by acceptable documentary evidence. For current enrollees, the 90-day ROP will begin on the date that the enrollee receives notice of the ROP. The date on which the enrollee receives notice is considered to be 5 days after the date on the notice, unless the individual shows that he did not receive the notice within the 5-day period.

During the ROP, TennCare must accept a declaration of citizenship or immigration. TennCare must not delay, reduce, or terminate benefits for an applicant who is otherwise TennCare Medicaid- or CoverKids-eligible during this period.

If an applicant must provide information in addition to verification of citizenship, for example, verification of residence, she has 10 days from the day on which the notice is received to return the additional information. If verification of residence is provided within the 10 days, but verification of citizenship remains outstanding, a period of reasonable opportunity for verification of citizenship will be invoked.

b. Reasonable Opportunity Period

During the ROP, the state must assist the applicant with securing acceptable verification. This may include, but is not limited to:

i. Assisting the individual in obtaining a Social Security Number; ii. Attempting to resolve any inconsistencies, including typographical or other clerical errors, between information provided by the individual and data from an electronic data source, and resubmit corrected information to the electronic data source; iii. Providing the individual with information on how to contact the source of the electronic data so that he can attempt to resolve such inconsistencies; and iv. Permitting the individual to provide other documentation of citizenship or immigration status, as listed in this section.

If satisfactory citizenship or immigration verification is received by the 90th day, the individual’s eligibility will continue based on the initial application date and no additional action will be taken.

If citizenship or immigration verification is received during the 90-day ROP that shows that the individual is not a U.S. citizen or an eligible immigrant, eligibility may be terminated. If satisfactory citizenship or immigration verification is not received by the 90th day, eligibility will be terminated.

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Aged, Blind and Disabled Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.010 Chapter: ABD Citizenship and Immigration

Document Title ABD Citizenship and Immigration First Published 2.23.2015 Revision History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 08.01.2016 2 Definitions – Qualified Non- 2 Policy Clarification AJ 05.01.2017 4.c-d. Documentary Evidence of Citizenship 3-7 Policy Change RS 08.01.2019 5 Legal Authority; Reasonable Opportunity for Verification of Citizenship and Immigration 1; 8-9 Policy Clarification TB

Aged, Blind and Disabled Manual Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.015 Chapter: ABD Qualified Non-Citizens Legal Authority: 42 CFR 435.139; 42 CFR 435.406; 42 CFR 440.255; 42 CFR 457.320; SSA SI 00502; Tenn. Comp. R. & Regs. 1200-13-20 1. Policy Statement Non-citizen eligibility for TennCare Medicaid and CoverKids is limited to certain immigration statuses. In order to be eligible, an individual must be either: a. A qualified non-citizen, as defined by Section 431 of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 at 8 USC 1641; b. An American Indian born outside of the U.S.; or c. A non-citizen who has been granted a certain humanitarian status. Ineligible non-citizens are potentially eligible for Emergency Medical Services (EMS) only. Ineligible non-citizens are not required to provide information regarding citizenship, immigration status or enumeration when applying for EMS. 2. Qualified Non-Citizen The PRWORA created two categories of non-citizens for the purpose of public assistance eligibility: qualified and non-qualified (ineligible) non-citizens. A non-citizen’s status is based on an individual’s date of entry into the U.S. and their immigration status with the United States Citizenship and Immigration Services (USCIS). A qualified non-citizen is an individual who belongs to one of several non-citizen categories, each of which is tied to a specific section of the Immigration and Nationality Act (INA) at 8 USC. 1101, et seq. Qualified non-citizens are potentially eligible for full TennCare Medicaid and CoverKids benefits just like U.S. citizens. However, certain categories of qualified non-citizens have periods of program ineligibility or time limits placed on eligibility. Qualified non-citizens are: a. Non-citizens lawfully admitted for permanent residence, a Lawful Permanent Resident (LPR), as an immigrant as defined in the INA (8 USC 1101); b. Refugees admitted under Section 207 of the INA (8 USC 1157); c. Asylees granted asylum under Section 208 of the INA (8 USC 1158);

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 2 d. Non-citizens paroled in the U.S. under Section 212(d)(5) of the INA (8 USC 1182(d)(5)) for a period of at least one year; e. Non-citizens whose deportation is withheld under the INA (8 USC 1253 or 8 USC 1231(b)(3), as amended); f. Battered immigrants and children who meet the conditions set forth in Section 431(c) of the PRWORA (8 USC 1641(c)); g. Cuban or Haitian entrants as defined in Section 501(e) of the Refugee Education Assistance Act of 1980; h. Non-citizens granted conditional entry under the INA (8 USC 1153(a)(7)) in effect before April 1, 1980; i. Non-citizens who are victims of a severe form of trafficking or who have been granted nonimmigrant status under Section 101(a)(15)(T) of the INA or who have a pending application that sets forth a prima facie case for such nonimmigrant status; j. Non-citizens who lawfully reside in the U.S. in accordance with the Compacts of Free Association (COFA) between the Government of the United States and the Governments of the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau; and k. Cuban or Haitian parolees admitted under 212(d)(5)(A) of the INA.

3. Other Eligible Immigration Statuses

The following immigration statuses are not statutorily defined as qualified non-citizens however, these groups are generally treated like qualified non-citizens for eligibility purposes:

a. Non-citizens admitted as Amerasian immigrants under Section 584 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act of 1988; b. Non-citizens who are members of a Federally recognized Indian tribe as defined in the Indian Self-Determination and Education Assistance Act (25 USC 450(b)(e)); c. Non-citizens who are American Indians born in Canada to whom the INA (8 USC 1359) applies; d. Afghan non-citizens granted Special Immigrant Status under Section 602(b) of the Afghan Allies Protection Act of 2009 as described in the INA (8 USC 1101(a)(27)); e. Iraqi non-citizens granted Special Immigration Status under the National Defense Authorization Act for Fiscal Year 2008 as described in the INA (8 USC 1101(a)(27)); and f. Ukrainian non-citizens who have been paroled into the United States as Ukrainian Humanitarian Parolees under Section 401 of the Additional Ukraine Supplemental Appropriations Act, 2022. 4. Ineligible Non-Citizens Ineligible non-citizens are not eligible to receive full TennCare Medicaid or CoverKids benefits, but may be eligible to receive EMS. Ineligible non-citizens include:

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 3 a. Undocumented Non-Citizens Undocumented non-citizens are individuals who enter and reside in the U.S. without notification of or proper permission from the U.S. government. b. Lawfully Present Non-Citizens Lawfully present non-citizens are a specific group of non-citizens who are eligible to receive health insurance coverage through the Federally Facilitated Marketplace (FFM), but who are unable to receive TennCare Medicaid or CoverKids benefits. Lawfully present non-citizens include: i. Non-citizens paroled into the U.S. in accordance with 8 USC 1182(d)(5) for less than one year, except for an individual paroled for prosecution, for deferred inspection or pending removal proceedings; ii. Non-citizens granted temporary resident status in accordance with 8 USC 1160 or 1255a; iii. Non-citizens granted Temporary Protected Status (TPS) in accordance with 8 USC 1254a and individuals with pending applications for TPS who have been granted employment authorization; iv. Non-citizens granted employment authorization under 8 CFR 274a.12(c); v. Family Unity beneficiaries in accordance with 8 USC 1182; vi. Non-citizens under Deferred Enforced Departure (DED) in accordance with a decision made by the President of the United States; vii. Non-citizens granted Deferred Action status; viii. Non-citizens granted an administrative stay of removal under 8 CFR 241; ix. Beneficiaries of approved visa petitions who have a pending application for adjustment of status; x. Individuals with a pending application for asylum under 8 USC 1158, or for withholding of removal under 8 USC 1231 or under the Convention Against Torture, who: 1. Have been granted employment authorization; or 2. Are under the age of 14 and have had an application pending for at least 180 days; xi. Non-citizens who have been granted withholding of removal under the Convention Against Torture (8 CFR 208.16); xii. Children who have a pending application for Special Immigrant Juvenile status as described in 8 USC 1101(a)(27)(J); xiii. Non-citizens lawfully present in American Samoa under the immigration laws of American Samoa; xiv. Venezuelan parolees admitted under 212(d)(5)(A) of the INA; and xv. Nicaraguan parolees admitted under 212(d)(5)(A) of the INA. c. Non-Citizens Admitted for a Temporary Purpose Some non-citizens are lawfully admitted to the U.S. for a temporary or specified period of time. They include foreign students, visitors, foreign government representatives on official business,

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 4 crewmen on shore leave, treaty traders and investors and families, temporary workers, including agricultural contract workers, and members of the foreign press, radio, film and other media. Examples of the types of documentation that a non-qualified or ineligible non-citizen may possess include: i. Form I-185, Canadian Border Crossing Card; ii. Form I-186, Mexican Border Crossing Card; iii. Form SW-434, Mexican Border Visitor’s Permit; and iv. Form I-95A, Crewman’s Landing Permit. 5. Five-Year Period of Ineligibility The PRWORA established a five-year period of ineligibility for all federally funded benefits, including Medicaid and CoverKids, for certain qualified non-citizens entering the U.S. on or after August 22, 1996. The five-year period of ineligibility is not applied to qualified non-citizens admitted to the U.S. prior to August 22, 1996 who have been continuously present in the U.S. from the date of entry through the date the individual became a qualified non-citizen. An individual has been continuously present in the U.S. if the individual can demonstrate there has not been a single absence greater than 30 days or multiple absences totaling more than 90 days. Once the individual becomes a qualified non-citizen, absences from the U.S. do not impact the five-year period of ineligibility. a. Non-Citizens Subject to the Five-Year Period of Ineligibility The following qualified non-citizens are ineligible for TennCare Medicaid or CoverKids for a period of five years from the date they are granted qualified non-citizen status unless they meet an exception as described in 5.b.: i. LPRs admitted under the INA, 8 USC 1101, et seq., after August 22, 1996; ii. Non-citizens granted parole for at least one year under the INA (8 USC 1182(d)(5)); and iii. Battered immigrants and children who meet the conditions set forth in Section 431(c) of the PRWORA. A qualified non-citizen may apply for coverage once the five-year period of ineligibility expires. The five-year period of ineligibility expires on the five-year anniversary of the date the individual was granted a qualified status. Once the five-year bar expires, a qualified non-citizen may apply for benefits as if he was a U.S. citizen. No previous application is required. If the qualified non- citizen meets the technical and financial eligibility criteria for a TennCare Medicaid or CoverKids category and the five-year period of ineligibility has expired, he is eligible to receive coverage in the appropriate category as of the date of application.

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens

August 1, 2024 Division of TennCare 5 A non-citizen granted parole for at least one year is considered a qualified non-citizen from the date he is granted parole. For non-citizens paroled in the U.S. for at least one year, the five-year period of ineligibility begins on the first day of the parole period. Qualified non-citizens who are subject to the five-year bar are eligible to receive EMS and CoverKids Pregnant Woman during their period of ineligibility, if otherwise eligible. b. Non-Citizens Exempt from the Five-Year Period of Ineligibility The five-year period of ineligibility does not apply to the following qualified non-citizens: i. Non-citizens who are victims of a severe form of trafficking or who have been granted nonimmigrant status under Section 101(a)(15)(T) of the INA or who have a pending application that sets forth a prima facie case for such nonimmigrant status; ii. LPRs who first entered the country under another exempt category (i.e., as a refugee, asylee, Cuban or Haitian entrant, trafficking victim, or non-citizen whose deportation is being withheld and who later converted to LPR status); iii. Non-citizens who are: 1. Honorably discharged veterans; 2. On active duty in the U.S. military; or 3. The spouses, the unmarried dependent children, or the unremarried surviving spouses of honorably discharged veterans or individuals on active duty in the U.S. military; iv. Members of a federally-recognized Indian tribe; v. American Indians born in Canada to whom the INA (8 USC 1359) applies; vi. Non-citizens granted a specific humanitarian entrance status by the USCIS (8 U.S.C. 1612), including: 1. Refugees and asylees; 2. Cuban and Haitian entrants; 3. Non-citizens whose deportation is being withheld; 4. Amerasian immigrants; and 5. Afghan and Iraqi non-citizens;. vii. Non-citizens who lawfully reside in the U.S. in accordance with the COFA between the Government of the United States and the Governments of the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau and whose immigration status is currently COFA Migrant. Once a COFA Migrant adjusts to an LPR status, the five-year period of ineligibility applies, unless the individual meets another exception to the five-year period of ineligibility; viii. Afghan individuals paroled into the United States between July 31, 2021 to September 30, 2022 are considered Qualified Non-Citizens to the same extent as refugees under section 207 of the Immigration and Nationality Act (8 U.S.C. 1157). They are exempt from the five-year period of ineligibility. Afghan Parolees are considered Qualified Non-Citizens until March 31, 2023 or until the end of their parole term, whichever is later. Individuals who are paroled after September 30, 2022 must either be the parent, legal guardian, spouse

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 6 or child of an Afghan parolee to be considered Qualified Non-Citizens to the same extent as refugees under section 207 of the Immigration and Nationality Act (8 U.S.C. 1157); ix. Ukrainian individuals who were paroled into the United States between February 24, 2022 and September 30, 2024 as a Ukrainian Humanitarian Parolee (UHP), or paroled into the United States after September 30, 2023 and is the spouse or child of a UHP, or is the parent, legal guardian, or primary caregiver of a UHP who is determined to be an unaccompanied child under section 462(g)(2) of the Homeland Security Act of 2002 or section 412(d)(2)(B) of the Immigration and Nationality Act; x. Cuban or Haitian parolees admitted under 212(d)(5)(A) of the INA; and xi. Children receiving foster care or adoption assistance under Title IV-E. Note: Non-citizens granted a specific humanitarian entrance status by the USCIS are exempt from the five-year bar for TennCare Medicaid and CoverKids eligibility, but they are subject to a seven-year eligibility time limit. 6. Seven-Year Eligibility Time Limit for Certain Non-Citizens a. General Rule Non-citizens admitted into the U.S. by the USCIS under a specific section of the INA identified below are qualified non-citizens, and are potentially eligible for TennCare Medicaid and CoverKids for the first seven years after refugee, asylee, or other humanitarian status is granted. b. Non-Citizens Subject to Seven-Year Eligibility Time Limit Non-citizens granted a specific humanitarian status and subject to the seven-year eligibility time limit include: i. Refugees admitted under Section 207 of the INA (8 USC 1157); ii. Non-citizens granted asylum under Section 208 of the INA (8 USC 1158); iii. Cuban-Haitian Entrant, as defined in Section 501(e) of the Refugee Education Assistance Act of 1980; iv. Non-citizens whose deportation is withheld under the INA (8 USC 1253) as in effect prior to April 1, 1997 or 8 USC 1231(b)(3), as amended; v. Non-citizens admitted to the U.S. as an Amerasian Immigrant pursuant to Section 584 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act of 1988; vi. Afghan non-citizens granted Special Immigrant Status under Section 602(b) of the Afghan Allies Protection Act of 2009 as described in the INA (8 USC 1101(a)(27)); vii. Iraqi non-citizens granted Special Immigrant Status under the National Defense Authorization Act for Fiscal Year 2008 as described in the INA (8 USC 1101(a)(27)); viii. Spouses and unmarried children under age 21 of Afghan and Iraqi Special Immigrants who accompany or later join the Special Immigrant;

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 7 ix. Ukrainian Humanitarian Parolees (UHPs) as defined in Section 401 of the Additional Ukraine Supplemental Appropriations Act, 2022; and x. Cuban or Haitian parolees admitted under 212(d)(5)(A) of the INA. c. Expiration of Seven-Year Eligibility Time Limit A non-citizen who is subject to the seven-year eligibility limit and does not have a change in immigration status or does not meet one of the exemptions listed in the following section will lose eligibility the first month after the seven-year anniversary date of entrance into the U.S. (or date that deportation was withheld under the INA (8 USC 1231 and 1253)). d. Continuing Eligibility After the Seven-Year Eligibility Time Limit A non-citizen who is subject to the seven-year eligibility time limit can remain eligible beyond the seven-year period if at the time of application or at any time during or after the seven-year period the USCIS determines that the non-citizen continues to be a qualified non-citizen and that she is one of the following: i. An LPR; or ii. An honorably discharged veteran, an active-duty member of the U.S. Armed Forces, or a spouse, an unmarried dependent child, or an unremarried surviving spouse of an honorably discharged veteran or active-duty member of the U.S. Armed Forces. e. Adjustment to LPR Status within Seven-Year Eligibility Period A qualified non-citizen subject to the seven-year eligibility time limit can adjust his status to LPR within the seven-year period. Non-citizens who adjust to LPR status within the seven-year period are not subject to the five-year bar and remain potentially eligible for benefits as an LPR beyond the seven-year period of eligibility. Note: A COFA migrant who adjusts to LPR status is r subject to the five-year bar and may be ineligible for benefits as an LPR, unless the individual meets another exception to the five-year period of ineligibility per CMS SHO #21-005. 7. Victims of Trafficking The Trafficking Victims Protection Act (TVPA) of 2000 allows victims of human trafficking and non-citizens classified as nonimmigrants under Section 101(a)(15)(T) of the INA who are physically present in the U.S. to receive federally funded benefits and services to the same extent as refugees. Victims of human trafficking are non-citizens who are eligible to receive a special visa and benefits once they are identified.

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 8 a. Assistance Available to Victims of Human Trafficking Adult victims of human trafficking who are certified by the U.S. Department of Health and Human Services (HHS) and are otherwise eligible may receive Medicaid in any Medicaid category available. Children under age 18 do not have to be certified by HHS to receive benefits. For an adult victim of trafficking to receive certification, she must: i. Be a victim of human trafficking as defined by the TVPA or a non-citizen classified as a nonimmigrant under Section 101(a)(15)(T) of the INA; ii. Be willing to assist with the investigation and prosecution of traffickers; and iii. Have completed a bona fide application for a T Visa that has not been denied, or have received continued presence status from the U.S. Department of Homeland Security. b. The T Visa - Under the TVPA of 2000 The T Visa was established to allow victims of severe forms of trafficking to become temporary residents of the U.S. The Trafficking Victims Protection Act recognizes that returning victims to their country of origin is often not in the best interest of victims and those victims need the opportunity to rebuild their lives without the threat of deportation. After three years since the first date of admission as a T-1 nonimmigrant, a recipient of a T Visa may be eligible for permanent residence status if he: i. Is a person of good moral character; ii. Has complied with any reasonable request for assistance in the investigation during the three-year period; and iii. Will suffer extreme hardship if removed from this country. c. The Certification Process The certification process typically takes a few days after HHS is notified that a person has made a bona fide T Visa application or has been granted continued presence status (both of these actions are completed by the U.S. Department of Homeland Security). If the status of a person who has received HHS certification changes so that they are no longer eligible, HHS may be required to decertify that individual.

d. Verification of Victim Certification A toll-free number can be used to verify victims of trafficking: 1-866-401-5510. Before victims can receive benefits, the Eligibility Specialist must call the toll-free trafficking victim verification line to verify the validity of the certification letter and to inform HHS that the individual has applied for program benefits.

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 9 8. Battered Immigrants and Children a. Battered Immigrant Defined Certain immigrants who have been subjected to battery or extreme cruelty in the U.S. by a family member with whom they reside are qualified non-citizens and are potentially eligible for TennCare Medicaid and CoverKids. The non-citizen must be either: i. The individual battered; or ii. The parent of a child who is battered; or iii. A child whose parent has been battered. A family member includes a spouse, parent, or member of the spouse or parent’s family residing in the same household. If admitted to the U.S. on or after August 22, 1996, a battered immigrant and/or child is subject to the five-year period of ineligibility for TennCare Medicaid and CoverKids benefits. The five-year period of ineligibility begins on the date she obtains qualified non-citizen status. b. Eligibility Conditions In order to be considered as a qualified non-citizen and become potentially eligible for TennCare Medicaid (subject to five-year bar) or CoverKids (subject to five-year bar), a battered immigrant must meet all of the requirements provided below. i. The immigrant has been approved or has a pending petition which sets forth a prima facie case for: 1. Immigrant status as a battered spouse or child of a U.S. citizen or LPR (Form I-360); 2. Immediate Relative status (Form I-130); 3. Cancellation of removal pursuant to 8 U.S.C. 1229b(b)(2); or 4. Suspension of deportation and adjustment to LPR status; ii. The immigrant must show that there is a substantial connection between such battery or cruelty and the need for benefits; and iii. The immigrant must no longer be residing in the same household as the abuser. Battered immigrants may be granted good cause for non-cooperation with child support when cooperation requires the involvement of the abuser. 9. American Indians An Indian born in Canada who is at least one-half American Indian blood may enter and reside lawfully in the U.S., but this does not extend to the spouse or child of the Indian unless the child or spouse is also at least one-half American Indian. An Indian meeting the above criteria may be eligible for full TennCare Medicaid coverage if all other eligibility requirements are met.

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 10 The following documents may be used to verify an Indian is at least one-half American Indian blood: i. Birth or baptismal certificate issued on reservation; ii. Tribal record; iii. Letter from the Canadian Department of Indian Affairs; or iv. School records.

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 11 Version History

Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 12.03.2014

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08.01.2016 1-3.; 5.; 6.b.; 6.d.; 7. Policy Statement; Qualified Non-Citizen; Other Eligible Immigration Statuses; Five- Year Period of Ineligibility; Non-Citizens Subject to 7- Year Eligibility Time Limit; Continuing Eligibility After the 7-Year Limit; Victims of Trafficking 1-2; 4-7 Policy Clarification AJ 01.03.2018 1.; 3-5.; 7.; 9. Policy Statement; Other Eligible Immigration Statuses; Ineligible Non- Citizens; Five Year Period of Ineligibility; Victims of Trafficking; American Indians 1-5; 7-9 Non-Substantive Change JH 01.03.2018 2.; 8. Qualified Non-Citizen; Battered Immigrants and Children 1-2; 8-9 Policy Clarification JH

01.03.2018 6. Seven Year Eligibility Time Limit for Certain Non-Citizens 5-7 Policy Change JH 03.18.2019 5.a. Legal Authority; Non- Citizens Subject to the Five-Year Period of Ineligibility 4 Policy Clarification TB 10.01.2021 2.j.; 5.b.vii Qualified Non-Citizens; Non-Citizens Exempt from the Five-Year Period of Ineligibility 2; 5 Policy Change KF 05.02.2022 5.b.vii; 6. Qualified Non-Citizens; Non-Citizens Exempt from the Five-Year Period of Ineligibility 5 Policy Change SA 08.01.2024 2.k.; 3.f.; 4.b.xiv; 4.b.xv; Qualified Non-Citizen; Other Eligible Immigration Statuses; Ineligible Non- Citizen; Non-Citizens Exempt from the Five-Year 2; 3, 5-7; 9 Policy Change SA

Aged, Blind, and Disabled Policy Manual Number: 100.015 Section: Non-Financial Eligibility Requirements Chapter: ABD Qualified Non-Citizens August 1, 2024 Division of TennCare 12 5.b.vi.; 5.b.ix; 5.b.x; 5.b.xi 6.b.ix; 6e. Period of Ineligibility; Seven-Year Eligibility Time Limit for Certain Non-Citizens

Aged, Blind and Disabled Manual Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.020 Chapter: ABD Enumeration Legal Authority: 42 CFR 435.910 1. Policy Statement Enumeration is the procedure by which the Social Security Administration (SSA) assigns and verifies Social Security Numbers (SSNs). As a condition of eligibility for TennCare Medicaid, applicants who are eligible to receive an SSN must provide HCFA with: • A valid SSN; or • The SSN application date, if the individual’s SSN is unknown or a number has never been issued. Benefits will not be delayed or denied to otherwise eligible individuals pending issuance or verification of an SSN by the SSA. By law, non-applicants are not required to provide their SSN. HCFA can request a non-applicant’s SSN under the following conditions: • When provision of the SSN is voluntary; and • HCFA provides clear notice to the individual that provision of the non-applicant’s SSN is voluntary and information about how the SSN will be used. 2. Notification of the Enumeration Requirement Individuals will receive notification of the regulation requiring that they furnish an SSN when applying for TennCare Medicaid and how the SSN will be used. Individuals will be informed that: • They are only required to furnish an SSN for the individuals in their household applying for benefits. Provision of a non-applicant’s SSN is voluntary; • Each applicant’s SSN will be used to verify program eligibility, income and the amount of medical assistance payments received; • This is a requirement of the state and federal government; • Failure to furnish an SSN or proof that the individual has applied can result in that individual’s ineligibility.

Aged, Blind and Disabled Manual Policy Manual Number: 100.020 Section: Non-Financial Eligibility Requirements Chapter: ABD Enumeration March 19, 2015 Division of Tenncare 2

If an applicant does not have an SSN or the SSN is questionable, the agency will provide the individual with information about how to obtain an SSN through the SSA. 3. Children Less than 1 Year of Age A newborn can be added to their mother’s case without waiting for the enumeration process to conclude. In most situations, the enumeration process (completion of SS-5 application, which is the application for a Social Security card) now occurs for newborns at the hospital. Newborns must be enumerated by age one or before they can be approved in another TennCare Medicaid category, whichever occurs first. 4. Refusal to Obtain an SSN If an applicant fails or refuses to provide an SSN, then that individual is not eligible to receive benefits, unless he or she meets an exception or is a legal alien who is not eligible for an SSN. a. Exceptions An applicant may refuse to obtain an SSN because of a well-established religious objection. A well-established religious objection means that the applicant: • Is a member of a recognized religious sect or division of that sect; and • Adheres to the teachings of the sect or division of that sect and for that reason is opposed to applying for or using an SSN. HCFA will provide a Medicaid identification number to an applicant who refuses to obtain an SSN due to a well-established religious objection. The Medicaid identification number will not be able to be used for eligibility verification purposes. 5. Enumeration of Legal Immigrants The Affordable Care Act amended the enumeration requirement for individuals who are not eligible for a regular SSN. Legal immigrants who are ineligible for a work-related or regular SSN are not required to obtain a non-work SSN for the purpose of TennCare Medicaid eligibility. The SSA will continue to issue SSNs for people who do have work authorization when an SSN is required to obtain other program benefits. However, a non-work SSN cannot be used to obtain data from other programs or agencies to verify eligibility for TennCare Medicaid. Legal immigrants who are not eligible for a regular SSN must still meet the citizenship and immigration requirements, as well as all other conditions of eligibility, in order to receive TennCare Medicaid benefits.

Aged, Blind and Disabled Manual Policy Manual Number: 100.020 Section: Non-Financial Eligibility Requirements Chapter: ABD Enumeration March 19, 2015 Division of Tenncare 3

6. Verification a. Individuals With an SSN SSNs will be verified by the SSA via the Federal Data Services Hub (the Hub). If the Hub is unavailable, the state will verify the SSN using the State Verification Exchange System (SVES) daily interface. If the Hub or another electronic data source, such as the State On-Line Query (SOLQ), is unable to verify an individual’s SSN or validates the SSN as someone else’s SSN, the state must first address any possible discrepancies with the SSN that was entered. If the individual’s SSN cannot be verified, the state will notify the applicant and request a copy of the individual’s Social Security card in order to verify the individual’s SSN. b. Individuals Without an SSN Individuals who report not having an SSN, but who are eligible to obtain a work-related SSN must apply for an SSN prior to approval for TennCare Medicaid. Acceptable verification of an application for an SSN is a copy of Form SS-5. c. Individuals Ineligible for a Work-Related SSN

If an individual attests that he or she is ineligible for a work-related SSN and the U.S. Department of Homeland Security has verified his or her immigration status, the Eligibility Specialist will make note of the exception in the individual’s case record. Non-work SSNs should not be used when applying for TennCare Medicaid since these cannot be used for verification.

Aged, Blind and Disabled Manual Policy Manual Number: 100.020 Section: Non-Financial Eligibility Requirements Chapter: ABD Enumeration

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Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.19.2015

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Aged, Blind and Disabled Manual Section: Non-Financial Eligibility Requirements Policy Manual Number: 100.025 Chapter: ABD AGE Legal Authority: 42 CFR 435.945; 42 CFR 435.952; 42 CFR 435.956 1. Policy Statement In order to be eligible for TennCare Medicaid, an individual must meet the age requirement of the specific TennCare Medicaid category. 2. Verification HCFA accepts self-attestation of the applicant’s age, unless the HCFA has information that is not compatible with the attested information. If there is reason to believe that the attested age is incorrect, the state will attempt to verify the age of the individual using specific electronic data sources. If the individual’s age is unable to be electronically verified, then acceptable documentary evidence of age must be provided. a. Electronic Data Source The following is a list of electronic data sources that may be used to verify the age of an applicant: • Federal Data Services Hub (Hub); • Social Security Administration interface; and • Tennessee Vital Statistics. 3. Documentary Evidence The following is a list of acceptable documentary evidence of age: • A birth certificate; • Birth verification; • Census Bureau records; • Immigration record; • An insurance policy; • A passport; and • Proof of entitlement to Social Security benefits based on age.

Aged, Blind and Disabled Manual Policy Manual Number: 100.025 Section: Non-Financial Eligibility Requirements Chapter: ABD Age March 4, 2015 HCFA 2

If none of the examples of documentary evidence listed above can be provided, HCFA will accept a statement from the applicant which reasonably explains the discrepancy.

Aged, Blind and Disabled Manual Policy Manual Number: 100.025 Section: Non-Financial Eligibility Requirements Chapter: ABD Age

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Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.04.2015

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Aged, Blind and Disabled Manual Policy Manual Number: 100.030 Section: Non-Financial Eligibility Requirements Chapter: ABD Death

May 1, 2025 Division of TennCare 1

ABD DEATH Legal Authority: 42 CFR 435.919; 42 CFR 431.213 1. Policy Statement Eligibility for TennCare Medicaid will be terminated once an enrollee’s death has been verified. Advance notice of action is not required if TennCare has factual information confirming the death of a beneficiary. 2. Verification a. Notification of Death from the Enrollee’s Family or Representative If an enrollee’s family member or representative reports an unverified date of death, then verification of the death must be obtained. Verification can be obtained electronically by staff through Vital Statistics Inquiry. When TennCare is unable to verify a date of death electronically, a hard copy of the obituary or death certificate, or a statement from a funeral home or medical provider is considered acceptable verification. b. Notification of Death Through an Electronic Interface TennCare accepts a date of death received electronically from Vital Statistics and such date will be applied systematically without requiring any additional verification. If the State receives a date of death through the State Verification and Exchange System (SVES) or State On-Line Query Inquiry (SOLQi), additional verification of death must be obtained. Additional verification can be obtained electronically through Vital Statistics Inquiry. When additional verification is not available through Vital Statistics Inquiry, a hard copy of the obituary or death certificate or a statement from a funeral home or medical provider may be used as verification of death.

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Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 10.28.2014

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03.19.2015 1. Legal Authority; Policy Statement 1 Policy Clarification AF 03.18.2019 2. Verification 1 Policy Clarification AJ 05.01.2025 2.a.; 2.b. Verification 1 Policy Clarification LW

Aged, Blind and Disabled Manual Section: Categories of Eligibility Policy Manual Number: 110.005 Chapter: ABD Income Overview Legal Authority: 26 USC 6409; 42 CFR 435.601; 20 CFR 416.1102; 20 CFR 416.1103; 20 CFR 416.1111; 20 CFR 416.1123; State Plan, Supplement 11b to Attachment 2.6-A; Tenn. Comp. R. & Regs. 1200-13-20 1. Policy Statement Income is any item an individual receives in cash or in-kind that can be used to meet his need for food or shelter. Income includes the receipt of any item which can be applied, either directly or by sale or conversion, to meet basic needs of food or shelter. 2. Types of Income Income is either earned or unearned, and different rules apply to each. Either type may be cash or in- kind. Earned income is compensation an individual receives for the performance of services or as a result of his own efforts either as an employee or through self-employment. Unearned income is money an individual receives that is not the result of current work efforts, but accrues to an individual as the result of investment, inheritance, previous work efforts, etc. Income eligibility for the ABD TennCare Medicaid categories is determined according to the Social Security Administration (SSA) Supplemental Security Income (SSI) treatment of income rules. a. Earned Income Includes: i. Bonus; ii. Combat Pay; iii. Commission; iv. Contractual; v. Differential; vi. Domestic Volunteer Act; vii. Earned Income Tax Credit; viii. Farming/Fishing; ix. In-Kind Not Food/Shelter; x. In-Kind Wages; xi. Irregular or Infrequent Income; xii. Military Allowances; xiii. Older Americans Act; xiv. Royalties/Honoraria;

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xv. Self-Employment; xvi. Severance Pay; xvii. Sheltered Workshop; xviii. Sick Pay/Disability Pay; xix. Tips; xx. Volunteers in Service to America/AmeriCorps; xxi. Wages; and xxii. Work Study. b. Unearned Income Includes: i. Achieving a Better Life Experience (ABLE); ii. Adoption Subsidies; iii. Alimony; iv. Annuities; v. Canceled Debts; vi. Capital Gains; vii. Care and Contribution in Exchange for a Transferred Asset; viii. Cash Inheritance; ix. Cash Support; x. Child Support Arrearage; xi. Child Support; xii. Community Spouse Income Maintenance Allowance (CSIMA)/Dependent Income Maintenance Allowance (DIMA); xiii. Death Benefits; xiv. Education Income Not Work Study; xv. Excluded Unearned Income; xvi. Federal Emergency Management Agency (FEMA) Payment Disaster or Emergency; xvii. Federal Emergency Management Agency (FEMA) Payment Non Disaster or Emergency; xviii. Gambling, Prizes, and Awards; xix. General Assistance; xx. Gifts; xxi. In-Kind Support and Maintenance (ISM); xxii. Income Not Pursued; xxiii. Income-Producing Resource; xxiv. Interest Income; xxv. Irregular or Infrequent Income; xxvi. Jury Duty; xxvii. Lump Sum; xxviii. Long-Term Care (LTC) Insurance Payout; xxix. Pension; xxx. Protective Payee; xxxi. Railroad Retirement; xxxii. Reimbursements;

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xxxiii. Rental or Lease; xxxiv. Royalties/Honoraria; xxxv. Settlements and Restitutions; xxxvi. Sick/Disability Pay; xxxvii. Social Security Disability Benefit (SSDI); xxxviii. Social Security Survivor or Retirement Benefit; xxxix. Supplemental Security Income (SSI); xl. Temporary Assistance for Needy Families (TANF) Allotment; xli. Temporary Disability Insurance; xlii. Trusts; xliii. Unemployment Insurance; xliv. VA Apportioned; xlv. VA Augmented Benefit; xlvi. VA Disability; xlvii. VA Education Grant; xlviii. VA Pension; xlix. VA Survivor (DIC); and l. Workers Compensation. 3. What is Not Income Any item an individual receives that is not food or shelter or that cannot be used to obtain food or shelter is not income. When an individual receives items from the sale or exchange of property, the items received are not income, but are resources that have changed from one form to another. Items which are not income include: a. Bills Paid by a Third Party; b. Cash or In-Kind Items Received from the Sale, Exchange or Replacement of a Resource; c. Child Tax Credit payments (received either as monthly advance payments or a one-time refund) d. Income Tax Refunds; e. Loan Proceeds (excluding interest); f. Medical and Social Services (cash or in-kind); g. Payments Made by Credit Life or Credit Disability Insurance; h. Receipt of Certain Noncash Items (partially or totally excluded as a resource if retained the month after receipt); i. Replacement of Income Already Received; j. VA Aid and Attendance; k. VA Payments for Unreimbursed Medical Expenses; l. Vocational Rehabilitation; and m. Weatherization Assistance.

Aged, Blind and Disabled Manual Policy Manual Number: 110.005 Section: Financial Eligibility Requirements Chapter: ABD Income Overview November 01, 2021 Division of TennCare 4

4. When Income is Counted Count income at the earliest of the following points: a. When it is received; b. When it is credited to an individual’s account; or c. When it is set aside for her use. An exception to this is when a regular periodic payment (such as wages, Social Security, or Veterans Affairs benefits) is received in a month other than the month of normal receipt. If there is no intent to interrupt the regular payment schedule, consider the funds to be income in the normal month of receipt. When a payer advance dates a check because the regular payment date falls on a weekend or holiday, there is no intent to change the normal delivery date or to disrupt the existing relationship between the check receipt and SSI benefits. When an individual’s money goes to a bank by direct deposit, the funds may be posted to the account before or after the month they are payable. When this occurs, the funds count as income in the month of normal receipt. When a third party payment results in an individual’s receipt of In-Kind Support and Maintenance (ISM), determine the month in which the individual receives the ISM. 5. Amount Counted as Income a. Garnishment or Other Withholding Income includes amounts withheld because of a garnishment or other payments (such as payment of Medicare premiums). Income includes amounts withheld from income whether the withholding is purely voluntary, to repay a debt, or to meet a legal obligation. Some items for which amounts may be withheld but considered received are: i. Federal, state or local income taxes; ii. Health or life insurance premiums; iii. Supplemental Medical Insurance (SMI) premiums; iv. Union dues; v. Penalty deductions for failure to report changes; vi. Loan payments; vii. Garnishments; viii. Legally obligated child support; ix. Legally obligated child support arrearage;

Aged, Blind and Disabled Manual Policy Manual Number: 110.005 Section: Financial Eligibility Requirements Chapter: ABD Income Overview

November 01, 2021 Division of TennCare 5

x. Legally obligated alimony; xi. Court ordered bankruptcy; xii. Mandatory taxes; xiii. Service fees charged on interest-bearing checking accounts; xiv. Inheritance taxes; or xv. Guardianship fees if presence of a guardian is not a requirement for receiving the income. Note: Mandatory deductions such as FICA and withholding tax on pensions and other unearned income are not included in gross income for Institutional Medicaid and the Medicare Savings Programs (MSPs).

b. Expenses of Obtaining Income Unearned income does not include any portion of a payment used for expenses incurred in receiving the income. The expense must have been an essential factor in obtaining the income. For example, if an individual is paid for damages he received in an accident, the individual’s medical, legal, or other expenses connected with the accident may be deducted from the payment, as long as the expenses are verified. The payment of personal income taxes is not an expense and should not be deducted from unearned income. 6. Counting Income Eligibility is determined based on monthly income. All income must be converted to a monthly figure. The following formulas are used to convert income to a monthly amount. a. Hourly Work: Multiply the hourly wage by the number of hours the individual worked or is expected to work in a week to determine the weekly earnings figure.

b. Weekly Income: Multiply weekly income by 4.3333 to determine monthly income.

c. Bi-Weekly Income: Multiply the amount received every two weeks by 2.1666 to determine the monthly amount.

d. Semi-Monthly Income: Add the two semi-monthly amounts together to determine the monthly amount.

e. Annual Income: Divide the full amount of annual income by 12 to determine the average monthly amount.

Aged, Blind and Disabled Manual Policy Manual Number: 110.005 Section: Financial Eligibility Requirements Chapter: ABD Income Overview November 01, 2021 Division of TennCare 6

7. Loss of Income

Self-attested loss of income is accepted, unless there is reason to suspect the income is still being received by the individual. See the Verification policy.

Aged, Blind and Disabled Manual Policy Manual Number: 110.005 Section: Financial Eligibility Requirements Chapter: ABD Income Overview November 01, 2021 Division of TennCare 7

Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.20.2015

Publication

03.18.2019 2.a-b.; 3.; 4.; 5.a-b. Legal Authority; Earned Income Includes; Unearned Income Includes; What is Not Income; Garnishment or Other Withholding; Amount Counted as Income 1-5 Policy Clarification RZ 03.18.2019 4. Garnishment or Other Withholding 4-5 Non-Substantive Change RZ 03.18.2019 7. Loss of Income 5 Policy Change RZ 05.01.2019 6.b.; 6.c. Counting Income 5 Policy Clarification TN 11.01.2021 3.c. Legal Authority; Types of Income 3 Policy Clarification MH

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.010 Chapter: ABD Eligibility Determination Legal Authority: 20 CFR 416.1160–20 CFR 416.1165; 20 CFR 416.1202–20 CFR 416.1204; 42 CFR 435.601; State Plan Attachment 2.6-A; Tenn. Comp. R. & Regs. 1200-13-20 1. Policy Statement For the SSI-Related Categories of Eligibility (COE), the following individuals will be included in the applicant’s Eligibility Determination Group (EDG), if living in the same home: a. The applicant; and b. The applicant’s eligible spouse. For Medicare Savings Programs (MSPs), the applicant’s spouse and dependent children under age 21 will be included in the EDG when living in the applicant’s home. Stepchildren are included in the EDG when they live in the home and their natural or adoptive parent is the spouse of the applicant and living in the home. Income and resources of parents, siblings, children, and ineligible spouses not included in the EDG are still considered in the financial determination through deeming. See the ABD Deeming of Income and Resources policy. 2. Definitions a. Child Child includes individuals: i. Not married; ii. Not the head of a household; and iii. Under 18 years of age or under 22 years of age if a student regularly attending school. b. Deeming The term deeming identifies the process of considering another person’s income and resources to be available for meeting an applicant/enrollee’s basic needs of food and shelter. c. Eligibility Determination Group (EDG) The EDG includes individuals who impact the household size for an applicant requesting assistance.

Aged, Blind and Disabled Manual Policy Manual Number: 110.010 Section: Financial Eligibility Requirements Chapter: ABD Eligibility Determination Group October 1, 2020 Division of TennCare 2 d. Holding Out Spouse A holding out relationship exists when an unrelated man and woman present themselves to the community as husband and wife in the absence of a legal marriage. The concept of a holding out relationship does not apply to the MSPs or Institutional Medicaid COEs. e. Ineligible Parent/Spouse A parent or spouse who is not eligible or potentially eligible for the COE for which the applicant is being considered. f. Parent Parent as related to this policy includes natural and adopted parents. A parent is a natural, adoptive or, in certain situations, a stepparent. A stepparent is not included in the deeming budget if any of the following circumstances apply: i. The natural or adoptive parent to whom the individual was married has died; ii. The natural or adoptive parent and the individual are divorced; or iii. The natural or adoptive parent and the stepparent’s marriage has been annulled. g. Public Income-Maintenance Payments Income provided based on a determination of need by the federal, a state, or local government. Public income-maintenance payments include: i. Temporary Assistance for Needy Families (TANF); ii. Supplemental Security Income (SSI); iii. Refugee Act of 1980 payments based on need; iv. Disaster Relief and Emergency Assistance Act benefits; v. General assistance programs of the Bureau of Indian Affairs; vi. U.S. Department of Veterans Affairs payments based on need; and vii. State or local government assistance programs based on need. h. SSI-Related SSI-Related includes the following TennCare Medicaid COEs: i. Pickle Passalong; ii. Disabled Adult Child (DAC); and iii. Widow/Widower. i. Spouse A spouse is: i. An individual’s legally married spouse; ii. An individual determined by the Social Security Administration (SSA) as eligible to receive Social Security benefits as the spouse of another; or iii. An individual’s holding out spouse for SSI-Related COE only.

Aged, Blind and Disabled Manual Policy Manual Number: 110.010 Section: Financial Eligibility Requirements Chapter: ABD Eligibility Determination Group October 1, 2020 Division of TennCare 3 3. SSI-Related Eligibility Determination Group Financial eligibility in the SSI-Related COEs is determined based on an EDG size of one or two. Included EDG members are the applicant/enrollee and, if applicable, his eligible spouse if they have the same living arrangement. Otherwise, if there are additional household members, they will be considered in deeming budgets, if appropriate. For example, an ineligible spouse’s income and resources may be deemed into the budget. If an ineligible spouse’s income and resources are deemed into an applicant’s budget, the EDG size will be two. See the ABD Deeming of Income and Resources policy for additional information. If the applicant is a child, her parent’s assets and needs, e.g. financial responsibility to other children in the home, are considered in the deeming budget. 4. Institutional Medicaid Eligibility Determination Group Financial eligibility for Institutional Medicaid COEs is determined based on an EDG size of one. The only included EDG member is the applicant/enrollee. However, the community spouse and dependents do impact budgeting of the post-eligibility treatment of income (i.e. patient liability), and the community spouse’s resources are considered in the resource assessment. See the Post-Eligibility Treatment of Income and Resource Assessment policies. 5. Medicare Savings Program Eligibility Determination Group MSP household composition is governed by the principle of Financially Responsible Relatives (FRR) and the applicant/enrollee’s living arrangements. Financial responsibility is limited to spouse to spouse and parent to child. The living arrangement of each MSP applicant and, if applicable, his spouse and children, must be considered in determining EDG size. The following potential living arrangements should be taken into consideration for MSP applicants: a. A married individual living alone in the community, separated from her spouse is treated as an individual for MSP. b. A single or widowed individual living alone in the community is treated as an individual for MSP. c. A married couple living together in the community will be included in the EDG of one another, except when one or both spouses are eligible for HCBS. When an individual is eligible for HCBS and has a spouse living in the home, his spouse will not be included in the EDG. The institutionalized spouse will be treated as an individual and will have an EDG size of 1 for MSP. The community spouse’s EDG will include the institutionalized spouse and will be an EDG size of 2. d. A couple who lives separately because one is in the community and one is in a nursing facility will have an EDG size of 1 because they do not live together. e. A couple in which both spouses reside in a nursing facility will have an EDG size of 1 for MSPs, even if they share the same room.

Aged, Blind and Disabled Manual Policy Manual Number: 110.010 Section: Financial Eligibility Requirements Chapter: ABD Eligibility Determination Group October 1, 2020 Division of TennCare 4 f. Dependent children under 21 living in the household of the applicant will increase the EDG size, including the corresponding federal poverty level threshold, for the applicant. 6. Verification The state accepts self-attestation of EDG members and relationships between the EDG members. The state will use the Public Assistance Reporting Information System (PARIS) data post-enrollment to determine if any enrollees are receiving benefits in another state, and to identify children for whom non-custodial parents are applying for benefits through TennCare.

Aged, Blind and Disabled Manual Policy Manual Number: 110.010 Section: Financial Eligibility Requirements Chapter: ABD Eligibility Determination Group October 1, 2020 Division of TennCare 5 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.15.2015

Publication

12.13.2016 4. Medicare Savings Program (MSP) Household Composition 2 Non-Substantive Change RH 03.18.2019 1.; 2.a.; 2.c.; 2.e.; 2.g.; 2.h.; 3-5. Legal Authority; Policy Statement; Child; Eligibility Determination Group (EDG); Ineligible Parent/Spouse; Public Income-Maintenance Payments; SSI-Related; SSI-Related Eligibility Determination Group; Institutional Medicaid Eligibility Determination Group; Medicare Savings Program (MSP) Eligibility Determination Group 1-3 Policy Clarification LW 03.18.2019 2.a.; 2.g.; 2.h.; 3-4.; 6. Child; Public Income- Maintenance Payments; SSI-Related; SSI-Related Eligibility Determination Group; Institutional Medicaid Eligibility Determination Group; Verification 1-3 Non-Substantive Change LW 10.01.2020 1.-3.; 5. Policy Statement; Definitions; SSI-Related Eligibility Determination Group; Medicare Savings Program Eligibility Determination Group 1-3 Policy Clarification AJ 10.01.2020 2.-4. Definitions; SSI-Related Eligibility Determination Group; Institutional Medicaid Eligibility Determination Group 1-3 Non-Substantive Change TN

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.020 Chapter: ABD Financially Responsible Relatives ABD Legal Authority: 20 CFR 416.1160 – 20 CFR 416.1165; 20 CFR 416.1202 – 20 CFR 416.1204; 42 CFR 435.601; TennCare 1115 Demonstration Waiver, Amendment 27; TCA Title 36 1. Policy Statement A family member’s financial responsibility for an applicant/enrollee’s basic needs of food and shelter is recognized when determining eligibility for TennCare Medicaid. The following are considered Financially Responsible Relatives (FRRs) for the purpose of TennCare Medicaid: • A spouse is financially responsible for his or her spouse; and • A parent is financially responsible for his or her child(ren). The income and resources of the applicant/enrollee’s FRR are considered part of the applicant/enrollee’s available countable assets. Income and resources belonging to a FRR who receives Families First or SSI benefits are not deemed available to the applicant/enrollee. 2. Defined Terms Deeming: The term deeming identifies the process of considering another person’s income and resources to be available for meeting a TennCare Medicaid applicant/enrollee’s basic needs of food and shelter. Child: Child as related to this policy includes individuals: • Not married; and • Not the head of a household; and • Under 18 years of age or under 22 years of age if a student regularly attending school. Holding Out Spouse: A “holding out” relationship exists when an unrelated man and woman present themselves to the community as husband and wife in the absence of a legal marriage. The concept of a holding out relationship does not apply to the MSPs or Institutional Medicaid categories. Ineligible Spouse: A spouse who is not eligible for an Aged, Blind and Disabled TennCare Medicaid category.

Health Care Finance and Administration Policy Manual Number: 110.020 Section: Financial Eligibility Requirements Chapter: ABD Financially Responsible Relatives July 1, 2016 HCFA 2 Parent: Parent as related to this policy includes natural and adopted parents. A parent is a natural, adoptive or, in certain situations, a step-parent. A step-parent is not included in the deeming budget if any of the following circumstances apply: • The natural or adoptive parent to whom the individual was married has died; • The natural or adoptive parent and the individual are divorced; or • The natural or adoptive parent and the step-parent’s marriage has been annulled. Spouse: A spouse is: • An individual’s legally married spouse; or • An individual determined by the Social Security Administration (SSA) as eligible to receive Social Security benefits as the spouse of another; or • An individual’s “holding out” spouse. 3. Spousal Financial Responsibility a. When Financial Responsibility Applies The income and resources of the individual’s legally married spouse are considered available to him or her whether or not they are actually contributed: • While the couple live together, including temporary absences; AND • During the first month of separation by one member’s admission to a medical institution, unless the couple had been living apart for at least six months prior to their separation. A couple residing in a separate or the same room in a long-term nursing care facility is not considered to be sharing the same living arrangement and are each treated as individuals with no deeming of income or resources. Financial responsibility by the ineligible or eligible spouse ends the month of separation for any reason such as: • Admission to a medical institution when 30 days of continuous confinement is met; or • Applying for Home and Community Based Services (HCBS); or • The individual is determined to need and to be likely to receive services for a continuous period of at least 30 days going forward. If an individual applies in the month of separation, his or her eligibility is determined as an individual only. At that point, only resources and income actually contributed to the individual are considered available to him.

Health Care Finance and Administration Policy Manual Number: 110.020 Section: Financial Eligibility Requirements Chapter: ABD Financially Responsible Relatives July 1, 2016 HCFA 3 b. Determining Marital Relationship Accept the individual’s attestation regarding marital status if he or she is married, unmarried or separated from his or her spouse. c. Holding Out Spouse A “holding out” relationship exists when an unrelated man and woman present themselves to the community as husband and wife in the absence of a legal marriage. The concept of a holding out relationship does not apply to the MSPs or Institutional Medicaid categories. 4. Parental Financial Responsibility a. When Parental Financial Responsibility Applies The income and resources of the parents of the child are considered available to the child in determining his or her financial eligibility: • When the child and parent(s) live together; and • During the child’s temporary absence from the home. A child’s admission to a psychiatric facility is considered a temporary absence. Psychiatric care is not considered institutionalization for purposes of determining the under age 21 individual’s separation from his or her FRR. b. When Parental Financial Responsibility Does Not Apply The income and resources of the parents of the child are not considered available to the child in determining his or her financial eligibility when the child applies for Long-Term Supports and Services, unless a child under 18 is determined eligible at an “At Risk” for nursing facility Level of Care and is requesting HCBS services in the Employment and Communities First (ECF) program. c. Step-parents The income and resources of a step-parent living in the home are considered available to the child when the step-parent is the spouse of the child’s natural or adopted parent and the natural or adopted parent is living in the home with the child.

Health Care Finance and Administration Policy Manual Number: 110.020 Section: Financial Eligibility Requirements Chapter: ABD Financially Responsible Relatives July 1, 2016 HCFA 4 d. Joint Custody/Parenting Time For the purpose of determining Medicaid eligibility, the custodial parent, often referred to as the primary residential parent in Tennessee, is established based on physical custody specified in a court order, binding separation, divorce, or parenting plan. If there is no court order or parenting plan, custody of a child born out of wedlock is with the mother. If there is a parenting plan, the primary residential parent is the parent with whom the child spends most nights. i. Equally-Shared Joint Custody/Parenting Time When an individual claims that equally-shared (50/50) joint physical and legal custody exists or provides a parenting plan that evenly divides the child(ren)’s living arrangement and parenting responsibilities, the parenting time situation must be carefully examined. Though a court order or parenting plan may evenly divide the care and control of the child(ren), the parents may not, in fact, be following the parenting plan. In cases of alleged equal parenting time (50/50), the Eligibility Specialist must verify that: • Both parents exercise parental guidance. Parental guidance may include issues such as which parent takes the child(ren) to and from school and/or day care, which parent does the school and/or daycare consider the responsible relative, who exercises responsibility for consenting to major medical treatment for the child, etc. • Parents equally share physical custody. If one parent has the child(ren) a majority of the time, this is not considered equally shared parenting time. Child(ren) must spend an equal amount of time living with each parent. The living arrangement may be based on days, weeks, or months, but it must be equal (182.5 days per year with each parent) and parental functions of guidance and physical care cannot be substantially interrupted. (If equal time means six months at a time are spent with each parent, this will be considered extended visits. Eligibility for the parent ceases when the child is with the other parent.) 5. Other Relatives There are no additional financial responsibilities for any other relatives other than the spouse to spouse and parent to child provisions set forth in this section. The income and resources of the spouse or parent not living in the same household with the applicant are considered available only to the extent they are actually contributed.

Health Care Finance and Administration Policy Manual Number: 110.020 Section: Financial Eligibility Requirements Chapter: ABD Financially Responsible Relatives July 1, 2016 HCFA 5 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.23.15

Publication

4.5.16 1 Policy Statement 1 Non-Substantive Change AK 4.5.16 2 Defined Terms 1 Non-Substantive Change AK 4.5.16 4-d-ii Parental Financial Responsibility -Equally- Shared Joint Custody/Parenting Time 4 Non-Substantive Change AK 7.1.16 4-b Parental Financial Responsibility -When Parental Financial Responsibility Does Not Apply 3 Policy Clarification LW

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements

Policy Manual Number: 110.025 Chapter: ABD Earned Income

November 01, 2021 Division of TennCare 1 ABD EARNED INCOME

Legal Authority: 26 USC 6409; Social Security Act, Sections 1611 and 1612; 20 CFR 416.1100, et seq.; State Plan, Supplement 8A to Attachment 2.6-A; Tenn. Comp. R. & Regs. 1200-13-20

1. Policy Statement

Earned income is compensation an individual receives for the performance of services or as a result of his own efforts either as an employee or through self-employment. Income eligibility for the Aged, Blind and Disabled (ABD) TennCare Medicaid Categories of Eligibility (COEs) is determined using the Supplemental Security Income (SSI) treatment of income rules. 2. Earned Income

Bonus Countable.

A bonus is a one-time payment that an individual receives in addition to normal job wages or salary. Census Wages Excluded.

Wages paid to an individual by the Census Bureau for temporary employment activities in connection with the full Census that occurs every 10 years are excluded. Child Tax Credit Excluded.

Child Tax Credit payments received either as monthly advance payments or a one-time refund are excluded. Combat Pay Excluded.

Payments made to an individual serving active duty in a combat zone. These payments are excluded in the month of receipt.

Any amount of the payment retained into the following month is a countable resource unless otherwise excluded. Commission Countable.

Commission is income received by an individual for services performed. Commission income often paid based on a percentage of a sale or a fixed amount per sale. Contractual Countable.

Income paid to an individual based on a contractual agreement. To calculate contractual income, average the full amount of income paid on a contractual basis over the number of months the contract covers. Differential

Countable.

Payment made to an individual by an employer for a period during which he or she is performing service in the uniformed services while on active duty for a period of more than 30 days. Payment represents all or a portion of the wages the individual would have received if he was performing services for the employer.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements

Policy Manual Number: 110.025 Chapter: ABD Earned Income

November 01, 2021 Division of TennCare 2 Domestic Volunteer Act Excluded.

Payments to volunteers from the following programs are excluded:

• Title II Retired Senior Volunteer Program; • Foster Grandparent Program; and • Title III Service Corps of Retired Executives, Senior Companion Program and Active Corps of Executives.

Earned Income Tax Credit (EITC) Excluded.

Earned income tax credit payments received as advance payments or as refunds are excluded.

Farming/Fishing Farming or fishing income may be considered self-employment income.

1. Farming Income

Countable. An individual is in the business of farming if she cultivates, operates or manages a farm for profit, either as owner or tenant. A farm can include livestock, dairy, poultry, fish or fruit. It can also include plantations, ranches, ranges and orchards.

2. Fishing Income

Countable. Fishing income includes amounts an individual receives from catching, taking, harvesting, cultivating or farming fish, shellfish, crustacean, sponges, seaweeds or other aquatic forms of animal or vegetable life, as well as money from patronage dividends and fuel tax credits and refunds.

3. Counting Farming or Fishing Income

a. Income Received on a Regular Business

If an individual has a federal tax return available to verify the earnings from last year and the business model remains the same, prorate the reported annual profit over 12 months. Count the result as earned income, taking into account any changes for the prorated period.

If the individual does not have a federal tax return available from the previous year, determine the monthly income received and any expenses the applicant has paid or expects to pay in that month.

b. Income Received Annually or Infrequently

If farming or fishing income is received on an annual or infrequent basis, prorate the annual amount with anticipated

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements

Policy Manual Number: 110.025 Chapter: ABD Earned Income

November 01, 2021 Division of TennCare 3 changes over 12 months and count the monthly income as earned income. 4. Verification

If verification is required for farming or fishing income, request at least one of the following documents:

• A copy of the agreement executed by the owner and the individual working the farm (the applicant could be either the owner or tenant); • A copy of the most recent profit or loss statement; or • A copy of the previous year’s Federal income tax return.

In-Kind Not Food/Shelter Excluded.

This includes clothing that is not considered part of an employee’s wages. In-Kind Wages Countable.

Noncash compensation such as food, shelter or other items received by an individual for work performed in place of, or in addition to, wages, profit or payment in cash. The value of in-kind wages is determined by the current market value of the item(s) minus the amount of the outstanding balance due on the item, if any.

Exceptions: In-kind payments of food or shelter to the following people, or under the following conditions, are treated as unearned income:

• Certain agricultural employees (a farmer provides commodity payments—lodging, food, livestock, grain or milk products—to an employee and the commodity cannot be converted to cash or is equivalent to a cash payment); • Domestic employees; • Service not in the course of the employer’s trade or business; • Service by certain home workers; • Members of the Uniformed Services; and • Provided on the employer’s business premises, for the employer’s convenience, and in the case of shelter received, its acceptance by the employee is a condition of employment.

Irregular or Infrequent Income Countable.

Exclude up to $30 per calendar quarter of earned income that is received either irregularly or infrequently. In order to be excluded, the income need only be irregular or infrequent.

Income is considered to be irregularly received if an individual cannot reasonably expect to receive it. Income is received infrequently if an individual receives it only once during a calendar quarter from a single

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements

Policy Manual Number: 110.025 Chapter: ABD Earned Income

November 01, 2021 Division of TennCare 4 source and the individual did not receive that type of income in the previous month or in the month following the month in which the money was received. A single source of earned income is an employer, trade or a business. Military Allowances Countable.

Military allowances are cash benefits that compensate the service member, at least in part, for the expenses of housing, food, clothing, and special situations during periods of active duty service.

Military allowances paid to service members and their families, other than for on-base or privatized military housing, are counted as earned income.

Such allowances include, but are not limited to:

• The basic allowance for subsistence (BAS) (i.e. food allowance); • The basic allowance for housing (BAH); and • Clothing allowance.

The basic allowance for housing (BAH) is counted as earned income when the payment is made to military personnel living in private housing. The BAH should be treated as unearned income in the form of in-kind support and maintenance (ISM) subject to the Presumed Maximum Value (PMV) rule for service members and their families who live on base or in privatized military housing. See ABD Unearned Income.

Older Americans Act Countable.

Title V of the Older Americans Act of 1965 provides part-time jobs for unemployed low-income people age 55 and older who have poor employment prospects. Count only wages and salaries paid to individuals as a result of their participation in a program funded under Title V of the Older Americans Act of 1965 as earned income.

Royalties/Honoraria Countable.

Royalties are earned income when they are either received as part of a trade or business or received by an individual in connection with any publication of his work. Royalties are counted as unearned income in all other situations. For example, an individual may receive payment for the use of a patent or natural resource that he or she owns.

Honoraria are payment for services when fees are not legally or traditionally required. Honoraria are counted as earned income. For example, a professional who speaks at a meeting may receive an honorarium for her service and time.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements

Policy Manual Number: 110.025 Chapter: ABD Earned Income

November 01, 2021 Division of TennCare 5 Self-Employment Countable.

Net earnings from self-employment count. Self-employment is the act of engaging in a trade or business; which is an activity carried on for a livelihood or in good faith to make a profit. Individuals may be contractors, franchise holders, owners, operators, partners, etc. An individual must meet all of the following criteria to be considered self- employed:

• Earns income directly from the business or trade, not from wages or salary from an employer; • Is responsible for the payment of their entire Social Security and federal withholding taxes; • Does not have an employee/employer relationship with another individual and the services performed cannot be controlled by an employer; and • Should file self-employment tax forms (Schedule F, C, C-EZ, SE, etc.).

Net income is the gross income from any trade or business less allowable deductions for that trade or business. Allowable deductions include expenses paid to operate the business or participate in the trade, including:

• Car and truck expenses; • Depreciation; • Employee wages and fringe benefits; • Property, liability or business interruption insurance; • Interest on loans for your business; • Legal and professional services; • Rent or lease of business property and utilities; • Commissions, taxes, licenses and fees; • Advertising; • Contract labor; and • Repairs and maintenance.

There are different types of business structures referred to as self- employment. Some of the common structures include:

• Sole Proprietorship: A self-employment business that is not incorporated and has one or two owners. A Limited Liability Company (LLC) is not a sole proprietorship. • Independent Contractor: An individual who pays his own employment taxes and does not have an employee/employer relationship is considered self-employed, unless incorporated or an LLC. Sharecropper: If a sharecropper pays the costs of doing business and receives a portion of the net income in exchange for her labor, she is considered self-employed, unless incorporated or an LLC.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements

Policy Manual Number: 110.025 Chapter: ABD Earned Income

November 01, 2021 Division of TennCare 6 If an applicant is self-employed and has a partner or is a joint owner of a business, the applicant’s self-employment net earnings will be based on his distributive share from the business.

Federal Income Tax Return Forms

1. Net Earnings from Self-Employment (NESE)

Self-employed individuals report their Net Earnings from Self- Employment (NESE) on the Schedule SE tax form. Other forms may be used to report income (Schedule C, Schedule F, etc.) but the amount listed on the Schedule SE should be used to verify self- employment earnings, whenever possible. The NESE is the gross income from any trade or business less allowable deduction for that trade or business. NESE also includes any profit or loss in partnership. For the purpose of determining eligibility, count the NESE on a taxable year basis and divide the total of these earnings equally among the months in the taxable year.

Verify net earnings from self-employment on Schedule SE. The amount of net earnings from self-employment that should be reported based on a Schedule SE may be found under:

• Section A, line 4; or • Section B, line 4.c.

If line 4 or 4.c. show a positive amount of less than $400, then line 3 is used even if the amount on line 3 is greater than $400.

2. Schedule SE may not be available or usable when:

• An individual has started a new business and was not self- employed in the prior tax year; or • An individual has applied for or is receiving Title II (Social Security) benefits.

3. Other Tax Forms and Business Records

If an individual does not have a Schedule SE, then other tax forms may be used to determine and verify net self-employment earnings. Other forms include:

• Schedule F: Used to report income and expenses from a farm operation. Net profit or loss is listed on the Schedule F. • Schedule C: Used to report profit or loss from a Sole Proprietor business (general). Net profit or loss is listed on the Schedule C. • Business Records: When a federal income tax return is not available, or the individual has changed, stopped or added to the business, business records may be used to determine net earnings. When business records are used, use the individual’s

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements

Policy Manual Number: 110.025 Chapter: ABD Earned Income

November 01, 2021 Division of TennCare 7 gross income and allow the same deductions that are allowed by the IRS.

Severance Pay Countable.

Severance pay is countable earned income in the month received.

Sheltered Workshop Countable.

Sheltered workshops provide employment opportunities for individuals with developmental, physical or mental impairment. Sheltered workshops prepare the individuals for gainful work and provide rehabilitation, work training, and life skills. Sheltered workshops are operated by certain nonprofit organizations, or by state or local government institutions.

Under some circumstances, income earned by enrollees in a nursing facility may be considered therapeutic. These individuals are recognized as having a greater need for personal income, because of the nature of their activities. Retention of additional income derived from work is considered essential for achieving a degree of independence.

See the Post-Eligibility Treatment of Income policy for impact to patient liability for individuals receiving Long-Term Services and Supports (LTSS).

Sick Pay/Disability Pay Countable.

Sick or disability pay is a payment made to or on behalf of an employee by an employer or private third party for sickness or accident disability. Sick or disability pay is counted as earned income when it is received within 6 calendar months after the individual has stopped work. Sick or disability pay received more than 6 months after stopping work is counted as unearned income.

Tips Countable.

Tips that total more than $20 in a calendar month from any one employer are countable.

See ABD Unearned Income policy for tips received totaling less than $20 in a calendar month.

Volunteers In Service To America (VISTA) Payments Excluded.

Volunteers in Service to America under Title I of the Domestic Volunteer Services Act of 1973 (VISTA) payments are excluded.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements

Policy Manual Number: 110.025 Chapter: ABD Earned Income

November 01, 2021 Division of TennCare 8 Wages Countable.

Wages include all payment from employment, and the term is generally defined to mean gross wages. Gross wages are the total amount paid to the individual before deductions.

Wages are counted (considered available to the individual) at the earliest of the following:

• When wages are received or paid; • When wages are credited to the individual’s account; or • When wages are set aside for the individual’s use.

Deferred wage payment occurs when wages are paid at a time later than the wages normally would have been paid. If wage payments are deferred due to circumstances beyond the employee’s control, consider the payment earned income when it is actually available to her. If the wage payment(s) is deferred at the employee’s request, determine when the wages would normally have been paid and consider them earned income for that period.

Work Study Excluded.

Exclude educational income that is directly contingent upon the individual attending an institution of higher education, including work study and stipends.

Workforce Innovation and Opportunity Act (WIOA) The WIOA funds a variety of programs designed to connect individuals with employment opportunities.

Examples of WIOA-funded programs include:

• Adult Services Program • Dislocated Workers Program • Job Corps Act • YouthBuild

The wages, bonuses, or incentives received from these programs are considered as countable earned income, unless the payments are for supportive services such as child care, transportation, or job placement services.

Any compensation received from a WIOA program that is not food or shelter, and cannot be used to obtain food or shelter, is excluded from income. This would include any type of voucher that can only be redeemed for items such as clothing or transportation.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements

Policy Manual Number: 110.025 Chapter: ABD Earned Income

November 01, 2021 Division of TennCare 9 Document Title ABD Earned Income First Published 03.09.2015 Revision History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 07.05.2017 2. Combat Pay; Military Allowances 1; 3-4 Policy Change RH 03.18.2019 1.; 2. Policy Statement; Bonus; Combat Pay; Differential; Domestic Volunteer Act; Farming/Fishing; In-Kind Not Food/Shelter; Military Allowances; Royalties/Honoraria; Self- Employment; Severance Pay; Sheltered Workshop; Volunteers In Service To America (VISTA) Payments; Wages; Work Study 1-7 Non-Substantive Change RZ 03.18.2019 2. Sheltered Workshop; Tips 3-7 Policy Change RZ 03.18.2019 2. In-Kind Wages; Irregular or Infrequent Income; Sheltered Workshop 3-4; 7 Policy Clarification RZ 09.03.2019 2. Legal Authority; Census Wages; Workforce Innovation and Opportunity Act (WIOA) 1; 8 Policy Clarification AJ/TB 09.03.2019 1.; 2. Policy Statement; Domestic Volunteer Act 1-2 Non-Substantive Change TN 11.01.2021 2. Legal Authority; Child Tax Credit 1 Policy Clarification MH

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 1 ABD UNEARNED INCOME

Legal Authority: 20 CFR 416.1110; 20 CFR 416.1120; 20 CFR 416.1121; 20 CFR 416.1123; 20 CFR 416.1124; Public Law 113–295; Tenn. Code Title 71, Chapter 4, Part 8

1. Policy Statement

Unearned income is money an individual receives that is not the result of current work efforts, but accrues to an individual as the result of investment, inheritance, previous work efforts, etc. Unearned income for the ABD TennCare Medicaid categories is counted according to the Social Security Administration (SSA) Supplemental Security Income (SSI) financial methodology.

2. Unearned Income

Achieving a Better Life Experience (ABLE) Excluded.

ABLE accounts or 529A accounts are tax-advantaged savings accounts for individuals with disabilities that are established under a qualified ABLE program. The funds within an ABLE account are intended to cover the individual’s Qualified Disability Expenses (QDEs) related to her blindness or disability.

All contributions and ABLE account earnings in an ABLE account are excluded as income, except that contributions are not deducted from countable income of the individual making the contribution. Contributions to an ABLE account from a third party should not be considered countable as income or a resource. This includes funds from a trust.

Distributions from an ABLE account are not income of the designated beneficiary in any month, regardless of whether the distribution is for non-housing QDEs, housing QDEs or non-qualified expenses. Distribution from an ABLE account is the conversion of a resource from one form to another.

QDEs include, but are not limited to: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, and funeral and burial expenses, and basic living expenses.

Adoption Subsidies Title IV adoption subsidies are intended to pay for general

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 2 living expenses and are countable unearned income to the child.

When the adoption subsidy is a reimbursement for child care while the adult responsible for the child is at work or seeking employment, or is for medical expenses, it is excluded.

Alimony Countable.

Payments an individual receives from a spouse he no longer lives with, or a former spouse, if paid as part of a divorce agreement, separation agreement or court order.

Annuities Annuities are contracts or agreements that, in exchange for a lump sum payment or series of payments, provide income at regular intervals (i.e., monthly, quarterly, annually). Annuities establish a source of income for a future period, and are often used in retirement planning.

Annuity payments count as unearned income the month received when the annuity is an excluded resource, except when the payments are from a State annuity. Payments to an individual or spouse from a State annuity are excluded if the annuity is paid by a state based on a determination that the individual is a veteran who is aged, blind or disabled.

If an annuity is an excluded resource, the periodic payments are countable unearned income, unless specifically excluded under this policy. See the ABD Countable and Excluded Resources policy for resource treatment of an annuity.

Canceled Debts Excluded.

The amount of a debt an individual is no longer required to pay or that is forgiven.

Capital Gains Countable.

Income an individual receives when a capital asset is sold and an individual makes a profit from the sale. Capital assets include a home, household furnishings and stocks and bonds held in a personal account. When a capital asset is sold, the difference between the amount paid for the asset and the amount it is sold for is the capital gain or loss.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 3 Care and Contribution in Exchange for a Transferred Asset Countable.

If the individual has transferred an asset and part or all of the compensation he received included a provision for lifetime total care and support, the value of the care and support contribution is unearned income.

Cash Inheritance Countable.

The value of inherited cash is counted as income in the month of receipt and if the individual retains it, as a resource in the months thereafter. The month of receipt for an inheritance composed of cash is the month the individual receives that money.

Cash Support Countable.

Count regular contributions made directly to the individual as unearned income unless it can be excluded as irregular or infrequent income.

Child Support Arrearage Countable.

Child support arrearages received, whether received on a regular monthly schedule or as a one-time payment.

One-third (1/3) of the child support arrearage payment, received from an absent parent by a child under age 18 or under age 22 and regularly attending school, is excluded. The remaining 2/3 value is counted as unearned income in the month of receipt.

The child support arrearage is counted in its entirety when the child is an ineligible child in a deeming budget or is applying for Institutional Medicaid.

Child Support Child support payments are countable to the child(ren) the payments are intended to support. If the support order does not indicate the amount per child, assume the amount received is equally distributed among all of the non-custodial parent’s children for whom the payment is made.

When determining eligibility for a disabled child under age 18 or under age 22 and regularly attending school, and the child

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 4 support payment is countable to the child, 1/3 of the child support amount received from an absent parent is excluded. The remaining 2/3 value is counted as unearned income in the month of receipt.

The one-third exclusion does not apply when the child is an ineligible child in a deeming budget or is applying for Institutional Medicaid.

The value of support payments is counted in its entirety for individuals age 22 and older as unearned income in the month of receipt.

Use one of the following to verify the value and frequency of support payments:

• Copy of the child support award agreement; or • Written statement from the individual paying the support and a copy of the most recent support check or receipt.

Community Spouse Income Maintenance Amount (CSIMA) / Dependent Income Maintenance Amount (DIMA) The CSIMA and the DIMA are income allocations made to certain spouses and dependents of individuals eligible in an Institutional Medicaid category. When an institutionalized individual has a community spouse or dependent living in the home, a portion of the individual’s income is allocated to the community spouse or dependent in order to cover the necessary costs of living in the home.

The CSIMA and/or DIMA are countable unearned income for applicants ONLY when the institutionalized individual is NOT in the community spouse’s or dependent’s household.

If the institutionalized individual is living in the applicant’s household, the CSIMA and DIMA are excluded.

Death Benefits Countable.

A death benefit is received as the result of another’s death. Examples of death benefits include:

• Proceeds of life insurance policies received due to the death of the insured;

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 5 • SSA, Veterans Affairs (VA) or Railroad retirement lump sum death benefits; • Inheritances in cash or in-kind; and • Cash or in-kind gifts given by relatives, friends or a community group to “help out” with expenses related to the death, etc.

Recurring survivor benefits such as those received under Social Security Title II, private pension programs, etc. are not death benefits.

Death benefits are income to an individual if the total amount exceeds the expense of the deceased person’s last illness and burial paid by the individual to whom the death benefit is issued.

Education Income Not Work Study Excluded.

Income received through Federal Student Aid, such as grants and loans, except for income received through Work Study programs.

Federal Emergency Management Agency (FEMA) Payment Disaster or Emergency Excluded.

FEMA payments issued as a result of a presidentially declared emergency or major disaster are excluded. Payments made by comparable disaster assistance programs by states, local governments and disaster assistance organizations are also excluded.

Federal Emergency Management Agency (FEMA) Payment Non Disaster or Emergency Countable.

FEMA payments made to a household to pay for rent, food and utility assistance when there is NO major disaster or emergency declaration are countable.

Gambling, Prizes and Awards Countable.

The value of a prize or award is unearned income in the month the individual receives it.

A prize is something won in a contest, lottery or game of chance. If the individual is offered a choice between an in-

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 6 kind prize or cash, the cash offered is counted as unearned income even if the individual chooses the in-kind item and regardless of the value of the in-kind item.

An award is received as the result of a decision by a court, board of arbitration, etc. Secure from the applicant any of the following types of verification:

• Award letter; • Copy of the check received; • Contest advertisement; or • Income tax return for the year the prize or award was claimed.

Gifts Countable.

A gift is received by a household member without the giver’s legal obligation or as repayment for goods or services. The value of a gift, either cash or in-kind, is counted as unearned income in the month of receipt. The cash gifts value is counted in whole the month of receipt, unless it can be excluded as infrequent or irregular income.

The value of in-kind gifts is equal to the item’s current market value. A gift of a house which is used as shelter is not counted as income and is exempted as a homestead. A gift of a house which is not used as shelter is not counted as income and is valued as a resource at its current market value.

Gifts of commercial travel tickets for domestic travel are excluded from income if they are not converted to cash.

Use any of the following methods to verify the type, amount and date of receipt of a gift:

• Photocopy of the check; • A written or verbal statement from the donor regarding the gift’s value and date given; or • In the absence of the first two verification types listed, the individual’s sworn statement.

In-Kind Support and Maintenance (ISM) Unearned in-kind income, in the form of food and/or shelter, is referred to as ISM and is countable income in the month

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 7 received. See the In-Kind Support and Maintenance policy to determine the value of ISM.

Income Not Pursued Countable.

Income not pursued includes payments for which an individual could apply on an ongoing or one-time basis and may include annuities, pensions, retirement benefits or disability benefits.

Note: This may decrease household size for other individuals in the household and the applicant may be found not eligible due to failure to apply for other benefits.

Income Producing Resource Income earned off of an income-generating resource is counted or excluded based on the treatment of the resource. Income generating resources include:

• Annuities; • Contract for Deeds; and • Promissory Notes.

Income generated by a resource that is excluded is countable unearned income. Income generated by a resource that is countable is excluded as income. See the ABD Countable and Excluded Resources policy for determining when a resource is countable or excluded.

Interest Income Interest income and dividends are a return on a capital investment such as stocks, bonds, mutual funds or savings accounts. A cash gift or incentive payment to open an account is considered interest income.

Interest income and dividends can be countable or excluded, depending on the treatment of the source of the interest or dividend. If the interest-bearing resource is counted, the interest income is excluded. If the interest-bearing resource is excluded, the interest income is counted. Interest bearing resources include the following:

• Certificate of Deposit; • Checking Account; • Life insurance;

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 8 • Mutual Funds; • Retirement account; • Savings account; and • Stocks and Bonds.

If interest income is countable, count it at the earliest of the following:

• Income is credited to an individual’s account and is available for use; • Income is set aside for the individual’s use; or • When the income is actually received by the individual. See the ABD Countable and Excluded Resources policy for determining when a resource is countable or excluded.

Irregular or Infrequent Income Exclude up to $60 per calendar quarter per household of unearned income that is received either irregularly or infrequently. In order to be excluded, the income need only be irregular or infrequent.

Income is considered to be irregularly received if an individual cannot reasonably expect to receive it. Income is received infrequently if an individual receives it only once during a calendar quarter from a single source and the individual did not receive that type of income in the previous month or in the month following the month in which the money was received. A single source of unearned income is from one individual, household, organization or investment (single financial account, life insurance policy, rental property or other resource providing a return to its owner).

Irregular or infrequent income is not excluded when determining Institutional Medicaid eligibility. See the ABD Income Disregards and Expenses policy.

Jury Duty Jury duty is countable unearned income in the month it is received. Any jury duty pay that is turned over to an individual’s employer is excluded. Countable jury duty pay does not include expense money provided during jury duty participation.

Lump Sum Lump sum payments are countable income in the month

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 9

received, if they are not from an excluded source.

Long Term Care (LTC) Insurance Payout Long-Term Care (LTC) insurance policies are treated as Third Party Liability. The LTC policy must be assigned to the nursing home, the HCBS provider, or the Managed Care Organization (MCO). If the LTC policy is not assignable, the individual must provide any payments received to the nursing home, the HCBS provider, or the MCO. Payments made to the nursing home, HCBS provider, or the MCO are not treated as income.

If an individual receives an LTC Insurance payout, and does not use the benefit to pay the nursing facility, the HCBS provider, or the MCO, the payout will be counted as unearned income in the month received.

Military Allowances Countable.

Military allowances are cash benefits that compensate the service member, at least in part, for the expenses of housing, food, clothing, and special situations during periods of active duty service.

Military allowances paid to service members and their families are generally counted as earned income. See the ABD Earned Income policy.

The basic allowance for housing (BAH) is a cash allowance that service members receive during periods of active duty military service to pay for housing.

The BAH is treated as earned income when the payment is made to military personnel living in private housing. The BAH counts as unearned income in the form of in-kind support and maintenance (ISM) subject to the Presumed Maximum Value (PMV) rule when paid to service members and their families living in on-base housing or privatized military housing.

See the In-Kind Support and Maintenance policy to determine the value of ISM.

Pension Countable.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 10 Recurring pension payments are countable unearned income.

Protective Payee

Funds received by a protective payee (conservator, authorized representative or representative payee) and used for the care and maintenance of a third party beneficiary (adult or child) who may or may not be a member of the protective payee’s household are excluded as income to the protective payee. Any part of the payment that is retained by the protective payee for his own use is countable income to the protective payee. Even if the protective payee retains a fee for his services, the entire payment issued to the beneficiary is countable income to the beneficiary.

As a condition of eligibility, applicants and enrollees must take necessary steps to obtain all countable income to which they may be entitled. Therefore, the total amount intended for the beneficiary is counted to the beneficiary even if he is not actually receiving the income from the protective payee.

Railroad Retirement Countable.

Railroad Retirement Board benefits are countable unearned income in the month received.

Reimbursements Reimbursements are any payments to reimburse past or future expenses that do not exceed the actual expenses and are excluded income to the extent that they do not exceed actual expenses. Examples of excluded reimbursements include:

• Reimbursements for job or training-related expenses (travel, per diem, transportation); • Reimbursements for out-of-pocket expenses of volunteers incurred during the course of volunteer work; and • Medical and dependent care reimbursements.

Rental or Lease Countable.

Rent is payment for the use of real or personal property, such as land, housing or machinery. Rental income is considered unearned when the individual is not a real estate or property owner in the business of buying, selling and/or renting

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 11 property for a profit.

Count the net rental income in determining income eligibility. Gross income from rent is subject to deductions for paid expenses necessary for the production or collection of income. See Self-Employment.

Royalties/Honoraria Countable.

Royalties are countable unearned income when the individual receives payment based on the use of a natural resource for which he owns the usage rights.

Settlements and Restitutions Excluded.

The following settlements and restitution payments are excluded as unearned income:

• Agent Orange Settlement Payments (and interest from payments); • Disaster Relief Assistance received under the Disaster Relief Act of 1974; • Distribution of perpetual judgment funds to Indian tribes under the following: o Indian Judgment Funds Distribution (P.L 93- 134); o Black Feet and Gros Ventre Tribes (PL 92- 254); o Grand River Band of Ottawah Indiana in Indian Claims Commission Docket No. 40-K; o Tribes of groups under PL 93-134; o Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation (PL 94-433); and o Receipts from land held in trust by the Federal government and distributed to certain Indian tribes under PL 94-114; • Factor VIII or IX Concentrate Blood Products Litigation. The settlement payments (and interest from payments) made as a result of the class action lawsuit to hemophilia patients infected with HIV through blood plasma products; • Filipino Veterans Compensation Fund Payments: Lump sum payments (and interest from payments)

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 12 made to certain veterans and spouses of veterans who served in the military of the Government of the Commonwealth of the Philippines during WWII; • Japanese-American and Aleutian Restitution Payments (and interest from payments); • Payments made to individuals because of their status as victims of Nazi persecution (e.g., Austrian, German, and Netherlands Reparation Payments and interest from payments); • Payments to children born of Vietnam veterans diagnosed with spina bifida (and interest from payments); • Payments made under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (interest is not excluded); • Revenues from the Alaska Native Fund paid under section 21(a) of the Alaska Native Claims Settlement Act; • Radiation Exposure Compensation Trust Fund Payment; and • State funds paid to crime victims.

Sick/Disability Pay Countable.

Sick or disability payments made by an employer 6 months or more after the last month the individual worked are considered unearned income in the month of receipt.

Verify the amount and date of receipt of these payments using one of the following documents:

• Recent check stubs; or • Written statement from the employer or insurer indicating the amount of the payment, date paid and related information concerning continued payments.

Social Security Disability Benefit (SSDI) Countable.

Social Security Disability Insurance (SSDI) is received when an individual is under the full retirement age of 65, but has enough Social Security Credits and a severe medical impairment that prevents her from working for a year or more, or could result in death.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 13

Social Security Survivor or Retirement Benefit Countable.

Social Security Retirement Benefits are received once an individual reaches the full retirement age of 65 and has enough Social Security Credits.

Social Security Survivor’s Benefits are received by a surviving spouse, dependent child or parent who received more than half of his support from the deceased wage earner.

Social Services Excluded.

A social service is any service (other than medical) which is intended to assist a handicapped or socially disadvantaged individual to function in society on a level comparable to that of an individual who does not have such a handicap or disadvantage.

Cash received in conjunction with a social service is not income if it is for medical or social services already received or is restricted to the future purchase of a medical or social service. Social service programs include programs authorized under:

• Title XX of the Social Security Act; • Title IV-B of the Act (Child Welfare); • Title V of the Act (Maternal and Child Health and Crippled Children’s Services); and • The Rehabilitation Act of 1973 including vocational rehabilitation services to handicapped individuals.

Food or shelter provided by a nongovernmental social services program is unearned income unless otherwise excluded (e.g., the food is provided during a medical confinement).

Supplemental Security Income (SSI) Excluded.

SSI is excluded unearned income.

Temporary Assistance for Needy Families (TANF) Allotment Excluded.

In Tennessee, the TANF program is known as Families First.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 14 TANF Allotment is cash assistance provided to families with dependent children when at least one parent is incapacitated, unemployed, deceased or absent from the home, and the family is unable to pay for essential living expenses.

Temporary Disability Insurance Countable.

Temporary Disability Insurance is countable as unearned income to the extent it is not a reimbursement for specific costs and is paid directly to the household.

Tips Countable.

Tips totaling less than $20 in a calendar month from any one employer are countable as unearned income.

See the ABD Earned Income policy for tips totaling more than $20 in a calendar month.

Trusts Dividends, interests, rents and other income generated by a trust fund, unless otherwise excluded, that can be paid to the beneficiary or to a third party on the beneficiary’s behalf are countable income to the beneficiary for the period the fund is intended to cover, beginning the month the funds become available, regardless of whether the income is actually paid out to the beneficiary. When funds are withdrawn irregularly, the payments are countable in the month received.

Monies withdrawn from the principal of an accessible (countable) trust fund are excluded as income to the beneficiary, because an accessible trust fund is a countable resource. Money cannot be considered income and a resource in the same month.

Monies disbursed from the principal of an inaccessible trust fund are counted as income because an inaccessible trust fund is an excluded resource.

Monies received by the trustee of a trust and used for the care and maintenance of a third party beneficiary (adult or child) are excluded as income for the trustee.

See the ABD Trusts policy.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 15 Unemployment Insurance Countable.

Count the full value of unemployment compensation benefits as available unearned income in the month of receipt. Unemployment compensation includes any amount you receive under an unemployment compensation law of the United States or a state.

Verification

If verification is required, verify the amount of unemployment benefits received with one of the following:

• Documentary evidence from the TN Department of Labor; • Access through data matches available; or • Documentary evidence from the state of issue of unemployment if benefits are from another state.

VA Aid and Attendance and Housebound Allowances Excluded.

VA Aid and Attendance and Housebound allowances are payments made to a veteran, a veteran’s spouse, a surviving spouse, or a surviving parent based on the individual’s need of the aid of another person to perform functions required for everyday living, or if substantially confined to his immediate premises, due to permanent disability. Aid and Attendance and Housebound allowances cannot be received without some other form of VA payment.

VA Apportioned Countable.

An Apportioned benefit is a VA payment made to a dependent spouse, child or parent not residing with the veteran. The VA Apportioned amount is unearned income for the individual receiving the payment.

VA Augmented Benefit Countable.

A VA Augmented Benefit is an increase in payment to the veteran or his surviving spouse in order to provide for a dependent as defined by VA. An Augmented Benefit is unearned income to the dependent.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 16 VA Disability Countable.

VA Disability is a benefit paid to veterans with disabilities as a result of a disease or injury incurred or aggravated during active military service or that arises after service but is thought to be related to her service. The benefit is graduated according to the degree of the veteran’s disability on a scale from 10% to 100%.

VA Education Grant Excluded.

A VA Education Grant is for a veteran who is in an approved program and provides up to 36 months of education benefits. These benefits are intended to provide assistance as follows:

• Tuition and fees; and • Annual books and supplies stipend.

If the veteran receives a stipend to assist with housing, the stipend is countable unearned income.

VA Pension Countable.

A VA Pension is the standard benefit received by a veteran for wartime service which is based on financial need, not on a service-connected disability.

A VA Survivors Pension is paid to the low-income, un- remarried surviving spouse and the unmarried child(ren) of a deceased veteran with wartime service.

VA Pensions limited to $90 per month are excluded. For additional information, please see the Post-Eligibility Treatment of Income policy.

VA Survivor (DIC) Countable.

VA Dependency and Indemnity Compensation (DIC) is a benefit paid to eligible surviving dependents, including the spouse, of service members who died while on duty or survivors of veterans who died from their service-connected illness or injury.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 17 Parents’ DIC is an income-based benefit for parents who were financially dependent on a service member or veteran who died from a service-related cause.

Workers’ Compensation Countable.

Payments an individual receives for occupational sickness or injury, and paid under a workers’ compensation act or statute in the nature of the workers’ compensation act, are countable to the extent that they are not an expense attributable to obtaining the compensation.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.030 Chapter: ABD Unearned Income

March 18, 2019 Division of TennCare 18 Document Title ABD Unearned Income First Published 04.17.2015 Revision History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 12.02.2015 2. In-Kind Unearned Income or In-Kind Support and Maintenance 9 Policy Clarification LW 11.01.2016 2. ABLE Accounts 1 Policy Change AJ 11.01.2016 2. Annuity Payments 1 Policy Clarification AJ 07.05.2017 2. Military Allowances 12 Policy Clarification RH 03.18.2019 2. Achieving a Better Life Experience (ABLE), Child Support Arrearage, Child Support, Excluded Unearned Income, Irregular or Infrequent Income, Long Term Care Insurance (LTC) Payout, , Social Security Disability Benefit (SSDI), Social Security Survivor or Retirement Benefit, Social Services, Temporary Assistance for Needy Families (TANF) Allotment, VA Aid and Attendance and Housebound Allowances, VA Apportioned, VA Augmented Benefit, VA Disability, VA Education Grant, VA Pension, VA Survivor (DIC), Workers’ Compensation 1–16 Policy Clarification RZ 03.18.2019 2. Tips 14 Policy Change TN

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements; Policy Manual Number: 110.032 Chapter: ABD In-Kind Support and Maintenance

Legal Authority: 20 CFR 416.1120; 20 CFR 416.1121; 20 CFR 416.1130 – 1147; Tenn. Comp. R. & Regs. 1200-13-20-.06(3)(b) 1. Policy Statement

In-kind Support and Maintenance (ISM) is food or shelter that a person is given or receives because someone else pays for it. ISM can be received from a source outside of the household or from other household members. ISM is countable unearned income for the SSI-related categories: Pickle Passalong, Disabled Adult Child (DAC), and Widow/Widower.

2. Definitions a. Current Market Value (CMV): The amount for which an item would sell on the local open market.

b. Household: A personal place of residence in which individuals share common living quarters and function as a single economic unit.

c. Household Operating Expenses: The average monthly amount in cash a household spends for shelter.

d. Pro Rata Share: An individual’s share of the household operating expenses determined by dividing the household operating expenses by the number of persons residing in the household, regardless of age.

e. Shelter: Living quarters for an individual. Shelter items are mortgage payments, property insurance (if required by a mortgage holder), rent, gas, electricity, heating fuel, water, sewer, garbage collection service, and real property taxes.

f. Third-party Vendor Payment: A payment made directly to a vendor by a third party for goods or services provided to an individual or couple.

3. Determining the Value of ISM There are two rules used to determine the value of ISM: The Value of the One-Third Reduction (VTR) rule and the Presumed Maximum Value (PMV) rule.

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a. VTR Rule The VTR rule is used to determine the value of ISM when an individual or an eligible couple:

i. Lives for a full calendar month in another person’s household; and ii. Receives food and shelter from the person whose household the individual or couple is living in.

The VTR is equal to one-third of the SSI Federal Benefit Rate (SSI-FBR) for an individual or a couple. Effective 01/01/2026, the VTR for an individual is $331.33 and for a couple $497. The VTR is counted in full or does not count at all. When the VTR applies in a given month, no other ISM is countable.

An individual is not subject to the VTR if his average monthly contribution toward household operating expenses equals or exceeds the pro rata share or is within $5 of the pro rata share. The pro rata share is determined by dividing the average monthly amount in cash the household pays for shelter by the number of individuals living in the household.

Example: Steven lives with his brother, Bill, Bill’s wife, and son in Bill’s apartment. There are 4 people in the household. The rent is $1150 a month. The household pays $450 a month for electricity, water, and sewer. The total monthly household expenses are $1600. Steven’s share of the household expenses is $400. Steven pays $400 a month toward household expenses. Because Steven pays a pro rata share, the VTR does not apply.

b. PMV Rule The PMV is the maximum amount of ISM that can be counted in a given month. The PMV rule is used to determine the value of ISM when the VTR rule does not apply.

The PMV is equal to one-third of the SSI-FBR, for an individual or couple, plus $20. Effective 01/01/2026, the PMV for an individual is $351.33 and for a couple $517. Under the PMV rule, an individual can rebut the amount of ISM counted as income. An individual can rebut the PMV by showing:

i. That the current market value of ISM received, minus any payment that an individual makes for the ISM, is lower than the PMV; or ii. The actual amount of ISM received is lower than the PMV.

If the actual value of the ISM received is lower than the PMV, the Actual Value (AV) is used.

Example 1: Mr. and Mrs. Johnson live with their daughter, Barbara and her family in Barbara’s home. There are 7 household members. Mr. and Mrs. Johnson have a special diet that requires them to purchase their own food. The household pays $1400 a month for shelter expenses. Mr.

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and Mrs. Johnson’s pro rata share is $400 a month ($1400/7 = $200 x 2 = $400). The Johnsons pay their daughter $300 a month toward shelter expenses. Because the couple’s contribution is less than the couple’s pro rata share, they are receiving ISM. The actual value of the ISM that the couple receives is $100. Since the actual value is less than the PMV, the AV is used.

Example 2: Harriet lives alone rent-free in a house owned by her uncle, Stanley. The house would rent for $1200 a month if it was rented on the open market. The rent-free house is ISM. The actual value of the rent-free shelter that she receives is $1200 a month. Since the actual value is more than the PMV, the PMV is used.

4. Living Arrangement The living arrangement of an individual determines whether ISM is valued under the PMV or the VTR rule. The living arrangement of an individual is where the individual lives. It also includes the type of household the individual lives in and who pays for the individual’s food and shelter.

a. Living in the Household of Another An individual lives in another person’s household if:

i. The individual does not live in his own household; and ii. The person who supplies the individual’s food and shelter lives in the same household and is not the individual’s spouse, a minor child, or someone whose income may be deemed to him.

b. Living in Own Household An individual lives in her own household if:

i. She (or someone whose income may be deemed to her) has an ownership interest or a life estate interest in the home; ii. She (or someone whose income may be deemed to her) is liable to the landlord for payment of any part of the rental charges; iii. She lives in a noninstitutional care situation (e.g., foster or family care); iv. She pays at least a pro rata share of the household operating expenses; or v. She lives in a household in which all household members, including the individual, receive public-income maintenance payments. See public-income maintenance payments defined in the ABD Deeming of Income and Resources policy.

Note: An individual who lives in a household in which all members receive public-income maintenance payments does not receive ISM from other members inside the household.

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Individuals who are homeless, transient (i.e., without a fixed place of residence) or living in an institution do not live in a household.

5. When ISM is Counted ISM counts as income in the month that the individual has use of the shelter item, except when the ISM is from a third-party vendor payment. When a shelter item is obtained through a vendor extending credit to an individual and a third party later makes a payment directly to the vendor for the item as a gift, the third-party vendor payment is income in the month the payment is made.

6. Exceptions to Charging ISM Shelter does not count as ISM if the shelter is not considered to be income or is excluded from income under federal statute. This includes shelter that:

a. Has no CMV; b. Is provided under the terms of a bona fide loan agreement; c. Can be excluded as infrequent or irregular income; d. Is provided by someone in the household whose income may be deemed to the individual; e. Is specifically excluded by Federal law; f. Is provided under a governmental medical or social service program; g. Is assistance based on need from a state or political subdivision; h. Is received during a temporary absence; i. Is received during medical confinement in an institution; j. Replaces lost, damaged or stolen resources; or k. Is received because of payments made under the terms of credit life or credit disability insurance.

7. ISM from an Employer Shelter provided by an employer to the following people, or under the following conditions, is considered ISM, including payments:

a. To certain agricultural employees; b. To domestic employees; c. For service not in the course of the employer’s trade or business; d. For service by certain home workers; e. For members of the Uniformed Services; and f. Provided on the employer’s business premises, for the employer’s convenience, and in the case of shelter received, its acceptance by the employee is a condition of employment.

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8. Verification TennCare accepts self-attestation of ISM, and applies the VTR rule or the PMV rule, depending on a person’s living arrangement. If an individual alleges that his contribution towards household expenses is within $20 of the pro rata share or alleges that the actual value of ISM is less than the PMV, and he wishes to rebut the PMV, written documentation is required. Written documentation may include any of the following: a written statement from another adult household member other than the person’s spouse, a written statement from the person paying for or providing the shelter, a copy of a bill, receipt or canceled check showing the actual value of the shelter item. If written documentation is not provided, ISM is counted based on the VTR or PMV rule.

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Version History

Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 04.01.2024

Publication

01.02.2025 3. Determining the Value of ISM 2 Non-Substantive Change CE 06.02.2025 2.c.; 3.a; 5.; 6.; 7.; 8. Definitions; VTR Rule; When ISM is Counted; Exceptions to Charging ISM; ISM from an Employer; Verification 1-2; 4-5 Policy Change BP 01.05.2026 3.a.; 3.b. Determining the Value of ISM 2 Non-Substantive Change KJ

Aged, Blind and Disabled Manual; Section: Financial Eligibility Requirements; Policy Manual Number: 110.035; Chapter: ABD INCOME DISREGARDS AND EXPENSES

Legal Authority: 20 CFR 416.1112; 20 CFR 416.1124; 42 CFR 435.1005; Tenn. Comp. R. & Regs. 1200-13-20-.06

1. Overview Certain types of income and verified expenses of an individual may be deducted or disregarded when determining financial eligibility for the ABD TennCare Medicaid categories. The types of income and expenses listed in this policy chapter are not deducted or disregarded when determining financial eligibility for Institutional Medicaid.

2. Unearned Income Disregards and Expenses a. Irregular or Infrequent Income The first $60.00 of unearned income received in a calendar quarter, if infrequent or irregular, is disregarded.

b. Child Support Disregard A child support payment (including child support arrearage) is a payment from an absent parent to or for a child to meet the child’s needs for food and shelter. When determining eligibility for a disabled child under age 18 or under age 22 and a student regularly attending school, and the child support payment is countable to the child, 1/3 of the child support amount received from an absent parent is excluded. The remaining 2/3 value is counted as unearned income in the month of receipt. c. General Deduction A $20 monthly General Deduction is allowed per Eligibility Determination Group (EDG). The $20 monthly General Deduction is first applied to any of the applicant’s unearned income. If any of the $20 deduction is not offset by unearned income, apply the remainder of the deduction to a spouse’s unearned income and then to the applicant’s earned income before applying the Earned Income Deduction. The $20 monthly General Income Disregard does not apply to in-kind support and maintenance valued at one-third of the Federal Benefit Rate (FBR) (i.e., the Value of One- Third Reduction (VTR)) or to income based on need.

Aged, Blind and Disabled Manual Policy Manual Number: 110.035 Section: Financial Eligibility Requirements Chapter: ABD Income Disregards and Expenses

January 5, 2026 Division of TennCare 2 3. Earned Income Disregards and Expenses a. Irregular Earned Income Disregard The first $30.00 of earned income received in a calendar quarter, if infrequent or irregular, is disregarded.

b. Student Earned Income Exclusion The Student Earned Income Exclusion (SEIE) applies to the earnings of the student who is under age 22 and regularly attending school. The exclusion may apply to an eligible or ineligible child, spouse, or parent(s). The SEIE monthly amount is determined by the Social Security Administration. The monthly exclusion for 2026 is $2,410. The maximum annual exclusion for 2026 is $9,730.

The SEIE does not apply to children attending elementary school. i. A student is regularly attending school if he is:

1. In a college or university for at least 8 hours per week under a semester or quarter system; 2. In grades 7-12 for at least 12 hours per week; 3. In a training course preparing him for a paying job for at least 12 hours per week (if the course involves shop practice the hour minimum is 15); or 4. For less than the amount of time indicated above for reasons beyond the student’s control, such as illness, if circumstances justify a reduced credit load or attendance. ii. A home-schooled student if she is:

1. In grades 7-12 for at least 12 hours per week; and 2. In accordance with state or jurisdictional home school laws. iii. A homebound individual is a student regularly attending school when he: 1. Must stay at home because of a disability; 2. Studies a course or courses given by a school (grades 7-12), college, university or government agency; and 3. Has a home visitor or tutor from school who directs the studying or training.

A child retains his student status during official school vacations and breaks if the individual met the conditions required to be considered a student prior to the vacation or break, and he plans to return to school after the break.

Aged, Blind and Disabled Manual Policy Manual Number: 110.035 Section: Financial Eligibility Requirements Chapter: ABD Income Disregards and Expenses

January 5, 2026 Division of TennCare 3 c. Earned Income Deduction The first $65 of the earned income of each aged, blind or disabled individual is disregarded when determining financial eligibility. This is also known as the work expense disregard.

d. Impairment-Related and Blind Work Expenses i. Overview The gross countable earned income of each blind or disabled individual not living in a medical institution may be reduced by the amount of expenses attributable to earning the income. The allowable Blind or Blind and Disabled Work Expenses (BWE) and allowable Impairment-Related Work Expenses (IRWE) are not the same.

BWE and IRWE apply only to earned income. In order to deduct either BWE or IRWE, the individual must be:

1. Blind or disabled; and 2. Under age 65; or 3. Age 65 or older and received SSI payments due to blindness or disability the month before attaining age 65.

Work expenses must be verified and documented with receipts, etc. Work expenses must not be payable or reimbursable by a third party, such as Medicaid, Medicare or other insurance.

ii. Impairment-Related Work Expenses (IRWE) IRWE are expenses for items or services which are directly related to enabling a person with a disability to work and which are necessarily incurred by that individual because of a physical or mental impairment.

A payment for a service or item is excludable as an IRWE when:

1. The individual is disabled and under age 65, or received SSI as a disabled person for the month before attaining age 65; 2. The severity of the impairment requires the individual to purchase or rent items and services in order to work; 3. The expense is reasonable; 4. The cost is paid in cash (cash, check, money orders or credit cards) by the individual; and 5. The payment is made in a month the individual receives earned income for a month in which she both worked and received the services or used the item; or 6. The individual is working but makes a payment before the earned income is received.

Aged, Blind and Disabled Manual Policy Manual Number: 110.035 Section: Financial Eligibility Requirements Chapter: ABD Income Disregards and Expenses

January 5, 2026 Division of TennCare 4 IRWE apply only to earned income and are deducted after any remaining portion of the General Income Disregard and the Earned Income Disregard, but before deducting the One-Half Disregard (see section 3.e. below).

iii. Blind Work Expenses (BWE) BWE are expenses incurred by a blind person which are reasonably attributable to earning income. Allowable BWE are listed below under Allowable BWE and IRWE Types.

Items which are not BWE include:

1. In-kind payments; 2. Expenses deducted under other provisions (e.g., Plan for Achieving Self 3. Support (PASS)); 4. Life maintenance expenses (meals outside of work, self-care items, savings plans, health insurance premiums); 5. Items furnished by others that are needed in order to work; and 6. Expenses claimed on a self-employment tax return.

iv. Allowable IRWE and BWE Types Expense Blind Only Blind and Disabled Disabled Only Attendant Care X X X Drugs/Medical Services X X X Expendable Medical Supplies X X X Guide Dog X X X Medical Devices X X X Non-Medical Equipment Services X X X Federal, State and Local Income Taxes X X

Social Security Taxes X X

Fees X X

Mandatory Contributions X X

Meals Consumed During Work Hours X X

Other Work-Related Equipment Services X X X Physical Therapy X X X Prosthetic Devices X X X Structural Modifications to the Home X X X Training to Use an Impairment-Related Device X X X Transportation To and From Work X X X

Aged, Blind and Disabled Manual Policy Manual Number: 110.035 Section: Financial Eligibility Requirements Chapter: ABD Income Disregards and Expenses

January 5, 2026 Division of TennCare 5 Vehicle Modifications X X X

e. One-Half Deduction

One-half of the remaining earned income in the month is disregarded. This disregard is deducted after IRWE but before deducting BWE. If the remainder before the one-half disregard is $0 or less, the BWE disregard will not be applied.

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Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.20.2015

Publication

05.02.2016 2.a.; 3.a. Legal Authority; Irregular or Infrequent Income; Irregular Earned Income Disregard 1 Policy Clarification LW 05.02.2016 3.d. Impairment-Related and Blind Work Expenses 3-4 Non-Substantive Change LW 03.18.2019 1.; 2.b.; 2.c.; 3.b.; 3.e. Legal Authority; Overview; Child Support Disregard; General Deduction; Student Earned Income Exclusion; One-Half Deduction 1-5 Policy Clarification AJ 03.18.2019 3.d.i. Overview 3 Non-Substantive Change JH 01.02.2020 3.b. Student Earned Income Exclusion 2 Non-Substantive Change TN 01.04.2021 3.b. Student Earned Income Exclusion 2 Non-Substantive Change RS 01.04.2022 3.b. Student Earned Income Exclusion 2 Non-Substantive Change TN

01.03.2023 3.b. Student Earned Income Exclusion 2 Non-Substantive Change KF 01.02.2024 3.b. Student Earned Income Exclusion 2 Non-Substantive Change CE 01.02.2025 3.b. Student Earned Income Exclusion 2 Non-Substantive Change CE 01.05.2026 3.b. Student Earned Income Exclusion 2 Non-Substantive Change BP

Chapter: ABD DEEMING OF INCOME AND RESOURCES Aged, Blind and Disabled Manual; Section: Financial Eligibility Requirements; Policy Manual Number: 110.040 Legal Authority: 20 CFR 416.120; 20 CFR 416.1101; 20 CFR 416.1102; 20 CFR 416.1142; 20 CFR 416.1160; 20 CFR 416.1161; 20 CFR 416.1163; 20 CFR 416.1165; 20 CFR 416.1166; 20 CFR 416.1167; 20 CFR 416.1202; 20 CFR 416.1205; 20 CFR 416.1802; 20 CFR 416.1806; 20 CFR 416.1856; 20 CFR 416.1870; 20 CFR 416.1872; 20 CFR 416.1881; TennCare 1115 Demonstration Waiver, Amendment 27; Tenn. Comp. R. & Regs. 1200-13-20-.06(3) 1. Policy Statement Countable income and resources belonging to individuals other than the TennCare Medicaid applicant/enrollee may be deemed available when determining eligibility. The deeming provisions recognize the family responsibility of parents and spouses for meeting an applicant’s basic needs of food and shelter. The deeming concept applies only to the Financially Responsible Relatives (FRRs) of applicants and enrollees in the following Aged, Blind and Disabled (ABD) Categories of Eligibility (COEs): a. Medicare Savings Programs (MSPs): QMB, SLMB, QI and QDWI; b. SSI-Related COEs: Pickle Passalong, Disabled Adult Children, and Widow/Widower; and c. Institutional Medicaid. 2. Definitions a. Child: Child as related to this policy includes individuals: i. Not married; and ii. Not the head of a household; and iii. Under 18 years of age or under 22 years of age if a student regularly attending school. b. Deeming: The term deeming identifies the process of considering another person’s income and resources to be available for meeting a TennCare applicant/enrollee’s basic needs of food and shelter. c. Eligible Child: A child who is eligible or potentially eligible for the COE for which he is being considered. d. Eligible Spouse: A spouse who is living with the applicant and is eligible or potentially eligible for the SSI-related COE for which the applicant is being considered. e. Federal Benefit Rate (FBR): The FBR is the maximum monthly Supplemental Security Income (SSI) benefit amount for a couple or an individual.

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f. Holding Out Spouse: A holding out relationship exists when an unrelated man and woman present themselves to the community as husband and wife in the absence of a legal marriage. The concept of a holding out relationship does not apply to the MSPs or Institutional Medicaid COEs. g. Ineligible Child: A child living in the home of an applicant who is not being reviewed for an ABD COE. An ineligible child: i. Is not eligible for Medicare (for MSP eligibility determinations); ii. Is not institutionalized (for Institutional Medicaid eligibility determinations); and iii. Does not meet SSI-Related COE criteria (for Disabled Adult Child, Widow/Widower or Pickle Passalong eligibility determinations). h. Ineligible Parent: A parent living in the home of an eligible child whose resources and income may be/are deemed to the eligible child. An ineligible parent: i. Is not eligible for Medicare (for MSP eligibility determinations); ii. Is not institutionalized (for Institutional Medicaid eligibility determinations); and iii. Does not meet SSI-Related COE criteria (for Disabled Adult Child, Widow/Widower or Pickle Passalong eligibility determinations). i. Ineligible Spouse: A spouse living in the home of an eligible spouse whose resources and income may be/are deemed to the eligible spouse. An ineligible spouse: i. Is not institutionalized (for Institutional Medicaid eligibility determinations); and ii. Does not meet SSI-Related COE criteria (for Disabled Adult Child, Widow/Widower or Pickle Passalong eligibility determinations). j. Parent: Parent as related to this policy includes natural and adoptive parents. A parent is a natural, adoptive or, in certain situations, a stepparent. A stepparent is not included in the deeming budget if any of the following circumstances apply: i. The natural or adoptive parent to whom the individual was married has died; ii. The natural or adoptive parent and the individual are divorced; or iii. The natural or adoptive parent and the stepparent’s marriage has been annulled. k. Public Income-Maintenance Payments: Income provided based on a determination of need by the federal, a state or local government. Public income-maintenance payments include: i. Temporary Assistance for Needy Families (TANF); ii. Supplemental Security Income; iii. Refugee Act of 1980 payments based on need; iv. Disaster Relief and Emergency Assistance Act benefits;

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v. General assistance programs of the Bureau of Indian Affairs; vi. U.S. Department of Veterans Affairs payments based on need; and vii. State or local government assistance programs based on need. l. Spouse: A spouse is: i. An individual’s legally married spouse; ii. An individual determined by the Social Security Administration (SSA) as eligible to receive Social Security benefits as the spouse of another; or iii. An individual’s “holding out” spouse. 3. Ineligible Parent(s) to Eligible Child(ren) Income Deeming a. Overview When a blind or disabled child under age 18 is living with his ineligible parents(s), a portion of the parents’ income may be deemed available to the child and counted as unearned income to the child in determining his TennCare Medicaid eligibility. Income belonging to a parent receiving public income-maintenance payments is not deemed to an eligible child. Note: Parent to child deeming does not occur for a child applying for Institutional Medicaid, including Home and Community Based Services (HCBS) and the Department of Disability and Aging (DDA) Waiver applications, except for a child under 18 who is requesting HCBS services in the Employment and Community First (ECF) CHOICES program, with certain exceptions. See the Parent-to-Child Deeming section in the Employment and Community First CHOICES policy for more information. b. Ineligible Parent Income Deeming When deeming applies, the ineligible parent(s) receives income disregards and allocations to meet her needs and the needs of other children living in the household. Child and parental allocations are deducted from the parents’ income before any income is deemed to the applicant/enrollee. i. Ineligible Child Allocation When deeming from parent to child, the parent receives an ineligible child allocation for each ineligible child residing in her home. The parent does not receive an ineligible child allocation for any child in the home who receives public income-maintenance payments. Changes in family composition, such as birth, death, entering or leaving the household or no longer meeting the definition of a child, will impact deeming.

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The ineligible child allocation is equal to the difference between the FBR for a couple and the FBR for an individual. The allocation is reduced by the child’s own countable income. If there is more than one ineligible child in the household, an allocation is determined for each ineligible child. When the ineligible child allocation is deducted from parental income, that amount should include the total of all ineligible child allocations, if applicable. See the ABD Income Disregards and Expenses policy for specific deductions and expenses used to determine the child’s net income effecting the child allocation. ii. Ineligible Child Allocation Budget Two siblings live in a home with their mom and her husband. One of the children has an application submitted for ABD TennCare Medicaid. His parents’ extra income will be deemed to him. Before the extra income amount can be determined, the sibling who is not applying must be allocated income for her needs. She receives $200 in child support from her father who lives outside the home. She has no other income. Ineligible Child(ren) Net Self-Employment Income $ 0.00 Net Earned Income + $ 0.00 Total Earned Income = $ 0.00 Student Earned Income Exclusion - $ 0.00 Net Unearned Income + $ 200.00 Cost of Living Adjustment (COLA) Disregard - $ 0.00 Living Allowance (SSI-FBR for a couple minus SSI-FBR for an individual) = $ 392.00 Total Countable Income (Total Earned Income + Net Unearned Income) - $ 200.00 Total Ineligible Child Allocation = $ 192.00 The above budget is current as of January 2020. The allocation is deducted from the parent’s unearned income first, then from the parent’s earned income. iii. Ineligible Parental Allocation Ineligible parents of an ABD TennCare Medicaid applicant/enrollee will receive the ABD disregards prior to determining the deemed income amount. See the ABD Income Disregards and Expenses policy for specific deduction/expenses descriptions. If an ineligible parent is required to pay mandatory child support to an individual outside of the household, then the income used to pay the mandatory child support is not deemed.

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iv. Ineligible Parent Deeming Budget An application is submitted for ABD TennCare Medicaid for a 12-year-old child. He lives in the home with his two siblings and his mother, whose income may be deemed to him. His siblings have no income and are not applying. They each have a child allocation of $392 for a total of $784. His mother has no unearned income, but she does receive $2,500 in monthly earned income. Once all deductions and allocations are removed, a total deemed amount of $32.50 will be included in the applicant’s countable income. Income Deeming for Ineligible Parent Total Unearned Income $ 0.00 Cost of Living Adjustment (COLA) Disregard - $ 0.00 Irregular Unearned Income Disregard - $ 0.00 Child Support Mandatory Expenses - $ 0.00 Total Ineligible Child Allocation - $ 0.00 General Deduction ($20) - $ 0.00 Net Countable Unearned Income = $ 0.00 Self-Employment Income $ 0.00 Earned Income + $ 2,500.00 Total Earned Income = $ 2,500.00 Irregular Earned Income Disregard - $ 0.00 Remaining General Deduction - $ 20.00 Student Earned Income Exclusion - $ 0.00 Child Support Mandatory Expenses (if not subtracted from Unearned Income) - $ 0.00 Remaining Ineligible Child Allocation - $ 784.00 Earned Income Deduction - $ 65.00 ½ Deduction - $ 815.50 Net Countable Earned Income = $ 815.50 Net Countable Unearned Income + $ 0.00 Total Net Income of Ineligible Parent = $ 815.50 Federal Benefit Rate - $ 783.00 Number of Eligible Children ÷ 1 Ineligible Parent’s Deemed Income = $ 32.50 The above budget is current as of January 2020.

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4. Ineligible Spouse to Eligible Spouse Deeming a. Overview The countable income of an applicant/enrollee’s ineligible spouse living in the home may be deemed available to the applicant/enrollee. Income belonging to an ineligible spouse receiving public income-maintenance payments is not deemed to the applicant/enrollee. Spousal deeming applies to the Medicare Savings Program (QMB, SLMB, QI-1, AND QDWI) and Pickle Passalong. Note: Spousal responsibility for Institutional Medicaid COEs is based on spousal impoverishment rules. See the Post Eligibility Treatment of Income and Resource Assessment policy. Spousal responsibility for the Medicare Savings Programs is based on the financially responsible relatives principle. See the ABD Eligibility Determination Group and ABD Financially Responsible Relatives policy. b. When Spousal Deeming Applies Spousal deeming only applies when the spouses share a living arrangement; i.e. live in the community or home together. An FRR’s responsibility ends the month that the individual and spouse are separated for any reason such as one spouse moving to another home. If an ineligible spouse incurs mandatory child support expenses paid to support an individual outside of the household, then the income used to pay those expenses is not considered deemed. For treatment of Institutional Medicaid, see the Post Eligibility Treatment of Income policy. Spouse to spouse deeming only occurs when the deemed amount available to the eligible spouse is greater than the difference between the FBR for a couple and the FBR for an individual. When spousal deeming does occur, the Eligibility Determination Group (EDG) size increases by 1, so an EDG of 1 would become 2. c. Ineligible Spouse Income Deeming The ineligible spouse of an ABD TennCare Medicaid applicant/enrollee will receive all applicable ABD disregards prior to determining the deemed income amount. See the ABD Income Disregards and Expenses policy for specific deduction/expenses descriptions. If an ineligible spouse is required to pay mandatory child support to an individual outside of the household, then the income used to pay the mandatory child support is not deemed. d. Ineligible Spouse Income Deeming Budget The example below is for Pickle Passalong, which considers living arrangements when determining whether deeming applies. See the Pickle Passalong and ABD Eligibility Determination Group policies.

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A married man is applying for Pickle Passalong. He lives in his home with his wife. The applicant meets the non-financial criteria for Pickle Passalong, but his wife does not. Since he is married and living at home with his spouse, her income may be deemed available to him. The deeming budget below calculates whether the spouse’s income should be deemed to the applicant. The budget determines that the spouse’s income is greater than the FBR difference ($392). The spouse’s income will deem to the applicant when determining his income eligibility. The applicant’s EDG size will be 2. Income Deeming for Ineligible Spouse

Total Unearned Income $ 0.00 Cost of Living Adjustment (COLA) Disregard - $ 0.00 Irregular Earned Income Disregard ($60 per quarter) - $ 0.00 Child Support Mandatory Expenses - $ 0.00 Total Ineligible Child Allocation - $ 0.00 Ineligible Spouse’s Deemed Unearned Income = $ 0.00 Self-Employment Income $ 0.00 Earned Income + $ 1,200.00 Ineligible Spouse’s Total Earned Income = $ 1,200.00 Irregular Earned Income Disregard ($30 per quarter) - $ 0.00 Student Earned Income Exclusion - $ 0.00 Child Support Mandatory Expenses (if not subtracted from Unearned Income) - $ 0.00 Remaining Ineligible Child Allocation - $ 0.00 Ineligible Spouse’s Deemed Earned Income $ 1,200.00 Ineligible Spouse’s Deemed Unearned Income + $ 0.00 Ineligible Spouse’s Income (This amount is only deemed if greater than the difference between the FBR for a couple and the FBR for an individual.) = $ 1,200.00 The above budget is current as of January 2020. 5. Resource Deeming a. Overview Resources may be deemed from FRRs when determining financial eligibility for applicants. Exception: Pension funds belonging to an ineligible spouse or ineligible parent are excluded from resources for deeming purposes in order for the spouse or parent to provide for his own future support.

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b. Ineligible Parent(s) To Eligible Child(ren) Resource Deeming The resources of the child include the value of the countable resources of the parent(s) or spouse of the parent, to the extent that the resources of the ineligible parent(s) or spouse of the parent exceed the resource limit of an individual (if one parent lives in the home) or a couple (if two parents live in the home). If there is more than one disabled child under age 18 in the household, equally divide the value of the deemed resources among those children. i. Ineligible Parent(s) Resource Deeming Budget A 15-year-old child applies for Institutional Medicaid with an ECF CHOICES “At-Risk” LOC Pre-Admission Evaluation (PAE). He lives in the home with his parents. His parents have combined countable liquid resources of $2,300. They have $3,000 of countable non- liquid resources (not retirement accounts). They also have one car, which is excluded. Since the applicant has an “At-Risk” LOC, his parents’ resources are deemed to him. $2,300 is deemed to the child placing him over the resource limit of $2,000. Countable Resources Liquid Resources $ 2,300.00 Non-Liquid Resources (Excludes Individual Retirement Accounts, Keogh Accounts, or Pension Funds owned by Parent(s)) + $ 3,000.00 Burial Reserve Exclusion − $ 0.00 Vehicle Resources + $ 0.00 Total Countable Resource Amount = $ 5,300.00 Resource Limit - $ 3,000.00 Subtotal Deemed Amount = $ 2,300.00 Number of Eligible Child(ren) ÷ 1 Total Deemed Amount = $ 2,300.00 The above budget is current as of January 2020. c. Ineligible Spouse to Eligible Spouse Resource Deeming Total countable resources are the combination of the resources of the applicant/enrollee and the spouse after all applicable resource exclusions are applied. Total countable resources are compared with the resource limitation for a couple. If the amount of the resources does not exceed the limit, the applicant/enrollee is resource eligible. See the Resource Assessment policy for Institutional Medicaid COEs.

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i. Spouse to Spouse Resource Deeming Budget A married individual applies for TennCare Medicaid. She is being reviewed for eligibility in an SSI-Related COE. She and her spouse live together. Her spouse has countable liquid resources of $600. He has countable non-liquid resources of $8,000. The only vehicle is excluded. His total combined resources of $8,600 will be deemed to her. This amount will be added to her countable resources and compared against the limit for an EDG size of 2. Countable Resources Liquid Resources $ 600.00 Non-Liquid Resources (Excludes Individual Retirement Accounts, Keogh Accounts, or Pension Funds owned by Parent(s).) + $ 8,000.00 Burial Reserve Exclusion − $ 0.00 Vehicle Resources + $ 0.00 Total Countable Resource Amount = $ 8,600.00 Resource Limit = N/A Subtotal Deemed Amount = $ 8,600.00 Number of Eligible Child(ren) ÷ N/A Total Deemed Amount = $ 8,600.00 The above budget is current as of January 2020. 6. Temporary Absence During a temporary absence, deeming continues to apply to an individual. When deeming income, a temporary absence exists if an individual leaves the household, but intends to return home, and does, the same month the individual left or the month after the individual left the home. When an individual returns the same month or the month after the individual left the household, it can be assumed that the individual intended to return to the household. a. Child at School If a child is away at school in an educational or vocational training program but returns to the household on some weekends or holidays, and the child is under parental control, the child is considered temporarily absent, and parent to child deeming may occur. Parents that have the authority to make decisions on a child’s behalf have parental control. If a child is away at school, but the parents do not have parental control, the absence is not temporary. b. Absent Military Spouse or Parent Any spouse or parent that is absent from the household solely for a military duty assignment, while an on active duty as a member of the Armed Forces, will still be considered to be living in the

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household for deeming purposes, as long as the intent to return home remains. Members of the Army, Navy, Air Force, Marine Corps or Coast Guard are considered members of the Armed Forces. The length of absence is not a factor in determining if the spouse or parent is included in the household.

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Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 04.15.2015

Publication

07.01.2016 3.a. Overview 2 Policy Clarification LW 12.08.2016 2; 3.b.i.B.; 4.c.; 6.a. Defined Terms; Ineligible Child Allocation Calculation; Spousal Deeming Budget; Spouse to Spouse Deeming 1-3; 6-8 Policy Clarification RH 03.18.2019 1.; 2.a.; 2.c.; 2.d.; 2.g.; 2.h.; 2.i.; 2.k.; 3- 6. Legal Authority; Policy Statement; Child; Eligible Child; Eligible Spouse; Ineligible Child; Ineligible Parent; Ineligible Spouse; Public Income- Maintenance Payments; Ineligible Parent(s) to Eligible Child(ren) Income Deeming; Ineligible Spouse to Eligible Spouse Deeming; Resource Deeming; Temporary Absence 1-9 Policy Clarification LW 03.18.2019 1. Policy Statement 1 Non-Substantive Change LW 07.01.2019 3.b.ii - iv.; 4.b- d.; 5.b.i.; 5.c.i. Ineligible Child Allocation Budget; Ineligible Parental Allocation; Ineligible Parent Deeming Budget; When Spousal Deeming Applies; Ineligible Spouse Income Deeming; Ineligible Spouse Income Deeming; Ineligible Parent(s) Resource Deeming Budget; Spouse to Spouse Resource Deeming Budget 4-8 Policy Clarification TB 10.01.2020 1.-3.; 5.b.i.; 5.c. Policy Statement; Definitions; Ineligible Parent(s) to Eligible Child(ren) Income Deeming; Ineligible Parent(s) Resource Deeming Budget; Ineligible Spouse to Eligible Spouse Resource Deeming 1-3; 8 Non-Substantive Change TN 10.01.2020

1.-2.; 3.b.i.; 4.a.; 4.d. Legal Authority; Policy Statement; Definitions; Ineligible Child Allocation; Overview; Ineligible Spouse Income Deeming Budget 1-3; 5-7 Policy Clarification AJ

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10.01.2020 3.b.ii.; 3.b.iv. Ineligible Child Allocation Budget; Ineligible Parent Deeming Budget 4-5 Non-Substantive Change AJ 09.01.2022 3.a. Overview 3 Policy Change AJ 08.01.2024 3.a. Overview 3 Non-Substantive Change BP 08.01.2025 1; 3.a; 4.a Legal Authority Ineligible Parent(s) to Eligible Child(ren) Income Deeming Overview Ineligible Spouse to Eligible Spouse Deeming Overview 1, 3, 5 Policy Clarification TC

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.045 Chapter: ABD Treatment of Resources: Ownership, Equity Value and Accessibility Legal Authority: 20 CFR 416.1201; 20 CFR 416.1208 1. Policy Statement A resource is real or personal property which has economic value. Resources can include, but are not limited to, cash, savings, investments, houses, land and vehicles. The household’s resources are evaluated for ownership, accessibility and equity value. All resources are countable unless specifically excluded by regulation. 2. Definitions Resource: Cash or other liquid asset or any real or personal property that an individual owns jointly or individually that could be converted to cash and used for medical support and maintenance. Resources are those assets the individual has on hand at the beginning of the month as opposed to income, which is any cash, wages, pensions or other funds received during the month. 3. Liquid and Non-Liquid Resources Liquid resources are cash and other resources that can be readily converted to cash. Examples of resources that are ordinarily liquid include (but are not limited to) stocks, bonds, mutual fund shares, promissory notes, mortgages, life insurance policies, financial institution accounts (savings, checking, time deposits/CDs) and similar items. The value of countable liquid resources is typically based on the specific value of the resource, e.g., the amount in the financial account, the cash surrender value, or the value of the note held by the individual. Non-liquid resources are resources that cannot reasonably be immediately converted into cash. A resource which has been determined to be non-liquid for any reason is not considered inaccessible or excluded simply because the value of the asset cannot be accessed at the time of application. The value of a countable non-liquid resource is based on the resource equity value.

Aged, Blind and Disabled Manual Policy Manual Number: 110.045 Section: Financial Eligibility Requirements Chapter: ABD Treatment of Resources: Ownership, Equity Value & Accessibility April 15, 2015 Division of TennCare 2 4. Fair Market Value (FMV) The FMV of a resource is determined based on the type of resource. For example, bank accounts are based on the amount of money in the account. Certificates of deposit and other time deposits are based on the amount of money that can be withdrawn after penalties for early withdrawal. Car values are based on National Automobile Dealers Association (NADA) values or statements from knowledgeable sources, such as area car dealers. Real estate is based on Total Market Appraisal, which can be found at the Tenneessee Property Assessment Data listing. Nine counties do not provide property information through the Comptroller’s listing. However, links to the property information for those nine counties can be found on the Comptroller’s web-site. Other types of resources are valued based on statements from knowledgeable sources or other means that are reasonable and appropriate to the type of resource being valued. Fair market value is an estimate of the value of an asset, if sold at the prevailing price at the time it was actually transferred. Value is based on criteria you use in appraising the value of assets for the purpose of determining Medicaid eligibility. 5. Equity Value The equity value of a resource is the FMV minus the debt or amount owed on the resource. (Equity = FMV – amount owed). Only the equity value of an accessible resource is counted toward the resource limit, other than for vehicles. Only debts (amounts owed) that are secured by liens or other legal encumbrances against the resource can be subtracted from the FMV when determining equity. 6. Resource Accessibility & Availability Resources are considered available either when actually available to the individual or when the individual has a legal or equitable interest in the property or asset, and has the legal or equitable ability to access funds or convert non-cash property into cash. If the individual has the legal or equitable ability to access his or her funds, the resource is considered available regardless of whether the individual has the practical ability to access the resource or convert non-cash property into cash. The individual’s incompetence, whether presumed or actual, does not bar the person’s legal authority to withdraw his or her liquid resources in the situation where a conservator, guardian or someone acting on the person’s behalf has not been legally appointed. The resources belonging to an individual whose conservator, guardian, or legally appointed representative does not cooperate with TennCare during the facilitation of accessing resources, shall be considered inaccessible, assuming the methods to access the resources have been fully exhausted.

Aged, Blind and Disabled Manual Policy Manual Number: 110.045 Section: Financial Eligibility Requirements Chapter: ABD Treatment of Resources: Ownership, Equity Value & Accessibility April 15, 2015 Division of TennCare 3 For applicants who do not have a conservator, guardian or legally appointed representative, or for applicants whose conservator, guardian or legally appointed representatives cannot or will not perform his or her duties on behalf of the individual, contact the Eligibility Policy Unit for assistance. Consider jointly-owned resources accessible according to the information above unless the individual rebuts ownership or accessibility, and can verify that the joint ownership does block accessibility of the resource. 7. Ownership a. Determining Ownership Ownership of a resource is determined by the: • Name(s) on the account, title, deed, contract, etc.; • Source of the funds in the account or used to purchase the resource; • Purpose for which the account or investment was opened or made; and • Activity and use of the account or investment. If the title, deed, contract, account, etc., has only one name listed, the resource belongs to that individual. If more than one name is listed, it is considered a jointly-owned resource. Once a resource has been determined to be jointly owned, the resource’s accessibility must be evaluated. b. Jointly-Owned Resources Resources owned jointly with someone outside the household must be evaluated to determine accessibility to the household. Consider 100% of the resource as available to the household unless the: • Household can demonstrate it only has access to a portion of the resource (count the value of the proportional interest owned by the household member), or; o The accessible portion of jointly-owned real estate or other titled or deeded property is the percent owned by the applicant; o The accessible portion of a bank account or other liquid resource is considered to be 100% unless otherwise restricted. • The resource cannot be practically subdivided and the household’s access to the resource is dependent on the agreement of a joint owner who refuses to comply. This provision does not apply to real property or

Aged, Blind and Disabled Manual Policy Manual Number: 110.045 Section: Financial Eligibility Requirements Chapter: ABD Treatment of Resources: Ownership, Equity Value & Accessibility April 15, 2015 Division of TennCare 4 • The resource is a joint bank account. When two or more eligible individuals have unrestricted access as joint owners of a bank account (savings, checking and time deposits) with or without other ineligible owners, each eligible individual is presumed to own an equal share of the total funds in the account regardless of the source of the funds. The eligible individual(s) and/or his responsible party have the right to rebut the ownership presumption. If an asset cannot be sold or converted due to the conditions of joint ownership, exclude the applicant’s equity value in determining resource eligibility. The applicant’s equity value in a jointly-owned asset can be excluded under the following conditions: • The joint owner of the resource (who is not a Financially Responsible Relative) refuses to consent to the sale of the asset or to purchase the applicant’s interest; or • The applicant is free to sell his or her own individual interest in the property, but is unable to find a buyer. c. Rebuttal of Ownership

i. Rebuttal of 100% Ownership or Accessibility of a Resource Applicants who wish to rebut a determination that the he or she has unrestricted access to a resource will have 30 days from the date of application to present rebuttal evidence. If the individual presents all required rebuttal evidence corroborating his or her allegation of partial or non-ownership and the initial determination is rebutted, count only that portion of the resource the individual owns as an available asset. ii. Rebuttal Evidence Rebuttal of resource ownership and accessibility must be submitted in writing, and must be signed by all co-owners. The rebuttal must explain and include verification of the following: • The reason co-ownership was established; • The names of individuals whose funds were used to establish the account or purchase the asset, and the amounts each invested; • The names of individuals who made deposits or withdrawals from an account or who have used the resource; and • How the funds were spent or what the resources have been used for. If the individual successfully rebuts the presumption of 100% ownership or accessibility, action must be immediately taken by the applicant to separate commingled funds, remove his or her name from the account or resource, or restrict his or her access to the account, as applicable to the situation.

Aged, Blind and Disabled Manual Policy Manual Number: 110.045 Section: Financial Eligibility Requirements Chapter: ABD Treatment of Resources: Ownership, Equity Value & Accessibility April 15, 2015 Division of TennCare 5 d. Verification of Jointly-Owned Resources If a resource is jointly-owned, or an individual successfully rebuts a presumption of 100% ownership or accessibility, verification of ownership and accessibility are required. Verification must include bank statements, agreements, deeds, titles or other collateral statements. The individual’s statement is not sufficient verification. 8. Inaccessible Resources A resource is not considered inaccessible simply because it is non-liquid. The practical inability to access the resource also does not make it inaccessible. See the ABD Inaccessible Resources policy. 9. Resource Time and Value Limits A resource may be excluded for a limited period of time or excluded up to a certain amount. To determine applicable limits, see the specific resource type in the ABD Countable and Excluded Resources policy. Time limits and value limits should be considered when assessing a commingled resource. 10. Identifying Excluded Funds in Commingled Resources Otherwise excludable resource funds must be identifiable to remain excluded when commingled with non-excludable funds. Funds are generally not required to be maintained separately to be considered identifiable, see the specific resource type in the ABD Countable and Excluded Resources policy to see if commingling is specifically prohibited. When assessing withdrawals from commingled funds, the withdrawal should be deducted from non-excluded funds first. Interest from excluded funds may also be excluded, see the specific unearned income type in the ABD Unearned Income policy.

Aged, Blind and Disabled Manual Policy Manual Number: 110.045 Section: Financial Eligibility Requirements Chapter: ABD Treatment of Resources: Ownership, Equity Value & Accessibility April 15, 2015 Division of TennCare 6 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 04.15.15

Publication

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.050 Chapter: ABD Countable and Excluded Resources Legal Authority: 42 USC 1396p(f); 26 USC 6409; 20 CFR 416 Subpart L; 42 CFR 483.10; Public Law 109-171 (Deficit Reduction Act of 2005); Public Law 113–295; Tenn. Code Ann. Title 71, Chapter 4, Part 8; Tenn. Comp. R. & Regs. 1200-13-20-.06(3)(c) 1. Countable Resources Countable resources are all those available assets whose value is considered in determining resource eligibility. The equity value of all resources (real and personal property) owned by the Eligibility Determination Group (EDG) are countable unless specifically excluded by regulation. Count the resources of the following individuals: a. All individuals included in the EDG; and b. The resources belonging to the Financially Responsible Relative (FRR) of the EDG members, if the relative and EDG members are living together at the time. For Supplemental Security Income (SSI) recipients, TennCare relies on the resource and income determination made by the Social Security Administration (SSA) and the income information from available data sources. Additional requests for resources and income may occur when there is reason to believe that the individual has additional income or resources beyond what is known to SSA. 2. Definitions Resource Characteristic: A description of a resource’s intended use, source or a more specific description of a particular kind of resource. The resource characteristic often determines how to treat the resource, i.e. count or exclude. Not all resource types have a particular resource characteristic. Examples of a resource characteristic include: burial, business or self-employment, personal, and specific types of retirement plans. Resource Type: A liquid or non-liquid asset that an individual owns jointly or individually. The resource type describes the asset itself, and not its intended use, source or other specific features. Examples of a resource type include: checking account, insurance, trusts and real property. 3. Resource Characteristics and Types To determine whether a resource is countable or excluded, factors that must be considered are: the nature of the resource, the date it was created, its intended use, and the source of funds used to create the resource.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 2 Resource Term Type or Characteristic Defined Achieving a Better Life Experience (ABLE) Accounts Resource Type ABLE accounts or 529A accounts are tax-advantaged savings accounts for individuals with disabilities that are established under a qualified ABLE program. The funds in an ABLE account are intended to cover an individual’s Qualified Disability Expenses (QDEs) related to her blindness or disability. QDEs include, but are not limited to: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, funeral and burial expenses and basic living expenses. The balance within a single ABLE account for an individual, including contributions and earnings, is excluded as a resource. This includes contributions made by an ABLE account owner from his own resources and contributions made by a third party, including a trust. Distributions from an ABLE account are excluded if used or intended to be used for QDEs as long as the distributions are identifiable. Distributions from an ABLE account used for non- qualified expenses are excluded if spent in the month of receipt. Distributions from an ABLE account are countable when: • Distributions are retained past the month of receipt and are used for, or intended to be used for, non-qualified disability expenses; • Distributions are retained past the month of receipt and were previously excluded because intended for a QDE, but used for a non-qualified expense. Count the amount of funds used as a resource the month in which funds were spent; or • Distributions are retained past the month of receipt, have not been spent, and the intent to use the funds for a QDE has changed. Count the retained funds as a resource the following month.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 3 Normal counting rules and exclusions apply to assets or other items purchased with funds from an ABLE account. Documentary evidence of an ABLE account should show the following information: • The name of the designated beneficiary or owner of the account; • The state ABLE program administering the account; • The name of the person who has signature authority (if different from the owner); • The unique account number assigned by the state to the ABLE account; • The date the account was opened; and • The account balance. Annuity Resource Type Annuities are contracts or agreements that, in exchange for a lump sum payment or series of payments, provide income at regular intervals (i.e., monthly, quarterly, annually). Annuities establish a source of income for a future period, and are often used in retirement planning. 1. Definitions Annuitant: The person on whose life the income payments are based. Often, the annuitant is the contract owner and receives the benefits of the contract. Annuity payments may also be based on more than one life or based on a fixed period of time. Annuitization: The process of converting an annuity contract’s value into a guaranteed income stream represented by periodic payments over a specified period of time. Payee: The individual or entity designated by the annuity owner to receive periodic payments. An annuity payee is sometimes referred to as an annuitant; however, a payee may not also be an annuitant. Deferred Annuity: An annuity contract under which payments begin sometime in the future. Immediate Annuity: An annuity contract purchased with a lump sum under which payments begin within a short period, always within 12 months.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 4 Accumulation Phase: The first phase of a deferred annuity during which the contract accumulates funds from the payments made into the annuity and accrues interest and earnings. Free Look Period: Period of time after an annuity contract is delivered (usually between 10 and 30 days) when the owner may cancel the contract and receive either their initial payment or the current value of the annuity contract. Maturity Date: The date specified in the annuity contract at which time the owner may choose to extend the contract, surrender the contract for a one-time lump sum payment, or annuitize the contract and receive periodic payments. Systematic Withdrawal Plan: A distribution plan that allows a variable annuity contract owner to receive a specified amount or a percentage of funds from an annuity’s contract value at regular intervals prior to the annuity start date. Required Minimum Distribution (RMD): The minimum amount that an owner of a qualified annuity (established with pre-tax dollars) must withdraw annually starting with the year that he reaches 70½ years of age or, if later, the year in which he retires. 2. General Rule An annuity is a countable resource when it is revocable, assignable or can be sold. Generally, annuities are revocable while in the accumulation phase though an annuity owner will not receive a full refund, unless the annuity is cancelled during the free look period. Once an annuity has been annuitized, the funds are typically unavailable as a lump sum. 3. Types of Annuities Annuities can be classified in a number of ways based on the following: • The time at which annuity payments begin (e.g., deferred, immediate); • The nature of the periodic payments (e.g., fixed, variable); • The period over which annuity payments will be made (e.g., term or period certain, life); and/or

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 5 • The type of annuity issuer (e.g., commercial, private). 4. Countable Value Annuities may be counted as a resource or as unearned income, depending on the circumstances of the annuity. An annuity is a resource during the free look period and the accumulation phase. Free Look Period • During the free look period, the countable value of an annuity is the purchase value. (Exception: The value of a variable annuity may be more or less than the purchase value.) Accumulation Phase

• During the accumulation phase, the countable value of an annuity is the cash value, minus any withdrawals and surrender charges or penalty fees for early withdrawal. Distributions from an annuity, such as systematic withdrawals and RMDs, should be considered conversions of a resource rather than income. Some annuity contracts contain a provision allowing an individual to cash in the contract after annuitization. If an annuity contract contains such a provision, the annuity is a resource, and the countable value is the commuted cash value, i.e. the present value of all future payments. An annuity is unearned income when it has been irrevocably converted to an income stream and is no longer available as a lump sum. Any portion of an annuity payment held following the month of receipt is a countable resource, except when the annuity is a State annuity for certain veterans. A State annuity for certain veterans is an annuity paid for by a state to an individual the state determined is a veteran, who is aged, blind or disabled, or to that individual’s spouse.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 6 5. Annuities Funded by a Pension or Retirement Fund Annuities that are funded by a pension or retirement fund held by an employer or union should not be counted as a resource while the individual is employed, if termination of employment would be necessary to access the funds. If the annuity contains a special provision that allows the individual to access a portion of the funds or the funds in entirety under certain circumstances such as a medical emergency, the dollar amount available to the individual is a countable resource. Federal law requires individuals to take all necessary steps to obtain any annuity to which they are entitled, unless they can show good cause for not doing so. 6. Annuities Owned or Purchased by LTSS Applicants Annuities owned or purchased by individuals applying for Long-Term Services and Supports (LTSS) are subject to additional requirements and should be reviewed according to transfer of assets policy. See the Transfer of Assets and Penalty Periods policy. a. Disclosure Requirements of Interest in an Annuity at Application Individuals applying for LTSS must disclose information regarding any interest that the individual or his spouse may have in an annuity. This disclosure requirement applies regardless of whether the annuity is counted or excluded as a resource. If the individual or his spouse refuses to disclose information related to an annuity, the individual will be denied Medicaid eligibility based on the individual’s failure to cooperate.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 7 Burial Contracts Resource Type Burial Contracts Legal Authority: Tennessee Code Annotated 62-5-401 through 409

1. Prepaid or Preneed Burial Contracts A prepaid or preneed burial contract is an agreement under which an individual pays in advance for a burial that the seller agrees to furnish upon the death of the individual or another designated individual. Sellers of prepaid burial contracts are individuals and entities in the funeral industry, e.g. funeral homes. Prepaid burial contracts can be funded numerous ways, including cash payment to the funeral home or the purchase of an annuity or life insurance with assignment to the funeral home (See Section b. for additional information about life insurance funded burial contracts). The funeral home is then required by state law to place those funds into a preneed burial trust, or a preneed burial insurance product. Note: Installment payments on a prepaid burial contract are treated as countable funds subject to the burial reserve exclusion, until the contract is paid off in full. Once the contract has been paid in full, apply burial space and funds exclusions as provided below. This applies to contracts under which the buyer is not entitled to the spaces or services listed in the contract until paid in full; and the seller is not obligated to provide spaces or services until the contract is paid in full. a. Revocable Burial Contract The value of a revocable prepaid burial contract is a countable resource. b. Irrevocable Burial Contract The value of an irrevocable prepaid burial contract is an excluded resource, under the following conditions: i. Agreements established prior to 7/1/1981

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 8 A prepaid contract that has been declared irrevocable by a court of law is an excluded asset. It is a countable asset if it has not been declared irrevocable by a court of law.

ii. Agreements established between 7/1/1981 and 7/1/1995

The entire value of the prepaid contract is excluded as a resource if the contract contains the following statement: “This contract is irrevocable and the funds paid hereunder are not refundable.”

iii. Agreements established 7/1/1995 or later

A prepaid burial contract under which is a trust or an insurance arrangement is established by the funeral provider is excluded if it meets the following conditions:

• Both the individual and the funeral home representative have signed the document; • An itemized list of the services provided under the contract is provided; • The price of all major services is specified; • The total dollar amount of the agreement is specified; • The individual was neither a minor or legally declared incompetent when the agreement was signed; and • The agreement specifies in writing that the money is not refundable under any circumstances.

Review an excluded irrevocable burial contract under the Transfer of Assets and Penalty Periods policy for individuals applying for Institutionalized Medicaid. If the individual is receiving Fair Market Value (FMV) for all services specified under the contract, then the burial contract does not constitute a transfer of assets for less than FMV.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 9 Note: If an individual enters into an irrevocable contract with a funeral home, but he establishes a revocable trust to fund the contract, evaluate the revocable trust under the Burial Trust policy. The burial contract is not a resource in this scenario.

c. Ownership and Value

The owner of the burial agreement or contract is the individual who deposited the funds into the agreement, usually the beneficiary. Verify ownership by securing a copy of the burial contract. The current value of the contract is the sum of the amount of the initial deposit, any subsequent deposit and accrued interest, less any processing fees charged to the individual for dismantling or encroaching upon the trust. Verify the amount by reviewing the agreement, written verification from the funeral home or from the bank holding the funds.

2. Life Insurance Funded Burial Contract

A life insurance funded burial contract involves an individual purchasing a life insurance policy on her own life and then assigning, revocably or irrevocably, either the proceeds or ownership of the policy to a funeral provider. The purpose of the assignment is to fund a burial contract.

Life insurance funded burial contracts are not burial insurance.

a. Revocable Assignment

The resource value of the burial contract is equal to the Cash Surrender Value (CSV) of the life insurance policy, and is subject to the $1,500 burial reserve exclusion. The Face Value (FV) of the resource is not a factor in determining whether the $1,500 exclusion applies to the CSV of a life insurance-funded burial contract. Burial spaces included in the contract cannot be excluded because there is no obligation to provide any spaces until the individual dies.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 10 Example: Mrs. White has a burial contract funded by the revocable assignment of a life insurance policy. The FV of both the burial contract and the life insurance policy is $3,000 and the CSV of the life insurance policy is $1,700. The total resource value of Mrs. White’s burial contract is equal to the CSV of $1,700. The burial space exclusion does not apply to Mrs. White’s burial contract, but $1,500 of the CSV can be excluded under the burial reserve. Mrs. White has no other resources to apply to the burial reserve. The remaining $200 is a countable resource.

b. Irrevocable Assignment

The life insurance policy and the burial contract are excluded resources if the burial contract meets the criteria described in (1)(a) of this section. If the burial contract includes an FV for services (not burial spaces/plots) included in the contract, that portion of the contract may offset the burial reserve.

Example: Mr. Jones has irrevocably assigned ownership of a life insurance policy to funeral home to fund a burial contract. The FV of the life insurance policy is $3,000. The burial contract includes the purchase of $1,300 of burial space/plot and $1,700 of burial funds. The contract is an excluded resource, and the $1,700 in burial funds will be counted against any possible burial reserve exclusion (limit of $1500), so Mr. Jones may not have any other excluded burial funds.

Burial Plot and Space Resource Type Exclude the value of one burial space for each family member, e.g. spouse, child, parent, sibling) whether living in the home or not.

Burial plots and spaces include a burial plot, gravesite, crypt, mausoleum, niche or other repository for bodily remains. It also includes vaults, headstones, markers, plaques, containers, and arrangements for opening and closing the gravesite.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 11 Burial plots are real property (if a single individual has two burial spaces, but no family member to which he may designate the second burial space). Burial Reserves Resource Type 1. Burial Reserve

Individuals and their spouses are each allowed a $1,500 resource exclusion for funds set aside for burial expenses. This exclusion is separate from, and in addition to, the burial plot exclusion. Funds allowed to be excluded under this provision include certain otherwise countable resources. These resources must be separately identifiable and set aside for burial expense, and they may not be commingled. To determine the amount of the burial reserve, the maximum $1,500 that may be excluded is first reduced by:

a. Life insurance, if the total value of all life insurance owned by the individual is $1,500 or less; and

b. Funds in an irrevocable burial agreement or contract (see above for irrevocable burial contract definition).

Any remaining amount of the reserve once the above reductions have been applied can be used to exclude other burial funds/expenses. Burial funds set aside for any relatives other than the individual and her spouse are not eligible for exclusion.

Burial funds must not be commingled with other resources. At application and redetermination, burial funds that are commingled with other resources will be counted unless the individual takes action to separate the burial funds.

If an impediment exists that prevents the separation of burial funds, the existing burial funds may be excluded if the individual remains otherwise continuously eligible for the exclusion.

2. Determining the Amount of the Reserve

Example: John owns life insurance with a total Face Value (FV) of $1,000 and an $800 savings account for burial. The value of the life insurance is excluded, and there is $500 remaining as the burial reserve.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 12 $1,500 Maximum Burial Reserve – $1,000 FV of Life Insurance Policy $500 Amount of Remaining Burial Reserve

The $500 burial reserve is applied to his burial savings account, and the remaining $300 in the designated burial savings account is a countable resource. The value of any burial funds in excess of the $1,500 maximum is a countable resource.

$1,800 Total Value of all Burial Assets – $1,500 Maximum Burial Reserve $300 Countable Asset

3. Treatment of Excluded Value

Interest earned on excluded burial funds is excluded as long as the individual remains continuously eligible for TennCare Medicaid. If an individual’s eligibility is terminated, and she later applies for benefits, the full value of the asset (including interest) must be considered when evaluating for a burial exclusion.

The value of the burial reserve loses its exclusion if any portion of the principal and accrued interest is used for any other purpose than to meet the individual’s burial expenses.

Burial Trusts

Resource Type A burial trust is a trust established by an individual for the purposes of setting aside funds or payment of burial expenses for the individual or someone else. A burial trust is a trust established with the individual’s assets. It may be a revocable or irrevocable trust.

Note: It is important to determine whether the trust was established with the individual’s assets or with funds that have been irrevocably paid to the funeral provider. If it is the latter, then that trust is subject to the policies in the Burial Contracts, section (1)(a).

All funds in a burial trust, established by an individual, including interest payments, are excluded if the value of the trust does not exceed $6,000 per individual. Interest payments and cost of transport which cause the trust value to exceed $6,000 are also excluded. This applies to both irrevocable and revocable burial trusts.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 13 Burial trusts, established by an individual, whose value exceeds $6,000 are subject to treatment according to the nature of the trust, including transfer of assets policy for Institutionalized Medicaid applicants.

Business or Self Employment Resource Characteristic Excluded as essential for the production of earned income either in trade, business or self-employment.

Resources may include: • Tools/equipment; • Stock or raw materials; • Real property; • Personal property essential for income production; • Office equipment; • Business loans for the purchase of capital assets; • Inventory; • Machinery and equipment; • Business/commercial checking accounts; and • Life insurance.

No exclusions listed in this section will be applied to property a household does not own, nor to use of such property except by owners who are members of the household.

Property that represents the authority granted by a governmental agency to engage in an income-producing activity is also excluded if it is used in a trade or business or non-business income-producing activity or not used due to circumstances beyond the individual’s control and there is a reasonable expectation that the use will resume.

Cash Resource Type Cash is money on hand or available in the form of currency or coins and is countable. Foreign currency or coins are cash to the extent that they can be exchanged for U.S. issue.

Certificate of Deposit Resource Type Certificates of Deposit (CDs) are countable if held in a personal account. The value of a CD is the net amount that could be received after penalties for early withdrawal, if applicable. Taxes are not deducted in determining net value. Determine the net value of a CD via a detailed breakdown from the institution holding the deposit. The breakdown must include the gross deposit and identify any and all deductions and penalties that

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 14 would be deducted from the gross deposit if the funds were withdrawn. See the ABD Treatment of Resources: Ownership, Equity Value & Accessibility policy for treatment of jointly owned CDs. Checking Account Resource Type A personal checking account is countable. Determine the countable portion of the account based on ownership. See the ABD Treatment of Resources: Ownership, Equity Value & Accessibility policy for treatment of jointly owned accounts.

1. A checking account that is used for purposes other than personal use may be excluded on the terms of intended use. Other resource characteristics of a checking account include:

• Burial needs; • Educational Income; • Individual Development Account (IDA); • Plan to Achieve Self Support (PASS); • Prorated as Income; • Business or Self-Employment; • Proceeds from the Sale of a House; • Disaster/Settlement Funds, if excluded by policy; and • SSI/Social Security Administration (SSA) Retroactive Payment. Note: Income tax refunds (including any advance payments), such as the Child Tax Credit, are excluded as a resource for a period of 12 months following receipt. Christmas Club Resource Type The accessible funds of a Christmas Club account are a countable resource minus any fees that may be incurred for withdrawal.

A Christmas Club is a type of savings account designed to help the account holder save money for Christmas. Funds are typically accessible throughout the year, although a fee may be incurred for early withdrawal. Determine any applicable fees or penalties associated with the withdrawal of funds. Subtract this amount from the balance of the Christmas Club to determine the value of the resource.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 15 Continuing Care Retirement Community Entrance Fee or Deposit Resource Type 1. Description of Continuing Care Retirement Communities

Continuing Care Retirement Communities (CCRC), or life communities, provide living arrangements for individuals as they get older and who may require different levels of assistance. Many of these communities include independent living arrangements, memory support living arrangements and skilled nursing care.

CCRCs provide various options to individuals who wish to live in their community. Most contracts require significant entrance and monthly fees, which are used to cover all aspects of their needs within the community. Potential residents must provide extensive information about their finances, prior to being accepted for admission, and sign detailed contracts regarding current and future needs and payments.

2. CCRC Entrance Fee and Spousal Impoverishment

The Deficit Reduction Act of 2005 (DRA) amended the Social Security Act to require that CCRC contracts are subject to the Medicaid spousal impoverishment rules. CCRC contract provisions requiring the expenditure of resident entrance deposits must take into account the required allocation of resources and of the entrance or income to the community spouse before determining the amount of resources that a resident must spend on her own care.

3. CCRC Entrance Fees as a Countable Resource

Entrance fees paid to a CCRC may be a countable resource. The following three conditions must all be met in order for the entrance fee to be an available, countable resource:

• The entrance fee can be used to pay for care under the terms of the entrance contract should other resources of the individual be insufficient;

• The entrance fee (or remaining portion) is refundable when the individual dies or terminates the contract and leaves the CCRC; and

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 16 • The entrance fee does not confer an ownership interest in the community.

It is not necessary for the CCRC to provide a full, lump-sum refund of the entrance fee to the resident in order to satisfy the first condition. If portions of the fee can be refunded or applied to pay for care as required, the condition is met.

In order to meet the second condition listed above, it is not necessary for the resident to actually receive a refund of the entrance fee or 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. Contract for Deed or Mortgage Resource Type The value of a contract for deed or mortgage may be a countable asset depending on the circumstances of the loan, including the individual’s role as lender or borrower and the accessibility of the asset.

1. Definition

A security held by the lender on a particular property for the repayment of debt by the borrower within a particular time period. A contract for deed, land contract, and deed of trust are all mortgages on real property.

2. Individual is the Lender

a. Countable Value

When the individual is the lender for a contract for deed, he may sell or transfer the instrument to have immediate access to the unpaid loan principal. The value of the resource equity value is a countable asset.

Any subsequent payments to the principal made by the debtor after approval are considered a resource because the unpaid loan principal is a resource.

b. Excluded as a Resource

The value of the contract may be excluded from countable resources if the individual can demonstrate that the contract cannot be sold without his realizing a net loss.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 17 Evaluate the current status of the contract at redetermination. Do not extend benefits pending a demonstration of unsaleability.

c. Establishing Value

The amount of the unpaid balance of the property agreement (mortgage, contract for deed, etc.) is the value of the countable asset and must be verified at each application and redetermination.

3. Individual is the Borrower

If the individual is the borrower, the property agreement is not a resource. However, the property purchased may be a countable resource following the month of transaction.

4. Reverse Mortgage

a. Description

A reverse mortgage is a loan against the equity in an individual’s home that provides cash advances but requires no mandatory monthly repayment during the life of the loan. If the interest is unpaid, it is allowed to accrue against the value of the individual’s home.

A reverse mortgage is similar to a conventional mortgage because the bank does not own the home but holds a lien on the property. The borrower continues to hold the title to the property. The bank cannot demand payment from any family member if there is not enough equity to cover paying off the loan and there is no penalty for paying off the mortgage early.

b. Policy Application

The proceeds received from a reverse mortgage are tax-free and available as a lump sum or fixed monthly payment for as long as the individual lives on the property. The loan is not due and payable until the borrower no longer occupies the home as a principal place of residence. When the owner

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 18 no longer resides on the property, the balance of the borrowed funds is due and payable. After the amount received is repaid, any additional equity in the property belongs to the owners or their beneficiaries.

When an individual has money in a reverse mortgage line of credit, this money does not count as a loan, or as income or a resource for determining TennCare Medicaid eligibility. If the individual transfers the money to an investment or to a bank account, the amount transferred will become a countable resource.

In order to qualify for a reverse mortgage, an individual must be at least age 62 and the property must be the borrower’s primary residence.

When money is received from a reverse mortgage:

• The money withdrawn is tax-free and can be used for any purpose; • The money can be received as a lump sum, line of credit, a monthly payment or any combination of the 3; • There are no mandatory monthly repayments and the loan can be repaid anytime without penalty;

• The title of the home does not change; and • The lender sets the maximum loan amount.

5. Transfer of Asset Provisions

The purchase of a contract for deed or mortgage is subject to transfer of asset policy for Institutional Medicaid individuals. Funds used to purchase a mortgage on or after February 8, 2006 must meet the following conditions:

• The repayment terms must be actuarially sound; • Payments must be made in equal amounts during the term of the loan with no deferral of payments and no balloon payments; and

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 19 • The promissory note, loan or mortgage must prohibit the cancellation of the balance upon the death of the lender.

If an individual applying for LTSS purchases a mortgage within the look back period that does not meet these conditions, the purchase will be treated as a transfer of assets. The value used to determine the penalty period is the outstanding balance due on the date of the individual’s application for TennCare Medicaid. Economic- Impact Payments Resource Type Stimulus checks or recovery rebates, such as those authorized under the Coronavirus Aid Relief and Economic Security (CARES) Act, are excluded as a countable resource. Educational Income Resource Characteristic Educational income received under Title IV of the Higher Education Act of 1965, such as Pell Grants, Federal Educational Loans and Work Study Programs, or Bureau of Indian Affairs (BIA) grants should be excluded as a resource; there is no time limit.

Grants (other than Title IV or BIA grants) scholarships, fellowships, and gifts intended to pay for tuition, fees or educational expenses are excluded for 9 months beginning the month after receipt.

Excess Patient Liability Accumulated due to the Public Health Emergency (PHE) Resource Type During the Public Health Emergency (PHE) created by the COVID- 19 pandemic, some members enrolled in Institutional Medicaid may not have had their Patient Liability (PL) adjusted. For those who accrued excess resources due to their PL amount not being adjusted, that amount will be excluded as a resource for 12 months following the end of the PHE. Farm, Business/Self- Employment or other Equipment Resource Type The equity value of non self-employment income-producing real property, other than the homestead, is subject to the Rate of Return Test. See the Income-Producing resource characteristic. If the property is used for self-employment, it is excluded as Business or Self-Employment. Rental property is a common form of income-producing property. Rental property is countable, subject to the Rate of Return Test, if the individual who owns the property is not ‘in the business of’ renting property. This means that the individual does not buy, sell

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 20 and/or rent property for a profit and participate in the operation of the property less than 20 hours per week.

Someone who is ‘in the business of renting property’ is someone who materially participates in the operation and decision making of the rental business for at least 20 hours per week. Health Reimbursement Account (HRA) Resource Type A Health Reimbursement Account is an employer-funded group health plan from which an employee is reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. An unused amount may be rolled over for use in subsequent years. The account is funded and owned by the employer, and is not a countable resource for the beneficiary. Any amounts paid to the employee that exceed the cost of medical expenses incurred in the year are countable income. Homestead Exclusion This policy applies to resource type Real Property, with the resource characteristic of Home 1. General Rule

The entire value of the home, whether on land or water, all adjoining land not separated by property owned by others, and any related outbuildings are excluded in determining resource eligibility, as long as:

• The home is the principal place of residence for the applicant, spouse or dependent relatives; and • Intent to return to the home is established, if the individual resides in a Long-Term Care Facility (LTCF).

An individual must have lived in the home for it to be considered her home or principal place of residence.

For an institutional individual, the individual is ineligible for payments of LTSS (CHOICES) when home equity exceeds $752,000, unless one of the following lawfully resides in the individual’s home:

• the spouse of such individual; • such individual’s child who is under age 21; or • such individual’s child who is blind or disabled according to 42 USC 1382c. If the individual’s child is not receiving benefits from SSA, contact the Policy Unit for assistance.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 21 The home equity limit can be waived if an undue hardship is requested, and a determination is made that undue hardship exists. Undue hardship is considered to exist if the application of the home equity limit would deprive the individual of medical care, such that the individual’s health or life would be endangered, or would deprive the individual of food, clothing, shelter, or other necessities of life.

2. Exclusion Based on Intent to Return

The value of the home and surrounding land will not be counted as a resource during the individual’s absence from an unoccupied home when she intends to return to the property.

• Absence from the Home

An absence from the home can be necessary to accomplish a specific purpose such as hospitalization, confinement in a nursing home or receipt of services, such as nursing or personal care services not available to the individual in her home.

• Development of Intent to Return

When the individual is absent from her homestead, and it is not occupied by a spouse or dependent relative, verify the individual’s intent to return home at each redetermination of eligibility.

• When the Exemption Period Ends

An intent to return home is nullified by any efforts to sell or dispose of the property during the exemption period. The exemption based on the intent to return ends the first day of the month after the month efforts are made to sell or dispose of the homestead property.

Rental of a homestead which has been excluded because of intent to return does not nullify the exclusion. The homestead retains the exclusion as long as there is a clear, non-contradictory intent to return, and no efforts are made to sell or dispose of the

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 22 property. The rent will be counted as unearned income in the month received.

The exemption based on residence of the enrollee’s dependent relative ends the first day of the month after the relative last lived in the homestead, if the relative does not intend to return.

3. Homestead Located Outside of Tennessee

Real property located outside of Tennessee can be excluded from countable resources as homestead property, if there is substantiation of the individual’s intent to return to the home OR the property is the principal residence of the individual’s spouse or dependent relatives.

4. Dependent Relative (for purposes of Homestead Exclusion)

A homestead retains its exclusion if it is the principal residence for the individual, her spouse or relative within the specified degree below who is dependent on the individual. Dependency may be of any kind: financial, medical, residential, etc. Relatives include:

Aunt Grandson Son Brother Half brother Stepbrother Cousin Half sister Stepdaughter Daughter In-laws Stepfather Father Mother Stepmother Granddaughter Nephew Stepsister Grandfather Niece Stepson Grandmother Sister Uncle

Accept the signed statement by the individual’s spouse or dependent relative regarding her relationship to the individual and residence in the homestead without question, unless it is contradictory.

Individual Development Account (IDA) Resource Characteristic IDAs may be established by or on behalf of an individual eligible for Families First assistance. An IDA is different from a regular savings account because funds deposited by a participant are

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 23 matched by a separate entity and there are restrictions on the use of these funds. An IDA will provide an opportunity for a participant to build assets to further support the transition to self-sufficiency.

Funds, including accrued interest, in the account are disregarded as a resource as long as the individual complies with the IDA eligibility rules and continue to maintain or make contributions into the account.

Income- Producing Resource Characteristic For property used in a trade or business (i.e. farming), see “Business or Self-Employment”.

Income-producing resources can be real or personal property. Income-producing property is non-liquid property used in the passive production of income (i.e., not a business or trade). It may include such property as rental property (when the person is not in the business of managing rental properties), a non-working ownership in a business venture, or leased land in which the owner is not actively participating in the operation and decision-making of the business for at least 20 hours per week. If the owner is participating at least 20 hours per week throughout the year, claims the endeavor as self-employment, and, if filing taxes, reports the income on Schedule C, F or SE, the property is treated as property/equipment necessary for self-employment. Otherwise, the property is treated as income-producing property.

Other income-producing resources include buildings, farm, business and other equipment and supplies, motor vehicles, livestock, oil and mineral rights and items of unusual value.

For individuals who are in an institution or seeking services under a 1915(c) HCBS waiver program and for MSP financial determinations, the equity value in business/non-business resources (land, buildings, equipment, supplies, inventory, tools of a tradesperson, livestock of a farmer, cash on hand, accounts receivable, etc. which are used in the person’s trade or business, or in the employment of a family member or by the individual as an employee) used to produce income are excluded.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 24 Rate of Return Test

For all remaining ABD financial determinations, exclude up to $6,000 of an individual’s equity in an income-producing resource if it produces a net annual income to the individual of at least 6 percent of the property’s equity value. If the individual’s equity value is greater than $6,000, the amount that exceeds $6,000 is countable towards the resource limit.

If an income-producing resource does not produce a net annual income of at least 6 percent of the resource’s equity value, the entire equity value of the resource is countable.

If the individual owns more than one piece of income-producing resource and each produces income, each is reviewed to determine whether the 6 percent test is met. Then the amounts of the individual’s equity in all of those properties producing 6 percent are totaled to determine if the total equity of all properties is $6,000 or less. If the total equity value in the properties that meet the 6 percent rule is over the $6,000 equity limit, the amount exceeding $6,000 is counted as a resource.

Insurance Resource Type There are two types of insurance considered under this resource type:

1. Sick and Disability Insurance

Excluded. Sick and disability insurance primarily provides income to the insured if he becomes disabled.

2. Burial Insurance

Excluded. Burial insurance is a contract whose terms specifically provide that the proceeds can only be used to pay the burial expenses of the insured.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 25 Items of Unusual Value Household Goods and Personal Effects Resource Type Items of Unusual Value

An item of unusual value that generates income for the individual is countable. The countable value is determined by applying the Rate of Return test, see the Income-Producing resource characteristic. A personal item of unusual value is excluded from resources.

Items that an individual acquires or holds because of their value or as an investment. These items may meet the definition of personal effects. Examples of an item of unusual value include: gems, art collections and animals owned for investment purposes.

In general, an item may be considered an item of unusual value if the item is not excluded as a household good or personal effect, and the equity value of the item is greater than $500.

Household Goods and Personal Effects

Household good and personal effects are excluded from countable resources.

Household goods are items of personal property, found in or near the home, which the individual uses on a regular basis. The individual needs household goods for maintenance, use and occupancy of the premises as a home. Examples of household goods include: furniture, appliances and electronic equipment.

Personal Effects are items of personal property ordinarily worn or carried by the individual, or items that have an intimate relation to the individual. Examples of personal goods include: personal jewelry, personal care items and clothing, pets, educational or recreational items and items of cultural or religious significance to the individual.

Items required because of an individual’s physical or mental impairment, such as prosthetic devices or wheelchairs, are also personal effects.

Life Estates Resource Type 1. General Rule

A life estate is property right with a duration limited to the life of the party holding it or to the life of some other party. The holder of a life estate does not have title to the property and

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 26 cannot sell the property. However, the holder of a life estate can sell his interest in the property, unless restricted by the terms of the contract, and is entitled to any income from the property. The income is deemed available to the holder, regardless of whether she actually receives the income.

Upon the death of the owner of a life estate, full title and ownership usually passes to the individual named in the will or deed as entitled to the property.

Property in which an individual holds a life estate is subject to the same exclusion rules as property the individual owns by title.

2. Life Estate Exceptions

• A life estate will be excluded as the home when the property meets the homestead exemption.

• If the property is used in the passive production of income, the life estate is subject to the Rate of Return test. See Income-Producing. • A life estate will be excluded when ownership is necessary for the production of earned income. See the Business or Self-Employment resource characteristic.

• The terms of the life estate contract prevent the holder from selling his interest in the property.

3. Countable Value

If the life estate is not excluded based on the criteria above, the entire value of the life estate is a countable resource. The life estate value is determined by multiplying the Fair Market Value (FMV) of the property by the percentage listed in the “Life Estate Interest Table” for the age of the individual on whose lifetime the life estate is based.

If more than one person owns the life estate, the value is based on the owner with the longest life expectancy.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 27 4. Purchase of a Life Estate under Transfer of Asset Rules

When an individual purchases or receives as compensation in a transaction a life estate in another individual’s home, the purchase of the life estate is considered an asset transfer subject to penalty, unless the individual then lives in the home for a period of at least one year after receiving the life estate.

If the individual does live in the home for a period of one year after receiving or purchasing the life estate, the amount of the transfer is the entire amount used to purchase the life estate.

If an individual purchases a life estate in another individual’s home and then does live there for one year after the purchase, the life estate is an excluded resource while being used as the individual’s (or the individual’s spouse’s home). However, if payment for a life estate exceeds the FMV of the life estate as calculated below, the difference between the amount paid and the FMV should be treated as an asset transfer. In addition, if an individual makes a gift or transfer of a life estate interest, the value of the life estate should be treated as a transfer of assets.

a. Calculation: See the “Life Estate Interest Table” See Life Estate Interest Table.

• Multiply the FMV of the property by the life estate factor that corresponds to the age of the individual at the time the life estate was established. The result is the life estate value at the time of the asset transfer.

• Determine the amount of the uncompensated asset transfer by subtracting the life estate value from the FMV.

• Use the uncompensated asset transfer value to determine the asset transfer penalty period.

b. Example

Mrs. Jones, age 70, owns a house with a small farm attached to it, worth $100,000 in total. She deeds the house and farm to her son but retains a life estate in the property.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 28 Under the terms of the life estate, Mrs. Jones is entitled to live in the house for the rest of her life and to any produce, income, etc. generated by the farm. To determine the value of Mrs. Jones’ life estate, the Current Market Value (CMV) of the property ($100,000) is multiplied by the life estate factor corresponding to her age in the table (0.60522), resulting in a life estate value of $60,522. The penalty is assessed for the difference between the value of the asset transferred ($100,000) and the value of the life estate ($60,522), or a penalty based on $39,478 of assets transferred for less than FMV.

Life Insurance Resource Type Life insurance is determined countable or excluded based on the type of life insurance owned by the individual and/or its intended use.

1. Definitions

Insured: The individual upon whose life insurance is effected.

Beneficiary: The individual, entity or organization named in the contract to receive the policy’s proceeds upon the death of the insured.

Owner: The individual who has the right to change the policy and is typically the person who pays the premiums.

Face Value (FV): The amount that is contracted for at the time the life insurance policy is purchased (the amount to be paid out when the insured dies). The FV does not include any dividend additions or additional amounts paid in the event of an accidental death or other special provision. Cash Surrender Value (CSV): The amount, which increases with the age of the policy, the insurer will pay upon cancellation or surrender of the policy before the death of the insured or maturity date of the policy.

Dividends: Any interest paid by the insurance company to its policy holders. If dividends are paid, they may be paid directly to the owner, added to the CSV of the policy, or to purchase additional coverage.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 29 2. Types of Life Insurance

There are two groups of life insurance policies: those that accrue a CSV and those that do not. Count only the CSVs of the types of life insurance policies that accrue a CSV.

Life Insurance with a CSV

Whole life insurance is a contract for which the insured pays premiums during his lifetime or up to age 100 and the insurer pays the FV of the policy to the beneficiary upon the death of the insured. The net CSV of whole life insurance is countable.

A limited payment policy is a contract for which the insured makes payments for a specific number of years rather than for his whole life. The insurer pays the FV of the policy to the beneficiary upon the death of the insured. The net CSV of limited payment life insurance is countable.

An endowment policy is a contract that promises payment of the FV of the policy either upon the death of the insured or within a specific period of time. The net CSV of an endowment policy is countable.

Life Insurance without a CSV

Term life insurance is a type of contract for which the insured receives temporary protection (for a specific period of time) or limited protection through a steadily decreasing FV. Term life insurance is excluded.

3. Life Insurance Limit

Exclude the CSV of all countable life insurance policies the individual owns if the total FV of those policies is equal to or less than $1,500. Exclude the CSV of all countable life insurance policies owned by each of the individual’s Financially Responsible Relatives FRR(s) if the total FV of the policies owned by the FRR is less than $1,500.

Note: This exclusion of $1,500 may only be applied if no other funds have been excluded under the burial reserve provision. If the individual has a burial contract or burial trust, then the $1,500

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September 1, 2026 Division of TennCare 30 burial reserve allowance is first reduced by the value of the burial contract or trust.

4. Countable Value

The total net CSV of life insurance policies owned by the individual is a countable resource if the total FV of those policies is greater than $1,500. The net value is equal to the total CSV less the amount of any outstanding loans made against the policy.

Count only the CSV of policies available to the individual. The CSV may be unavailable to the individual for the following reasons:

• The consent of the co-owner is required to surrender a policy for its CSV, the co-owner’s consent cannot be secured, and he is someone other than the individual’s FRR.

• When a policy has been assigned to another individual, that person’s consent for surrender is required. If that person declines to consent, exclude the policy as an unavailable resource. If the individual is applying for long term care benefits and the assignment occurred within the look back period, examine the assignment under the Transfer of Assets and Penalty Periods policy.

5. Ownership

The owner of the policy is the person who has the right to change the policy. This is typically the same individual who pays the premiums. The owner of a life insurance policy is usually the insured individual and ownership can be verified by seeing the policy or written correspondence with the insurance company or the individual’s insurance agent.

If the person alleges ownership of policies for which he is not the insured, verify ownership by determining whether the individual is listed on the policy or through written

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September 1, 2026 Division of TennCare 31 correspondence with the insurer or the individual’s insurance agent.

6. Establishing Value

Consult the table of CSVs on the policy itself. The tables usually indicate CSV at one to five year intervals from the date the policy was issued. Use the CSV from the chart in determining the countable value of the policy unless the individual can provide written verification from the insurer of a lesser value. Document Case Notes if a lesser value is determined.

If the CSV table is not available, or the life insurance policy is paid up, the only acceptable verification of value is written correspondence from the insurer.

Verification of the following information must be obtained from the insurer or insurance agency:

• Full name of policy owner; • Policy number; • Status of policy; • Date the policy was issued; • FV; • Paid-up cash value (if applicable); • Amount of any outstanding loans; • Current CSV; and • Authorization to release information obtained by applicant or responsible party. If verification cannot be provided in a timely manner, the Estimated CSV Method is used to estimate the life insurance policy’s CSV.

Estimated CSV Method:

Use the following method to estimate the net CSV, unless it appears that dividends have been added to the basic CSV of the policy or the individual alleges that the policy is encumbered. If either of these conditions exist, accept only written verification of the CSV.

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September 1, 2026 Division of TennCare 32 Estimated CSV Calculation:

• Determine the number of years the policy has been in effect.

• Consult the table entitled Presumed Valuation Table below to obtain the percentage amount that corresponds to the number of years in effect.

• Multiply the percentage amount by the life insurance policy’s FV.

• The result is the Estimated CSV for the policy.

Note: If the estimated value is used and later verification is received that the actual amount is greater, there is no penalty for using the estimated value for the time it took to secure verification.

PRESUMED VALUATION TABLE Years in Effect Percentage of FV 20 or more 60% 15 – 19 50% 11 – 14 45% 6 –10 30% 4 – 5 20% 3 10 % 2 5% 1 0%

7. Additional Life Insurance Topics

Encumbered or Lapsed Policies

Secure written verification from the insurance company or the individual’s insurance agent for any life insurance policies that are either encumbered, i.e. the owner has borrowed against the CSV, or the policy lapsed when the owner stopped paying premiums.

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September 1, 2026 Division of TennCare 33 Accelerated Life Insurance Payments

A life insurance company, or a privately owned business, may offer to pay the owner of a life insurance policy money that would normally go only to the named beneficiary after the insurer’s death. Accelerated payments usually provide payments to cover costs related to long term care, a catastrophic illness or a terminal illness. Payments may be received in a lump sum or monthly amounts. Accelerated payment plans involve early payout of some or most of the proceeds of the policy to the insured. Accelerated payments are income in the month received, and a resource if retained into the following month. The receipt of an accelerated payment is not treated as a conversion of a resource.

Accelerated payments are not considered benefits for the purpose of the eligibility requirement to apply for other benefits. Therefore, an individual is not required to file for accelerated payments as a condition of eligibility.

Livestock Resource Type The value of livestock necessary for self-employment, as a tool of the trade, or raised for home/personal consumption is an excluded resource. Income received is countable as self-employment income.

Livestock that is used as non-business income-producing property is countable, and subject to the policy provided under the Income- Producing resource characteristic.

Oil and Mineral Rights Resource Type Oil and mineral rights may be included with land ownership or owned separately. If surface rights of the same property are excluded (for example, as a home) so are oil and mineral rights. Oil and mineral rights are countable when owned for personal use, or when the surface rights of the same property are countable (non- homestead, real property).

Obtain verification of oil and/or mineral rights. Acceptable verifications are deeds, lease agreements, titles and homestead documents. If oil or mineral rights are producing income under a lease agreement, the owner may be constrained from selling or otherwise disposing of those rights. If the land is already excluded, the oil and mineral rights are excluded.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 34 If oil or mineral rights are producing income to the individual, and she is not actively engaged in the production of income, the equity value of the rights is subject to the Rate or Return test. See the Income-Producing resource characteristic.

Patient Trust Account Resource Type Countable. A patient trust account is a bank account set up by the nursing home for the convenience of the resident. An enrollee may deposit her Personal Needs Allowance (PNA) into the account, as well as other funds the enrollee receives, such as irregular or infrequent income or sheltered workshop earnings. This type of account is not a trust fund subject to trust fund policy.

A patient trust account is typically an interest-bearing checking account. However, a Nursing Facility (NF) holding a patient trust account with a balance of $50 or less is not required to pay interest on the account. Any earned interest on the account belongs to the patient/enrollee.

The balance of the account at the time of application and redetermination is the countable amount. Verify the balance with the facility at every application, reapplication and redetermination. Document the contact with the facility and include the patient trust account number, date of contact, name of contact and the value of the trust account in Case Notes.

If the amount in the account reaches $200 less than the SSI resource limit, the NF is required to notify the enrollee that if the amount reaches the SSI resource limit, he may lose Medicaid eligibility.

Personal Resource Characteristic A personal resource is typically for the use of the individual and his family. A personal resource is typically countable, unless excluded based on the terms of the resource. Personal Consumption Resource Characteristic Up to $6,000 of the equity value of non-business property used to produce goods or services essential to daily activities is excluded from resources. Any portion of the property’s equity value in excess of $6,000 is not excluded under this provision.

Non-business property used for personal consumption can be real or personal property. It produces goods or services essential to daily activities if it is used, for example, to:

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September 1, 2026 Division of TennCare 35 • Grow produce or livestock solely for personal consumption in the individual’s household; or • Perform activities essential to the production of food solely for home consumption.

Note: This does not include any vehicle that is used for transportation.

The property must be in current use or, if it is not in use for reasons beyond the individual’s control, there must be a reasonable expectation that the required use will resume.

Plan to Achieve Self Support (PASS) Resource Characteristic PASS is an SSI provision to help individuals with disabilities return to work. Any income an SSI recipient places in an approved PASS account is excluded as a resource. The PASS account itself is also excluded. This exclusion expires when the PASS contract expires or ends, or when the individual is no longer an SSI recipient.

Prepayment of Rent Resource Type Prepayment of an individual’s mortgage is not considered a resource. Prepayment of rent, however, will be a countable resource unless the individual cannot receive the money back under any circumstances (i.e., the lease agreement includes a no refund policy, or the landlord provides a statement that the funds will not be returned to the renter).

Prepayment of Nursing Home Care Resource Type This resource type is only available to individuals who have entered Title XIX Long-Term Care Facilities (LTCFs).

1. Defined

Prepayment for care deposited by the individual upon admission to a TennCare Medicaid-participating LTCF. The value of the deposit is a countable resource for the individual who is subsequently approved for TennCare Medicaid benefits if the deposit was paid from the individual’s own funds.

2. Deposit Policy

An LTCF may require a deposit or prepayment for the first month’s care upon admission. Federal Medicaid regulations

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September 1, 2026 Division of TennCare 36 provide for certain restrictions regarding these deposits based on the individual’s TennCare Medicaid eligibility status:

• Deposits for the currently eligible individual are limited to the amount of her patient liability. The facility may not require the full amount of a month’s cost of care and may not require any deposit as a condition of admission.

• The facility may require a deposit of any amount not to exceed whatever the facility “normally requires of all admitted patients” from any individual ineligible for TennCare Medicaid benefits at admission, including individuals applying for TennCare Medicaid. If the individual is subsequently approved for benefits, the facility must refund that portion of the deposit that was not used to pay for the individual’s care, i.e. the amount paid by the TennCare Medicaid program. A refund is made after the facility is notified of the individual’s TennCare Medicaid approval.

3. Refund as a Countable Resource

The individual who paid a deposit upon admission to an LTCF and who is subsequently approved for TennCare Medicaid is eligible for a refund of the deposit (in whole or in part) from the facility.

The amount of the anticipated refund is a countable resource during the first month for which the individual has applied for TennCare Medicaid coverage, if the deposit was paid from the individual’s own funds. Refunds of deposits paid from the funds of someone else other than the individual and/or her FRRs are not a countable resource.

Use the following procedure to determine the amount of the deposit that is a countable resource:

• Determine the total amount of the deposit and from whose funds it was paid.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 37 • Subtract the amount of the individual’s patient liability effective the first month of her eligibility for TennCare Medicaid/CHOICES from the total deposit paid.

• The result is the amount of the anticipated refund and part of the individual’s countable resources for the first month in which the individual has applied for TennCare Medicaid.

Use the following procedure to determine the individual’s resource eligibility when part of or her countable resources is an anticipated deposit for prepaid institutional care:

• Add the amount of the anticipated refund from the deposit to the rest of the individual’s countable resources beginning with the first month for which the individual requested coverage.

• If the amount of the individual’s resources, including the anticipated refund, exceeds the resource reserve limit throughout the month, she is ineligible due to excess resources effective the first month for which coverage is requested. Assume the entire amount of the anticipated refund will be retained by the facility to cover the cost of care for the first month for which the individual requested TennCare Medicaid benefits and was determined to be resource ineligible. Beginning the first day of the following month, the anticipated refund is no longer a countable resource.

• If the total amount of the individual’s countable resources is within the appropriate resource limit, he is resource eligible. Do not verify or budget the refund as income in the month the individual actually receives it, because it has already been counted as an available resource. Beginning the month following the month in which the individual actually receives the refund, the value of the refund is considered a countable resource if retained.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 38 The value of the refund of a prepayment of institutional care belongs to the individual who paid the deposit. The facility can verify who paid the deposit upon the individual’s admission. Resolve any discrepancies by requesting the individual or responsible party provide some verification of payment.

Verify the full value of the deposit with the admitting facility or other verification of payment provided by the individual. Calculate the value of the anticipated refund of the item. The resultant amount is the value of the prepaid institutional care. It is not necessary to verify the actual amount of the refund. Proceeds from the Sale of a Home Resource Characteristic The proceeds from the sale of a home are excluded to the extent that the funds are intended to be used to purchase another home subject to the homestead exclusion, and the funds are used for such a purpose within 3 months of the date of receipt of the proceeds.

Promissory Note and other Loans Resource Type 1. Promissory Notes: Personal Use

A promissory note or other loan given by the household is considered personal property and is countable, unless the note or loan balance is inaccessible or the promissory note is held for reasons other than personal use. The lender holds legal interest and has the legal ability to make available his share in the note or loan. The equity value of the note or loan is countable.

2. Promissory Notes and Transfer of Asset Policy

If a household makes a loan that is considered inaccessible, or is shown to have a significantly lower market value than the unpaid balance of the loan, the loan will be considered to be an uncompensated transfer of assets. The uncompensated asset transfer will be considered to be the outstanding balance due on the loan as of the date of the lender’s application for LTSS (nursing facility or HCBS services).

In addition, the Deficit Reduction Act of 2005 (DRA) provides that funds used to purchase a promissory note, loan or mortgage must meet the following criteria or the purchase will be treated as a transfer of assets for less than Fair Market Value (FMV):

• The repayment term must be actuarially sound;

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September 1, 2026 Division of TennCare 39 • Payments must be made in equal amounts during the term of the loan with no deferral payment and no balloon payments; and

• The promissory note, loan or mortgage must prohibit the cancellation of the balance upon the death of the lender.

The actuarial standards used are those determined by the SSA. See the “SSA Period Life Expectancy Table” See SSA Period Life Expectancy Table .

If the above criteria are not met, the purchase of the promissory note or loan must be treated as a transfer of assets. The amount used to calculate a penalty will be the outstanding balance of the loan due as the date of application for TennCare Medicaid. Promissory Notes: Other Uses

Promissory notes that are made for purposes other than personal use are treated according to their use. Promissory notes may be made for the following purposes:

• Burial; • Business or Self-Employment; and • Proceeds from the Sale of a Home.

Prorated as Income Resource Characteristic A resource that has been prorated as income is an excluded resource.

Example: Farmer Jones sells his crop in September for $12,000. The money from the sale is intended to support his family for a year. The $12,000 is prorated as income, $1,000 a month. The $12,000 is excluded as a resource.

Real Property Resource Type Real property is any building and/or land, improved or unimproved, including recreational, residential and/or commercial property.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 40 1. Countable Value

The equity value in all real property the individual owns individually or jointly is a countable asset with the following exceptions:

• Property excluded as homestead; • The inaccessible equity value of real property; • Equity value of income producing property (subject to the Rate of Return test); and • Real property necessary for the production of earned income (see the Business or Self-Employment resource characteristic).

2. Ownership by Title

a. Ownership Types

Sole Ownership: Individual is the only person who owns the property and its sale or transfer is not subject to the approval of others.

Tenancy-in-Common: Each owner has an undivided interest in the whole property and can sell his own interest without the consent of the other owner(s). Upon the individual owner’s death, his share passes directly to his heir(s).

Joint Tenancy: Each owner holds an individual interest in the whole property and can sell her interest at any time without the consent of the other owner(s). If specifically stated in the deed, the interest of one owner upon her death will automatically pass to the other owner. This is the “right of survivorship.”

Tenancy by the Entirety: This form of ownership can exist only between individuals validly married to each other. Any real property held jointly between a husband and wife is held as “tenants by the entirety” unless the deed explicitly states otherwise. The owners are treated as if they were one entity, requiring the consent of both owners before any

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September 1, 2026 Division of TennCare 41 interest can be sold. Upon the death of one owner, his interest passes directly to the other owner.

b. Verification

Verify ownership by accepting the individual’s sworn statement as to property ownership, a copy of the deed or other public record AND telephone or personal contact with the county Register of Deeds who can verify ownership information.

3. Establishing Value

The countable value of real property is equal to the individual’s equity value in it. The equity value is equal to the Total Market Appraisal, as known as the real value or Fair Market Value (FMV), of the property less any encumbrances, liens or other legal claims.

a. Total Market Appraisal

Total Market Appraisal is determined using the property’s assessed value, which can be easily verified. Assessed value is expressed as a percentage of Total Market Appraisal and in Tennessee the ratios are in the chart below.

Type of Property Assessed Value: Real Value Farm/Residential 25% Commercial/Industrial 40%

Use the following formula to determine a property’s real value:

Farm/Residential: Assessed Value x 4.0 = Real Value Commercial/Industrial: Assessed Value x 2.5 = Real Value

Tenn. Code Ann. § 67-5-801

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September 1, 2026 Division of TennCare 42 b. Assessed Value

Determine and verify the assessed value by reviewing a recent tax assessment notice, contact with the county assessor’s office, or written documentation of assessed/real value from the agency responsible for property assessment in another state, if appropriate.

The individual has the right to rebut the assessed value. She must provide a written appraisal from a knowledgeable and disinterested source, such as a licensed real estate agent, or an appraiser for the Veterans Affairs (VA) or Federal Housing Administration (FHA) that substantiates the claim. If the property value is redetermined in this way, the individual must have the opportunity to present a current alternated valuation at every reapplication or redetermination.

c. Equity Value

To determine the individual’s equity value in real property, subtract the following from the Total Market Appraisal:

• The unpaid mortgage principal, excluding interest; • The value of any legal lien or claim filed against the property; and • The amount of any unpaid taxes, excluding current taxes.

The remainder is the equity value and is a countable resource.

d. Greenbelt Property

Tennessee’s Agricultural, Forest and Open Space Land Act of 1976, commonly known as the greenbelt law, allows qualifying agricultural, forest, and open space property to be taxed based on the property’s use rather than fair market value. Greenbelt assessment values are not used to Establish Value for Real Property described in this policy. For Medicaid eligibility purposes, a greenbelt property will be valued based on the Equity Value.

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September 1, 2026 Division of TennCare 43 20 C.F.R. § 416.1201(c) Tenn. Code. Ann. § 67-5-1008(b)(4)

4. Descent of Homestead/Right to Elective Share (TCA 31-4- 101)

The surviving spouse of an intestate (without a will) decedent who elects against taking an intestate share, or a surviving spouse who elects against a decedent’s will, has the right of election, unless limited by subsection (c) of this same title, to take an elective share amount equal to the value of the decedent’s net estate as defined in subsection (b) of this title. The elective share is determined by the length of time the surviving spouse and the decedent were married to each other. Share of Surviving Spouse and Heirs (TCA 31-2-104) The intestate share of the surviving spouse is:

• If there are no surviving descendants of the decedent, the entire intestate estate; or

• If there are surviving heirs of the descendants, either one-third or a child share’s of the entire intestate estate, whichever is greater.

5. Ownership Interest in Unprobated Estate

An individual may inherit an interest in property which he may sell or transfer even though the estate is still in probate, i.e. the inheritance has not been legally distributed.

Ownership interest in an unprobated estate is substantiated by the will which granted the individual her interest:

• Deceased died Testate (with a will): Review a copy of the will or request that the individual provide a written statement from her attorney itemizing the property in which the individual has an interest. Value each item as is appropriate for its classification, i.e. real estate, personal property, vehicle, etc. The value is a countable resource unless the individual alleges it to be

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September 1, 2026 Division of TennCare 44 inaccessible and it is determined the availability of the asset provisions apply.

• Deceased died intestate (without a will): Collect the following information and submit it to the TennCare Eligibility Policy Unit with a request for assistance in determining the value and availability of the individual’s interest in unprobated property:

o Copies of deeds or titles to all properties owned by the deceased; o Description of other items owned by the deceased, e.g. motor vehicles; o The individual’s relationship to the deceased; o The date of the deceased’s death; and o The number of surviving relatives and their relationship to the deceased.

Qualified Tuition Savings Plan (529 Plans) Resource Type A Qualified Tuition Savings Plan, also known as a 529 plan, is a special savings plan operated by a state or educational institute. A 529 plan is intended to make it easier for an individual to save money for higher education. A 529 plan acts like a savings account, from which the account owner can withdraw funds at any time. The funds in a 529 plan are a countable resource to the individual who owns the account, minus any early withdrawal penalties. Funds distributed to a beneficiary and used or set aside for educational expenses are excluded as income in the month of receipt, and if retained into the month following the month of receipt, excluded for 9 months as a resource.

Retirement Accounts and Pension Funds Resource Type Retirement accounts and pension funds are work-related plans established for providing income when an individual retires.

General Rule

Retirement accounts and pension funds owned by an individual are resources if the individual has the option of withdrawing funds in a lump sum. The value of a retirement account or pension fund is the amount of money the individual can currently withdraw less any early withdrawal penalty.

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September 1, 2026 Division of TennCare 45 Retirement accounts and pension funds are excluded:

• if termination of employment is necessary to access the funds; and

• excluded from deeming, if owned by an ineligible spouse or an ineligible parent (non-institutional categories).

Note: Retirement accounts and pension funds owned by a community spouse are considered in the resource assessment and in determining the institutionalized spouse’s eligibility for Institutional Medicaid.

When a retirement account or pension fund is an individual’s resource, distributions and systematic withdrawals are not income, but are resources that have changed from one form to another.

Types of Retirement Plans

Retirement plans may be established by an employer for the benefit of employees or set up through a financial institution for the benefit of an individual. Qualified plans are employer-sponsored plans that qualify for tax-favored treatment because they meet the requirements of the Internal Revenue Code. There are two basic types of qualified plans: defined benefit plans and defined contribution plans.

Defined Benefit Plans

Defined benefit plans promise a participant a specified monthly benefit at retirement, often based on salary, age and length of employment. A traditional pension is the most common type of defined benefit plan. Generally, pension funds cannot be accessed until a participant retires or attains the normal or early retirement age specified in the plan, at which time the participant has the option to receive the funds in either a single lump sum or in periodic payments. Even after an individual is eligible to receive funds in a lump sum, pension funds are not counted as resources if the individual is eligible for periodic payments that could begin immediately.

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September 1, 2026 Division of TennCare 46 Some defined benefit plans may allow a participant to choose more than one form of benefit. For example, an individual may receive a portion of the accrued benefit in periodic payments, but may also have the option of withdrawing a portion in a lump sum. If a defined benefit plan provides this option, each portion of the accrued benefit is treated separately. Any amount that can be withdrawn in a lump sum is counted as a resource. If periodic payments are received, the payments also count as unearned income in the month received.

Individuals eligible for periodic benefits must take all necessary steps to obtain any benefits to which they are entitled, unless they can show good cause for not doing so.

Defined Contribution Plans

Defined contribution plans do not promise a specific amount of benefits at retirement. An employee and an employer make contributions to the employee’s individual account under the plan. Typically, funds within a defined contribution plan can be accessed at age 59 ½ without a tax penalty, or before age 59 ½, with a tax penalty. Other withdrawal restrictions may apply depending on the plan. Examples of defined contribution plans include 401(k) plans, 403(b) plans, and Keogh plans.

401(k) and 403(b) Plans

Funds held in a 401(k) or 403(b) retirement account are countable when an individual is no longer job-attached or, if part of a profit- sharing plan or stock bonus plan, when an individual has attained age 59 ½. Funds for a Savings Incentive Match Plan for Employees (SIMPLE) account may be held in a 401(k). Funds in a SIMPLE plan set up as a 401(k) should be treated as a 401(k).

Keogh Plan

A Keogh plan established for a self-employed individual is considered accessible and is counted as a resource to the individual even if the household is not actually accessing the funds.

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September 1, 2026 Division of TennCare 47 Individual Retirement Account (IRA)

Funds held in an IRA, established for the benefit of an individual, are considered accessible. Count the equity value of an accessible IRA when determining eligibility. Funds in a SIMPLE plan or a Simplified Employee Pension (SEP) may be held in an IRA. Funds in an SEP or SIMPLE plan set up as an IRA should be treated as an IRA. An IRA held in the form of an annuity must be evaluated as an annuity.

If the accessibility of a retirement account or pension fund cannot be determined, the summary plan description or a written statement from the plan administrator must be obtained.

Retirement funds are considered nonliquid resources unless there is evidence to suggest otherwise (i.e., that they can be converted to cash in less than 20 days). As such, an individual with excess nonliquid resources, including retirement funds, who is otherwise Medicaid eligible, may qualify for conditional assistance while waiting for funds to become available if the individual agrees in writing to use the funds to repay the benefits he received during the conditional assistance period. Any excess funds remaining after the repayment are considered a resource. See the ABD Conditional Assistance policy for additional information regarding conditional assistance. Savings Account Resource Type The value of a savings account is a countable resource. If the current month’s income has been deposited into the account it must be excluded when determining the current value of the account. See the ABD Treatment of Resources: Ownership, Equity Value & Accessibility policy for treatment of jointly owned accounts.

A savings account may be excluded if it is used for one of the following purposes:

• Burial funds; • Business or Self-Employment; • Educational Income; • Individual Development Account; • PASS; • Proceeds from the Sale of a Home (subject to time limits); • Prorated as Income;

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 48 • Settlement or Disaster Payment, if excluded by policy; and • SSI/SSA Retroactive Payment (subject to time limits).

Note: Income tax refunds (including any advance payments), such as the Child Tax Credit, are excluded as a resource for a period of 12 months following receipt.

Settlement or Disaster Payment Resource Characteristic Payments or benefits provided under certain federal statutes are excluded. Excluded settlement and/or disaster payments include:

• Agent Orange Settlement Payments; • Disaster Relief Assistance received under the Disaster Relief Act of 1974; • Distribution of perpetual judgment funds to Indian tribes under the following: o Indian Judgment Funds Distribution (P.L. 93-134); o Black Feet and Gros Ventre Tribes (P.L. 92-254); o Grand River Band of Ottawah Indiana in Indian Claims Commission Docket No. 40-K; o Tribes of groups under P.L. 93-134; o Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation (P.L. 94-433); and o Receipts from land held in trust by the Federal government and distributed to certain Indian tribes under P.L. 94-114. • Factor VIII or IX Concentrate Blood Products Litigation: Settlement payments made as a result of the class action lawsuit to hemophilia patients infected with HIV through blood plasma products; • Filipino Veterans Equity Compensation Fund Payments: Lump sum payments made to certain veterans and spouses of veterans who served in the military of the Government of the Commonwealth of the Philippines during WWII; • Japanese-American and Aleutian Restitution Payments; • Payments made to individuals because of their status as victims of Nazi persecutions; • Payments to children born of Vietnam veterans diagnosed with spina bifida;

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 49 • Payments made under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (state and local payments are only excluded for 9 months); • Revenues from the Alaska Native Fund paid under section 21(a) of the Alaska Native Claims Settlement Act; • Radiation Exposure Compensation Trust Fund; and State funds paid to crime victims (excluded for 9 months). Social Security Account Resource Type Any amount retained in a Social Security Account after the month of receipt is a countable resource.

A Social Security Account is a bank account that is set up to receive payments as a direct deposit from the SSA. Identify the portion of the account balance that represents income received in the current month. This amount will be subtracted from the account balance to determine the total countable value of the resource.

Note: A Social Security Account is distinguished from a “my Social Security” account (an online account that an individual can create on the SSA website and use to access their Social Security information). SSI/SSA Retroactive Payment Resource Type SSI retroactive payments are benefits issued in any month after the calendar month for which they are paid. SSA retroactive payments are benefits issued in any month that is more than a month after the calendar month for which they are paid.

SSI/SSA retroactive payments are excluded for 9 months after the payment is received and counted after that 9 month exclusion period.

Stocks/Bonds Resource Type Stocks

Countable. Shares of stock represent ownership in a corporation or business. For incorporation purposes, stock is assigned a “par value”, but a stock’s value as an asset is based on the market value. The market value of a stock is a countable asset. Accept the

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 50 individual’s attestation or a copy of the stock certificate, if available.

The stock may be counted at a lower value than the market value of a stock if the individual can substantiate the lower value by providing written confirmation of the lower value from a local securities broker.

Bonds

Countable. A U.S. Savings Bond is a document issued by the government acknowledging that the money has been loaned to it and will be repaid to the owner with interest. The current value of a bond, which is its countable value, depends on the length of time elapsed since the date of issue and is subject to fluctuations in the interest rate. The name of the bond owner is printed on its face. Some bonds have conversion or “cash-in” restrictions.

Consult a bank to determine the current value of a U.S. Savings Bond and document the date the contact was made, the name of the institution contacted and the quoted value in the Case Notes.

Mutual Funds

1. Personal

Personal mutual fund shares are countable. A mutual fund is a company that buys and sells securities and other property. The Current Market Value (CMV) of the shares in the mutual fund owned by an individual is a countable asset unless the individual can establish a lesser value. Determine the CMV by consulting a stockbroker or newspaper to verify the closing price of the stock market for the date of application or redetermination.

Document the case record with the following information:

• Date contact was made or date of newspaper; • Name of individual or newspaper consulted; and • Price quoted.

The individual can substantiate a lower value by presenting written confirmation of a lower price from a local securities

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September 1, 2026 Division of TennCare 51 broker. Accept written verification of ownership from the mutual fund company or by viewing the shares themselves.

2. Mutual fund shares owned for other purposes

Mutual fund shares held for purposes other than personal use are subject to different treatment. Mutual funds shares may be owned for the following purposes:

• Burial; • Business or Self-Employment; • Educational Income; • Proceeds from the Sale of a Home; • Prorated as Income; or • Settlement or Disaster payment, if excluded by policy.

Trusts Resource Type A trust is any arrangement in which a grantor transfers real or personal property with the intention that it be held, managed or administered by a trustee(s) for the benefit of the grantor or other beneficiary(ies). A trust and the income generated by a trust will be counted or excluded based on the nature of the trust, the date the trust was created, the source of funds used to create the trust, and other factors.

See the ABD Trusts policy.

Uniform Gifts to Minors Act (UGMA) Assets or Property Resource Characteristic Excluded for individuals who have not reached the age of majority (as established by the state law controlling such gift). Counted for individuals who have reached the age of majority (as established by the state law controlling such gift).

Uniform Transfers to Minors Act (UTMA) Assets or Property Resource Characteristic Excluded for individuals who have not reach the age of majority (as established by the state law controlling such transfer). Counted for individuals who have reached the age of majority (as established by the state law controlling such transfer).

Tenn. Code Ann. § 35-7-102

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 52 Vehicle

Resource Type 1. Vehicle Types

Vehicle includes cars, trucks, motorcycles, campers, motor homes, aircraft, snowmobiles, watercraft, boats and all-terrain vehicles (ATVs).

2. Determining Ownership

Accept the individual’s sworn statement regarding motor vehicle ownership. If ownership is questionable, the following are acceptable verifications:

• Vehicle registration; • Bill of sale; or • Title (individual named on title is the undisputed owner).

3. CMV

The CMV value of a vehicle is the average price that particular year, make, model and condition will sell for on the open market in the particular geographical area involved.

Use the average loan value in a current Kelley Blue Book (KBB) to establish the CMV of a car or truck. If the vehicle is not listed in the Kelley Blue Book, request estimates of the vehicle’s market value from two reputable dealers. Use the higher estimate to value the vehicle and make note of both estimates in Case Notes.

Contact a reputable dealer to obtain an estimate of the value of other types of vehicles, such as campers, motorcycles, etc. Document contact and estimate in Case Notes.

The individual can substantiate a lower value be submitting written statements of the vehicle’s value by from two reputable dealers.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 53 4. Equity Value

The equity value of a vehicle is the price it can reasonably be expected to sell for on the open market in the particular geographic area involved less any encumbrances.

5. Exclusion of One Vehicle Regardless of Value

One vehicle of any of the types listed above is excluded regardless of its value if it’s used for transportation of the individual or a member of her household.

Assume that a vehicle is used for transportation, absent evidence to the contrary.

6. Applying the Exclusion When Individual Owns More than One Vehicle

When an individual owns more than one vehicle that is used for transportation of household members, apply the exclusion in the manner most advantageous to the individual. In general, the total exclusion will be applied to the vehicle with the greatest equity value.

7. Countable Value

The equity value of any vehicle, other than the one wholly excluded, is a resource when it:

a. Is owned by the individual or a deemed household member; and b. It cannot be excluded under another provision, including: • Home (only applicable to cars, trucks, campers and motor homes); • Business or Self-Employment; • Income-Producing; • PASS; or • Tools of the Trade (only applicable to cars, trucks, campers and motorhomes and only one vehicle may be excluded).

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 54 Recreational Vehicles Resource Type Boats, motorcycles, snowmobiles, jet skis, ATVs and aircraft are generally considered recreational vehicles. The entire amount of the individual’s equity in this type of vehicle is a countable resource, unless the vehicle can be excluded under one of the vehicle exclusions listed above.

Accept the individual’s attestation regarding ownership unless there is reason to question his statement. Request the appropriate type of legal documentation of ownership if ownership is questionable. Contact a reputable dealer familiar with the type of asset in question to determine the item’s market value. The individual may substantiate a lower market value than that determined by submitting written statements of the vehicle’s value by two reputable dealers.

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 55 Version History Revision Date Section Section Title Page Number (s) Reason for Revision Reviser 04.17.2015

Publication

12.01.2015 3. Burial Contracts; Burial Trusts 11; 15 Policy Clarification AF 05.17.2016 3. Burial Contracts; Retirement Accounts and Pension Plans 8-15; 45-46 Policy Clarification LW 11.01.2016 3. ABLE Accounts 2-3 Policy Change AJ 11.01.2016 3. Annuity 3-8 Policy Clarification AJ 12.01.2016 3. Homestead Exclusion 17-18 Policy Clarification RS 12.01.2016 3. Life Insurance 26 Policy Clarification RH 03.17.2017 3. ABLE Accounts 2-3 Policy Clarification AJ 09.11.2017 3. Homestead Exclusion 17-18 Non-Substantive Change AJ 01.03.2018 3. Homestead Exclusion 19-21 Non-Substantive Change AJ 11.01.2018 1. Countable Resources 1 Policy Clarification AJ 11.01.2018 3. Annuity 3-6 Policy Clarification AJ 01.02.2019 3. Homestead Exclusion 20 Non-Substantive Change HB 03.18.2019 3. ABLE Accounts; Health Reimbursement Accounts; Qualified Tuition Savings Plan (529 Plans) 2-3; 19; 41-42 Policy Clarification RZ 03.18.2019 3. Retirement Accounts and Pension Funds 42-45 Policy Clarification AJ 03.18.2019 3. Legal Authority; Burial Plot and Space; Burial Trusts; Checking Account; Contract for Deed or 1-48 Non-Substantive Change ME

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 56 Mortgage; Life Insurance; Patient Trust Account; Savings Account; Settlement or Disaster Payment; Stocks/Bonds; Trusts 01.04.2021 3. Legal Authority; Homestead Exclusion 1; 19 Policy Clarification TN 11.01.2021 3. Legal Authority; Checking Account; Savings Account 1; 14; 45 Policy Clarification MH 01.04.2022 3. Homestead Exclusion 20 Non-Substantive Change TN 08.01.2022 3. Excess Patient Liability Accumulated due to the Public Health Emergency (PHE), 19 Policy Change MH 08.01.2022 3. Christmas Club, Economic-Impact Payments, Social Security Account 14; 19; 47 Policy Clarification MH 01.03.2023 3. Homestead Exclusion 20 Non-Substantive Change AJ 01.02.2024 3. Homestead Exclusion 20 Non-Substantive Change CE 03.01.2024 3. Legal Authority; Achieving a Better Life Experience (ABLE) Accounts; Economic- Impact Payments; Homestead Exclusion 2-3; 19- 20 Policy Clarification TC 01.02.2025 3. Homestead Exclusion 20 Non-Substantive Change CE 08.01.2025 3. Legal Authority; Uniform Gifts to Minors Act (UGMA) Assets or Property; Uniform Transfers to Minors Act (UTMA) Assets or Property 52 Policy Change BP 08.01.2025 3. Income-Producing 24-25 Policy Clarification BP 08.01.2025 3. Life Estates; Promissory Note and other Loans 28; 39 Non-Substantive Change BP

Aged, Blind and Disabled Manual Policy Manual Number: 110.050 Section: Financial Eligibility Requirements Chapter: ABD Countable and Excluded Resources

September 1, 2026 Division of TennCare 57 08.01.2025 3. Vehicle 53 Policy Clarification MB 01.06.2026 3. Homestead Exclusion 20 Non-Substantive Change SA 09.01.2026 3.a; 3.d. Legal Authority; Real Property; Establishing Value; Greenbelt Property; Uniform Transfers to Minors Act (UTMA) Assets or Property 41-43; 51 Policy Clarification BP

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.052 Chapter: ABD Conditional Assistance Legal Authority: 20 CFR 416.1240 – 20 CFR 416.1245; 42 CFR 435.601 1. Policy Statement Conditional assistance may be available to an otherwise-eligible TennCare Medicaid applicant who has excess non-liquid resources. Conditional assistance is a contractual agreement allowing Medicaid eligibility based on the individual’s agreement to make reasonable efforts to sell excess non-liquid resources at current market value (CMV). The applicant must also agree to repay TennCare for Medicaid costs during the conditional assistance period with proceeds of the sale of the excess non- liquid resources. An individual is allowed to receive one period of conditional assistance during a period of eligibility. 2. Eligibility Conditions To be eligible for conditional assistance, an individual must: a. Meet all non-financial eligibility criteria (be aged, blind or disabled); b. Have liquid assets below the limit of $2,000.00; Note: When applying conditional assistance to a nursing home or waiver case with a community spouse, deduct the spousal resource maintenance allowance first from the community spouse’s own assets, then from the joint liquid assets, and finally from the joint non-liquid assets up to the total spousal resource maintenance allowance. Test the remaining liquid assets to limit of $2,000.00 for the institutionalized individual. c. Have total countable resources which exceed the Medicaid resource standard; and d. Agree in writing to sell excess non-liquid resources within the conditional assistance period. All joint owners of a property must sign the Agreement to Sell Property Form in order for any joint owner to be considered for conditional assistance. 3. Non-Liquid Personal Resources A non-liquid real or personal resource is a property which is not cash, and cannot be converted to cash within twenty (20) workdays. The following resource types are eligible to be sold under a conditional assistance agreement:

Aged, Blind and Disabled Manual Policy Manual Number: 110.052 Section: Financial Eligibility Requirements Chapter: ABD Conditional Assistance

November 1, 2016 TennCare 2 • Real property; • Life Estates; • Items of Unusual Value; • Livestock; • Oil and Mineral Rights; • Farm/Business/Other Equipment; and • Vehicles. 4. Liquid Resources A liquid resource is cash or any other form of resource which can be converted to cash within twenty (20) workdays. The following resource types are considered to be liquid resources: • Stocks, bonds, and mutual fund shares; • Checking and savings accounts and time deposits; • United States Savings Bonds and Treasury bills, notes and bonds: • Mortgages and promissory notes; and • Life insurance. 5. Eligibility Period Conditional assistance may be allowed to eligible individuals for up to 3 months while attempting to dispose of excess personal property, and up to 9 months while attempting to dispose of excess real property. An extension of 3 months may be given for good cause of failure to dispose of personal property timely. There is no good cause extension for failure to dispose of real property within 9 months. Good cause exists when circumstances beyond an individual’s control prevent him from maintaining reasonable efforts to sell the property. Examples of good cause may include: • Receiving no offer despite good faith effort to sell, or being prevented from good faith efforts for reasons beyond the individual’s control; • Reliance on a legitimate offer that doesn’t result in a sale; • Escrow begins, but closing doesn’t happen within disposal period; • Being homebound or hospitalized for a prolonged period due to illness or injury, and unable to arrange for someone else to sell the property; or • Joint owner dies and probate delays efforts to sell. Conditional benefits end the earliest of the following: • The property is sold; • Once it’s determined continued reasonable efforts to sell the property ended without good cause; • The individual requests in writing that conditional benefits end; • The individual becomes resource eligible without the property exclusion; or • The applicable conditional benefits eligibility period has ended.

Aged, Blind and Disabled Manual Policy Manual Number: 110.052 Section: Financial Eligibility Requirements Chapter: ABD Conditional Assistance

November 1, 2016 TennCare 3 The individual is required to sell all parcels of real property within one conditional assistance period. When eligibility is terminated, a new conditional benefits period is required. 6. Reasonable Efforts to Sell Reasonable efforts to sell resources consist of taking all necessary steps to sell in the geographic area where the resource is located. Within thirty (30) days of signing a conditional assistance agreement, the individual must: 1. List the property with an agent; or 2. All of the following: begin continuously advertising in at least one of the appropriate local media; place a “For Sale” sign on the property in clear public view; begin conducting “open houses” or otherwise show the property to interested parties on a continuous basis; AND attempt any other methods of sale. An individual who enters into a conditional assistance agreement must provide verification that she is making reasonable efforts to sell the property. Verification may include, but is not limited to: copy of contract with real estate agent; collateral contact; or copy of property advertisement in local media. Efforts to sell should not have gaps of more than one week. The individual may not reject any reasonable offers on the property. An offer for real property is assumed to be reasonable if it is at least two-thirds of CMV. The individual has the burden of proving that rejected offers over two- thirds of CMV are not reasonable. 7. Property Not Sold During Conditional Assistance Period If property under a conditional assistance agreement is not sold during the conditional assistance period, the property will become an inaccessible resource at the end of the conditional assistance period. An individual may receive one period of conditional assistance during the eligibility period. If the property is sold after the period of conditional assistance is over, Medicaid costs paid during the conditional assistance period will be recouped from the proceeds of the sale up to the total amount received from the sale. Any remainder will be subject to review of resource eligibility limits. Additionally, the sale will be reviewed under transfer of assets policy. See the Transfer of Assets and Penalty Periods policy. 8. Procedure Conditional assistance is not provided automatically if an individual is over the resource limit. An Eligibility Specialist must manually review the case to determine if an offer of conditional assistance can be made. Follow the steps below to determine whether an offer of conditional assistance is permissible: i. A completed application for TennCare Medicaid is submitted. Required verification is provided.

Aged, Blind and Disabled Manual Policy Manual Number: 110.052 Section: Financial Eligibility Requirements Chapter: ABD Conditional Assistance

November 1, 2016 TennCare 4 ii. The individual is not determined eligible for any TennCare Medicaid category. iii. The Eligibility Specialist determines if the individual would be eligible for an ABD TennCare Medicaid category if the non-liquid real or personal property was not considered. iv. If the individual would be eligible for an ABD TennCare Medicaid category if the non-liquid real or personal property was not considered, the Eligibility Specialist will offer conditional assistance to the individual. If the answer to iii. is no, the application will be denied. v. The individual will complete the Agreement to Sell Property Form, ensuring signatures of all owners of the property, and return the form to HCFA. vi. Upon receipt of the Agreement to Sell Property Form, the application will be approved. 9. Real Property If real property is listed at the Total Market Appraisal (Fair Market Value), consider the value to be CMV. If real property is listed significantly below or above the Total Market Appraisal (Fair Market Value), obtain a statement from a knowledgeable and disinterested third party stating the value of the real property and why it should be considered current market value. If the individual is working with a real estate agent to sell the real property, obtain the statement from the individual’s real estate agent. If the individual is selling the real property herself, request that the individual obtain a written statement from a third party real estate agent. 10. Recoupment Individuals receiving conditional assistance are subject to the recoupment of Medicaid costs up to the net proceeds (total sale price – any costs/taxes/mortgage/lien) received from the sale of excess personal or real property. Only the Medicaid costs assumed during the period of conditional assistance are subject to recoupment. The individual must continue making reasonable attempts to sell the property after the property becomes inaccessible due to the expiration of the conditional assistance period. If sold after the conditional assistance period ends, the recoupment amount is limited to the amount of Medicaid payments made during the conditional assistance period.

Aged, Blind and Disabled Manual Policy Manual Number: 110.052 Section: Financial Eligibility Requirements Chapter: ABD Conditional Assistance

November 1, 2016 TennCare 5 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 11.01.2016

Publication

Aged, Blind and Disabled; Section: Financial Eligibility Requirements; Policy Manual Number: 110.055; Chapter: ABD TRUSTS Legal Authority: Social Security Act § 1917(d); 42 USC 1396p(d); State Medicaid Manual § 3259; Tenn. Code Ann. § 35-15-813(a)(2); Tenn. Comp. R. & Regs. 1200-13-20-.06 1. Overview A trust is a right of funds or property held by an individual (the trustee) for the benefit of another (the beneficiary) or for self-benefit. A trust is composed of the initial amount used to create the trust (the principal) and any income (usually interest) it may produce. The trustee holds legal title to the trust and manages it for the benefit or use of the beneficiary. Determine whether a trust is a countable or excluded resource when an Eligibility Determination Group (EDG) member is either the trust’s trustee or beneficiary. 2. Definitions Beneficiary: The person for whose benefit the trust is created. Discretionary Trust: The trustee has discretion to use the trust for the beneficiary’s needs as he deems appropriate. The beneficiary has no control over the trust. Grantor/Trustor: The person who creates a trust, including a court or administrative body with legal authority to act in place of, on behalf of, or at the request or direction of the individual or spouse. Grantor Trust: A trust in which the grantor of the trust is the sole beneficiary of the trust (i.e., the grantor establishes a trust for himself). Legal Instrument or Device Similar to a Trust: Any financial instrument that resembles a trust which includes, but is not limited to: escrow accounts, pension funds, annuities, and other similar entities managed by an individual or entity with fiduciary responsibilities. Mandatory Trust: Requires the trustee to pay to or for the beneficiary’s benefit, the trust’s earnings and/or principal at certain times in specified amounts or for a specified type of care. The trustee has no discretion on distribution from the trust. Totten Trust: A tentative trust in which the grantor is trustee of her own funds for the benefit of another. The trustee or grantor can revoke the trust at any time. If the trustee dies before revoking the

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 2 trust, the beneficiary becomes owner of the trust. The terms of the trust will indicate how the trust is to be used or what limits are in place for the use of the funds by the trustee. Trustee: An individual who holds the legal title to funds for the benefit or use of another individual. 3. Accessibility Trusts must be evaluated for accessibility. If a trust is accessible, and verification is received that only a portion of the trust is available to the individual, only the available portion will be considered in the resource determination. If such verification is not received, the full value of the trust will be considered available to each beneficiary. a. Revocable Trust A revocable trust is a trust or similar legal device, which can be modified or terminated by the grantor or someone else according to the terms of the trust. A trust may be considered revocable if proof is provided that it can only be modified or terminated by a court. An irrevocable trust which terminates if some action is taken by the grantor is considered a revocable trust. For revocable trusts created prior to 8/11/1993, the full amount of the trust is a countable resource. Interest which accrues to the account is counted as unearned income. Withdrawals from the trust are not considered income, as they are a conversion of a resource. Revocable trusts created on or after 8/11/1993 which was established by the individual, a spouse, or a person/entity with legal authority to act on behalf of, at the direction of or by request of the individual or spouse, and the trust contains an individual’s assets (assets form part or all of the trust), the following policy applies: i. The principal of the trust is considered an available resource for all TennCare Medicaid categories; ii. Any payments from the trust to or for the benefit of the individual are considered income to the individual in all TennCare Medicaid categories; and iii. Any other payments from the trust for any other purpose must be considered under the Transfer of Assets and Penalty Periods policy (institutionalized TennCare Medicaid categories only). b. Irrevocable Trust An irrevocable trust is a trust or similar device which the grantor cannot revoke or modify in any way or under any circumstances. i. Irrevocable Trusts Created Prior to 8/11/1993 are Excluded as Resources if: 1. The trust is legally irrevocable;

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 3 2. The beneficiary is not a Financially Responsible Relative (FRR) or one for whom the individual is financially responsible; and 3. The individual does not have access to the funds, unless he is also a beneficiary. Review the terms of an irrevocable account, the principal amount and the income generated by such trust at every redetermination. ii. Irrevocable Trust and Similar Devices Established on or After 8/11/1993: An irrevocable trust or similar device which contains an individual’s own assets, forms all or part of the principal of a trust and is established (other than by will) by the individual or spouse, or by a person/entity with legal authority to act on behalf of or at the direction of the individual or spouse is subject to the policy outlined below. This policy applies to that portion of the trust which includes the assets of the individual regardless of the purpose of the trust, whether the trustees have or exercise any discretion under the trust, or any restrictions on distributions or the use of distributions: 1. Any payments from the trust paid to or for the benefit of the individual for any purpose are considered income to the individual, unless payment is made for medical care or other purposes in which it is not considered income under Supplemental Security Income (SSI) policy; and 2. Income on the corpus (principal) of the trust or any portion of corpus which could be paid to or for the benefit of the individual is considered an available resource to the individual. iii. For Institutionalized Individuals, the Following Additional Policy Requirements Apply: 1. Any other payments from the trust for any other purpose will be considered a transfer of assets for individuals subject to the transfer of assets policy; 2. If any portion of the trust containing the individual’s assets cannot be considered as income or a resource, it is considered a transfer of assets from the date the trust is established or payment to the individual is foreclosed: 3. The look-back period for trust transfers of assets is 60 months if no payment can be made to or for the benefit of the individual, or if payment is made for any other purpose than to or for the benefit of the individual; and 4. The corpus (principal) of the trust is the value of the transferred asset. Any additions to the irrevocable trust in which no payments can be made will be considered a transfer of assets at the point the addition is made. c. Value of an Accessible Trust If a trust is accessible, and verification is received that only a portion of the trust is available to the individual, only that portion will be considered in the resource determination. If such

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 4 verification is not received, the full value of the trust will be considered available to each beneficiary. 4. Trust Types a. Burial A burial trust is a trust established by an individual for purposes of setting aside funds for payment of burial expenses for the individual or someone else (typically a spouse or family member). Burial trusts under this provision are not the same as funds held in trust by a funeral home in conjunction with a prepaid funeral agreement/burial contract. All funds in a burial trust, established by an individual, including interest payments, are excluded if the value of the trust does not exceed $6,000 per individual. Interest payments and cost of transport which cause the trust value to exceed $6,000 are also excluded. A burial trust, established by an individual, with funds in excess of $6,000 will be treated under the normal trust provisions. The owner of the trust is the individual whose assets were used to create the trust. Verify ownership by securing a copy of the burial trust. The current value of the trust is the sum of the amount of the initial deposits, any subsequent deposits and accrued interest. b. Testamentary Trust (Trust Created by a Will) The countable value of a testamentary trust depends upon the terms of the will. The terms of the will may specify that only the income or both the income and principal are available to the beneficiary. In addition, the terms may specify that the beneficiary has limited access to the funds or that only the trustee and the court has access to the trust. The principal of the trust is a countable asset if it is accessible to the beneficiary. If the trustee has the discretion to use the trust principal for the individual’s support and maintenance or medical needs, the value of the trust is an unavailable asset, but the trust itself is a third party medical resource and must be reported to TennCare. Send a copy of the trust document and a brief written summary of the circumstances to the TennCare Third Party Liability Unit. c. Living Trust A living trust is usually a revocable, self-settled trust often created for tax and estate planning purposes. The principal of a living trust is a countable resource.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 5 d. Self-Settled Trust A self-settled trust is a trust created by a person with his own funds for his primary benefit. A self-settled trust is a countable resource. e. Special Needs Trust A Special Needs Trust is a trust: i. Established for the sole benefit of a disabled individual (as defined by the Social Security Act) who is under age 65 by: 1. The disabled individual; 2. A parent; 3. A grandparent; 4. A legal guardian; or 5. The court. ii. Established with assets of the disabled individual under age 65; and iii. Provides that upon the death of the disabled individual, the State of Tennessee will receive all amounts remaining in the trust up to the total amount of medical assistance paid on behalf of the individual during her lifetime. NOTE: This trust exclusion continues after the individual reaches age 65. However, the trust cannot be added to or otherwise augmented after the beneficiary reaches age 65. Funds contained in a Special Needs Trust are excluded as resources. Income of a Special Needs Trust is not counted as income to the disabled individual (beneficiary of the trust) unless actually distributed in the form of cash or in-kind payments for food or shelter. The Estate Recovery Unit must be notified of the existence of a Special Needs Trust, as well as when a TennCare Medicaid individual with a Special Needs Trust passes away. When the individual passes away, the closure notice will remind the family to contact the Estate Recovery Unit. f. Pooled Trust A pooled trust is a trust: i. Established for the sole benefit of a disabled person (as defined by the Social Security Administration (SSA)) by: 1. The disabled individual;

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 6 2. A parent; 3. A grandparent; 4. A legal guardian; or 5. The court. ii. Established with assets of the disabled individual; iii. Established and managed by a non-profit association with a separate account maintained for each trust beneficiary, but multiple trust accounts are pooled for investment purposes and management of funds; and iv. Provides that upon the death of the disabled individual, any amount remaining in the account that is not retained by the trust will be paid to TennCare, up to the total amount of medical assistance paid on behalf of the individual during his lifetime. Pooled trust established or modified by individuals age 65 or older must be evaluated for a potential transfer of assets. See the Transfer of Assets and Penalty Periods policy. g. Income-Producing Trusts (Applies to trusts created on or after 8/11/1993) i. If a trust fund is producing regular income for the beneficiary and the terms of the trust specify that the beneficiary does not have access to the trust principal or income, that such access is limited to the trustee or court, and the trust does not contain any of the beneficiary’s own assets, then the value of the trust is an excluded asset. Any payments the individual receives from the trust are considered unearned income. ii. Dividends, interest, rents and other income generated by a trust fund, unless otherwise excluded, that can be paid to or for the benefit of the beneficiary are considered countable income to the beneficiary in the month they become available, regardless of whether the income is actually paid out to the beneficiary. iii. Income earned by a trust that can be distributed, but is not distributed to the beneficiary and is instead retained in the trust becomes a countable resource to the beneficiary in the months following the month the income was available for distribution. iv. Funds withdrawn from the principal of an inaccessible or excluded trust, unless otherwise excluded, are considered countable income in the month received. v. Funds withdrawn from the principal of an accessible or countable trust fund are excluded as income because an accessible trust fund is a countable resource. Money cannot be considered as income and a resource in the same month. vi. If an individual is receiving regular payments from an inaccessible trust fund, and the trustee has the discretion to use the trust principal for the beneficiary’s support and

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 7 maintenance or medical needs, the value of the trust is an unavailable asset, but the trust itself is a third party medical resource and must be reported to the TennCare Third Party Liability Unit. h. Qualified Income Trust (QIT) or Miller Trust A QIT is a trust that is created specifically for the purpose of becoming eligible for TennCare Long-Term Services and Supports (LTSS). For individuals seeking LTSS whose gross income is over the income limit, the state allows the individual to create a QIT into which he or she directs income. This may enable an individual to qualify financially for TennCare Medicaid. i. QIT Defined A QIT is a trust consisting of the individual’s income. Any type of income may be directed into the QIT, although Social Security income and pension income are among the more common types. A QIT is created for the purpose of establishing income eligibility for TennCare Medicaid in order to receive Medicaid coverage when an individual is or soon will be confined to a nursing facility or Home and Community Based Services (HCBS) Waiver program. ii. QIT Policy Individuals applying for or receiving TennCare Medicaid LTSS, whose income is over the income limit, may still qualify for Medicaid coverage if some or all of his or her income is placed in a valid QIT. This applies to both individuals who are or who will be confined to a nursing facility or enrolled in an HCBS waiver. Individuals who are eligible to create a QIT must also meet all other TennCare Medicaid and CHOICES eligibility requirements. Income placed in a valid QIT will be treated as unavailable in accordance with federal standards. For the QIT to be considered valid, the individual’s gross monthly income must be above the income limit. Income that is not placed in the QIT must be at or below the income limit. If income not placed in the QIT is over the income limit, the individual is not financially eligible regardless of the income placed in the QIT. An individual whose income is placed in a QIT and who is subsequently found to be eligible for Medicaid will be considered eligible on the first day of the month in which eligibility is established, or the date of admission to the nursing home or HCBS program, whichever is later. iii. Income Test The amount of income placed in a QIT cannot be limited nor can it be counted when testing income against the income limit. However, it is used in determining patient liability during post-eligibility treatment of income. Income that is not placed in the QIT is tested against the income limit. If the individual’s income that is not placed in a QIT is over the income limit, the individual is not income-eligible for TennCare Medicaid.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 8 iv. Criteria for a Valid Trust The Trust must be irrevocable and cannot be modified or amended in whole or in part by the grantor at any time. However, the trustee or a court of competent jurisdiction shall have the right and jurisdiction to modify any provision of the Trust to the extent necessary to maintain the eligibility of the grantor for medical assistance. Each month the trustee shall distribute the entire amount of income transferred into the Trust except for an amount not to exceed $20, or another verified amount, for the expenses of the Trust. The sole beneficiaries of the Trust are the individual for whose benefit the Trust is established and the State of Tennessee. The Trust terminates upon the death of the individual, or when the Trust is no longer required to establish TennCare Medicaid eligibility in the State of Tennessee, or if nursing facility care or HCBS is no longer medically necessary for the individual, or if the individual is no longer receiving such services. The Trust must provide that upon the death of the individual or termination of the Trust, whichever occurs sooner, the State of Tennessee shall receive all amounts remaining in the Trust up to the total amount of medical assistance paid by the State on behalf of the individual along with an accounting of the payments from the Trust. v. Allowable Monthly Payments for Long-Term Care Facilities Allowable payments from the Trust include: 1. Personal Needs Allowance (PNA) the amount the individual is allowed to retain for his or her personal needs under Tennessee’s TennCare Medicaid policies. As of January 1, 2025, this amount is $70 for confinement in a nursing facility or ICF/MR and 300% of the SSI-FBR for HCBS enrollees and Self-Determination Waiver; and 300% for the Comprehensive Aggregate Cap (CAC) and Statewide Waivers; 2. A deduction not to exceed $20, or another verified amount, for expenses necessary for managing the trust (i.e. bank charges); 3. Community Spouse Income Maintenance Allowance/Dependent Income Maintenance Allowance (CSIMA/DIMA), if applicable; 4. Health Insurance Premiums – allowed when the individual has health insurance other than TennCare Medicaid (for example, Medicare premium or a Medicare supplement policy); and 5. Item D deductions - payment for types of medical or remedial care recognized under state law, but not covered as medical assistance under TennCare Medicaid.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 9 vi. Payment for Nursing Facility Care, HCBS, and other TennCare Medicaid-Covered Services Any available income not placed in the QIT and any Trust income remaining after allowable deductions are made shall be paid monthly to the facility by the individual or from the Trust in an amount not to exceed the Medicaid reimbursement rate. Any excess income not distributed from the Trust shall accumulate in the Trust monthly. vii. Restrictions on Other Expenses No other deductions or expenses may be paid from the Trust. Expenses which cannot be paid from the Trust, except as specifically provided herein include, but are not limited to, trustee fees, attorney fees and costs (including attorney fees and costs incurred in establishing the trust), accountant fees, court fees and costs, fees for guardians ad litem, funeral expenses, past due medical bills, and other debts. viii. Home and Community Based Services (HCBS) For an individual with a valid Trust receiving HCBS, the following methodology will be used to determine the financial liability of the individual for the cost of care. 1. Determine the amount of the individual’s gross monthly income. Based on federal regulations and guidance, all of the individual’s income is counted, including the amount placed in the Trust. 2. Deduct the individual’s Personal Needs Allowance (PNA). The PNA for HCBS is 300% of the SSI/FBR for HCBS enrollees and Self-Determination Waiver; and 300% for the Comprehensive Aggregate Cap (CAC) and Statewide Waivers. 3. A deduction not to exceed $20, or another verified amount, for trust expenses, i.e. bank charges is allowed. 4. A deduction may be made for spousal allocation, health insurance or any approved non-covered medical or remedial care expense (Item D). Approved non-covered services are listed in TennCare State Rules. 5. The remainder, after the above deductions, is the individual’s financial liability amount. 5. Undue Hardship An individual applying for or receiving TennCare Medicaid-reimbursed LTSS may request an undue hardship waiver if application of the trust provisions would work an undue hardship. We will consider the possibility of undue hardship if: a. Counting an irrevocable trust as a resource would make the individual ineligible due to excess resources;

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 10 b. The trustee is prohibited from disbursing funds from the trust for the individual’s support and maintenance due to the terms of the trust; and c. Application of the trust provisions would deprive the individual of essential medical care such that his health or life would be endangered, or would deprive the individual of food, clothing, shelter, or other necessities of life. Note: If the trust is revocable, the requirements for undue hardship are not met, because the individual can access the trust funds for his support and maintenance.

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.055 Chapter: ABD Trusts

May 1, 2026 Division of TennCare 11 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Revis er 04.17.2015

Publication

12.02.2015 4.h.; 4.h.i. Qualified Income Trust (QIT) or Miller Trust; QIT Defined 7 Policy Clarification AF 03.18.2019 3.b.iii.; 4.h.iv-v.; 4.h.viii. Legal Authority; For Institutionalized Individuals, the Following Additional Policy Requirements Apply; Criteria for a Valid Trust; Allowable Monthly Payments for Long-Term Care Facilities; Home and Community Based Services (HCBS) 1; 3; 7-9 Policy Clarification AJ 03.18.2019 2. Definitions 1 Non-Substantive Change ME 03.01.2024 4.h.ii.-iv. 5. Legal Authority; Trust Types; Undue Hardship 1; 7; 9-10 Policy Change TC 07.01.2024 4.h.v.1; 4.h.viii.2 Allowable Monthly Payments for Long-Term Care Facilities; Home and Community Based Services 8-9 Non-Substantive Change BP 05.01.2026 4.iv.

Legal Authority; Criteria for a Valid Trust 1; 8 Policy Change BP 05.01.2026 4.v. Allowable Monthly Payments for Long-Term Care Facilities 8 Non-Substantive Change BP

Aged, Blind and Disabled Manual Section: Financial Eligibility Requirements Policy Manual Number: 110.060 Chapter: ABD Inaccessible Resources Legal Authority: 20 CFR 416.120; 20 CFR 416.1245 1. Policy Statement A resource may be considered inaccessible if: • An individual cannot legally access the value of the resource beyond her control and, unless undue hardship exists, all legal avenues have been exhausted in order to access the value of the resource; or • An individual is unable to sell an asset due to limited use rights, mental impairment or due to conditions of joint ownership; or • The resource is jointly owned real property AND sale of the property would result in the joint owner being homeless; or • An individual is unable to locate a buyer for the asset, the conditional assistance period has expired, and the individual continues reasonable to sell the property; • The value is unavailable due to a lien against the asset; or • The asset’s value is not accessible to the individual due to litigation. 2. Limited Use Rights If the individual has only limited use rights to a piece of real property such as lifetime occupancy or dower rights, he is not able to sell the property; however, he can sell his use rights. Exclude the equity value due to inaccessibility in determining countable resources if the individual can demonstrate unsaleability by providing written statements from two licensed real estate agents substantiating that, in their professional opinion, the life estate (or other use rights arrangement) is unsaleable. Note: Record in case notes the verbal statements of those in a position to know if they refuse to give a written statement or to sign a written statement.

Aged, Blind and Disabled Policy Manual Number: 110.060 Section: Financial Eligibility Requirements Chapter: ABD Inaccessible Resources August 01, 2024 TennCare 2 3. Individual’s Mental Impairment (applicable to non-liquid resources only) a. General Rule If the individual has a guardian, conservator, power of attorney or durable power of attorney at the time of application or renewal, the assets of the individual are considered available to the individual. That person is legally appointed to act on behalf of the individual and is expected to make the individual’s assets available for use by or for the care of the individual. If the individual’s mental impairment precludes her negotiating the sale of an asset, and she has no guardian or conservator to act on her behalf, exclude the asset as unavailable under certain conditions. It is not necessary that the individual be adjudicated incompetent by a court of law. If, in the Eligibility Specialist’s opinion or that of the responsible party or person in a position to know the facts of the individual’s situation, the individual is mentally impaired, apply the provision of this policy. b. Individual’s Mental Impairment at Application i. Temporary Exemption Exclude the asset as unavailable for up to 3 months from approval date if the individual or the person applying on his behalf agrees to the following: • Take steps to be appointed guardian or to contact the individual’s friends and relatives regarding their willingness to serve as the individual’s guardian/conservator; • See that the individual who agrees to serve takes immediate steps toward appointment; AND • To provide HCFA with substantial documentation of his action and that of the guardian designee. If the individual or responsible party is unable to perform the above-cited tasks, he must provide the names and addresses of individuals who might be willing to serve as the individual’s guardian. The HCFA Eligibility Specialist accepts the responsibility for contacting the named individuals in an effort to locate someone willing to act as guardian. Contact each of the individuals by telephone or by mail explaining the situation and requesting their assistance in securing a guardianship for the individual for the purposes of making available assets which the applicant needs to meet his medical needs. Document the case thoroughly.

Aged, Blind and Disabled Policy Manual Number: 110.060 Section: Financial Eligibility Requirements Chapter: ABD Inaccessible Resources August 01, 2024 TennCare 3 ii. Long-Term Exemption An asset may continue to be considered unavailable beyond the initial 3 month period until the next renewal under the following conditions: a. No guardian is found If after 3 months, the efforts of the Eligibility Specialist and the person acting on the individual’s behalf have failed to locate a potential guardian, document the case record establishing the asset’s inaccessibility. If the individual is otherwise eligible, continue assistance. Extend benefits if all of the following conditions are met: • The individual requested benefits for that period; • The same conditions regarding the disputed asset still exist; and • The individual is otherwise eligible. b. Potential Guardian is Found Exclude the asset for an additional 30 days from the date the potential guardian agrees to serve to allow him to file a petition for guardianship with the court. If after 30 days the potential guardian has not initiated guardianship procedures for any reason, exclude the resource per instruction above under No Guardian is Found section. If after 30 days, the potential guardian has begun appointment procedures, continue to exclude the asset as unavailable until the next renewal. Set an expected change at regular intervals (every 60 to 90 days) to follow up on the situation and to determine the court’s instructions regarding the asset. Note: If it becomes necessary to delay action on an application in order to determine an asset’s availability as described in this item, secure the applicant’s written permission to hold the application pending beyond the processing time limits. c. Individual’s Mental Impairment at Renewal i. Exclusion Previously Granted If an asset has previously been excluded as unavailable as described in this item, at least 30 days before the renewal is due, secure current information to substantiate that the asset remains inaccessible because:

Aged, Blind and Disabled Policy Manual Number: 110.060 Section: Financial Eligibility Requirements Chapter: ABD Inaccessible Resources August 01, 2024 TennCare 4 • A guardian has not been located; or • Guardianship proceedings have begun but are not complete or the court has issued no instruction regarding the asset. ii. Initial Exclusion If the asset has not been previously excluded as inaccessible as described, but since the last renewal its equity value along with other countable assets results in the individual’s ineligibility, and the individual cannot dispose of the asset due to his mental condition, do not continue to extend TennCare Medicaid benefits until the asset’s inaccessibility has been substantiated as described above. Take action to close the case observing the adequate and advance notice requirements. Once the asset’s inaccessibility is verified and the individual has reapplied, benefits may be extended retroactively to the date of closure provided the individual is otherwise eligible. 4. Joint Ownership

a. General Rule If an asset cannot be sold or converted due to the conditions of joint ownership, exclude the individual’s equity value in determining resource eligibility. The individual’s equity value in a jointly owned asset can be excluded under the following conditions: • The resource is jointly owned with a person or persons who are not the individual’s Financially Responsible Relative (i.e., spouse or parent); and • The joint owner refuses to consent to the sale of the asset or to purchase the individual’s interest. • Even though the individual is free to sell his own individual interest in the property, he is unable to find a buyer. Note: Any portion of real property owned through “tenancy-in-common” or “joint tenancy” arrangements is available to each owner for sale or transfer without the consent of the other (joint) owner(s). b. Joint Ownership Policy at Initial Application Do not extend TennCare Medicaid benefits until the asset’s inaccessibility to the individual has been substantiated by the following: • The co-owner(s) written refusal to consent to the sale of the asset and to purchase the individual’s share, if applicable; or

Aged, Blind and Disabled Policy Manual Number: 110.060 Section: Financial Eligibility Requirements Chapter: ABD Inaccessible Resources August 01, 2024 TennCare 5 • Substantiation (by deed or the written statement of a licensed real estate agent or an attorney) that the individual is unable to sell his interest in the asset without the consent of the co- owner(s) OR that his individual share is unsaleable. Note: If it is necessary to hold the application pending beyond the processing time limits, secure the individual’s written permission to do so. c. Joint Ownership Policy at Redetermination If the asset has not previously been excluded as described in this item, do not continue to extend benefits at review until the asset has been demonstrated to be unavailable as described above. Take steps to close the case observing standard adequate and advance notice requirements. Once the asset’s inaccessibility has been verified and the individual has reapplied, benefits may be extended retroactively to the date of closure provided the individual was otherwise eligible. At least 30 days before the review is due, secure the joint owner’s written statement regarding his position on the sale of the asset and the purchase of the individual’s share, if applicable. Request that the individual present written substantiation of his inability to sell the asset as described above. Continue to exclude the value of the asset if the individual’s claim of inaccessibility is supported by the joint owner’s statement. 5. Ownership Interest in an Unprobated Estate If the individual has inherited an interest in real property that is part of an estate still in probate, her interest is a countable asset because she can legally sell it. It may, however, be difficult to do so. Exclude the value of the asset if the individual can demonstrate that he is unable to sell his interest by providing statements from two knowledgeable sources, e.g., an attorney or real estate agent, that his interest cannot be sold. The exclusion can be applied to the asset only while it remains in probate. Extend benefits only after the inaccessibility of the asset is substantiated as described above. Secure the individual’s written permission to hold the application pending beyond the processing time limits, if necessary. Do not continue to extend benefits until receipt of current verification that the asset is unavailable. 6. Inability to Locate a Buyer a. Policy Statement If the individual owns an asset for which he has full use rights and the unrestricted right to sell, and he is making reasonable efforts to sell the resource, but he is unable to locate a buyer, his equity value may be excluded as a countable resource. Before the property may be excluded, the

Aged, Blind and Disabled Policy Manual Number: 110.060 Section: Financial Eligibility Requirements Chapter: ABD Inaccessible Resources August 01, 2024 TennCare 6 individual must agree to a conditional assistance period (see ABD Conditional Assistance policy chapter). If the conditional assistance period expires without a sale, the property can be considered inaccessible. However, attempts to sell the property must continue. b. Defined Terms Offered for sale - means listing the property with a licensed real estate agent, advertising the property for sale using at least two alternate methods such as a sign on the property (real or personal) and a newspaper ad in a newspaper that serves the area where the property is located, or placing the property on auction. Reasonable asking price - means a price that is not inflated, i.e., not in excess of 100% of the real value. Legitimate offer - means one that is at least equal to the reasonable asking price, does not require the individual to extend credit, and does not result in a net loss to the individual. No reasonable offer to buy may be refused by the individual or his/her authorized representative. Mortgage or Promissory Note - A reasonable effort to sell a mortgage or Promissory note exists when all the following conditions are met: • The individual has made an effort to offer the instrument to a bank or other financial institution; AND • The best offer he received is more than 10% below the actual value of the remaining principal; AND • The individual presents written verification from the representative of at least two financial institutions that the mortgage or note could only be sold if discounted by more than 10%. c. Policy Implementation-At Application i. Initial Exclusion-Conditional Assistance Once property is exempt under the provisions of this policy, it must remain on the market at a reasonable asking price until it is sold OR the individual is no longer eligible for and a recipient of TennCare Medicaid benefits. ii. Mortgage or Promissory Note Before excluding the value of a mortgage or promissory note, entered into on or after February 8, 2006, the repayment terms must be actuarially sound. The actuarial standards to be applied are those determined by the Office of the Chief Actuary of the Social Security Administration (SSA, the table called the Period Life Table can be found on Sosa’s Actuarial Publications Standard Table and can be assessed at (http//:www.ssa.gov/OACT/STATS/table4c6.html). The agreement must provide for payments to be made in equal amounts during the term of the loan and with no deferral or

Aged, Blind and Disabled Policy Manual Number: 110.060 Section: Financial Eligibility Requirements Chapter: ABD Inaccessible Resources August 01, 2024 TennCare 7 balloon payments. It must prohibit the cancellation of the balance upon the death of the lender. If the required criteria are not met, the purchase of the promissory note, loan or mortgage’s outstanding balance that is owed at the time of application must be treated as a transfer of assets. EXAMPLE: Ms. Jones made an application for nursing home Medicaid on November 8, 2006. She sold her home to her daughter that same day, for $80,000. Her daughter agrees to pay $100 per month for 19 years and 11 months with a balloon payment in the last month of the term loan. Their agreement was notarized by a notary republic. Because this loan was not actuarially sound and had a balloon payment on the end, this loan must be treated as a transfer of asset. Exclude the value of the mortgage or note effective the date of application unless the individual can establish that the same conditions existed in the retro period. On excluded notes, any payments made by the debtor towards the principle or interest are counted as unearned income to the individual in the month of receipt. If a buyer cannot be found, before excluding the value of the loan or promissory note, the individual must provide written substantiation from two knowledgeable sources that the note could be sold only if discounted by more than 10%. The importance of timely reporting any change of status regarding the sale of the property must be discussed and emphasized with the individual or his/her authorized representative. An Expected Change must be scheduled to review the progress of the sale no later than three months from the date the property is placed for sale or from the date of approval if the case continues to be active. d. At Redetermination - Reasonable Efforts to Sell i. Initial Exclusion If the asset has not previously been excluded based on the offer and acceptance of a conditional assistance period, do not continue to extend benefits until such an offer and acceptance occurs (see ABD Conditional Assistance policy chapter). If the individual does not agree to the conditional assistance period, take steps to close the case observing standard adequate and advance notification procedures. NOTE: Property cannot be exempt as homestead while it is being offered for sale. A property’s exemption as homestead is voided by an attempt to sell it. ii. Real Estate Once the asset has been proven unavailable, exclude the individual’s equity value in real estate effective the date it was placed for sale. This will allow any subsequent approval and include

Aged, Blind and Disabled Policy Manual Number: 110.060 Section: Financial Eligibility Requirements Chapter: ABD Inaccessible Resources August 01, 2024 TennCare 8 benefits retroactively to the date of closure. In order for the real property to continue in its exclusion status, it must remain on the market until it is sold or until the individual’s case is closed. iii. Mortgage Exclude the value of a mortgage or note effective the date of the written verification or prior to that date if similar (documented) conditions existed, whichever is earlier. iv. Asset Previously Excluded At least 30 days before the redetermination is due, begin the review of asset availability. In order for property to retain its exclusion under the terms of this item, it must remain on the market until sold or the individual is no longer eligible. The individual must provide current verification of the following regarding the property: • The property is advertised for sale using at least two methods of advertisement OR is listed with a broker; AND • Is listed with a reasonable asking price; AND • The individual has not declined any reasonable offers. In order to continue exclusion of the unpaid principal on a mortgage or promissory note, the individual must provide current (no older than 30 days) verification of his reasonable effort to sell as defined above. 7. Lien Consider unavailable to the individual any portion of real or personal property against which a legal lien has been filed. The equity value in the remaining portion is an available asset. Do not exempt any portion of an asset under the provisions of this item until it is established that the lien is legal, i.e., filed, UNLESS the lien is one pending filing by the Department of Disability and Aging (DDA). Deduct the amount of the legal (filed) lien from the individual’s equity value in the asset to determine the portion that remains a countable asset. Record the following information regarding the lien in the eligibility system: • Name of the party filing the lien; • Total amount of the lien; • Filing date; and • Place filed.

Aged, Blind and Disabled Policy Manual Number: 110.060 Section: Financial Eligibility Requirements Chapter: ABD Inaccessible Resources August 01, 2024 TennCare 9 a. DDA Liens Exclude as unavailable an amount equal to the amount of the pending lien if there is written assurance from the DDA’s Office of General Counsel that a claim will be filed within 90 days is received. Do not extend or continue benefits until confirmation of the DDA’s intent to file a lien is confirmed. If a temporary 90 day exemption is extended, set up an expected change effective the 90th day. On the 91st day, secure a copy of the lien for the case record. If one has not been filed, discontinue the exemption and consider the entire amount of the applicant’s resources available to him. 8. Litigation The equity value of any resource involved in litigation is considered to be unavailable to the individual. Litigation means involved in a lawsuit or some type of court action. Verify with the individual’s attorney that litigation is ongoing or secure written documentation that substantiates the individual’s allegation that the asset is involved in litigation. The asset is considered unavailable to the individual effective the date it became involved in the litigation action.

Aged, Blind and Disabled Policy Manual Number: 110.060 Section: Financial Eligibility Requirements Chapter: ABD Inaccessible Resources August 01, 2024 TennCare 10 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 04.15.2015

Publication

11.1.2016 1 Policy Statement 1 Policy Change LW 11.1.2016 2 Limited Use Rights 1 Non-Substantive Change NF 11.1.2016 3 Individual’s Mental Impairment (applicable to non-liquid resources only) 1-3 Non-Substantive Change NF 11.1.2016 4 Joint Ownership 4-5 Non-Substantive Change NF 11.1.2016 5 Ownership Interest in an Unprobated Estate 5 Non-Substantive Change NF 11.1.2016 6-a Inability to Locate a Buyer-Policy Statement 5 Policy Change LW 11.1.2016 6-b Inability to Locate a Buyer- Defined Terms 5-6 Policy Change LW 11.1.2016 6-c Inability to Locate a Buyer-Policy Implementation 6-7 Policy Change LW 11.1.2016 6-d Inability to Locate a Buyer-At Redetermination-Reasonable Efforts to Sell 7 Policy Change LW 08.01.2024 7. 7.a. Lien DDA Liens 8 Non-Substantive Change BP

Aged, Blind and Disabled Manual Section: Categories of Eligibility Policy Manual Number: 115.005 Chapter: Breast or Cervical Cancer

Legal Authority: 1902(a)(10)(A)(ii)(XVIII) of the Social Security Act; Tenn. Comp. R. & Regs. 1200- 13-20 1. Overview The Center for Disease Control and Prevention’s (CDC) National Breast and Cervical Cancer Early Detection Program (NBCCEDP) provides funding to all 50 states, the District of Columbia, 5 U.S. territories, and 11 American Indian/Alaska Native tribes or tribal organizations to provide low- income individuals with screening, diagnostic and referral services for breast and cervical cancer. The Department of Health (DOH) Tennessee Breast and Cervical Cancer Screening Program (TBCCSP) provides these screening services to individuals at DOH local offices throughout the state. The TBCCSP provides clinical breast exams, mammograms and Pap tests and other needed cervical services for eligible individuals, free of charge. In order to receive these services free of charge, an individual must be: a. Under a certain income level based on family size; and b. Uninsured, or insured by a health policy that does not cover these screening tests. The Breast and Cervical Cancer Prevention and Treatment Act of 2000 allows states to offer individuals in the NBCCEDP access to treatment through the Medicaid program. In Tennessee, eligible individuals receive Medicaid benefits in the Breast or Cervical Cancer (BCC) Category of Eligibility (COE). The CDC and the Centers for Medicare and Medicaid Services (CMS) provide matching funds to the program, equal to the state’s Medicaid Federal Medical Assistance Payment (FMAP). 2. Policy Statement TennCare Medicaid benefits are available to individuals who receive breast or cervical cancer diagnoses, including for precancerous conditions, through the TBCCSP. Eligible individuals must require ongoing treatment for the cancer, meet all non-financial and financial eligibility requirements, and not be eligible in any other TennCare Medicaid or TennCare Standard COE. Individuals diagnosed with breast or cervical cancer by the DOH may receive presumptive eligibility for the TennCare Medicaid program, if they are otherwise eligible. Presumptive eligibility provides coverage through the end of the month after the eligibility determination is made.

Aged, Blind and Disabled Manual Policy Manual Number: 115.005 Section: Categories of Eligibility Chapter: Breast or Cervical Cancer

July 1, 2021 Division of TennCare 2 3. Presumptive Eligibility Presumptive eligibility for the BCC COE is determined by the DOH. a. Primary Screening Providers and Locations All DOH offices are expected to provide assistance to qualified individuals who are diagnosed with breast or cervical cancer, or who have suspicious symptoms related to these two forms of cancer. Participating statewide providers, including local DOH offices and certain primary care clinics provide screening services. A list of participating Community Health Centers is available on the Department of Health Local and Regional Health Department website. b. Presumptive Eligibility Requirements To be eligible for presumptive eligibility, an individual must: i. Have a verified diagnosis of breast or cervical cancer, including precancerous conditions; ii. Be under age 65; iii. Be uninsured or lack creditable health insurance coverage; iv. Participate in the TBCCSP program; and v. Have income at or below 250% of the Federal Poverty Level (FPL), based on family size.

Note: Self-attestation of income is accepted by TBCCSP when determining presumptive eligibility. c. Presumptive Eligibility Benefits Presumptive eligibility benefits include TennCare Medicaid coverage not limited to the treatment of breast and/or cervical cancer but does not include experimental treatments. Presumptive eligibility extends through the end of the month following the month in which presumptive eligibility is established. If an individual files a Valid Application during that period, the individual’s presumptive eligibility will remain open until final disposition of the Valid Application.

Aged, Blind and Disabled Manual Policy Manual Number: 115.005 Section: Categories of Eligibility Chapter: Breast or Cervical Cancer

July 1, 2021 Division of TennCare 3 d. DOH Responsibilities i. Establishing Presumptive Eligibility Once the TBCCSP determines presumptive eligibility, DOH staff complete the Presumptive Eligibility application using TennCare Access. DOH staff will either assist or instruct the individuals eligible for presumptive coverage to apply for Medicaid ii. Services and Treatment-Related Expenses The DOH TBCCSP provides all screening tests necessary to make a cancer diagnosis, as well as post-screening diagnostic services, such as surgical consultations and biopsy, to ensure that all individuals with abnormal results receive timely and adequate referrals. 4. Coverage under the BCC COE a. Applicants with Presumptive Eligibility i. Individuals who file a Valid Application during their presumptive eligibility period may receive continuous eligibility (i.e., no interruption between presumptive eligibility and TennCare Medicaid coverage) in the BCC COE if they meet all non-financial and financial eligibility requirements. See all non-financial and financial eligibility requirements listed below. ii. Individuals who file a Valid Application up to 45 days prior to the approval of the presumptive eligibility period may receive continuous eligibility in the BCC COE if they meet all non-financial and financial eligibility requirements. Individuals will not be required to file a subsequent application during the presumptive period b. Applicants who Require a Referral to DOH TBCCSP If TennCare Medicaid applicants indicate that they have breast or cervical cancer, and they are not eligible in any open non-BCC TennCare Medicaid COE, they must be referred to the DOH TBCCSP program. 5. Non-Financial Eligibility Requirements a. Age Eligible individuals must be under the age of 65.

Aged, Blind and Disabled Manual Policy Manual Number: 115.005 Section: Categories of Eligibility Chapter: Breast or Cervical Cancer

July 1, 2021 Division of TennCare 4 b. Citizenship Eligible individuals must be U.S. citizens, U.S. nationals or eligible non-citizens. c. Residency Eligible individuals must be residents of Tennessee. d. Enumeration Eligible individuals must possess and provide a valid Social Security Number (SSN) or proof of application for an SSN.

e. TBCCSP Participant Eligible individuals must be participants of the TBCCSP program. They must have received a cancer diagnosis from the TBCCSP and be approved for presumptive eligibility. f. Cancer Diagnosis and Ongoing Treatment Eligible individuals must have a diagnosis of breast or cervical cancer, including cancerous or precancerous conditions, and require on-going treatment. In order to be continuously eligible in the BCC COE after presumptive eligibility is established, individuals must submit a treatment plan to TennCare. The treatment plan is also submitted at each redetermination. Once a treatment plan is received by TennCare, it is reviewed by TennCare Member Services. Coverage in the BCC COE provides full TennCare Medicaid benefits; however, TennCare Medicaid does not cover experimental treatments. g. Lacks Creditable Coverage Eligible individuals must be uninsured. An individual who lacks “creditable coverage” is considered to be uninsured. “Creditable coverage” includes: i. Other health insurance, including individual plans; ii. Group health insurance plans; iii. Medicare; iv. Medicaid (Individuals applying for coverage will be screened for all open TennCare Medicaid COEs prior to being determined eligible in the BCC COE); v. Military health plans; vi. Medical care programs of the Indian Health Services or tribal organizations; vii. State risk pools; viii. Public health plans; and

Aged, Blind and Disabled Manual Policy Manual Number: 115.005 Section: Categories of Eligibility Chapter: Breast or Cervical Cancer

July 1, 2021 Division of TennCare 5 ix. Health plans under Section 5(e) of the Peace Corps Act.

Note: Once third party coverage of cancer has been exhausted, the applicant will be considered to no longer have health insurance. Insurance through the Exchange does not prevent eligibility for the BCC COE. h. TennCare Medicaid Eligibility An eligible individual cannot be eligible for any other open TennCare Medicaid COE. 6. Financial Eligibility Requirements Income and resources are not taken into account by TennCare when providing continuing eligibility in the BCC COE after presumptive eligibility is approved. However, this information is required for processing the eligibility determination of other open TennCare Medicaid COEs. 7. Coverage in another TennCare Medicaid COE If an individual receiving coverage in the BCC COE gains eligibility in another TennCare Medicaid COE, BCC coverage will close. This policy applies to all COEs, except Emergency Medical Services (EMS) and both Presumptive Pregnancy and BCC. 8. Case Closure a. Presumptive Eligibility If an individual is diagnosed with breast or cervical cancer and is approved for presumptive eligibility, and the diagnosis is determined to be benign or the individual fails to provide necessary information for ongoing coverage in the BCC COE (or other TennCare Medicaid COE), the presumptive eligibility coverage will end the last day of the month following the month in which presumptive eligibility was established. b. BCC Eligibility Once an oncologist determines that the enrollee is cancer-free or in remission, the BCC coverage will be terminated. Individuals losing eligibility in the BCC COE will be reviewed for coverage in an open TennCare Medicaid COE prior to termination.

Aged, Blind and Disabled Manual Policy Manual Number: 115.005 Section: Categories of Eligibility Chapter: Breast or Cervical Cancer

July 1, 2021 Division of TennCare 6 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.10.2015

Publication

05.02.2016 1. Overview of the Breast and Cervical Cancer Early Detection Program 1 Policy Clarification AK 05.02.2016 3.a. Primary Screening Provider and Locations 2 Non-Substantive Change AK

05.01.2017 4.b. Applicants who Require a Referral to DOH TBCCEDP 2 Non-Substantive Change RS

03.18.2019 1.; 3.a; 3.d.i Overview; Primary Screening Providers and Locations; Services and Treatment- Related Expenses 1-3 Non-Substantive Change RZ 03.18.2019 5.g. Lacks Creditable Coverage 4 - 5 Policy Clarification RZ 07.01.2019 3.a; 3d.i; 5.g. Legal Authority; Primary Screening Providers and Locations; Establishing Presumptive Eligibility; Lacks Creditable Coverage 1-3 Policy Clarification TN

07.01.2019 4.a.ii Applicants with Presumptive Eligibility 3 Policy Change TN 07.01.2021 1.; 3.a. Overview; Primary Screening Providers and Locations 1-2 Non-Substantive Change TB

Aged, Blind and Disabled Manual Section: Categories of Eligibility Policy Manual Number: 115.010 Chapter: Disabled Adult Children Legal Authority: 42 USC 1383c; Social Security Act 1634(c) 1. Policy Statement Medicaid benefits are extended to individuals who would be eligible for Supplemental Security Income (SSI) payments but for entitlement to OR increase in the amount of the Disabled Adult Child’s (DAC) Social Security benefits. When SSI recipients lose SSI eligibility because of entitlement to or increase in Social Security DAC benefits, they remain eligible for Medicaid as long as they would meet SSI income guidelines but for their initial entitlement to or increase in DAC payments and any other non-Cost of Living Adjustment (COLA) Social Security increase. This coverage applies to an individual who is: a. At least 18 years of age; b. Receiving Social Security benefits as a DAC on the basis of blindness or disability which began before age 22; c. SSI was terminated after July 1987; and d. The individual was at least 18 or older when SSI terminated. 2. Non-Financial Eligibility Requirements a. Age This coverage applies to an individual who is at least 18 years of age AND is receiving Social Security benefits as a DAC on the basis of blindness or disability which began before age 22. b. Citizenship Individuals must be U.S. citizens, U.S. nationals or eligible non-citizens. Individuals are not required to provide documentary evidence of citizenship or national status if they are entitled to or enrolled in any part of Medicare. c. Residency Individuals must be residents of Tennessee.

Aged, Blind and Disabled Manual Policy Manual Number: 115.010 Section: Categories of Eligibility Chapter: Disabled Adult Children March 18, 2019 Division of TennCare 2 d. Enumeration Individuals must possess and provide a valid Social Security Number (SSN) or proof of application for an SSN. e. DAC Status This coverage applies to an individual who is at least 18 years of age AND is receiving Social Security benefits as a DAC. A DAC must be unmarried, age 18 or older, and have a disability that started before age 22. The DAC benefit is considered a “child’s benefit” because the recipient is paid on a parent’s Social Security earnings record. DAC benefits typically begin when the parent begins receiving OASDI or dies. f. Marital Status In order to be eligible for Social Security benefits as a DAC, the individual must be unmarried. However, individuals may continue to be DAC eligible if they marry a Social Security beneficiary who is also eligible for DAC benefits, OASDI benefits, or Widow/Widower benefits. Individuals will not continue to be DAC eligible if they marry a Social Security beneficiary under the age of 19 or an individual who is not a Social Security beneficiary. The SSA will determine whether a married individual remains eligible for the DAC Social Security benefit. g. SSI Termination Date Eligible individuals must have had their SSI terminated after July 1987. Individuals must have been age 18 or older when his SSI terminated. 3. Financial Eligibility Requirements

a. Eligibility Determination Group To receive DAC Social Security benefits, an individual must be unmarried. However, if a DAC beneficiary marries another Social Security beneficiary, with certain limits, her DAC eligibility will continue. See Marital Status above. A DAC eligible couple must both meet all DAC eligibility criteria to qualify as a DAC eligible couple. If the individual’s spouse is ineligible for the Disabled Adult Child category, income may be deemed to the individual. See the ABD Deeming of Income and Resources policy. b. Income Limit The income limits for this category are the same as the current SSI Federal Benefit Rates (SSI- FBRs).

Aged, Blind and Disabled Manual Policy Manual Number: 115.010 Section: Categories of Eligibility Chapter: Disabled Adult Children March 18, 2019 Division of TennCare 3 c. Resource Limit Resource limits for individuals in this category are $2,000 for an individual and $3,000 for a couple. 4. Budget Overview a. DAC Increase i. Initial DAC Entitlement If the initial entitlement to the DAC benefit caused SSI ineligibility, the entire initial entitlement is disregarded from the applicant’s income. ii. Increase in DAC Benefit If an increase in the DAC benefit caused SSI ineligibility, the amount of the increase is disregarded from the applicant’s income. iii. Social Security COLA or non-COLA Increase Any Social Security COLA or non-COLA increases received by the individual after SSI was terminated will be disregarded b. Budget Mr. Black is an SSI recipient. While his father works, he receives a monthly SSI payment of $498. When his father retired and began receiving $1,000 a month in Social Security, Mr. Black began receiving a DAC payment of $500 a month. This lowered his SSI monthly benefit to $218. Mr. Black’s father passes away in January 2014, which increases his monthly DAC benefit to $750 and results in the loss of SSI eligibility. Mr. Black has earned income of $200 per month and has proof of $50 in disabled work expenses per month. Mr. Black’s total countable income, $42.50, is less than the current $735 SSI-FBR, so he is income eligible in the DAC category. Income Budget Calculation

Unearned Income $ 750.00 Irregular Unearned Income Disregard + $ 0.00 In-Kind Support and Maintenance + $ 0.00 Ineligible Spouse’s Deemed Unearned Income + $ 0.00 Ineligible Parent’s Deemed Income + $ 0.00

Aged, Blind and Disabled Manual Policy Manual Number: 115.010 Section: Categories of Eligibility Chapter: Disabled Adult Children March 18, 2019 Division of TennCare 4 General Deduction ($20) - $ 20.00 Child Support Disregard - $ 0.00 Widow/Widower Entitlement Disregard - N/A DAC Entitlement Disregard - $ 750.00 COLA Disregard - 0.00 Total Net Unearned Income = $ 0.00 Self-Employment Income

$ 0.00 Earned Income + $ 200.00 Irregular Earned Income Disregard - $ 0.00 Student Earned Income Exclusion - $ 0.00 Ineligible Spouse’s Deemed Earned Income + $ 0.00 Remaining General Deduction - $ 0.00 Earned Income Deduction - $ 65.00 Impairment Related Work Expense - $ 50.00 ½ Deduction - $ 42.50 Blind Work Expense - $ 0.00 Total Net Earned Income = $ 42.50 Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $ 42.50 Qualified Income Trust - $ 0.00 Net Countable Income

$ 0.00 Income Test Limit

$ 733.00 Income Test Result PASS Patient Liability $ 0.00 The above budget is current as of Januray 2017.

Aged, Blind and Disabled Manual Policy Manual Number: 115.010 Section: Categories of Eligibility Chapter: Disabled Adult Children March 18, 2019 Division of TennCare 5 Version History Document Title Disabled Adult Children First Published 03.11.2015 Revision History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.13.2015 1. Policy Statement 1 Policy Clarification AK 03.13.2015 3.b. Income Limit 2 - 3 Policy Clarification AK 03.13.2015 4.a.i. Initial DAC Entitlement 3 Policy Clarification AK 03.13.2015 4.b.5. Countable Income Computation 4 Policy Clarification AK 08.27.2015 2.h. DAC-OASDI Coverage 2 Non-Substantive Change NF 01.29.2016 2.h. DAC-OASDI Coverage 2 Non-Substantive Change SN 01.05.2017 2.h. DAC-OASDI Coverage 2 Non-Substantive Change RH 01.05.2017 3.b. Income Limit 2 Policy Clarification RH 01.05.2017 4.b.5 Countable Income Computation 4 Policy Clarification RH 01.05.2017 4.c.6. Countable Income Computation 6 Policy Clarification RH 04.02.2018 1. Policy Statement 1 Policy Clarification RZ 04.02.2018 2.g. SSI Termination Date 2 Policy Clarification RZ 04.02.2018 2.h. DAC Coverage 2 Non-Substantive Change RZ 04.02.2018 3.a. Household 2 Policy Clarification RZ 04.02.2018 3.b. Income Limit 2 - 3 Non-Substantive Change RZ 04.02.2018 4.a. DAC Entitlement or Increase 3 Policy Clarification RZ 04.02.2018 4.b.i Child Support Calculation 4 Policy Clarification RZ 04.02.2018 4.b.iv. Total Net Unearned Income Computation 4 Policy Clarification RZ 04.02.2018 4.c.vi. Countable Income Computation 6 Non-Substantive Change RZ 03.18.2019 1.; 2.g.; 3.a.; 4.a.iii.; Policy Statement; SSI Termination Date; Eligibility Determination Group; Social Security COLA or non-COLA Increase 1-3 Policy Clarification SN 03.18.2019 3.b.; 4.a.i-ii.; 4.b. Income Limit; Initial DAC Entitlment; Increase in DAC Benefit; Budget 2-4 Non-Substantive Change SN

Aged, Blind and Disabled Manual; Section: Categories of Eligibility; Policy Manual Number: 115.015; Chapter: INSTITUTIONAL MEDICAID

Legal Authority: 42 CFR 435.236; 42 CFR 435.1005; 42 CFR 435.1009; 42 CFR 435.1010; 42 CFR 435.520; 42 CFR 435.540; 42 CFR 435.541; TennCare 1115 Medicaid Demonstration; Section 1902(a)(10) of the Social Security Act; Tenn. Comp. R. & Regs. 1200-13-20-.08(5); State Plan Amendment TN-21-0010

1. Policy Statement Medicaid benefits and potentially Long-Term Services and Supports (LTSS) payments are available to eligible individuals receiving care in a medical institution (regardless of age) provided they are not:

a. An inmate of a public institution; or b. A patient in an Institution for Mental Disease (IMD), unless she is:

i. Under age 22 and receiving inpatient psychiatric services; or ii. At least 65 years of age.

LTSS payments are available for individuals receiving Nursing Facility (NF) care and approved for CHOICES. Individuals approved for Institutional Medicaid based on 30-day continuous confinement will not receive LTSS payments unless they are admitted to a NF or Intermediate Care Facility for Individuals with Intellectual Disabilities (ICF/IID) with an approved PAE. Medicaid benefits and LTSS payments are also available for aged adults and physically disabled adults (age 21 and older) when approved for and receiving CHOICES Home and Community Based Services (HCBS), and individuals of all ages with Intellectual and Developmental Disabilities (IDD) who are eligible for and receiving Employment and Community First (ECF) CHOICES services.

2. Definitions a. Aged: Individuals age 65 or older.

b. Blind: Individuals who have been determined to be legally blind by the Social Security Administration (SSA).

c. Disabled: Individuals who have been determined to be disabled by the SSA or TennCare. Generally, an individual is considered disabled when he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to last for a continuous period of not less than 12 months.

Aged, Blind, and Disabled Manual Policy Manual Number: 115.015 Section: Categories of Eligibility Chapter: Institutional Medicaid

January 5, 2026 Division of TennCare 2 d. Hospital: Medicaid category for individuals who are currently in a hospital facility, have met the 30 day length of stay requirement and are Aged, Blind, Disabled, a child under age 21, or a pregnant woman. Unlike Institutional Medicaid Aged, Blind, and Disabled, Institutional Medicaid Hospital does not have CHOICES eligibility.

3. Eligibility Period Once an individual is discharged from a medical institution before their renewal period, they will be tested for coverage in another Medicaid category of eligibility. If they are not found eligible in another Medicaid category, they will be terminated.

4. Non-Financial Eligibility Requirements a. Age To be eligible as aged, an individual must be age 65 or older. There is no age requirement for individuals who are eligible on the basis of disability or blindness.

b. Citizenship An individual must be a U.S. Citizen, a U.S. National or eligible immigrant. Individuals are not required to provide documentary evidence of citizenship or national status if they are entitled to or enrolled in any part of Medicare, entitled to or receiving Supplemental Security Income (SSI) or Social Security disability benefits.

c. Enumeration An individual must possess and provide a valid Social Security Number (SSN) or proof of application, unless she meets an exception.

d. State Residence An individual must be a resident of Tennessee. Individuals placed by an agency of the State of Tennessee in an institution out of state are still considered Tennessee residents. See the ABD State Residence policy.

e. Institutional Status An individual must have an institutional status to be eligible for the Institutional Medicaid category. See the Institutional Status policy.

Aged, Blind, and Disabled Manual Policy Manual Number: 115.015 Section: Categories of Eligibility Chapter: Institutional Medicaid

January 5, 2026 Division of TennCare 3 5. Financial Eligibility Requirements a. Eligibility Determination Group (EDG) The EDG for the Institutional Medicaid category is based on the principle of the Financially Responsible Relative (FRR). See the ABD Financially Responsible Relatives policy.

b. Resources Eligible individuals must have countable resources below the Institutional Medicaid Aged, Blind and Disabled (ABD) resource standard. The resource standard is $2,000.

The resources of an individual’s spouse or of an institutionalized child’s parent(s) may be deemed available to the individual. See the ABD Deeming of Income and Resources policy.

All individuals with a spouse must have a Resource Assessment completed prior to receiving an eligibility determination in the Institutional Medicaid category. Resources owned individually or jointly by members of a married couple are considered in the Resource Assessment and will be used to determine the Community Spouse Resource Maintenance Allowance (CSRMA). See the Resource Assessment policy.

Countable and excluded resources are determined using the ABD resource methodology as defined in the legal authority that governs SSI eligibility. See the ABD Countable and Excluded Resources policy.

c. Income i. General Rule Individuals must have countable income below the Medicaid Income Cap (MIC). The MIC is 300% of the SSI Federal Benefit Rate (SSI-FBR), a number which is annually updated by the SSA.

Income eligibility is determined by comparing the individual’s gross income to the MIC. If gross income is equal to or less than the MIC, the individual is income eligible in the Institutional Medicaid category. If gross income is greater than the MIC, the individual will be provided with the opportunity to establish a Qualified Income Trust (QIT). A QIT is a specific type of trust used only to establish Medicaid eligibility, in which an individual places certain types of monthly income. Once a QIT is established, the individual’s income eligibility is tested again to determine income eligibility. See the Qualified Income Trust (QIT) or Miller Trust section in the ABD Trusts policy. QIT deductions will not apply to Institutional Medicaid Hospital as a QIT is a trust that is created specifically for the purpose of becoming eligible for TennCare LTSS, and Institutional Medicaid Hospital does not provide LTSS benefits.

Aged, Blind, and Disabled Manual Policy Manual Number: 115.015 Section: Categories of Eligibility Chapter: Institutional Medicaid

January 5, 2026 Division of TennCare 4 ii. MIC The MIC is $2,982 effective 01/01/2026.

iii. Budgeting Process, Based on Eligibility Determination Group 1. Adult Individual with No Spouse or Spouse is Institutionalized Income eligibility for an adult individual with no spouse, or who has a spouse who is already institutionalized, is determined based on the individual’s income only.

2. Adult Individual with a Community Spouse Income eligibility for an adult individual with a community spouse is determined based on the applying individual’s income only. The community spouse’s income is considered post-eligibility when determining the appropriate Community Spouse Income Maintenance Allowance (CSIMA). This may include individuals where the community spouse is eligible for and receiving HCBS.

3. Individual is a Dependent Child and Lives with Parents (Prior to Institutionalization or Application for HCBS) If the individual is a dependent child (under age 18), income from the individual’s FRRs is deemed available to him when determining income eligibility until the child applies for LTSS. No income is deemed available to him when determining income eligibility after application for LTSS has been made, unless a child under 18 is requesting HCBS services in the ECF CHOICES program, and an exception does not apply. For Institutional Medicaid Hospital, Parent to Child income deeming does not apply. See the Parent-to-Child Deeming section in the Employment and Community First CHOICES policy for more information.

i. 250% Federal Poverty Level (FPL) Disregard Earned income up to 250% of the FPL is disregarded for the Comprehensive Aggregate Cap (CAC), Self-Determination, and Statewide Waivers. For more information on the Department of Disability and Aging (DDA) waivers, see the Institutional Status policy and the TennCare CHOICES in Long-Term Services and Supports policy.

b. Income Budget Income eligibility is first determined for the individual without consideration of a QIT. This is necessary in order to determine if the individual needs to establish a QIT to become income eligible. If the individual passes the initial budget, it is not necessary for her to establish a QIT.

Aged, Blind, and Disabled Manual Policy Manual Number: 115.015 Section: Categories of Eligibility Chapter: Institutional Medicaid

January 5, 2026 Division of TennCare 5 If the individual fails the income eligibility determination, then the individual must be provided with the opportunity to establish a QIT. If the individual is able to establish a QIT, her income eligibility will be tested again.

c. Example Budget Mr. Mason was admitted to a nursing home and is applying for medical assistance. He is 64 years old and receives $2,800 in Social Security per month. He also receives $800 per month from a pension. Since his monthly income total is determined to be above the MIC, he must establish a QIT to qualify.

Income Budget Calculation

Unearned Income $ 3600.00 Irregular Unearned Income Disregard + N/A In-Kind Support and Maintenance + N/A Ineligible Spouse’s Deemed Unearned Income + N/A Ineligible Parent’s Deemed Income + N/A General Deduction ($20) - N/A Child Support Disregard - N/A Widow/Widower Entitlement Disregard - N/A DAC Entitlement Disregard - N/A COLA Disregard - N/A Total Net Unearned Income = $ 3600.00 Self-Employment Income

$ 0.00 Earned Income + $ 0.00 Irregular Earned Income Disregard - N/A Student Earned Income Exclusion - N/A Ineligible Spouse’s Deemed Earned Income + N/A Remaining General Deduction - N/A Earned Income Deduction - N/A Impairment Related Work Expense - N/A ½ Deduction - N/A Blind Work Expense - N/A Total Net Earned Income = $ 0.00 Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $ 3600.00 Qualified Income Trust - $ 2800.00 FPL 250% Disregard N/A Net Countable Income

$ 800.00 Income Test Limit

$ 2313.00 Income Test Result PASS The above budget is current as of February 2019.

Aged, Blind, and Disabled Manual Policy Manual Number: 115.015 Section: Categories of Eligibility Chapter: Institutional Medicaid

January 5, 2026 Division of TennCare 6 Mr. Mason establishes a QIT, to which he allocates his SSA income. His Net Countable Income is under the MIC. He is income eligible for Institutional Medicaid.

Aged, Blind, and Disabled Manual Policy Manual Number: 115.015 Section: Categories of Eligibility Chapter: Institutional Medicaid

January 5, 2026 Division of TennCare 7 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 04.17.201

Publication

07.01.2016 1.; 4.c.iii. Policy Statement; Budgeting Process Based On Household Composition 1; 4 Policy Clarification LW 12.01.2016 2.c.; 4.d.i.a. Disabled; Total Gross Unearned Income Computation 1; 4 Policy Clarification RS 01.05.2017 4.c.i.; 4.d.i.c. General Rule; Countable Income Computation 3; 4 Non-Substantive Change RH 06.01.2017 2.c. Disabled 1 Policy Clarification RS 06.01.2017 3.a. Age 2 Non-Substantive Change RS 03.18.2019 1.; 2.c.; 4.c.iii; 4.d.; 4.e. Policy Statement; Disabled; Budgeting Process, Based on Eligibility Determination Group; Income Budget; Example Budget 1-5 Non-Substantive Change ME 03.18.2019 4.a. Eligibility Determination Group (EDG) 2 Policy Clarification ME 05.01.2019 4.c.ii; 4.e. Legal Authority; MIC; Example Budget 1-5 Policy Clarification TN 05.01.2020 4.c.ii. MIC 3 Policy Clarification TN 05.01.2020 1; 2.c. Legal Authority; Policy Statement; Disabled 1 Policy Change TB 01.04.2021 4.c.ii. MIC 3 Policy Clarification TN 01.04.2022 4.c.ii. MIC 3 Policy Clarification SA 06.01.2022 2.c. Disabled 1 Policy Clarification AJ 09.01.2022 4.c.iii.3. Individual is a Dependent Child and Lives with Parents (Prior to Institutionalization or Application for HCBS) 4 Policy Change AJ 09.01.2022 4.c.iv.; 4.e. 250% FPL Disregard; Example Budget 4 Policy Change AJ 01.03.2023 4.c.ii. MIC 3 Non-Substantive Change KF 01.02.2024 4.c.ii. MIC 3 Non-Substantive Change CE

Aged, Blind, and Disabled Manual Policy Manual Number: 115.015 Section: Categories of Eligibility Chapter: Institutional Medicaid

January 5, 2026 Division of TennCare 8 08.01.2024 4.c.iv. 250% FPL Disregard 4 Non-Substantive Change BP 01.02.2025 4.c.ii. MIC 3 Non-Substantive Change CE 06.02.2025 2; 3; 5.c.1.; 5.c.iii.3 Definitions; Financial Eligibility Requirements 2; 3;4 Policy Change LW 01.05.2026 5.c.ii. MIC 4 Non-Substantive Change BP

Aged, Blind and Disabled Manual; Section: Categories of Eligibility; Policy Manual Number: 115.020; Chapter: PICKLE PASSALONG

Legal Authority: 42 CFR 435.135; Tenn. Comp. R. & Regs. 1200-13-20-.08(3)

1. Overview The Pickle Passalong Medicaid category is named in honor of U.S. Congressman J.J. Pickle and was established in 1977. To be eligible in the Pickle Passalong category, an individual must have been receiving both Supplemental Security Income (SSI) and Social Security benefits. The individual must have then lost SSI eligibility but would remain SSI-eligible if the Social Security Cost of Living Adjustments (COLAs) received since the SSI payments ended were disregarded. 2. Policy Statement TennCare Medicaid benefits are available to individuals who would be eligible for SSI payments if increases in Social Security benefits due to COLAs were disregarded. An individual who meets all other non-financial and financial eligibility requirements remains eligible for TennCare Medicaid if he:

a. Is currently receiving Social Security benefits (Old Age, Survivors, or Disability Insurance (OASDI)); b. Is not currently receiving SSI; c. Was entitled to both OASDI and SSI benefits in the same month after April 1977; and d. Has countable income (including in-kind income) equal to or less than the current SSI-Federal Benefit Rate (FBR) after deducting all OASDI COLAs received since the last month in which the individual was eligible for both OASDI and SSI. 3. Non-Financial Eligibility Requirements a. Age Individuals must have attained at least age 65 or meet the Social Security Administration (SSA) requirements of blindness or disability. Individuals are not required to provide documentary evidence of age if they are entitled to or enrolled in any part of Medicare. b. Citizenship Individuals must be U.S. citizens, U.S. nationals or eligible non-citizens. Individuals are not required to provide documentary evidence of citizenship or national status if they are entitled to or enrolled in any part of Medicare and/or receiving Social Security disability benefits.

Aged, Blind and Disabled Manual Policy Manual Number: 115.020 Section: Categories of Eligibility Chapter: Pickle Passalong

January 05, 2026 Division of TennCare 2 c. Residency Individuals eligible for this category must be residents of Tennessee. d. Enumeration Individuals must possess and provide a valid Social Security Number (SSN) or proof of application for an SSN. e. Eligible For and Receiving Social Security Benefits Individuals must be eligible for and receiving Social Security benefits as authorized under Title II of the Social Security Act. 4. Financial Eligibility Requirements a. Eligibility Determination Group The Eligibility Determination Group (EDG) is governed by the principle of Financially Responsible Relatives (FRR). Financial responsibility is limited to spouse to spouse and parent to child. See the ABD Eligibility Determination Group policy.

b. Couples Both individuals in a Pickle Passalong eligible couple must meet all Pickle Passalong eligibility criteria to qualify as a Pickle Passalong eligible couple. If an individual’s spouse is ineligible for Pickle Passalong, income may be deemed to the individual. See the ABD Deeming of Income and Resources policy. c. Income i. Income Eligibility An individual is income eligible if their net countable income less all appropriate Social Security COLAs is less than the appropriate SSI-FBR.

ii. COLA Disregards Disregard all countable Social Security COLAs that caused or occurred since the applicant’s SSI payments ended for the

1. Applicant; 2. Financially responsible spouse; or 3. Other family members.

Aged, Blind and Disabled Manual Policy Manual Number: 115.020 Section: Categories of Eligibility Chapter: Pickle Passalong

January 05, 2026 Division of TennCare 3 iii. Determining the Amount of the COLA Disregard Determine the amount of the COLA disregard by multiplying the applicant’s, and if applicable, the applicant’s spouse’s or other family member’s current Social Security benefit by the appropriate conversion factor. Follow the steps below:

1. Verify the individual’s current Social Security benefit amount; 2. Verify their SSI non-pay date; 3. Locate the appropriate conversion factor based on the month and year of the SSI non- pay date for the applicant. Use the applicant’s conversion factor when calculating the COLA disregard for countable Social Security income received by a spouse or family member; 4. Multiply the current Social Security benefit by the conversion factor; and 5. Take the result (after multiplication by the conversation factor) and deduct it from the current Social Security benefit to determine the COLA disregard amount.

iv. Pickle Conversion Factor Table Timeframe Factor Timeframe Factor May-June 1977 0.179 Jan-December 2001 0.534 July 1977-June 1978 0.191 Jan-December 2002 0.548 July 1978-June 1979 0.209 Jan-December 2003 0.555 July 1979-June 1980 0.239 Jan-December 2004 0.567 July 1980-June 1981 0.266 Jan-December 2005 0.582 July 1981-June 1982 0.286 Jan-December 2006 0.607 July 1982-Dec 1983 0.306 Jan-December 2007 0.627 Jan-December 1984 0.316 Jan-December 2008 0.641 Jan-December 1985 0.327 Jan 2009-December 2011 0.678 Jan-December 1986 0.338 Jan-December 2012 0.702 Jan-December 1987 0.342 Jan-December 2013 0.714 Jan-December 1988 0.356 Jan-December 2014 0.725 Jan-December 1989 0.370 Jan 2015-December 2016 0.737 Jan-December 1990 0.388 Jan-December 2017 0.739 Jan-December 1991 0.409 Jan-December 2018 0.755 Jan-December 1992 0.425 Jan-December 2019 0.776 Jan-December 1993 0.437 Jan-December 2020 0.788 Jan-December 1994 0.449 Jan-December 2021 0.799 Jan-December 1995 0.461 Jan-December 2022 0.846 Jan-December 1996 0.473 Jan-December 2023 0.920 Jan-December 1997 0.487 Jan-December 2024 0.949 Jan-December 1998 0.497 Jan-December 2025 0.973 Jan-December 1999 0.503 Jan-December 2026 1.000 Jan-December 2000 0.516

Aged, Blind and Disabled Manual Policy Manual Number: 115.020 Section: Categories of Eligibility Chapter: Pickle Passalong

January 05, 2026 Division of TennCare 4

d. Resource Limit Resource limits for this category are $2,000 for an individual and $3,000 for a couple. 5. Budget Mrs. Stone was an SSI and OASDI benefit recipient until October 2013, when her SSI eligibility ended due to an OASDI COLA. She and her husband live together with no children. Mr. Stone is ineligible for SSI or TennCare Medicaid, and $290 of his OASDI benefits and $650 of his earned income is deemed available to Mrs. Stone. Mrs. Stone has $155 in monthly earned income and $600 in OASDI benefits. She applies for medical assistance on August 1, 2025.

The COLA disregard for Mrs. Stone’s Income Budget Calculation will use her SSI non-pay date. This means the October 2013 conversion factor of 0.734 will be used to determine how much can be disregarded from both Mrs. and Mr. Stone’s Social Security income. Her COLA disregard is $159.60, and his COLA disregard is $77.14, which means Mrs. Stone’s total COLA disregard will be $236.74 in her Income Budget Calculation. Mrs. Stone’s net countable income of $1,003.26 is less than the current SSI-FBR for a household of 2, $1,450. So, she is income eligible for the Pickle Passalong category.

Income Budget Calculation

Unearned Income $ 600.00 Irregular Unearned Income Disregard - $ 0.00 In-Kind Support and Maintenance + $ 0.00 Ineligible Spouse’s Deemed Unearned Income + $ 290.00 Ineligible Parent’s Deemed Income + $ 0.00 General Deduction ($20) - $ 20.00 Child Support Disregard - $ 0.00 Widow/Widower Entitlement Disregard - N/A DAC Entitlement Disregard - N/A COLA Disregard - $ 236.74 Total Net Unearned Income = $ 633.26 Self-Employment Income

$ 0.00 Earned Income + $ 155.00 Irregular Earned Income Disregard - $ 0.00 Student Earned Income Exclusion - $ 0.00 Ineligible Spouse’s Deemed Earned Income + $ 650.00 Remaining General Deduction - $ 0.00 Earned Income Deduction - $ 65.00 Impairment Related Work Expense - $ 0.00 ½ Deduction - $ 370.00 Blind Work Expense - $ 0.00 Total Net Earned Income = $ 370.00

Aged, Blind and Disabled Manual Policy Manual Number: 115.020 Section: Categories of Eligibility Chapter: Pickle Passalong

January 05, 2026 Division of TennCare 5 Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $ 1,003.26 Qualified Income Trust - $ 0.00 Net Countable Income

$ 1,003.26 Income Test Limit

$ 1,450.00 Income Test Result PASS Patient Liability N/A The above budget is current as of October 2025.

Mr. Moore was an SSI and OASDI benefit recipient until December 2021, when his SSI eligibility ended due to an OASDI COLA. He and his wife live together with no children. Mrs. Moore was also an SSI and OASDI benefit recipient until January 2020, when her SSI eligibility ended due to an OASDI COLA. Mr. Moore has $1,000 in OASDI benefits. Mrs. Moore has $1,200 in OASDI benefits. Mr. Moore applies for medical assistance on August 1, 2025.

The COLA disregard for Mr. Moore’s Income Budget will use his SSI non-pay date. This means the December 2021 conversion factor of 0.821 will be used to determine how much can be disregarded from both Mr. Moore’s and Mrs. Moore’s Social Security income. His COLA disregard is $179 and her COLA disregard is $214.80, which means Mr. Moore’s total COLA Disregard will be $393.80 in his Income Budget Calculation. Mr. Moore’s net countable income of $1,786.20 is greater than the current SSI-FBR for a household of 2, $1,450. So, he is not income eligible for the Pickle Passalong category.

Income Budget Calculation

Unearned Income $ 2,200.00 Irregular Unearned Income Disregard - $ 0.00 In-Kind Support and Maintenance + $ 0.00 Ineligible Spouse’s Deemed Unearned Income + $ 0.00 Ineligible Parent’s Deemed Income + $ 0.00 General Deduction ($20) - $ 20.00 Child Support Disregard - $ 0.00 Widow/Widower Entitlement Disregard - N/A DAC Entitlement Disregard - N/A COLA Disregard

- $ 393.80

Total Net Unearned Income = $ 1,786.20 Self-Employment Income

$ 0.00 Applicant’s Earned Income + $ 0.00 Irregular Earned Income Disregard - $ 0.00

Aged, Blind and Disabled Manual Policy Manual Number: 115.020 Section: Categories of Eligibility Chapter: Pickle Passalong

January 05, 2026 Division of TennCare 6 Student Earned Income Exclusion - $ 0.00 Eligible Spouse’s and Parent’s Deemed Earned Income + $ 0.00 Remaining General Deduction - $ 0.00 Earned Income Deduction - $ 65.00 Impairment Related Work Expense - $ 0.00 ½ Deduction - $ 370.00 Blind Work Expense - $ 0.00 Total Net Earned Income = $ 0.00 Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $ 1,786.20 Qualified Income Trust - $ 0.00 Net Countable Income

$ 1,786.20 Income Test Limit

$ 1,450.00 Income Test Result FAIL Patient Liability N/A The above budget is current as of October 2025.

Note: If the Income Budget Calculation was for Mrs. Moore’s eligibility determination, The COLA Disregard would be calculated using her SSI non-pay date, which was January 2020 of 0.810. Her COLA disregard would be $228 and his COLA disregard would be $190, which means Mrs. Moore’s total COLA Disregard will be $418 in her Income Budget Calculation.

Aged, Blind and Disabled Manual Policy Manual Number: 115.020 Section: Categories of Eligibility Chapter: Pickle Passalong

January 05, 2026 Division of TennCare 7 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 3.15.2015

Publication

03.16.2016 4.c.iii. Determining the Amount of the COLA Disregard 3 Policy Clarification LW 03.16.2016 5.b.vi. COLA Disregard and Eligibility Determination 6 Policy Clarification; Non- Substantive Change LW 05.02.2016 2. Policy Statement 1 Policy Clarification LW 01.05.2017 4.c.iii,

Determining the Amount of the COLA Disregard 3 Policy Clarification RH 01.05.2017 5.b.vi. COLA Disregard and Eligibility Determination 6 Policy Clarification RH 03.09.2018 1. Overview 1 Policy Change TN 03.09.2018 2. Policy Statement 1 Policy Clarification TN 03.09.2018 4.b. Couples 2 Policy Clarification TN 03.09.2018 4.c.iii. Determining the Amount of the COLA Disregard 3 Policy Clarification TN 03.09.2018

5.a.6. Countable Income Computation 5

TN 03.09.2018 5.b. Example Budget 5 - 6 Non-Substantive Change TN 03.18.2019 4.a.; 4.c.iii. Eligibility Determination Group; Determining the Amount of the COLA Disregard 2-3 Policy Clarification TB 03.18.2019 5. Budget 3 - 4 Non-Substantive Change SN 01.02.2020 4.b.iv.; 5. Legal Authority; Pickle Conversion Factor Table; Budget 1; 3-5 Non-Substantive Change TN 01.04.2021 4.b.iv. Pickle Conversion Factor Table 3 Non-Substantive Change TN 01.04.2022 4.b.iv. Pickle Conversion Factor Table 3 Non-Substantive Change SA 01.03.2023 4.b.iv. Pickle Conversion Factor Table 3 Non-Substantive Change KF 01.02.2024 4.b.iv. Pickle Conversion Factor Table 3 Non-Substantive Change CE 01.02.2025 4.b.iv. Pickle Conversion Factor Table 3 Non-Substantive Change CE 08.01.2025 1.; 4.c.ii- iii; 5 Legal Authority; Overview; COLA Disregard; Determining the Amount of the COLA Disregard; Budget 1-6 Policy Clarification TC 09.25.25 4.c.iii; 5 Determining the Amount of the COLA Disregard; Budget 3; 5-6 Policy Clarification KJ

Aged, Blind and Disabled Manual Policy Manual Number: 115.020 Section: Categories of Eligibility Chapter: Pickle Passalong

January 05, 2026 Division of TennCare 8 01.05.26 4.c.iv. Pickle Conversion Factor Table 3 Non-Substantive Change BP 01.05.26 4.c.iii Determining the Amount of the COLA Disregard 3 Policy Clarification BP

Aged, Blind and Disabled Manual; Section: Categories of Eligibility; Policy Manual Number: 115.025; Chapter: SSI CASH RECIPIENT

Legal Authority: 20 CFR 416.260; 20 CFR 416.903; 20 CFR 416.974; 42 CFR 435.120; Title XVI of the Social Security Act; Tenn. Comp. R. & Regs. 1200-13-20-.08

1. The SSI Program and Medicaid Eligibility The Social Security Act, as amended, established a national program, effective January 1, 1974, to provide Supplemental Security Income (SSI) to individuals who have attained age 65 or are blind or disabled and meet financial requirements. The program is intended to assure a minimum level of income for individuals who are aged, blind, or disabled that have insufficient income and resources to maintain a standard of living at the established federal minimum income level.

Individuals who are eligible for SSI are entitled to Medicaid. SSI eligibility is determined by the Social Security Administration (SSA) in Tennessee. Applications for SSI benefits may be filed at the Social Security office.

TennCare does not conduct an independent evaluation of income and resource eligibility before issuing regular TennCare Medicaid benefits to an SSI recipient.

2. Policy Statement TennCare Medicaid is provided to aged, blind or disabled individuals eligible for SSI under Section 1602 of the Social Security Act. Tennessee residents determined eligible for SSI benefits are automatically enrolled in TennCare Medicaid.

SSI recipients who are enrolled in TennCare Medicaid also receive automatic buy-in for Medicare Parts A & B.

3. Date of TennCare Medicaid and SSI Eligibility TennCare Medicaid coverage for SSI cash recipients begins according to data TennCare receives from the SSA regarding SSI eligibility.

4. SSI Benefit and TennCare Medicaid Termination SSA alerts TennCare when an SSI recipient’s SSI payments end. At that time, TennCare will review the enrollee for eligibility in all other categories prior to termination.

Aged, Blind and Disabled Manual Policy Manual Number: 115.025 Section: Categories of Eligibility Chapter: SSI Cash Recipient

January 5, 2026 Division of TennCare 2

Note: SSI payments may be suspended for an Achieving a Better Life Experience (ABLE) account owner if his ABLE account balance exceeds $100,000 or distributions from his ABLE account for housing-related qualified disability expenses (QDEs) are retained past the month of receipt and exceed the SSI resource limit. If the individual’s SSI was suspended for no other reason, the ABLE account owner remains eligible for SSI Medicaid. 5. Financial Eligibility Requirements a. Income Standard The SSA uses the Federal Benefit Rate. For 2026 the income standard is:

i. $994 for an individual; or ii. $1,491 for a couple. b. Resource Test Resource limits used by the SSA are:

i. $2,000 for an individual; or ii. $3,000 for a couple. 6. Additional Criteria for TennCare Medicaid Coverage As a condition of receiving TennCare Medicaid coverage, SSI cash recipients are subject to the following additional requirements: c. Cooperation with Third Party Liability SSI cash recipients must provide TennCare with any and all information necessary to obtain medical support or payment including, but not limited to, names of parties responsible for payment, address, and policy, account or claim numbers. See Assignment of Third Party Medical Support policy. d. Long Term Services and Supports (LTSS) Requirements SSI recipients who are requesting LTSS, either in a nursing facility or through Home and Community Based Services (HCBS), must have an approved Preadmission Evaluation (PAE). In addition, SSI recipients requesting LTSS who have a community spouse must complete a resource assessment and have asset transfers made within the look back period evaluated. In order to comply with the resource assessment requirements, SSI cash recipients seeking LTSS may be required to submit additional information to TennCare.

Aged, Blind and Disabled Manual Policy Manual Number: 115.025 Section: Categories of Eligibility Chapter: SSI Cash Recipient

January 5, 2026 Division of TennCare 3

7. Cluster Daniels and SSI Terminations SSI Medicaid Only SSI Medicaid Only recipients, also known as the Cluster Daniels individuals, are those individuals that remain eligible for TennCare Medicaid because they received a minimum of one SSI check in Tennessee since November 1987 and had their SSI terminated while a resident of Tennessee. The Daniels injunction was lifted on January 8, 2009 and reverification of this group of enrollees began in June 2009. Any SSI Medicaid Only recipients who have not yet been processed are reviewed for eligibility in open categories of Medicaid.

8. SSI Cash Recipient Enrollment Procedure TennCare receives a file directly from the SSA that contains all SSI eligibility determinations. TennCare automatically loads the State Data Exchange (SDX) file to TEDS to enroll SSI cash recipients in TennCare Medicaid.

SDX data may also be used as needed for verification of SSI benefit information.

Aged, Blind and Disabled Manual Policy Manual Number: 115.025 Section: Categories of Eligibility Chapter: SSI Cash Recipient

January 5, 2026 Division of TennCare 4

Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.18.2015

Publication

03.01.2016 1.; 2. The SSI Program and Medicaid Eligibility; Policy Statement 1 Policy Clarification LW 06.17.2016 4. SSI Benefit and TennCare Medicaid Termination 1 Policy Clarification AJ 01.05.2017 5.a. Financial Eligibility Requirements 2 Policy Change RH 01.02.2020 8. Legal Authority; SSI Cash Recipient Enrollment Procedures 1-3 Policy Clarification TN 01.02.2020 1;3-4; 5.a.; 6; 8 The SSI Program and Medicaid Eligibility; Date of TennCare Medicaid and SSI Eligibility; SSI Benefit and TennCare Medicaid Termination; Financial Eligibility; Additional Criteria for TennCare Medicaid Coverage; SSI Cash Recipient Enrollment Procedure 1-3 Non-Substantive Change TN 01.04.2021 5.a. Financial Eligibility Requirements 2 Non-Substantive Change RS 01.04.2022 5.a. Financial Eligibility Requirements 2 Non-Substantive Change TN 01.03.2023 5.a. Financial Eligibility Requirements 2 Non-Substantive Change KF 01.03.2023 6.b. Long Term Services and Supports (LTSS) Requirements 2 Policy Clarification AJ 01.02.2024 5.a. Financial Eligibility Requirements 2 Non-Substantive Change CE 01.02.2025 5.a. Financial Eligibility Requirements 2 Non-Substantive Change CE 1.05.2026 5.a. Financial Eligibility Requirements 2 Non-Substantive Change BP

Aged, Blind and Disabled Manual Section: Categories of Eligibility Policy Manual Number: 115.030 Chapter: Widow/Widower Categories

March 18, 2019 Division of TennCare 1 WIDOW/WIDOWER CATEGORIES Legal Authority: Social Security Act §1634(d); 42 CFR 435.137; 42 CFR 435.138; 1990 OBRA § 5103; Tenn. Comp. R. & Regs. 1200-13-20 1. Policy Statement

TennCare Medicaid benefits are available to certain widows/widowers who would be eligible for Supplemental Security Income (SSI) payments if initial entitlement to and/or increases in their Social Security widow/widower benefit were disregarded. Widows/widowers who are eligible for TennCare Medicaid on the basis of their widow/widower status must meet all other non-financial and financial eligibility conditions.

Widows/widowers may qualify for this category of TennCare Medicaid coverage under one of two categories: a. Widow/Widower Spousal Retirement; or b. Widow/Widower Actuarial Reduction.

The Social Security Widow/Widower benefit is based on the deceased spouse’s Title II Old-Age, Survivors and Disability Insurance (OASDI) benefit.

2. Eligibility Categories

a. Widow/Widower Spousal Retirement

A disabled widow/widower is eligible for TennCare Medicaid for any month in which he is entitled to a Social Security Widow/Widower benefit, but is not eligible for SSI, if he:

i. Was eligible for SSI based on his own disability; ii. Was entitled to the Social Security Widow/Widower benefit any time after the age of 50; iii. Received an SSI benefit the month before the Social Security Widow/Widower benefit began; iv. Would be eligible for SSI if the Widow/Widower entitlement and all subsequent COLAs were disregarded; v. Is not entitled to Medicare Part A; and vi. Is at least age 50 and up to age 65.

b. Widow/Widower Actuarial Reduction

NOTE: This category is closed to enrollment.

TennCare Medicaid benefits continued for certain disabled widows/widowers who lost SSI eligibility in 1984 due to an increase in the Social Security Widow/Widower benefit that occurred as a result of a change in the way the benefit was calculated. In order to receive TennCare Medicaid benefits in this category; the individual must:

Aged, Blind and Disabled Manual Section: Categories of Eligibility Policy Manual Number: 115.030 Chapter: Widow/Widower Categories

March 18, 2019 Division of TennCare 2

i. Have been entitled to a monthly Title II disabled Social Security Widow/Widower benefit for December 1983; ii. Have been entitled to a received a Title II Social Security Widow/ Widower benefit for January 1984; iii. Have lost SSI eligibility in the first month that her increased Widow/Widower benefit was paid, due to the elimination of the reduction factor; iv. Have been entitled to the Social Security Widow/Widower benefit prior to age 60; v. Have continuously been entitled to the Widow/Widower benefit from the month the benefit was increased; vi. Have continued to be eligible for SSI when the Widow/Widower increase and all subsequent COLAs were disregarded; and vii. Have applied for Medicaid benefits on the basis of this change in the Widow/Widower benefit prior to July 1, 1988.

3. Non-Financial Eligibility Requirements

a. Age

Individuals must be at least age 50 and up to age 65 when they lost SSI due to receipt of the Social Security Widow/Widower benefit.

b. Citizenship

Individuals must be U.S. citizens, U.S. nationals or eligible non-citizens. Individuals are not required to provide documentary evidence of citizenship or national status if they are receiving Social Security benefits.

c. Residency

Individuals must be residents of Tennessee.

d. Enumeration

Individuals must possess and provide a valid Social Security Number (SSN) or proof of application for an SSN.

e. Received an SSI Payment

Individuals would continue to be eligible for SSI if the Social Security Widow/Widower benefit and subsequent COLAs were not counted as income.

f. Medicare Eligibility

Aged, Blind and Disabled Manual Section: Categories of Eligibility Policy Manual Number: 115.030 Chapter: Widow/Widower Categories

March 18, 2019 Division of TennCare 3 Eligible individuals cannot be entitled to Medicare Part A. 4. Financial Eligibility Requirements

a. Eligibility Determination Group

Applicants/enrollees in the Widow/Widower Spousal Retirement category are treated as an individual, or have an Eligibility Determination Group (EDG) size of one.

b. Income Limit

The income limits for this category are the same as the current SSI Federal Benefit Rates (SSI- FBRs).

c. Resource Limit

The individual’s countable resources must be under $2,000.

5. Budget Overview

a. Widow/Widower Entitlement Disregard

i. Initial Entitlement

The initial Widow/Widower entitlement amount is disregarded from the applicant’s income.

ii. Social Security COLA or non-COLA Increase Any Social Security COLA or non-COLA increases received by the individual after SSI was terminated are also disregarded. b. Budget Mrs. Jones became SSI-eligible based on disability. At age 62, she became entitled to Social Security Widow/Widower benefits of $500. This additional income placed Mrs. Jones over the SSI-FBR and her SSI payments terminated. She is not entitled to Medicare Part A. She has $200 of unearned pension income per month, and $300 of earned income. Mrs. Jones’ net countable income is $297.50. Since this amount is less than the SSI-FBR, $735, she is eligible in the Widow/Widower Spousal Retirement category. Income Budget Calculation

Unearned Income

$ 700.00 Irregular Unearned Income Disregard + $ 0.00

Aged, Blind and Disabled Manual Section: Categories of Eligibility Policy Manual Number: 115.030 Chapter: Widow/Widower Categories

March 18, 2019 Division of TennCare 4 In-Kind Support and Maintenance + $ 0.00 Ineligible Spouse’s Deemed Unearned Income + N/A Ineligible Parent’s Deemed Income + N/A General Deduction ($20) - $ 20.00 Child Support Disregard - N/A Widow/Widower Entitlement Disregard - $ 500.00 DAC Entitlement Disregard - N/A COLA Disregard - $ 0.00 Total Net Unearned Income = $ 180.00 Self-Employment Income

$ 0.00 Earned Income + $ 300.00 Irregular Earned Income Disregard - $ 0.00 Student Earned Income Exclusion - N/A Ineligible Spouse’s Deemed Earned Income + N/A Remaining General Deduction - $ 0.00 Earned Income Deduction - $ 65.00 Impairment Related Work Expense - $ 0.00 ½ Deduction - $ 117.50 Blind Work Expense - $ 0.00 Total Net Earned Income = $ 117.50 Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $ 297.50 Qualified Income Trust - N/A Net Countable Income

$ 297.50 Income Test Limit

$ 735.00 Income Test Result

PASS Patient Liability

N/A The above budget is current as of January 2017.

Aged, Blind and Disabled Manual Section: Categories of Eligibility Policy Manual Number: 115.030 Chapter: Widow/Widower Categories

March 18, 2019 Division of TennCare 5 Document Title Widow/Widower Categories First Published 03.13.2015 Revision History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 01.05.2017 1. Policy Statement 1 Non-Substantive Change RH 01.05.2017 4.b. Income Limit 3 Policy Clarification RH 01.05.2017 5.b.5.; 5.c.6.; Net Earned Income Computation; Countable Income Computation 4-5 Non-Substantive Change RH 03.05.2018 4.b.; 5.b.v.; 5.c.vi. Income Limit; Total Net Earned Income Computation; Countable Income Computation 3-5 Non-Substantive Change SN 03.18.2019 2.a-2.a.iii.; 5.a.; 5.a.i; Legal Authority; Widow/Widower Spousal Retirement; Widow/Widower Entitlement Disregard; Initial Entitlement 1-3 Policy Clarification TN 03.18.2019 5.b. Budget 4-5 Non-Substantive Change AJ

Aged, Blind and Disabled Manual Section: Categories of Eligibility; Policy Manual Number: 115.035; Chapter: Katie Beckett

Legal Authority: Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982; Family Opportunity Act of 2005; 42 CFR 435.225; Tenn. Code Ann. § 71-5-164; TennCare III Medicaid Section 1115 Demonstration

1. Policy Statement The Katie Beckett program provides medical assistance to children under age 18 with disabilities or complex medical needs who live at home and do not otherwise qualify for Medicaid due to their parents’ income or resources. Parent to child deeming is waived so that parents’ income and resources are not counted in determining the child’s eligibility. Katie Beckett Part A and B enrollment is subject to the availability of state appropriations.

2. Katie Beckett Groups a. Katie Beckett Part A (Institutional Level of Care Group) Children are potentially eligible for Katie Beckett Part A if they qualify for care in a medical institution and would qualify for Supplemental Security Income (SSI) but for their parents’ income or resources. Children enrolled in Katie Beckett Part A receive full TennCare Medicaid benefits and up to $15,000 of specified Home and Community Based Services (HCBS) wraparound services.

b. Katie Beckett Part B (Diversion Group) Katie Beckett Part B is for children with disabilities or complex medical needs who qualify for care in a medical institution or are at risk of institutionalization. Children enrolled in Katie Beckett Part B receive up to $10,000 of services, including specified HCBS through the Department of Disability and Aging (DDA), but do not receive full TennCare Medicaid benefits.

c. Katie Beckett Continued Eligibility Group The Katie Beckett Continued Eligibility Group is for children who are enrolled in TennCare Medicaid, are losing eligibility, and would qualify to enroll in Katie Beckett Part A, but for whom there is no Katie Beckett Part A slot available. Children enrolled in the Katie Beckett Continued Eligibility Group receive full TennCare Medicaid benefits.

Aged, Blind and Disabled Manual Policy Manual Number: 115.035 Section: Categories of Eligibility Chapter: Katie Beckett

January 5, 2026 Division of TennCare 2 3. Non-Financial Eligibility Requirements Children eligible in a Katie Beckett group must meet all non-financial eligibility requirements.

a. Age: A child must be under age 18. Children enrolled in Katie Beckett Part A or the Katie Beckett Continued Eligibility Group may remain enrolled for up to 12 months following their 18th birthday if they have a pending application for SSI or their SSI application is in appeal status.

b. Level of Care (LOC): A child must be determined by the Long-Term Services and Supports (LTSS) Unit to qualify for the following LOC:

i. Katie Beckett Part A: Care in a medical institution ii. Katie Beckett Part B: Care in a medical institution or at risk of institutional placement. iii. Continued Eligibility Group: Care in a medical institution.

c. Citizenship: A child must be a U.S. citizen, U.S. national, or eligible non-citizen.

d. Enumeration: A child must possess and provide a valid Social Security Number (SSN) or proof of application for an SSN, unless they meet an exception.

e. State Residence: A child must be a resident of Tennessee.

f. TennCare Medicaid Eligibility: A child must be ineligible for any other TennCare Medicaid or TennCare Standard category.

g. Private or Employer-Sponsored Insurance: For Katie Beckett Part A, a child must be enrolled in or obtain private or employer-sponsored insurance that provides minimum essential coverage, in accordance with 45 CFR 156.110(a). Private or employer-sponsored insurance may also be referred to as Third Party Liability (TPL).

h. Slot Status: Children must be granted a slot in order to be enrolled in Katie Beckett Part A or Katie Beckett Part B.

4. Requirement to Purchase and Maintain Health Insurance Parents must obtain private or employer-sponsored insurance for children who do not have insurance upon enrollment in Katie Beckett Part A. Children who do not have private or employer-sponsored insurance and are enrolled in Katie Beckett Part A before October 1st of the current year will have until February 15th of the next year to be enrolled in and submit proof of insurance. Children who do not have private or employer-sponsored insurance and are enrolled in Katie Beckett Part A after October 1st of the current year will have until February 15th of the year following the next year to be enrolled in and submit proof of insurance.

Aged, Blind and Disabled Manual Policy Manual Number: 115.035 Section: Categories of Eligibility Chapter: Katie Beckett

January 5, 2026 Division of TennCare 3

a. Hardship Exception for Premium Assistance A hardship exception for premium assistance can only be requested if a child does not have private or employer-sponsored insurance when the child is first enrolled in Katie Beckett Part A. A hardship is considered to exist if: i. The cost of the child’s portion of available private or employer-sponsored insurance, including the cost of coverage for the parent when the parent is required to purchase health coverage in order to obtain coverage for the child, exceeds 5% of the family’s Modified Adjusted Gross Income (MAGI); or ii. The family’s MAGI is less than 400% of the Federal Poverty Level (FPL) and the child does not have access to employer-sponsored insurance through either parent’s employer.

A family who meets hardship criteria must still purchase health insurance for the child but may be granted premium assistance to help cover the child’s portion of the cost of insurance. For more information on premium assistance see section 8.

b. Loss of Health Insurance Children enrolled in Katie Beckett Part A who lose their private or employer-sponsored insurance will have 60 days to be enrolled in and submit proof of other insurance. A hardship exception for premium assistance is not available to children who have lost insurance but had private or employer-sponsored insurance at the time of enrollment in Katie Beckett.

5. Financial Eligibility Requirements Financial eligibility for the Katie Beckett COE is determined using Institutional Medicaid rules. Parent to child deeming of income and resources does not apply.

a. Eligibility Determination Group (EDG) Financial eligibility is determined based on an EDG size of one. The only EDG member included is the applicant.

b. Income Limit The income of the child must be no more than 300% of the SSI Federal Benefit Rate (SSI-FBR).

c. Resource Limit The child’s resources must not exceed $2,000.

Aged, Blind and Disabled Manual Policy Manual Number: 115.035 Section: Categories of Eligibility Chapter: Katie Beckett

January 5, 2026 Division of TennCare 4 6. Example Budget Susie Smith, an eight-year old, lives in the household with her mom, stepdad, and two siblings. Susie is disabled but does not qualify for SSI due to her family’s income and resources. The household is over the income limit for all Medicaid categories and does not have enough medical bills to meet a spenddown. Susie receives $300 month in child support and has no resources. She is covered under her father’s insurance at work.

Income Budget Calculation

Unearned Income $ 300.00 Irregular Unearned Income Disregard + N/A In-Kind Support and Maintenance + N/A Ineligible Spouse’s Deemed Unearned Income + N/A Ineligible Parent’s Deemed Income + N/A General Deduction ($20) - N/A Child Support Disregard - N/A Widow/Widower Entitlement Disregard - N/A DAC Entitlement Disregard - N/A COLA Disregard - N/A Total Net Unearned Income = $ 300.00 Self-Employment Income

$ 0.00 Earned Income + $ 0.00 Irregular Earned Income Disregard - N/A Student Earned Income Exclusion - N/A Ineligible Spouse’s Deemed Earned Income + N/A Remaining General Deduction - N/A Earned Income Deduction - N/A Impairment Related Work Expense - N/A ½ Deduction - N/A Blind Work Expense - N/A Total Net Earned Income = $ 0.00 Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $ 300.00 Qualified Income Trust - N/A Net Countable Income

$ 300.00 Income Test Limit

$ 2,349.00 Income Test Result PASS

The above budget is current as of January 2020.

Susie meets nursing facility LOC and has been granted a Katie Beckett Part A slot. Susie is eligible for Katie Beckett Part A.

Aged, Blind and Disabled Manual Policy Manual Number: 115.035 Section: Categories of Eligibility Chapter: Katie Beckett

January 5, 2026 Division of TennCare 5 7. Katie Beckett Part A Premium Payment Requirement a. General Rule As a condition of enrollment and continued eligibility for Katie Beckett Part A, children whose families have income of more than 150% of the FPL may be required to pay a monthly premium. The child’s premium is determined based on the family’s income and household size, using the MAGI methodology. The premium is calculated on a sliding scale using the table below:

The Katie Beckett Part A premium is reduced by the cost of the child’s portion of employer- sponsored or private insurance. If the child’s portion of employer-sponsored or private insurance (including the cost of coverage for the parent when the parent is required to purchase health coverage in order to obtain coverage for the child) equals or exceeds the child’s monthly premium for Katie Beckett Part A, the child will not have a premium obligation for Katie Beckett Part A.

Example 1: Jacob Zimmerman lives in the home with his mother, father, and sister. The family’s MAGI is $10,000 a month. The FPL for a household of 4 for 2020 is $2,184 a month. The family’s household income is more than 400% of the FPL. Since the household income is between 400% and 500% of the FPL, the Katie Beckett Part A premium would be $225 per month. However, Jacob has private insurance. The total cost of the family’s private insurance is $400 per month. Jacob’s father is not required to obtain coverage for himself in order to obtain coverage for Jacob. Jacob’s portion of insurance is calculated by dividing the total cost of the insurance by the number of household members covered under the insurance. Jacob’s insurance is $100 per month ($400/4 = $100). Jacob’s monthly premium for Katie Beckett Part A is reduced by his portion of his family’s private insurance. Jacob’s monthly Katie Beckett Part A premium is $125 per month ($225 - $100 = $125).

Example 2: Emily Cruz lives in the home with her mother, father, and 3 siblings. The family’s MAGI is $8,800 a month. The FPL for a household of 6 for 2020 is $2,930 a month. The family’s household income is more than 300% of the FPL. Since the household income is between 300% and 400% of the FPL, the Katie Beckett Part A premium would be $125 per month. However, Emily has insurance through her mother’s employer. The total cost of the family’s insurance is $375 per month. Emily’s mother is required to purchase insurance for herself in order to obtain coverage for Emily. Emily’s portion of insurance, including the cost of coverage for her mother, is calculated by dividing the total cost of the insurance by the Household Income (MAGI) Premium % of income for a household of two Monthly premium >150% - 250% FPL 1.5% $25 >250% - 300% FPL 2.5% $75 >300% - 400% FPL 3% $125 >400% - 500% FPL 4% $225 >500% FPL - No limit 5% $350 + $70 for every 100% above 500%

Aged, Blind and Disabled Manual Policy Manual Number: 115.035 Section: Categories of Eligibility Chapter: Katie Beckett

January 5, 2026 Division of TennCare 6 number of household members covered under the insurance and multiplying by 2. Emily’s insurance is $125 per month ($375/6 = $62.50 x 2 = $125). Emily’s monthly premium for Katie Beckett Part A is reduced by her portion of her family’s insurance. Emily’s monthly Katie Beckett Part A premium is $0 per month ($125 -$125 = 0). Emily does not have a Katie Beckett Part A premium obligation.

b. Initial Premium Payment The first month’s Katie Beckett Part A premium, along with electronic automatic payment arrangements for subsequent premiums, must be received before children who have a premium obligation can be enrolled in Katie Beckett Part A. The first month’s premium is due 60 days from the date the notice is mailed informing the household of the Katie Beckett Part A premium obligation amount. If the first month’s premium is not received within 60 days of the notice, the child will be denied for Katie Beckett Part A. The Katie Beckett Part A program slot will not be held unless a timely appeal is filed. If a timely appeal is filed, the Katie Beckett Part A program slot will be held until the conclusion of the appeal process.

c. Non-Payment of Premiums After the initial Katie Beckett Part A premium payment is made, ongoing premium payments must be made via automatic bank draft on the first of each month. If all or part of a premium is more than 30 days in arrears, an advance notice of suspension will be sent and program benefits for Katie Beckett Part A will be suspended if the premium is not paid. If all or part of premium payments are more than 60 days in arrears, an advance notice of program termination for non- payment of premiums will be sent. If the premium payments in arrears are paid in full before the effective date of termination, program benefits will return to active status back to the date they were suspended. If the premium payments in arrears are not paid in full before the effective date of termination, the child will be disenrolled from Katie Beckett Part A.

An appeal may be filed regarding the premium amount calculated or premium payments made. If an appeal is filed after the date of suspension, benefits will remain in suspended status pending the appeal but will be retroactively reinstated if resolved in the enrollee’s favor. A child who no longer qualifies for Katie Beckett Part A due to non-payment of premiums will be disenrolled from TennCare only after also being determined ineligible for all open TennCare categories. If the child later reapplies for Katie Beckett Part A, all arrearages and the first month’s premium must be paid in advance for the child to be re-enrolled in Katie Beckett Part A.

8. Premium Assistance If a family meets the requirements of a hardship exception, the family may receive premium assistance to help with the cost of the child’s private or employer-sponsored insurance, including the cost of coverage for the child’s parent when the parent must purchase health coverage in order to obtain coverage for the child. See Hardship Exception for Premium Assistance in section 4.a. Premium assistance will begin from the date the premium assistance is authorized or the date the

Aged, Blind and Disabled Manual Policy Manual Number: 115.035 Section: Categories of Eligibility Chapter: Katie Beckett

January 5, 2026 Division of TennCare 7 individual enrolls in and pays their initial private or employer-sponsored insurance premium, whichever is later.

Assistance with premium payments is limited to the lesser of:

a. The amount by which the child’s portion of the family’s monthly private or employer-sponsored insurance premium exceeds the child’s Katie Beckett Group Part A premium; or b. The amount by which the lowest cost silver-level child-only plan in the highest rating region in Tennessee offered through the Federally Facilitated Marketplace (FFM).

Effective 01/01/2026, the lowest cost silver-level child-only plan in the highest rating region in Tennessee offered through the FFM is $466 per month.

If the child’s monthly Katie Beckett Part A premium equals or exceeds the child’s portion of private or employer-sponsored insurance or the lowest cost silver-level child-only plan in the highest rating region in Tennessee offered through the FFM, whichever amount is less, the premium assistance amount is $0.

Example: Ryan White lives with his parents and 2 siblings. The family’s MAGI is $7,500 a month. The FPL for a household of 5 for 2020 is $2,557. Since the family’s MAGI is less than 400% of the FPL, and Ryan does not have access to insurance through either of his parent’s employer and was not enrolled in private insurance when he was enrolled in Katie Beckett Part A, Ryan meets the conditions for hardship and may receive premium assistance to help cover the cost of insurance. The cost of private insurance for the family is $600 a month. Ryan’s portion of the insurance is $120 ($600/5 = $120). Since the household income is between 250% and 300% of the FPL, his Katie Beckett Part A Premium is $75 per month. Ryan is eligible for $45 per month in premium assistance ($120 - $75 = $45).

9. Katie Beckett Effective Date a. Katie Beckett Part A i. For children who do not have a Katie Beckett Part A premium obligation, Katie Beckett Part A begins on the date the case is approved in the eligibility determination system.

ii. For children who have a Katie Beckett Part A premium obligation, Katie Beckett Part A begins on the date the initial premium payment is received in full, along with automatic electronic payment arrangements for ongoing premiums.

b. Katie Beckett Part B Katie Beckett Part B begins on the date of application or the date all eligibility requirements are met, whichever is later.

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January 5, 2026 Division of TennCare 8

c. Katie Beckett Continued Eligibility Group Katie Beckett Continued Eligibility Group begins on the date of transition from TennCare Medicaid.

10. Redetermination Financial eligibility and level of care are redetermined annually for children enrolled in any part of the Katie Beckett program. DDA is responsible for completing the annual redetermination for children enrolled in Katie Beckett Part B. Families must report changes during the eligibility period that affect a child’s eligibility for services. Families of children enrolled in Katie Beckett Part A are not required to report changes in family income that may impact a child’s Katie Beckett Part A premium until the next redetermination.

Aged, Blind and Disabled Manual Policy Manual Number: 115.035 Section: Categories of Eligibility Chapter: Katie Beckett

January 5, 2026 Division of TennCare 9 Version History

Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 11.23.2020

Publication

06.01.2021 3.f.-g.; 4.; 8. Non-Financial Eligibility Requirements; Requirement to Purchase and Maintain Health Insurance; Premium Assistance 2-3; 6-7 Policy Clarification TN 01.04.2022 4.; 8. Requirement to Purchase and Maintain Health Insurance; Premium Assistance 2; 7 Policy Clarification TN 02.01.2023 8. Premium Assistance 7 Non-Substantive Change SA 01.02.2024 8. Premium Assistance 7 Non-Substantive Change CE 08.01.2024 2.b. 10. Katie Beckett Part B Redetermination 1; 7 Non-Substantive Change BP 01.02.2025 8. Legal Authority; Premium Assistance 1; 6 Non-Substantive Change CE 01.05.2026 8. Premium Assistance 6 Non-Substantive Change KJ

Aged, Blind and Disabled Manual Section: Medicare Savings Programs Policy Manual Number: 120.005 Chapter: Medicare Savings Programs Overview

March 1, 2024 Division of TennCare 1 MEDICARE SAVINGS PROGRAMS OVERVIEW Legal Authority: Social Security Act § 1905(p)(1); 42 CFR 400.200; 42 CFR 435.406 1. Overview

Medicare is a national health insurance program administered by the federal government for individuals aged 65 and above, and disabled individuals. Medicare is a comprehensive health insurance program, but Medicare enrollees are required to pay premiums, certain out of pocket costs, and for services not covered by the program. The Medicare Catastrophic Coverage Act (MCCA) of 1988 created the Medicare Savings Programs (MSPs), which are a set of Medicaid programs available only to Medicare enrollees who meet specific resource and income standards. The MSPs provide for payments of Medicare premiums, coinsurance, and deductibles for Medicare-covered services.

The four MSPs are:

• Qualified Medicare Beneficiaries (QMB); • Specified Low-Income Medicare Beneficiaries (SLMB); • Qualifying Individuals (QI1); and • Qualified Disabled Working Individuals (QDWI).

2. Medicare Eligibility

An individual is entitled to receive Medicare benefits when:

• He or she is 65 years or older, is a U.S. citizen or has been permanent legal residents for 5 continuous years, and the individual or his or her spouse has paid Medicare taxes for at least 10 years; or • He or she is under age 65 and has been receiving either Social Security or Railroad Retirement Board disability benefits for at least 24 months; or • He or she is receiving dialysis for End Stage Renal Disease (ESRD) or needs a kidney transplant; or • He or she is eligible for Social Security Disability Insurance (SSDI) and has ALS or Lou Gehrig’s disease. Most Medicare beneficiaries are automatically enrolled in Medicare Parts A and B when they become eligible. Those who are not entitled to premium-free Medicare Part A, such as those individuals who are over age 65 but did not pay enough Medicare taxes, must apply for coverage and pay a monthly premium. These individuals are considered entitled to enroll in Medicare and are eligible for the MSPs. 3. Medicare Enrollment Period

There are two enrollment periods for Medicare Parts A and B:

a. The initial enrollment period, which includes:

Aged, Blind and Disabled Manual Section: Medicare Savings Programs Policy Manual Number: 120.005 Chapter: Medicare Savings Programs Overview

March 1, 2024 Division of TennCare 2

• The three months prior to an individual’s 65th birthday or 25th month of disability benefits receipt; • The month of the 65th birthday or 25th month of disability benefits receipt; and • The three months after the month of the 65th birthday or 25th month of disability benefits receipt.

b. The general enrollment period, which includes the months of January, February, and March of each year.

c. Enrollment Period Exceptions

Enrollment period requirements are waived for certain MSP applicants and enrollees. The following list provides situations when an individual can be immediately enrolled into Medicare Part A or B.

• Applicants who are enrolled in Medicare Part A, but who refused Part B coverage during initial Medicare enrollment are enrolled into Part B by the state upon approval of an MSP (QMB, SLMB or QI1). • Applicants who have established Medicare Part B, but who do not have Medicare Part A coverage, are enrolled into Part A by the state upon approval of QMB only.

Note: Tennessee is a Part A Buy-In state, which means the state has elected to cover QMB for individuals who are eligible to purchase Medicare Part A. The Part A Buy-In program allows a state to enroll a QMB-eligible individual into Part A if the individual has already established Part B.

See a description of TennCare’s Medicare Buy-In Unit below.

4. Medicare Parts and Benefits Overview

Medicare is made up of four separate “Parts”: A, B, C and D.

a. Medicare Part A

i. Eligibility

An individual who receives Social Security benefits and has sufficient work quarters is eligible for premium-free Medicare Part A, if one of the following applies:

1. Age 65 or older; 2. Disabled for 24 months or more; 3. Fits into a special Medicare-covered group; 4. Enrolled through ESRD program;

Aged, Blind and Disabled Manual Section: Medicare Savings Programs Policy Manual Number: 120.005 Chapter: Medicare Savings Programs Overview

March 1, 2024 Division of TennCare 3 5. No longer considered disabled due to work activities (limited eligibility period). Individuals who are not eligible for premium-free Medicare may become eligible by paying the Part A monthly premium. An individual under age 65 who does not receive SSDI benefits cannot buy into Part A coverage. ii. Benefits

Medicare Part A coverage includes inpatient hospitalization, some follow-up and 100 days of skilled level nursing home care.

b. Medicare Part B

i. Eligibility

Medicare Part B coverage is available to any individual age 65 or older, or to individuals who have enough work quarters and have been disabled for a minimum of 24 months. Eligible individuals must pay monthly premiums.

ii. Benefits

Medicare Part B coverage includes physician services, laboratory and x-ray services, medical supplies, outpatient hospital care, and other services.

c. Medicare Part C

Medicare Part C is also known as the Medicare Advantage plans. Individuals who are eligible for Medicare Parts A and B may choose to receive their Medicare benefits through private health insurance plans. These plans are administered by health insurance companies, rather than the federal government.

d. Medicare Part D

Medicare Part D is the outpatient prescription drug coverage component of Medicare. Anyone who is eligible/enrolled in Part A or B is eligible for Part D. Part D is administered by private health insurance companies and pharmacy benefit managers but is regulated by CMS.

5. Application for MSPs

a. Application Forms

Acceptable application forms for the MSPs include the TennCare application or an application submitted to the FFM. The TennCare application and FFM account transfer are processed by TennCare. In addition, the Low-income Subsidy (LIS) applications for Medicare Part D also initiate an application for the MSPs.

Aged, Blind and Disabled Manual Section: Medicare Savings Programs Policy Manual Number: 120.005 Chapter: Medicare Savings Programs Overview

March 1, 2024 Division of TennCare 4

The Social Security Administration (SSA) transmits LIS files to the State daily, which triggera review for MSP eligibility.

The MSP application date is the date the LIS application is filed with SSA. If an LIS application is approved for SLMB or QI1, the benefits will begin the date the LIS application was filed at the SSA office. If approved for QMB, the benefits will begin the month after the approval is authorized.

b. TennCare’s Medicare Buy-In Unit

For applicants and enrollees who must have Medicare Part A or B established by the state, the Medicare Buy-In Unit is responsible for notifying CMS and/or SSA to begin coverage. The Buy- In Unit sends a manual notification to CMS to begin Medicare in the following situations:

• An applicant is approved for QMB, SLMB, or QI1 and needs to be enrolled in Medicare Part B; • An SSI-recipient has reached aged 65 and must have Medicare Part A established. (The SSA establishes Medicare Part B.); • An applicant is approved for QMB and is enrolled in Medicare Part B, but must have Medicare Part A established; • An applicant already has active Part B enrollment, needs to have Part A enrollment started with a Part A buy-in, and is eligible for QMB and/or SSI; • An applicant is already actively enrolled in both Parts A and B, is approved for QMB and/or SSI, Part A is not free, and the applicant needs to have a Part A buy-in set up so the state can take over payment of Part A premiums; • An applicant is already actively enrolled in both Parts A and B, does not have free Part A, is approved for QMB and/or SSI, and has buy-in(s) for one or both parts from another state which are either still active or recently closed.

Aged, Blind and Disabled Manual Section: Medicare Savings Programs Policy Manual Number: 120.005 Chapter: Medicare Savings Programs Overview

March 1, 2024 Division of TennCare 5 Document Title Medicare Savings Programs Overview First Published 3.4.2015 Revision History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 1.3.2018 2 Medicare Eligibility 1 Policy Clarification AJ 1.3.2018 3(c) Medicare Enrollment Period – Enrollment Period Exceptions 2 Policy Clarification AJ 3.1.2024 3(c) Medicare Enrollment Period – Enrollment Period Exceptions 2 Policy Clarification LW 3.1.2024 5(b) Application for MSPs- TennCare’s Medicare Buy-in Unit 4 Policy Clarification LW

Aged, Blind, and Disabled; Section: Medicare Savings Programs Policy Manual 120.010 Chapter: Qualified Medicare Beneficiary

Legal Authority: Social Security Act §1905(p)(1), §1905(p)(2)(D); 42 CFR 400.200; 42 CFR 435.406; Tenn. Comp. R. & Regs. 1200-13-20-.08(7)(a)

1. Overview The Medicare Catastrophic Coverage Act (MCCA) of 1988 established the Qualified Medicare Beneficiary (QMB) program. The QMB program provides Medicaid benefits to individuals who are entitled to Medicare Part A, have monthly income and resources under the specific limits and who meet the non-financial eligibility requirements of the Medicaid program. Individuals enrolled in QMB receive Medicaid payment of Medicare premiums, coinsurance, and deductibles for Medicare- covered services. 2. Policy Statement To be eligible in the QMB category an individual must be entitled to Medicare Part A, have income that does not exceed 100% of the Federal Poverty Level (FPL) and not have resources over $9,950 for an individual or $14,910 for a couple.

3. QMB Benefits QMB benefits include payment of:

a. Medicare Part A premiums (for individuals who do not receive premium free Part A coverage); b. Medicare Part B premiums; c. Medicare deductibles; and d. Medicare coinsurance (the cost share amount the enrollee is responsible to pay).

Note: QMB recipients are not subject to Medicare copay provisions.

QMB eligibility will establish Medicare Part B effective the month after approval, even if the individual had previously refused Part B coverage. QMB eligibility will also establish Medicare Part A, if the applicant has already established Part B coverage. TennCare will automatically establish Part A or B coverage with the Social Security Administration (SSA), therefore it is not necessary to refer these individuals to the SSA.

Aged, Blind and Disabled Manual Policy Manual Number: 120.010 Section: Medicare Savings Programs Chapter: Qualified Medicare Beneficiary

January 5, 2026 Division of TennCare 2 4. QMB Effective Date The eligibility start date is the first day of the month after the application is approved.

Note: QMB is the only MSP in which the coverage effective date is first day of the month after the application is approved. 5. Non-Financial Eligibility Requirements a. Medicare Part A (Hospital Insurance) Individuals must be entitled to Medicare Part A benefits. Individuals may be either entitled to receive premium-free Medicare Part A, or eligible to purchase Medicare Part A. See the Medicare Savings Program Overview policy.

TennCare will use an individual’s Social Security Number (SSN) to verify his entitlement to and receipt of Medicare Part A benefits with the SSA.

Applicants who are enrolled in Part B only, but are otherwise eligible for QMB, will be determined eligible for QMB and the state will enroll them into Medicare Part A once the Medicare Buy-in Unit is notified by the eligibility worker. See the Medicare Savings Program Overview policy for additional information on when to notify TennCare’s Medicare Buy-in Unit.

b. Age If an applicant is eligible on the basis of age, he must be age 65 or older. There is no age limit for individuals who are eligible on the basis of disability.

c. Citizenship Individuals must be U.S. citizens, U.S. nationals, or eligible non-citizens. Individuals are not required to provide documentary evidence of citizenship or national status if they are entitled to or enrolled in any part of Medicare.

d. Enumeration Individuals must possess and provide a valid SSN or proof of application for an SSN, unless they meet an exception.

e. State Residence Individuals in this category must be residents of Tennessee.

Aged, Blind and Disabled Manual Policy Manual Number: 120.010 Section: Medicare Savings Programs Chapter: Qualified Medicare Beneficiary

January 5, 2026 Division of TennCare 3 6. Financial Eligibility Requirements a. Eligibility Determination Group The Eligibility Determination Group (EDG) is governed by the principle of Financially Responsible Relatives (FRR) and the applicant/enrollee’s living arrangements. See the ABD Eligibility Determination Group policy.

b. Income Limit The income limit for receiving benefits in this category is up to 100% FPL.

c. Resource Limit The resource limit for receiving benefits in this category is:

i. $9,950 for an individual; or ii. $14,910 for a couple.

d. Cost-of-Living Adjustment (COLA) Deduction The SSA is responsible for applying COLA to its benefit programs, including Old-Age, Survivors, and Disability Insurance (OASDI), Railroad Retirement Benefits (RRB), and Supplemental Security Income (SSI). If the SSA applies a COLA for a given year, it is applied on January 1st of that year. However, the annual update for FPLs is not typically released until mid- January. This can cause individuals who were previously QMB eligible to become income- ineligible due to their increased Social Security income in the period between the COLA adjustment and the FPL increase.

To address the discrepancy caused by the timing of the COLA and FPL adjustments, QMB enrollees who become income-ineligible in January are provided with a COLA deduction for the months of January through the month following when the FPLs are released. The COLA deduction is equal to the amount of the monthly COLA increase.

e. Budget Mr. Johnson is applying for medical assistance. He is entitled to and enrolled in Medicare Parts A and B and meets all non-financial eligibility requirements. Mr. Johnson has $750 in OASDI payments per month, $150 in unearned income per month, and $0 in earned income. Mr. Johnson is not married.

Mr. Johnson’s net countable monthly income of $880 is less than 100% FPL, $1305 for an EDG size of 1, so he is income eligible in the QMB category.

Aged, Blind and Disabled Manual Policy Manual Number: 120.010 Section: Medicare Savings Programs Chapter: Qualified Medicare Beneficiary

January 5, 2026 Division of TennCare 4 Income Budget Calculation

Unearned Income $ 900.00 Irregular Unearned Income Disregard $ 0.00 In-Kind Support and Maintenance + $ 0.00 Ineligible Spouse’s Deemed Unearned Income + $ 0.00 Ineligible Parent’s Deemed Income + $ 0.00 General Deduction ($20) - $ 20.00 Child Support Disregard - $ 0.00 Widow/Widower Entitlement Disregard - $ 0.00 DAC Entitlement Disregard - $ 0.00 COLA Deduction - $ 0.00 Total Net Unearned Income = $ 880.00 Self-Employment Income

$ 0.00 Earned Income + $ 0.00 Irregular Earned Income Disregard - $ 0.00 Student Earned Income Exclusion - $ 0.00 Ineligible Spouse’s Deemed Earned Income + $ 0.00 Remaining General Deduction - $ 0.00 Earned Income Deduction - $ 0.00 Impairment Related Work Expense - $ 0.00 ½ Deduction - $ 0.00 Blind Work Expense - $ 0.00 Total Net Earned Income = $ 0.00 Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $ 880.00 Qualified Income Trust - $ 0.00 Net Countable Income

$ 880.00 Income Test Limit

$ 1,305.00 Income Test Result PASS Patient Liability N/A The above budget is current as of April 2025.

7. QMB and TennCare Medicaid Eligibility Individuals may be eligible for both TennCare Medicaid and QMB, with the exception of TennCare Standard. Only individuals with “grandfathered status” in TennCare Standard may be eligible for both TennCare Standard and QMB because TennCare Standard enrollees, other than those with grandfathered status, are not allowed to have access to third party insurance.

Applicants/enrollees may not receive benefits in more than one MSP.

Aged, Blind and Disabled Manual Policy Manual Number: 120.010 Section: Medicare Savings Programs Chapter: Qualified Medicare Beneficiary

January 5, 2026 Division of TennCare 5 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.18.2015

Publication

06.02.2017 2. Policy Statement 1 Non-Substantive Change RH 06.02.2017 6.c. Resource Limit 2-3 Policy Clarification RH 01.03.2018 1.; 6.c. Overview; Resource Limit 2-3 Policy Clarification AJ 01.03.2018 2. Policy Statement 1 Policy Change AJ 03.18.2019 2; 6.a.; 6.c.; 6.e. Legal Authority; Policy Statement; Resource Limit; Eligibility Determination Group; Budget 1-4 Policy Clarification SN 01.02.2020 2.; 6c. Policy Statement; Resource Limit 1; 3 Non-Substantive Change TN 01.04.2021 2.; 6c. Policy Statement; Resource Limit 1; 3 Non-Substantive Change TN 01.04.2022 2.; 6c. Policy Statement; Resource Limit 1; 3 Non-Substantive Change TN 01.03.2023 2.; 6c. Policy Statement; Resource Limit 1; 3 Non-Substantive Change KF

01.02.2024 2.; 6c. Policy Statement; Resource Limit 1; 3 Non-Substantive Change CE 03.01.2024 5.a. Medicare Part A (Hospital Insurance) 2 Policy Clarification LW 12.02.2025 6.d. Legal Authority; Cost-of- Living Adjustment (COLA) Disregard 1; 3 Policy Change CE 01.02.2025 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change CE 05.01.2025 2.; 6.c.; 6.d.; 6.e. Policy Statement; Resource Limit; Cost-of-Living Adjustment (COLA) Deduction; Budget 1; 3; 4 Non-Substantive Change KJ 08.01.2025 6.e Budget 4 Non-Substantive Change LW 01.05.2026 2.; 6.c. Policy Statement; Resource Limit 1; 3 Non-Substantive Change KJ

Aged, Blind, Disabled Section: Medicare Savings Program Policy Manual: 120.015 Chapter: Specified Low Income Medicare Beneficiary

Legal Authority: Social Security Act § 1902(a)(10)(E), § 1905(p)(2)(D); 42 CFR 435.406; Tenn. Comp. R. & Regs. 1200-13-20-.08(7)(b)

1. Overview Effective January 1, 1993, Section 4501(b) of the Omnibus Budget Reconciliation Act (OBRA) of 1990 required states to pay Medicare Part B premiums for individuals whose income exceeds QMB standards but is less than a specified higher percentage of the Federal Poverty Level (FPL). The coverage is called Specified Low-Income Medicare Beneficiaries (SLMB). 2. Policy Statement To be eligible in the SLMB category an individual must be entitled to Medicare Part A, have income that is at least 100% FPL but less than 120% of the FPL, and not have resources over $9,950 for an individual or $14,910 for a couple.

3. SLMB Benefits Medicaid benefits available to SLMB enrollees only include payment of Medicare Part B premiums. If an applicant is approved for SLMB and previously refused Part B coverage, the SLMB approval will automatically establish Part B coverage.

4. SLMB Effective Date Eligibility begins the date a TennCare application or Low-Income Subsidy (LIS) application is filed or the date all eligibility requirements are met, whichever is later. 5. Non-Financial Eligibility Requirement a. Medicare Part A (Hospital Insurance) Individuals must be entitled to Medicare Part A benefits. Individuals may be either entitled to receive premium-free Medicare Part A, or eligible to purchase Medicare Part A. See the Medicare Savings Program Overview policy.

TennCare will use an individual’s Social Security Number (SSN) to verify his entitlement to Medicare Part A benefits with the SSA.

Aged, Blind and Disabled Manual Policy Manual Number: 120.015 Section: Medicare Savings Programs Chapter: Specified Low Income Medicare Beneficiary

January 5, 2026 Division of TennCare 2 b. Age If an applicant is eligible on the basis of age, then she must be age 65 or older. There is no age limit for individuals who are eligible on the basis of disability.

c. Citizenship Individuals must be U.S. citizens, U.S. nationals or eligible non-citizens. Individuals are not required to provide documentary evidence of citizenship or national status if they are entitled to or enrolled in any part of Medicare.

d. Enumeration Individuals must possess and provide a valid SSN or proof of application for an SSN, unless they meet an exception.

e. State Residence Individuals in this category must be residents of Tennessee. 6. Financial Eligibility Requirements a. Eligibility Determination Group The Eligibility Determination Group (EDG) is governed by the principle of Financially Responsible Relatives (FRR) and the applicant/enrollee’s living arrangements. See the ABD Eligibility Determination Group policy.

b. Income Limit The income limit for receiving benefits in this category is less than 120% FPL for an individual or couple.

c. Resource Limit The resource limit for receiving benefits in this category is: i. $9,950 for an individual; or ii. $14,910 for a couple. d. Cost-of-Living Adjustment (COLA) Deduction The Social Security Administration (SSA) is responsible for applying COLA to its benefit programs, including Old-Age, Survivors, and Disability Insurance (OASDI), Railroad Retirement Benefits (RRB) and Supplemental Security Income (SSI). If the SSA applies a COLA for a given year, it is applied on January 1st of that year. However, the annual update for FPLs is not typically

Aged, Blind and Disabled Manual Policy Manual Number: 120.015 Section: Medicare Savings Programs Chapter: Specified Low Income Medicare Beneficiary

January 5, 2026 Division of TennCare 3 released until mid-January. This can cause individuals who were previously SLMB eligible to become income-ineligible due to their increased Social Security income in the period between the COLA adjustment and the FPL increase.

To address the discrepancy caused by the timing of the COLA and FPL adjustments, SLMB enrollees who become income-ineligible in January are provided with a COLA deduction for the months of January through the month when the FPLs are released. The COLA deduction is equal to the amount of the monthly COLA increase.

e. Budget Mrs. Daley is 65 years old, receives $1,400 per month in Social Security benefits and is entitled to and receiving Medicare Part A. Her spouse is 60 years old with deemed monthly earned income of $800. Mr. Daley does not yet receive Medicare. The couple lives together in their home. Since Mr. Daley’s income in deemed to Mrs. Daley, her EDG is increased by 1. Mrs. Daley has an EDG size of 2. Mrs. Daley’s total countable income, $1,767.50, is less than 120% FPL, $2,115, so she is income eligible for the SLMB category.

Income Budget Calculation

Unearned Income $ 1,400.00 Irregular Unearned Income Disregard + $ 0.00 In-Kind Support and Maintenance + $ 0.00 Ineligible Spouse’s Deemed Unearned Income + $ 0.00 Ineligible Parent’s Deemed Income + $ 0.00 General Deduction ($20) - $ 20.00 Child Support Disregard - $ 0.00 Widow/Widower Entitlement Disregard - N/A DAC Entitlement Disregard - N/A COLA Deduction - N/A Total Net Unearned Income = $ 1380.00 Self-Employment Income

$ 0.00 Earned Income + $ 0.00 Irregular Earned Income Disregard - $ 0.00 Student Earned Income Exclusion - $ 0.00 Ineligible Spouse’s Deemed Earned Income + $ 800.00 Remaining General Deduction - $ 0.00 Earned Income Deduction - $ 65.00 Impairment Related Work Expense - $ 0.00 ½ Deduction - $ 367.50 Blind Work Expense - $ 0.00 Total Net Earned Income = $ 367.50

Aged, Blind and Disabled Manual Policy Manual Number: 120.015 Section: Medicare Savings Programs Chapter: Specified Low Income Medicare Beneficiary

January 5, 2026 Division of TennCare 4

The above budget is current as of April 2025.

7. SLMB and TennCare Medicaid Eligibility Individuals may be eligible for both TennCare Medicaid and SLMB, with the exception of TennCare Standard. Only individuals with “grandfathered status” in TennCare Standard may be eligible for both TennCare Standard and SLMB. Applicants/enrollees may not receive benefits in more than one Medicare Savings Program.

Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $ 1,747.50 Qualified Income Trust - $ 0.00 Net Countable Income

$ 1,747.50 Income Test Limit

$2,115.00 Income Test Result PASS Patient Liability N/A

Aged, Blind and Disabled Manual Policy Manual Number: 120.015 Section: Medicare Savings Programs Chapter: Specified Low Income Medicare Beneficiary

January 5, 2026 Division of TennCare 5 Version History Version Date Section Section Title Page Number(s) Reason for Revision Reviser 03.10.2015

Publication

06.02.2017 2.; 6.c. Policy Statement; Resource Limit 1-2 Policy Clarification RH 01.03.2018 2.; 5.a.; 6.c. Policy Statement; Medicare Part A (Hospital Insurance); Resource Limit 1-2 Policy Clarification AJ 03.18.2019 2.; 6.a.; 6.c.; 6.e. Legal Authority; Policy Statement; Eligibility Determination Group; Resource Limit; Budget 1-4 Policy Clarification RZ 07.01.2019 2.; 5.a. Policy Statement; Medicare Part A (Hospital Insurance) 1 Policy Clarification AJ 01.02.2020 2.; 6.c. Policy Statement; Resource Limit 1-2 Non-Substantive Change TN 01.04.2021 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change TN 01.04.2022 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change TN 01.03.2023 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change KF 01.02.2024 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change CE 01.02.2025 6.d. Legal Authority; Cost-of- Living Adjustment (COLA) Disregard 1; 3 Policy Change CE 05.01.2025 2.; 6.c.; 6.d.; 6.e. Policy Statement; Resource Limit; Cost-of-Living Adjustment (COLA) Deduction; Budget 1; 3; 4 Non-Substantive Change KJ 08.01.2025 2; 5.a. Policy Statement; Medicare Part A (Hospital Insurance) 1;2 Policy Change LW 08.01.2025 6.e Budget 3-4 Non-Substantive Change LW 01.05.2026 2.; 6.c. Policy Statement; Resource Limit 1; 3 Non-Substantive Change KJ

Aged Blind and Disabled Manual Section: Medicare Savings Plan Policy Manual: 120.020 Chapter: Qualifying Individuals 1

Legal Authority: Social Security Act §1902(a)(10)(E), §1905(p)(2)(D), §1933; 42 USC 1396a(a)(10)(E)(iv); 42 CFR 435.406; Tenn. Comp. R. & Regs. 1200-13-20-.08(7)(c)

1. Overview The Balanced Budget Act (BBA) of 1997 created the Qualifying Individuals 1 (QI1) program for states to assist eligible individuals with payment of the Medicare Part B premium. The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 permanently extended the QI1 program. 2. Policy Statement To be eligible in the QI1 category an individual must be entitled to Medicare Part A, have income at least at 120%, but less than 135%, of the Federal Poverty Level (FPL) and not have resources over $9,950 for an individual or $14,910 for a couple. To be eligible in the QI1 category, individuals must not be enrolled in TennCare Medicaid or TennCare Standard.

3. QI1 Effective Date Eligibility begins the date a TennCare application or Low-Income Subsidy (LIS) application is filed or the date all eligibility requirements are met, whichever is later.

4. QI1 Benefits The QI1 program only pays the current Medicare Part B premium. If an applicant is approved for QI1 and previously refused Part B coverage, the QI1 approval will automatically establish Part B coverage. 5. Non-Financial Eligibility Requirements a. Medicare Part A (Hospital Insurance) Individuals must be entitled to Medicare Part A. Individuals may either be entitled to receive premium-free Medicare Part A or eligible to purchase Medicare Part A. See the Medicare Savings Program Overview policy.

TennCare will use an individual’s Social Security Number (SSN) to verify her entitlement to and receipt of Medicare Part A benefits with the Social Security Administration (SSA).

Aged, Blind and Disabled Manual Policy Manual Number: 120.020 Section: Medicare Savings Programs Chapter: Qualifying Individuals 1

January 5, 2026 Division of TennCare 2

b. Age If an applicant is eligible on the basis of age, he must be age 65 or older. There is no age limit for individuals who are eligible on the basis of disability. c. Citizenship Individuals must be U.S. citizens, U.S. nationals or eligible non-citizens. Individuals are not required to provide documentary evidence of citizenship or national status if they are entitled to or enrolled in any part of Medicare.

d. Enumeration Individuals must possess and provide a valid SSN or proof of application for an SSN, unless they meet an exception.

e. State Residence Individuals in this category must be residents of Tennessee. 6. Financial Eligibility Requirements a. Determination Group The Eligibility Determination Group (EDG) is governed by the principle of Financially Responsible Relatives (FRR) and the applicant/enrollee’s living arrangements. See the ABD Eligibility Determination Group policy.

b. Income Limit The income limit for receiving benefits in this category is at least 120%, but less than 135% FPL for an individual or couple. c. Resource Limit The resource limit for receiving benefits in this category is:

i. $9,950 for an individual; or ii. $14,910 for a couple. d. Cost-of-Living Adjustment (COLA) Deduction The SSA is responsible for applying COLA to its benefit programs, including Old-Age, Survivors, and Disability Insurance (OASDI), Railroad Retirement Benefits (RRB) and Supplemental Security Income (SSI). If the SSA applies a COLA for a given year, it is applied on January 1st of that year. However, the annual update for FPLs is not typically released until mid-

Aged, Blind and Disabled Manual Policy Manual Number: 120.020 Section: Medicare Savings Programs Chapter: Qualifying Individuals 1

January 5, 2026 Division of TennCare 3 January. This can cause individuals who were previously QI1 eligible to become income- ineligible due to their increased Social Security income in the period between the COLA adjustment and the FPL increase. To address the discrepancy caused by the timing of the COLA and FPL adjustments, QI1 enrollees who become income-ineligible in January are provided with a COLA deduction for the months of January through the month following when the FPLs are released. The COLA deduction is equal to the amount of the monthly COLA increase.

e. Budget Mrs. Harrison is applying for medical assistance. She is entitled to and enrolled in Medicare Parts A and B and meets all non-financial eligibility requirements. Mrs. Harrison receives $1200 in OASDI payments per month, $430 in additional unearned income per month, and $0 in earned income. Mrs. Harrison is not married.

Mrs. Harrison’s total countable income, $1,260, is greater than 120% FPL but less than 135%, so she is eligible for the QI1 category.

Income Budget Calculation

Unearned Income $1,63 0.00 Irregular Unearned Income Disregard $ 0.00 In-Kind Support and Maintenance + $ 0.00 Ineligible Spouse’s Deemed Unearned Income + $ 0.00 Ineligible Parent’s Deemed Income + $ 0.00 General Deduction ($20) - $ 20.00 Child Support Disregard - $ 0.00 Widow/Widower Entitlement Disregard - N/A DAC Entitlement Disregard - N/A COLA Deduction - N/A Total Net Unearned Income = $1,260.00 Self-Employment Income

$ 0.00 Earned Income + $ 0.00 Irregular Earned Income Disregard - $ 0.00 Student Earned Income Exclusion - $ 0.00 Ineligible Spouse’s Deemed Earned Income + $ 0.00 Remaining General Deduction - $ 0.00 Earned Income Deduction - $ 0.00 Impairment Related Work Expense - $ 0.00 ½ Deduction - $ 0.00 Blind Work Expense - $ 0.00 Total Net Earned Income = $ 0.00 Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $1,260.00

Aged, Blind and Disabled Manual Policy Manual Number: 120.020 Section: Medicare Savings Programs Chapter: Qualifying Individuals 1

January 5, 2026 Division of TennCare 4 Qualified Income Trust - N/A Net Countable Income

$1,260.00 Income Test Limit

$1761.00 Income Test Result PASS Patient Liability N/A The above budget is current as of April 2025. 7. QI1 and TennCare Medicaid Eligibility QI1 enrollees may not also enroll in TennCare Medicaid or TennCare Standard. If an applicant is eligible for a TennCare Medicaid category and QI1, she should be determined eligible in the TennCare Medicaid category.

Applicants/enrollees may not receive benefits in more than one Medicare Savings Program.

Aged, Blind and Disabled Manual Policy Manual Number: 120.020 Section: Medicare Savings Programs Chapter: Qualifying Individuals 1

January 5, 2026 Division of TennCare 5 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 03.18.2025

Publication

06.02.2017 1.; 6.c. Policy Statement; Resource Limit 1-2 Policy Clarification RH 01.03.2018 2.; 5.a.; 6.c Policy Statement; Medicare Part A (Hospital Insurance); Resource Limit 1-2 Policy Clarification AJ 03.18.2019 2.; 6.a.; 6.c.; 6.e. Legal Authority; Policy Statement; Eligibility Determination Group; Resource Limit; Budget 1-2 Policy Clarification ME 07.01.2019 5.a. Legal Authority; Medicare Part A (Hospital Insurance) 1 Policy Clarification AJ 01.02.2020 2.; 6.c. Policy Statement; Resource Limit 1; 3 Non-Substantive Change TN 01.04.2021 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change TN 01.04.2022 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change TN 01.03.2023 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change KF

01.02.2024 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change CE 12.02.2024 6.d. Legal Authority; Cost-of- Living Adjustments (COLAs) Disregards 1 - 3 Policy Change CE 01.02.2025 2.;6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change CE 05.01.2025 6.d.; 6.e. Cost-of-Living Adjustment (COLA) Deduction; Budget 3 Non-Substantive Change KJ 08.01.2025 5.a.; 6.e. Medicare Part A (Hospital Insurance; Budget 1;3-4 Policy Change LW 08.01.2025 6.e. Budget 3-4 Non-Substantive Change LW 01.05.2026 2.; 6.c. Policy Statement; Resource Limit 1; 2 Non-Substantive Change SA

Aged, Blind and Disabled Manual Policy Manual Number: 120.025 Section: Medicare Savings Programs Chapter: Qualified Disabled Working Individuals

May 1, 2025 Division of TennCare 1 QUALIFIED DISABLED WORKING INDIVIDUALS Legal Authority: Social Security Act § 1905(p)(2)(D); § 1905(s); Tenn. Comp. R. & Regs. 1200-13-20- .08(7)(d) 1. Overview Section 6012 of the Omnibus Budget Reconciliation Act (OBRA) of 1989 provides an option to purchase Medicare Hospital Insurance Benefits (Part A) for an indefinite period for certain Disabled Working Individuals (DWI) under age 65 who are no longer entitled to premium-free Medicare Part A because they returned to work. Section 6048(s) of OBRA 1989 requires states to “buy in” the Medicare Part A only premium for those DWIs who meet all the requirements of being a Qualified Disabled Working Individual (QDWI). 2. Policy Statement To be eligible in the QDWI category an individual must: a. Be under age 65; b. Have a disabling impairment (determined by the Social Security Administration (SSA)); c. Be eligible to enroll in Medicare Part A, but no longer entitled to free Medicare Part A due to Substantial Gainful Activity (SGA); d. Have income that does not exceed 200% of the Federal Poverty Level (FPL); e. Not have resources over $4,000 for an individual or $6,000 for a couple; f. Not be eligible for TennCare Medicaid; and g. Meet all non-financial eligibility requirements.

3. SSA’s Responsibility When an individual who was previously disabled returns to work, the SSA will:

a. Determine continuous disability; b. Determine whether the income the individual receives exceeds the SGA limits; c. Notify the individual of Medicare termination and the opportunity to purchase continued coverage and/or apply for Medicaid assistance; and d. Update the Social Security system with the DWI eligibility determination and enrollment. 4. QDWI Benefits QDWI individuals receive payment of Medicare Part A premiums only. QDWI eligibility does NOT pay for Part B Medicare premiums, co-insurance or deductibles. If the individual is enrolled as a DWI more than 3 months prior to becoming eligible as a QDWI, the individual may be responsible for the premiums in the months prior to QDWI eligibility.

Aged, Blind and Disabled Manual Policy Manual Number: 120.025 Section: Medicare Savings Programs Chapter: Qualified Disabled Working Individuals

May 1, 2025 Division of TennCare 2 5. QDWI Effective Date Eligibility begins the date a TennCare application or LIS application is filed or the date all eligibility requirements are met, whichever is later. 6. Non-Financial Eligibility Requirements a. Age Individuals must be under age 65 to be eligible in this category. b. Citizenship Individuals must be U.S. citizens, U.S. nationals or eligible non-citizens. Individuals are not required to provide documentary evidence of citizenship or national status if they are entitled to or enrolled in any part of Medicare. c. Enumeration Individuals must possess and provide a valid Social Security Number (SSN) or proof of application for an SSN, unless they meet an exception. d. State Residence Individuals in this category must be residents of Tennessee. 7. Financial Eligibility Requirements a. Eligibility Determination Group The Eligibility Determination Group (EDG) is governed by the principle of Financially Responsible Relatives (FRR) and the applicant/enrollee’s living arrangements. See the ABD Eligibility Determination Group policy.

Aged, Blind and Disabled Manual Policy Manual Number: 120.025 Section: Medicare Savings Programs Chapter: Qualified Disabled Working Individuals

May 1, 2025 Division of TennCare 3 b. Income Limit The income limit for receiving benefits in this category is up to 200% FPL for an individual or couple. c. Resource Limit The resource limit for receiving benefits in this category is: i. $4,000 for an individual; or ii. $6,000 for a couple. d. Cost of Living Adjustment (COLA) Deduction The SSA is responsible for applying COLA to its benefit programs, including Old-Age, Survivors, and Disability Insurance (OASDI), Railroad Retirement Benefits (RRB) and Supplemental Security Income (SSI). If the SSA applies a COLA for a given year, it is applied on January 1st of that year. However, the annual update for FPLs is not typically released until mid-January. This can cause individuals who were previously QDWI eligible to become income-ineligible due to their increased Social Security income in the period between the COLA adjustment and the FPL increase. To address the discrepancy caused by the timing of the COLA and FPL adjustments, QDWI enrollees who become income-ineligible in January are provided with a COLA deduction for the months of January through the month following when the FPLs are released. The COLA deduction is equal to the amount of the monthly COLA increase. e. Budget Mr. Davis is 60 years old, has been determined a DWI by SSA, but is no longer entitled to premium free Medicare Part A. Mr. Davis receives $1,300 in earned income per month, and $200 in unearned income per month. Mr. Davis is not married. Mr. Davis’s total countable income, $797.50, is less than 200% FPL, $2,010, so he is income eligible for the QDWI category. Income Budget Calculation

Unearned Income

$ 200.00 Irregular Unearned Income Disregard + $ 0.00 In-Kind Support and Maintenance + $ 0.00 Ineligible Spouse’s Deemed Unearned Income + $ 0.00

Aged, Blind and Disabled Manual Policy Manual Number: 120.025 Section: Medicare Savings Programs Chapter: Qualified Disabled Working Individuals

May 1, 2025 Division of TennCare 4 Ineligible Parent’s Deemed Income + $ 0.00 General Deduction ($20) - $ 20.00 Child Support Disregard - $ 0.00 Widow/Widower Entitlement Disregard - N/A DAC Entitlement Disregard - N/A COLA Deduction - N/A Total Net Unearned Income = $ 180.00 Self-Employment Income

$ 0.00 Earned Income + $ 1,300.00 Irregular Earned Income Disregard - $ 0.00 Student Earned Income Exclusion - $ 0.00 Ineligible Spouse’s Deemed Earned Income + $ 0.00 Remaining General Deduction - $ 0.00 Earned Income Deduction - $ 65.00 Impairment Related Work Expense - $ 0.00 ½ Deduction - $ 617.50 Blind Work Expense - $ 0.00 Total Net Earned Income = $ 617.50 Total Countable Income (Total Net Unearned Income + Total Net Earned Income) = $ 797.50 Qualified Income Trust - $ 0.00 Net Countable Income

$ 797.50 Income Test Limit

$ 2,010.00 Income Test Result

PASS Patient Liability

N/A

The above budget is current as of March 2017. 8. Termination of QDWI Benefits

An individual will lose QDWI eligibility when:

a. He becomes eligible for any category of TennCare Medicaid; b. Personal resources exceed the resource limit; c. Income exceeds 200% of the current FPL; d. She becomes age 65 and is entitled to premium-free Medicare Part A; or e. SSA notifies TennCare that the individual is no longer considered disabled.

Aged, Blind and Disabled Manual Policy Manual Number: 120.025 Section: Medicare Savings Programs Chapter: Qualified Disabled Working Individuals

May 1, 2025 Division of TennCare 5 Version History Version Date Section Section Title Page Number(s) Reason for Revision Reviser 03.18.2015

Publication

03.18.2019 7.a. Eligibility Determination Group 2 Policy Clarification RZ 03.18.2019 7.e. Budget 3 - 4 Non-Substantive Change RZ 12.02.2024 7.d. Legal Authority; Cost of Living Adjustment (COLA) Disregard 1; 3 Policy Change CE 05.01.2025 7.d.; 7.e. Cost-of-Living Adjustment (COLA) Deduction; Budget 3 Non-Substantive Change KJ

Aged, Blind, and Disabled Manual; Section: Institutional Medicaid; Policy Manual Number: 125.005; Chapter: INSTITUTIONAL STATUS

Legal Authority: 42 CFR 435.1009; 42 CFR 435.1010; 42 CFR 435.236; 42 CFR 435.622; Tenn. Comp. R. & Regs. 1200-13-20-.08

1. Policy Statement

An individual must be institutionalized in order to receive benefits in the Institutional Medicaid category.

An individual is considered institutionalized when he has:

a. Been admitted to a medical institution (i.e. hospital, Nursing Facility (NF) or Intermediate Care Facility for Individuals with Intellectual Disabilities (ICF/IID)), and has been continuously confined for at least 30 days or admitted to a medical institution for hospice services; b. Been admitted to a Nursing Facility (NF) or Intermediate Care Facility for Individuals with Intellectual Disabilities (ICF/IID) and has been or determined by TennCare to be likely to be continuously confined for at least 30 days going forward; c. Applied to enroll in the Home and Community-Based Services (HCBS) waiver program, and has been determined to need and likely to receive services for a continuous period of at least 30 days going forward as demonstrated by an approved PAE in an applicable Level of Care; or d. Died while in long-term care nursing facility prior to meeting the 30 days continuous confinement requirement.

2. Continuous Confinement

a. Individuals with a Pre-Admission Evaluation (PAE)

An individual with a PAE is considered continuously confined when she has:

i. Been admitted to a NF or ICF/IID and has been determined by TennCare to be likely to be continuously confined for at least 30 days going forward, demonstrated by an approved PAE which is effective for at least 30 days ii. Been admitted to a NF or ICF/IID and the period of time spent in a medical institution combined with the period of time for which an approved PAE is effective exceeds 30 days; or iii. Been determined to need and likely to receive HCBS for a continuous period of at least 30 days going forward, demonstrated by an approved PAE and a CHOICES Enrollment form.

Aged, Blind and Disabled Manual Policy Manual Number: 125.005 Section: Institutional Medicaid Chapter: Institutional Status

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b. Individuals without a PAE

An individual without a PAE is considered continuously confined when he:

i. Has been admitted to a medical institution and is continuously confined in a medical institution (i.e. hospital, NF or ICF/IID) for at least 30 days; ii. Is dually-eligible for Medicare and Medicaid, and is receiving Level 2 Skilled Nursing Facility (SNF) care paid by Medicare. Medicare pays for the first 100 days of Level 2 SNF care; or iii. Has been admitted to a NF to receive hospice services for any length of time.

Note: A dual-eligible individual receiving SNF care paid for by Medicare does not need to be in an Institutional Medicaid category for TennCare to pay the Medicare co-pay. She must receive QMB, but may be eligible as a Supplemental Security Income (SSI) recipient or in another TennCare Medicaid category.

Note: If the dual-eligible individual continues to need Long-Term Services and Supports (LTSS) after his Medicare-covered stay in the SNF, then he must apply for CHOICES. If the individual is applying for HCBS services, he will need a PAE. If the individual applies for nursing facility care, he will need a PAE or may be approved based on continuous confinement.

3. Institution Types

An institution is an establishment that provides food, shelter, treatment and services to four or more individuals. Types of institutions include:

a. Medical Institution

An institution authorized by state law and organized to provide medical care, including nursing and convalescent care. Examples of medical institutions include: hospitals, convalescent or progressive care centers, and Long-Term Care Facilities (LTCFs), providing skilled and intermediate care and hospice services.

b. Institution for the Intellectually and Developmentally Disabled

An institution organized primarily for the diagnosis, treatment or rehabilitation of the intellectually and developmentally disabled. It provides a protected residential setting for the evaluation, rehabilitation and 24-hour supervision of the patient.

Aged, Blind and Disabled Manual Policy Manual Number: 125.005 Section: Institutional Medicaid Chapter: Institutional Status

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c. Institution for Mental Disease (IMD)

An institution licensed to provide diagnosis, treatment or care for persons with mental diseases.

TennCare Medicaid reimbursement is limited to care provided for an eligible individual who is at least 65 years of age and confined to an approved ward.

Confinement in an IMD does satisfy and establish institutional status for individuals under age 65 and those confined to unapproved wards; therefore, when subsequently admitted to a medical institution these individuals may already meet confinement.

d. Public Institution

A public institution is an institution serving more than 16 residents that is the responsibility of or controlled by a governmental unit. A public institution does not include:

i. A medical institution; or ii. An intermediate care facility (ICF), including those providing services to individuals age 65 and older in institutions for tuberculosis or mental disease.

e. Institution for Tuberculosis

A facility established and maintained primarily for the care and treatment of tuberculosis. Tennessee does not have any chest disease or tuberculosis hospitals. Reimbursement is available to an out-of-state hospital for a Tennessee resident who requires such care.

4. Special Low-Income Group

The following individuals are considered to be institutionalized when confined to a medical institution (i.e. hospital) for at least 30 days and are not eligible in another TennCare Medicaid Category of Eligibility (COE):

a. Children (under 18 years of age or under 22 years of age if a student regularly attending school); b. Pregnant women; c. Aged individuals as defined in the Institutional Medicaid policy; d. Blind individuals as defined in the Institutional Medicaid policy; or e. Disabled individuals as defined in the Institutional Medicaid policy.

Note: Institutionalized individuals cannot be considered caretaker relatives as individuals confined to a medical institution for 30 days or more no longer meet the Caretaker Relative Status criteria as defined in the Caretaker Relative MAGI policy.

Aged, Blind and Disabled Manual Policy Manual Number: 125.005 Section: Institutional Medicaid Chapter: Institutional Status

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5. Inmate of a Public Institution

a. Inmate Status

Inmate means any person living in a public institution who was committed under the penal system with no exception. Inmate status suspends receipt of Medicaid benefits, but is no longer considered a factor when looking at non-financial eligibility criteria.

The following would not be considered inmates:

i. Individuals in public educational or vocational institutions designed for the primary purposes of educational or vocational training designed to prepare her for gainful employment; ii. Individuals temporarily confined pending other arrangements appropriate to his needs; or iii. Individuals receiving medical treatment in a ward approved by TennCare, such as patients in certified wards of State Developmental Centers for Intellectual and Developmental Disabilities, including certified ICF/IID wards and certified SNF, as well as patients in certified wards of State Mental Health Hospitals and Private Certified Mental Health Hospitals.

b. Termination of Inmate Status

Inmate status is interrupted or terminated when an individual is admitted as an inpatient to a medical institution for more than 24 hours, except for those committed under the penal system. Inmate status for those committed under the penal system terminates upon release from custody. Release means:

i. Parole; ii. Pardon; iii. Bail; or iv. Dismissal of charges.

6. Verification of Institutional Status

Establish the individual’s institutional status using any one of the following methods or evidence as appropriate.

a. Continuous Confinement to a Medical Institution for 30 Days (Hospital or Similar Institution)

Verify that the individual has been continuously confined in a medical institution for a period of at least 30 days. Check with the hospital admission office either by phone or written correspondence to verify admission and discharge dates. Review the individual’s bill for hospital charges as it may include an admission and a discharge date.

Aged, Blind and Disabled Manual Policy Manual Number: 125.005 Section: Institutional Medicaid Chapter: Institutional Status

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b. LTCF

Evidence of an individual’s institutional status includes:

i. An approved PAE in the appropriate TennCare Pre-Admission Evaluation System (TPAES) queue; or ii. A completed Form 2350, a form submitted by entities such as hospitals and nursing homes to notify TennCare of the applicant’s admission to the facility. The form includes the admission date and other pertinent information regarding the individual’s confinement, states where the individual is located and/or how long the individual was confined.

c. Confinement to an IMD

Form 2350 from a Tennessee Department of Mental Health and Substance Abuse Services (TDMHSAS) facility is sufficient evidence that the unit to which the individual was admitted is one qualified for TennCare Medicaid reimbursement. The voluntary admission form the individual signed prior to admission to substantiate that the individual is not an inmate.

d. Enrollment in HCBS

The individual must have an approved PAE to be eligible to receive HCBS. An approved PAE is verification of institutionalized status.

7. Patient in an IMD

Patient includes an individual receiving professional services in an IMD, but does not include an individual on conditional release or convalescent leave from such an institution.

8. Coverage for Former Patients and Inmates of IMDs

a. Overview

A qualifying individual who is no longer a patient in an IMD or has had his inmate status interrupted may be eligible for TennCare Medicaid benefits upon his admission to a medical institution that is a Title XIX facility. Interruption of IMD patient status occurs when the individual is released, transferred from or receives convalescent leave from an IMD. Inmate status is interrupted when an individual is admitted to a medical institution unless he was admitted under the penal system, which requires release from the institution, i.e., parole, pardon, bail or dismissal of charges.

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b. Tennessee IMD

An individual may qualify for TennCare Medicaid benefits as an institutionalized individual when his patient or inmate status in one of the following public institutions is interrupted:

i. Memphis Mental Health Institute, Memphis; ii. Middle Tennessee Mental Health Institute, Nashville; iii. Western Mental Health Institute, Bolivar; or iv. Moccasin Bend Mental Health Institute, Chattanooga

These individuals must follow all procedures for filing an application for assistance and must meet all non-financial and financial requirements for TennCare Medicaid. As applications are processed for this group, refer to any individuals who might qualify for Supplemental Security Income (SSI) cash assistance to Social Security. Eligibility for SSI cash assistance includes TennCare Medicaid benefits.

The IMD representative will arrange for placement in a medical institution and will develop a plan with either the individual’s family or the medical facility to apply for TennCare Medicaid. Because of the individual’s former patient or inmate status, TennCare should be able to secure all necessary information from an IMD representative. If the IMD representative applies on behalf of the patient, she will act as the responsible person for the patient.

9. Children in Residential Treatment Centers

Children in residential treatment centers are not considered to be continuously confined for the purpose of determining institutional status.

When a child is ordered by Juvenile Court or by a treating physician to undergo a psychiatric evaluation or treatment for a sex offense, alcohol and drug abuse or some other type of residential treatment, the cost of care is the responsibility of the child’s family if the child remains in the custody of his parents or other caretaker relative.

a. Children not Currently Receiving TennCare Medicaid

If a child is placed in a residential treatment center and the family cannot afford to pay the cost of care, the family may apply for medical assistance. The child will be considered a member of the household whose absence from the home is temporary. This policy is applied to children who are in approved treatment centers, whether in state or out of state facilities.

Note: Residential treatment when medically necessary is a TennCare covered service for children.

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b. Children Currently Receiving TennCare Medicaid

TennCare Medicaid or TennCare Standard children who enter residential treatment facilities, such as those for sex offenses or alcohol and drug abuse and are in the custody of a parent or caretaker relative may be eligible in their existing COE. Children in this situation should still be considered a member of the household whose absence from the home is temporary.

As long as the child intends to return, the child will continue to be considered a member of her household and retain eligibility in the original COE received prior to placement in the treatment facility. If at any time during the absence it is determined that the child is no longer eligible for benefits, eligibility will be terminated.

10. HCBS

a. General Description

HCBS is provided in a home or community setting as an alternative to, or to delay the need for, LTSS in a NF or ICF/IID. HCBS is available to individuals who qualify for and are enrolled in CHOICES.

b. Waiver Types

i. HCBS

The HCBS program is authorized by a waiver of TennCare Medicaid statutory requirements. In this waiver program:

1. Services are provided to individuals in their own homes, in the home of a caregiver or family member or in a facility participating in the HCBS program (such as an Assisted Living Facility) who would otherwise require the level of care (LOC) provided in an ICF; 2. Services are required to be furnished under an individual written plan of care; and 3. Individuals enrolled must meet the same eligibility criteria as if admitted to an ICF.

Note: Group homes are considered a community-based setting, so individuals living in those settings could be eligible for HCBS benefits.

ii. Employment and Community First (ECF) CHOICES

ECF CHOICES is an HCBS program designed to support individuals with intellectual and developmental disabilities (I/DD) of all ages in realizing their employment and independent

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living goals. Individuals enrolled must either meet NF LOC or be at risk for NF placement in the absence of HCBS. In addition, enrollees must:

1. Have been assessed and found to have an intellectual disability manifested before eighteen (18) years of age or a developmental disability manifested before twenty-two (22) years of age, as specified in Tennessee State law (Tennessee Code Annotated, Title 33-1-101); and

Note: For children five years old or younger a “developmental disability” refers to a condition of substantial developmental delay or specific congenital or acquired conditions with a high probability of resulting in developmental disability if services and supports are not provided.

2. Be enrolled in TennCare Medicaid as an SSI recipient or through one of the demonstration groups: ECF CHOICES 217-Like Group or Interim ECF CHOICES At- Risk Group.

Eligibility for the ECF CHOICES 217-Like Group and the Interim ECF CHOICES At- Risk Group is determined based on Institutional Medicaid non-financial and financial eligibility rules.

iii. DDA Waivers

The DDA waivers provide LTSS for individuals with intellectual disabilities through ICF/IIDs and HCBS.

Individuals eligible for a DDA waiver must meet the non-financial and financial eligibility requirements of the Institutional Medicaid category or receive Medicaid through SSI. There are three DDA HCBS waivers for individuals with intellectual disabilities:

1. Comprehensive Aggregate Cap Waiver

Individuals qualify for, and absent the provision of waiver services would be placed in, an ICF/IID.

To enroll in this waiver program, an individual must:

a. Meet TennCare ICF/IID LOC criteria (TennCare Rule 1200-13-1-.15) and financial eligibility criteria and have a PAE approved by TennCare; b. Have been assessed and found to have an intellectual disability manifested before eighteen 18 years of age, as specified in Tennessee State law (Tennessee Code Annotated, Title 33-1-101); and

Aged, Blind and Disabled Manual Policy Manual Number: 125.005 Section: Institutional Medicaid Chapter: Institutional Status November 3, 2025 Division of TennCare 9 c. Have been identified by the state as a former member of the certified class in the United States vs. State of Tennessee, et al. (Arlington Developmental Center), a current member of the certified class in the United States vs. the State of Tennessee, et al. (Clover Bottom Developmental Center), or an individual transitioned from the Statewide Waiver (#0128) upon its renewal on January 1, 2015, because he was identified by the state as receiving services in excess of the individual cost neutrality cap established for the Statewide Waiver. 2. State-Wide ID Waiver The Statewide ID Waiver provides services to Tennessee children with developmental delays and adults and children with intellectual disabilities who meet the ICF/IID LOC criteria. To enroll in this waiver program, an individual must: a. Meet TennCare ICF/IID LOC criteria (TennCare Rule 1200-13-1-.15) and financial eligibility criteria and have a PAE approved by TennCare; and b. Have been assessed and found to: i. Have an intellectual disability manifested before eighteen (18) years of age, as specified in Tennessee State law (Tennessee Code Annotated, Title 33-1-101); or ii. Have a developmental disability, which is defined as a condition of substantial developmental delay or specific congenital or acquired conditions with a high probability of resulting in an intellectual disability and be a child five (5) years of age or younger. 3. Self-Determination Waiver The Self-Determination Waiver provides community-based services to individuals with developmental disabilities who would otherwise require the level of care provided in an ICF/IID To enroll in this waiver program, an individual must: a. Meet TennCare ICF/IID LOC criteria (TennCare Rule 1200-13-1-.15) and financial eligibility criteria and have a PAE approved by TennCare; b. Have been assessed and found to: i. Have an intellectual disability manifested before eighteen (18) years of age, as specified in Tennessee State law (Tennessee Code Annotated, Title 33-1-101); or,

Aged, Blind and Disabled Manual Policy Manual Number: 125.005 Section: Institutional Medicaid Chapter: Institutional Status November 3, 2025 Division of TennCare 10 ii. Have a developmental disability, which is defined as a condition of substantial developmental delay or specific congenital or acquired conditions with a high probability of resulting in an intellectual disability and be a child five (5) years of age or younger; and iii. Not require residential waiver services (e.g., family model, residential habilitation, supported living) and have an established non-institutional place of residence where the individual lives with family, a non-related caregiver or the individual’s own home.

Aged, Blind and Disabled Manual Policy Manual Number: 125.005 Section: Institutional Medicaid Chapter: Institutional Status November 3, 2025 Division of TennCare 11 Version History Revision Date Section Section Title Page Number(s) Reason for Revision Reviser 04.17.2015 Publication 07.01.2016 9.b.ii Employment and Community First (ECF) CHOICES 6-7 Section Addition AJ 04.01.2020 2.a.; 2.b.; 7.b.; 8.b. Legal Authority; Individuals with a Pre-Admission Evaluation (PAE); Individuals without a PAE; Tennessee IMD; Children Currently Receiving TennCare Medicaid 1-2; 5-6 Policy Clarification TN 05.01.2020 5.b-5.d LTCF; Confinement to and IMD; Enrollment in HCBS 4 Non-Substantive Change TN 05.01.2020 1; 2.a- b.; 4; 5.a Policy Statement; Continuous Confinement, Special Income Level Group; Verification of Institutional Status 1 Policy Change TB 08.01.2024 2.a.iii Continuous Confinement 1 Policy Change LW 08.01.2024 6.b.ii. Verification of Institutional Status 5 Policy Clarification LW 11.03.2025 1.a; 1.c; 3.a; 10.b.i.1 Policy Statement; Medical Institution; HCBS 1-2, 7 Policy Clarification BD 11.03.2025 1.a; 3.a; 3.b.ii. Policy Statement; Medical Institution; Self- Determination Waiver 1-2, 10 Non-Substantive Change BP

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Aged, Blind and Disabled Manual; Section: Financial Eligibility Requirements; Policy Manual Number: 125.010; Chapter: Transfer of Assets and Penalty Periods

Legal Authority: Social Security Act § 1917(c); 42 USC 1396p; State Medicaid Manual § 3257; Tenn. Comp. R. & Regs. 1200-13-20-.08(5)(i-j)

1. Transfer of Assets for Less than Fair Market Value (FMV)

a. Policy Statement

The uncompensated value of a transferred asset is considered available and countable for the purpose of determining eligibility for TennCare Medicaid Long-Term Services & Supports (LTSS) payments. The uncompensated value of a transferred asset is the equity value minus the amount received by the individual. An otherwise eligible Medicaid applicant or recipient is ineligible for payment of LTSS payments (nursing facility or Home and Community Based Services (HCBS)) for a period directly related to the uncompensated value of an asset transferred for less than Fair Market Value (FMV).

Only the uncompensated value of an asset transferred on or after an individual’s look-back date is considered available and countable for the purpose of determining eligibility for TennCare Medicaid LTSS payments.

b. Definitions

Term Definition Asset Asset refers to the value of the resource involved in the transfer, e.g., cash, bank accounts, bonds, real estate, etc. As of 8/11/1993, asset also refers to the value of the income, as well as the resource, of the total uncompensated value transferred.

Equity Value The price that an item can reasonably be expected to sell for on the open market in a particular geographic area minus any encumbrances. FMV The price that an item can reasonably be expected to sell for on the open market in a particular geographic area at a given time.

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Legal Representative A guardian conservator or one who has the individual’s power of attorney. Effective 10/1/1993 for transfers occurring on or after 8/11/1993, legal representative includes any court or administrative body or any person acting on behalf or at the request or direction of the institutionalized individual or his spouse.

Sole Benefit of a Transfer A transfer of assets for the sole benefit of a spouse, blind or disabled child, or disabled individual is a transfer that is arranged in such a way that no other individual or entity may benefit from the assets transferred at the time of the transfer or at any time in the future. Transfer

Transfer means the sale, exchange, donation or divestiture of a liquid or non-liquid asset including the exchange of an asset for one of less value, e.g., transfer of real property in exchange for a life estate in the property. Uncompensated Value The uncompensated value of an asset is the difference between the individual’s equity in the asset at the time of transfer and the compensation he received in the transaction. Institutionalized Individual An institutionalized individual, for application of transfer of assets policy, includes the institutionalized individual, the institutionalized individual’s spouse, legal representative (including a court or administrative body), or any person acting at the request of or direction of the institutionalized individual or the institutionalized individual’s spouse.

c. Types of Transfers

In addition to giving away or selling property for less than FMV, the actions listed below may be considered uncompensated transfers of assets:

i. Altering or establishing joint accounts in which the individual gives up or limits his rights or access to or interest in the asset; ii. Establishing an irrevocable trust; iii. Purchasing an annuity that does not satisfy the Deficit Reduction Act (DRA) of 2005 requirements or making a change to an annuity that alters the course of payments or the treatment of the income or principal; iv. Waiving entitled income or benefits; v. Waiving or giving up an inheritance; vi. Refusal to take legal action to obtain child support or alimony that is not being paid; or vii. Purchasing an irrevocable burial trust that exceeds the value of merchandise and services.

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d. Look-Back Period and Look-Back Date

The look-back period is sixty (60) months for all resource transfers made on or after 02/08/2006. An individual’s look-back period is established on the first date the individual has applied for TennCare Medicaid and:

i. Is institutionalized; or ii. Is determined to have met the requirements for home and community-based services.

When an individual is already enrolled in TennCare Medicaid and becomes institutionalized, the individual’s look-back period is established on the first date of institutionalization.

The look-back date is the beginning of the look-back period and the earliest date on which a transfer of assets made for less than FMV can impact an individual’s eligibility for LTSS. Once the look-back date is established for an individual, the look-back date does not change, regardless of multiple applications or multiple periods of eligibility. All transfers of assets made on or after the look-back date must be evaluated.

Example 1: Ms. Merriweather is institutionalized on January 3, 2017. She applies for Medicaid on February 8, 2017, but is denied. She reapplies for Medicaid on April 24, 2017. The look-back date is 60 months prior to the first date the individual met both requirements (i.e., institutionalization and application for Medicaid). Thus, the look-back date is February 8, 2012.

Example 2: Mr. Armstrong applies for Medicaid on August 8, 2016 and is approved. Mr. Armstrong becomes institutionalized on June 11, 2017. The look-back date is 60 months prior to the first date the individual met both requirements (i.e., institutionalization and application for Medicaid). Thus, the look-back date is June 11, 2012.

e. Effective Date Real Property is Evaluated as a Transfer of Assets

The effective date of the transfer of real property is the date the deed is registered with the Register of Deeds.

Example: Mrs. Jones quitclaims her homestead to her two sons on 10/15/2010. The deed is signed that day in the presence of a notary. The deed is not registered until 07/1/2012. TennCare must use the date the deed is registered as the effective date of the asset transfer.

In the Tennessee Attorney General Opinion 04-161, “failure to register a deed of conveyance for real property meant that such transfer has not occurred and that the property is still owned by the seller”. Therefore, if the property has not been registered with the Register of Deeds office, it is still owned by its original owner.

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The Eligibility Specialist may need to contact the Register of Deeds office for the county where the land is located to determine if a reported transfer of real property has been recorded. The Eligibility Specialist may also check how the deed is registered at the Tennessee Property Data home page. This proof will determine when or if ownership status of the real property changed.

f. Determining Whether a Transfer Occurred

i. Jointly Held Assets

Creation or alterations of jointly held assets which reduce or eliminate an asset for the institutionalized individual are transfers for less than FMV.

1. Transfers Involving Jointly Held Assets Examples of transfers for less than FMV include:

a. An individual is added to an “and” account and the new owner refuses to sign for a withdrawal of funds; or b. Removal of an institutionalized individual’s name from an account that he previously co-owned; or c. Addition of a joint owner who removes funds from the account for uses not allowed by policy (i.e., not for the sole benefit of a spouse or blind or disabled child).

2. Evaluation of Evidence

To determine whether a transfer took place under these conditions, evaluate the evidence and ask these questions:

a. How long has the asset been jointly owned? b. Who contributed the largest share to purchase the asset? c. Why did the joint owner transfer the asset or remove funds?

Document the case notes with information pertinent to the determination of whether the action constituted a transfer of assets.

ii. Transfer Executed by a Financially Responsible Relative (FRR) or Others

Effective 10/01/1993, transfers made 08/11/1993 or later by the institutionalized individual, the community spouse or legal representative including a court or administrative body at the request, direction or on behalf of the institutionalized individual or community spouse may result in a penalty for the institutionalized individual.

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iii. Asset Exchange versus Asset Conversion

1. Exchange The exchange of one asset for another is not a transfer provided the individual received FMV for the exchanged item. The exchange of a countable asset for one which is excluded is not a transfer of assets for less than FMV as long as the individual remains the owner.

Example: An individual exchanges $1000 cash surrender value of life insurance for an irrevocable burial arrangement of the same value. This is not a transfer of assets for less than FMV.

2. Conversion The conversion of one asset for another is not a transfer of assets for less than FMV provided the individual receives FMV in the exchange, e.g. the individual uses $1500 cash to purchase an automobile valued at $1500.

g. Exempt Asset Transfers

Transfers of assets made under the following circumstances are not considered as transfers of assets for less than FMV:

i. The asset was transferred to the individual’s spouse or to another for the sole benefit of the individual’s spouse prior to establishment of Institutional Medicaid eligibility.

ii. The asset was transferred from the institutionalized or HCBS spouse to a community spouse during the 12-month transfer period after approval of TennCare Medicaid and was part of the Community Spouse Resource Maintenance Allowance (CSRMA). See the Resource Assessment policy.

iii. The asset was transferred to, or to a trust for the sole benefit of, the individual’s minor or adult child who is blind or disabled according to 42 USC 1382c.

iv. The asset was transferred to a trust established for the sole benefit of an individual under age 65 who is disabled according to 42 USC 1382c. See the ABD Trust policy. Contact the Policy Unit regarding assets transferred into a pooled trust for individuals age 65 and over.

v. The asset transferred is the individual’s home and title to the home was transferred to:

1. The spouse of the owner; 2. A child of the owner who is under age 21;

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3. The owner’s adult child who is blind or disabled according to 42 USC 1382c; 4. A sibling of the owner who has equity interest in and has resided in the home for at least one year prior to the individual’s institutionalization; or 5. A child of the owner, regardless of age, who: a. Resided with the individual for two years immediately prior to the individual’s nursing home admission; and b. Provided care which permitted the individual to reside at home.

vi. The asset was transferred exclusively for a purpose other than qualifying for TennCare Medicaid, such as satisfaction of legally enforceable debts.

Note: The timing of payment of debts should be considered. For example, if a family member suddenly remembers or decides to collect on an alleged debt that has purportedly been outstanding for years, and no convincing evidence exists that either the individual affirmatively acknowledged the debt or worked toward satisfying the debt and the individual to whom the debt was owed made previous efforts to collect the debt, the validity of the debt and whether it is legally enforceable may be questionable.

h. Annuities i. Overview

Although usually purchased in order to establish a source of income for retirement, annuities may be used to shelter assets so that the individual purchasing them may become eligible for Medicaid. The DRA of 2005 added new requirements with respect to the disclosure and treatment of annuities for Medicaid. Individuals applying for long-term services and supports must:

1. Disclose any interest the individual or spouse has in an annuity (see the ABD Countable and Excluded Resources policy); 2. Name the State of Tennessee as a remainder beneficiary under any annuity purchased on or after February 8, 2006; and 3. Demonstrate that the purchase of any annuity and any annuity-related transaction made by the individual or spouse on or after February 8, 2006, was not a transfer of assets for less than fair market value.

ii. Requirement to Name the State as a Remainder Beneficiary

LTSS applicants and spouses must designate the State of Tennessee as the primary beneficiary of any death benefit payable under any annuity purchased on or after February 8, 2006. If the individual has a community spouse, or a minor or disabled child, the State may be named in the second position following one of these individuals. If the State is named in the second position following a community spouse or child, the annuity must also

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provide that the State becomes the remainder beneficiary in the first position if the community spouse, the child, or their representative disposes of any of the remainder of the annuity for less than fair market value.

As a remainder beneficiary, the State may receive the total amount of medical assistance paid for long-term care on the individual’s behalf. The State will notify the issuer of the annuity of the State’s right as the preferred remainder beneficiary. The issuer must notify the State if there are any changes in the amount of income or principal being withdrawn.

Any annuity purchased by an individual or community spouse on or after the individual’s look-back date that is not amended to meet these criteria should be treated as a transfer of assets for less than FMV. If an annuity does not have a death benefit or does not allow someone other than a surviving spouse to be named as a beneficiary, verification from the annuity issuer is required.

iii. Annuity Purchases

The purchase of an annuity on or after February 8, 2006, by or on behalf of an institutionalized individual who has applied for LTSS should be treated as a transfer of assets for less than fair market value, when it occurs on or after the individual’s look-back date, unless the annuity:

1. Is considered either:

b. An individual retirement annuity (Section 408(b) of the Internal Revenue Code of 1986 (IRC)); or c. A deemed Individual Retirement Account (IRA) under a qualified employer plan (Section 408(q) of the IRC).

OR

2. Is purchased with the proceeds from one of the following:

a. A traditional IRA (Section 408(a) of the IRC); b. Certain accounts or trusts which are treated as traditional IRAs (Section 408(c) of the IRC); c. A simple retirement account (Section 408(p) of the IRC); d. A simplified employee pension (Section 408(k) of the IRC); or e. A Roth IRA (Section 408A of the IRC).

OR

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3. Meets all of the following requirements:

a. Is irrevocable; b. Is non-assignable; c. Is actuarially sound; and d. Provides for payments in equal amounts during the term of the annuity, with no deferral or balloon payments.

Note: The above criteria should not be applied to annuities that are purchased with the applicant’s or couple’s assets that are held by the community spouse, annuities that are purchased entirely with the assets of someone other than the applicant or spouse, and annuities that are determined to be available to the applicant as a resource (see the ABD Countable and Excluded Resources policy).

4. Determining Whether an Annuity is Actuarially Sound

An annuity is actuarially sound when the expected return on the annuity will be paid within the actual or expected lifetime of the annuitant.

To determine whether an annuity is actuarially sound, multiply the annual amount scheduled to be paid out by the period of the annuity. If the period of the annuity is based on the annuitant’s lifetime, the annual payments are multiplied by the individual’s life expectancy at the time of annuitization, see SSA Period Life Table. If the annuity is a period certain annuity, annual payments are multiplied by the annuitant’s life expectancy or the period certain, whichever is less. The calculated amount is the amount the annuity is expected to pay out during the individual’s lifetime. If this amount is equal to or greater than the cash value of the annuity on the date it was annuitized, the annuity is actuarially sound.

When the cash value of the annuity on the date it was annuitized is greater than the amount that is expected to be paid out during the individual’s lifetime, the difference between the two is an uncompensated transfer of assets.

iv. Annuity Transactions

Since annuities owned by an applicant must be considered in determining the state’s obligation towards the cost of long-term care and/or the applicant’s eligibility for TennCare Medicaid, certain annuity transactions made on or after February 8, 2006, by an applicant, or by someone acting on his behalf, on or after the look-back date, can be considered asset transfers made for less than FMV. Transactions include any action taken that changes the

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course of payments to be made by an annuity or the treatment of the income or principal of an annuity.

Annuity transactions include, but are not limited to:

1. Adding unscheduled contributions to an annuity; 2. Making elective withdrawals from an annuity; 3. Assigning an annuity or payments in whole or in part to another person or entity; 4. Annuitizing the contract; 5. Changing the beneficiary of an annuity, in such a way that the annuity no longer names the state in the proper position; and 6. Changing the annuitant or distribution from an annuity, in such a way that the annuity no longer pays out the full value of the annuity to the applicant in equal amounts during the applicant’s lifetime.

Example: Mr. Greenfield discloses at application that he has assigned annuity payments to an irrevocable trust, from which no payments can be made to or for his own benefit. Since the transaction occurred on or after the look-back date and the transfer is not exempt under transfer of assets rules, the annuity transaction is a transfer of assets for less than FMV.

Annuity transactions made by a community spouse prior to the establishment of Institutional Medicaid eligibility may also be evaluated as improper transfers. Routine changes (e.g., change of address, notification of the death or divorce of a remainder beneficiary) and changes beyond the individual’s control are not considered transfers of assets for less than FMV.

v. Annuity is a Transfer of Assets for Less than FMV If an annuity purchase or transaction is determined to be an uncompensated transfer of assets, a penalty period will be applied. The amount used to calculate the penalty period is the full purchase price of the annuity, with two exceptions. When an annuity is determined to not be actuarially sound, the penalty period is determined using the difference between the cash value of the annuity on the date it was annuitized and the amount the annuity is expected to pay out during the individual’s lifetime. If an annuity transaction is determined to be a transfer of assets for less than FMV, the penalty period is determined using the difference between the transaction amount and any compensation received.

i. Excluded Resources Requiring Transfer Information Transfers of the following excluded resources must be evaluated in order to determine that adequate compensation was received. The initial exclusion of these resources was based on their intended use, and a transfer may void the exclusion:

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i. Burial space excluded based on its intended use; and ii. Real property excluded as property essential to self-support or as a homestead.

j. Transfer Executed by an Individual’s Legal Representative A transfer of assets for less than FMV made by any of the following people or entities will result in a penalty period for the institutionalized individual:

i. A person, court, or administrative body with legal authority to act on behalf of or in place of the individual and/or her spouse; or ii. A person, court or administrative body acting at the direction of or request of the individual and/or her spouse.

k. Compensation i. Determining Compensation To determine whether the individual received fair compensation for the transferred asset, subtract the amount the individual received in the transaction from the FMV of the asset, as follows:

FMV – Compensation Received = Uncompensated Value (Round the result to the nearest whole dollar)

If the individual alleges that part or all of his compensation is in-kind, attach a dollar value to the support and/or maintenance and subtract that value from the FMV as shown above. If the individual alleges he has an agreement for total support and care from the individual to whom he transferred the asset, determine the monthly amount of the support and care contribution. If the individual has transferred an asset in exchange for lifetime medical care, he may not be eligible for TennCare Medicaid benefits. See Section 1(n) Life Care Contracts.

ii. Fair Compensation An individual receives fair compensation for a transferred asset if the compensated value is equal to or greater than 100% of the FMV of the asset on the date of transfer or contract for sale. Compensation may be in cash or in-kind.

iii. In-Kind Compensation In-kind compensation is limited to agreements of support or maintenance. Compensation in the form of support or maintenance is acceptable if the individual can provide verification of the value of the in-kind compensation in written documentation form, including cancelled checks, receipts, etc.

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A transfer of assets in exchange for total support and care requires a determination of the amount of the monthly support and care contribution provided by the individual to whom the asset was transferred.

iv. Unfair Compensation An asset is transferred for less than FMV if the compensated value received by the individual is less than the FMV of the asset on the date of transfer or contract for sale. If the asset was transferred for less than FMV, presume that the asset was transferred to establish eligibility for TennCare Medicaid benefits unless one of the following applies:

1. The individual can rebut either of the transfer presumptions: a. transfer to attain TennCare Medicaid eligibility, or b. receipt of unfair compensation; or 2. The transfer was executed by the individual’s legal representative, other than a spouse, without her knowledge or permission prior to 08/11/1993; or 3. Hardship is determined to exist for transfers of assets belonging to institutionalized individuals occurring 07/01/1988 or later.

The uncompensated value of the transferred asset is counted in determining the period of ineligibility for LTSS payments.

l. Life Care Contracts An individual who has transferred her available assets to a third party in exchange for full medical care for life is considered to have entered into a life care contract. Because the individual has a third party medical resource legally responsible for all her medical needs, these individuals are not eligible for TennCare Medicaid benefits. These provisions apply even if the full amount of the individual’s assets have been spent by the third party for her care, unless the contract between the two parties is void or not enforceable for some reason.

If the individual entered into a contract of more limited scope, i.e., the terms of the contract specified certain medical care limitations, she may be eligible for benefits.

i. Third Party Defined For purposes of this policy, third party includes any individual, institution, corporation, or public or private agency liable or potentially liable for all or part of an individual’s medical costs.

Aged, Blind and Disabled Manual Policy Manual Number: 125.010 Section: Institutional Medicaid Chapter: Transfer of Assets and Penalty Periods

January 5, 2026 Division of TennCare 12

ii. Enforceable Contract An enforceable contract does not exist when its terms cannot be fulfilled and are void or rescinded. A contract is rescinded when the third party is financially unable to fulfill its contractual responsibilities. Under these circumstances, the third party is legally obligated to return to the individual any remaining assets from those originally assigned in the contract.

The individual may be eligible for TennCare Medicaid after requiring a financial accounting from the third party of the following: 1. The full amount of income and resources originally assigned to the third party by the terms of the contract; 2. Total expenses paid and fees charged by the third party; and 3. The full amount of the refund.