29.09 Value of resources counted toward the Medicaid resource limit

In general. Unless an exception under paragraph (d) below applies, the ownership interests of resources of the members of the financial responsibility group are valued according to these general rules. Resources not excluded under § 29.08 are valued at their equity value (see (b) below for definition of 23 32 VSA § 5830f. Financial Methodologies Part 5 – Page 36 (Sec.29.00, Sub.29.09) equity value). The portion of jointly-owned resources not excluded and countable toward the MABD resource limit is determined according to the rules in paragraph (c) below. The equity value of any resource owned entirely by members of the financial responsibility group and not excluded under § 29.08 is counted toward the MABD resource limit. Definition: Equity value The fair market value of the resource minus the total amount owed on it in mortgages, liens, or other encumbrances. Fair market value means the price an item can reasonably be expected to sell for on the open market in its locality. The original estimate of the equity value of a resource is used unless the owner submits evidence from a disinterested, knowledgeable source that, in AHS’s judgment, establishes a reasonable lower value. AHS estimates the equity value of real property located in Vermont using the town’s assessment of the real property adjusted by the common level of appraisal (CLA) minus the total amount owed on the real property in mortgages, liens or other encumbrances. Counting jointly-owned resources In general (i) This paragraph defines each type of joint ownership and the amount of the resource that is counted when ownership is shared. (ii) When two or more parties share rights to sell, transfer, or dispose of part or all of personal or real property, the ownership share held by members of the financial responsibility group is counted as prescribed by state law. Shared ownership or control occurs in different forms, including tenancy-in- common, joint tenancy, and tenancy-by-the-entirety. The type of shared ownership involved is determined and used to compute the countable value of the resource. If an individual submits evidence supporting another type of shared ownership, AHS will make a decision about which type applies. If AHS decides not to use the type submitted by the individual, it will provide the individual with a written notice stating the basis for its decision. (iii) Under Vermont law, a co-owner may demand partition, the dividing of lands held by more than one person. For this reason, AHS counts the individual’s proportionate share of the lands as an available resource, unless excluded as a home or property up for sale. Definition: Tenancy-in-common (i) In tenancy-in-common, two or more parties each have an undivided fractional interest in the whole property. These interests are not necessarily equal. One owner may sell, transfer or otherwise dispose of their share of the property without permission of the other owner(s) but cannot take these actions with respect to the entire property. (ii) When a tenant-in-common dies, the surviving tenant(s) has no automatic survivorship rights to the deceased’s ownership interest in the property. Upon a tenant’s death, their interest passes to their Financial Methodologies Part 5 – Page 37 (Sec.29.00, Sub.29.09) estate or heirs. (iii) Tenancy-in-common applies to all jointly-owned resources when title to the resource does not specify joint tenancy or tenancy-by-the-entirety. (iv) See (c)(5) below for how a resource owned by a member of the financial responsibility group as a tenant-in-common is counted. Definition: Joint tenancy (i) In joint tenancy, each of two or more parties has an undivided ownership interest in the whole property. In effect, each joint tenant owns all of the property. When the property is personal property, the interests of the joint tenants are equal. When the property is real property, the interests of the joint tenants can be equal or unequal (unless the instrument creating the joint tenancy contains language indicating a contrary intent, the joint tenants’ interests are presumed to be equal ).24 (ii) Upon the death of only one of two joint tenants, the survivor becomes the sole owner. Upon the death of one of three or more joint tenants, the survivors become joint tenants of the entire interest. For real property, the deceased joint tenant’s interest is allocated among the surviving joint tenants in proportion to their respective interests at the time of the deceased joint tenant’s death unless the instrument creating the joint tenancy contains language indicating a contrary intent.25 (iii) See (c)(5) below for how a resource owned by a member of the financial responsibility group as a joint tenant is counted. Definition: Tenancy-by-the-entirety (i) Tenancy-by-the-entirety can only exist between members of a married couple, including parties to a civil union. (ii) The couple, as a unit, owns the entire property which can be sold only with the consent of both parties. (iii) Upon the death of one tenant-by-the-entirety, the survivor takes the whole. Upon legal dissolution, the former couple become tenants-in-common (see (c)(2) above), and one can sell their share without the consent of the other. (iv) When a member of the financial responsibility group owns a resource as a tenant-by-the-entirety, the entire equity value of the resource is counted as available to the member. Countability (i) General rule for tenancy-in-common and joint tenancy. With the exception noted in (ii) below and subject to the presumption under § 29.09(d)(3) regarding real property joint ownerships created within 60 months prior to the date of the MABD application, AHS assumes, absent evidence to the 24 27 VSA § 2(b). 25 Id. Financial Methodologies Part 5 – Page 38 (Sec.29.00, Sub.29.09) contrary, that each owner of shared property owns only their fractional interest in the property. The total value of the property is divided among all of the owners in direct proportion to the ownership share held by each. (ii) Exception: Accounts in financial institutions. For an account in a financial institution, AHS assumes that all of the funds in the account belong to the individual. If another member (or members) of the individual’s financial responsibility group is on the account, AHS assumes the funds in the account belong to those account owners in equal shares. Exceptions to general valuation rule. The following paragraphs describe exceptions to the general valuation rules described in paragraph (a) above. Annuities. Unless an annuity is excluded as a resource under § 29.08(d)(1) or, for purposes of Medicaid coverage of long term care services and supports, treated as a transfer under § 25.03(h), the fair market value of an annuity is counted. The fair market value is equal to the amount of money used to establish the annuity and any additional payments used to fund the annuity, plus any earnings and minus any early withdrawals and surrender fees. If evidence is furnished from a reliable source showing that the annuity is worth a lesser amount, AHS will consider a lower value. Reliable sources include banks, other financial institutions, insurance companies, and brokers, as well as any other source AHS considers, in its discretion, to be reliable. Life estates. Unless a life estate interest in property is excluded under § 29.08(a)(6) or the fair market value of the entire property (the life estate and the remainder) is counted as a resource, the fair market value of a life estate interest in property is established by multiplying the fair market value of the property at the time the life estate interest was created by the number in the life expectancy table that corresponds with the individual’s age at that time. The life estate table is found in the SSA’s POMS at SI 01140.120 (https://secure.ssa.gov/apps10/poms.nsf/lnx/0501140120). If an individual submits evidence supporting another method of establishing the fair market value of a life estate, AHS will make a decision about what method to use. If AHS decides not to use the method submitted, it will provide the individual with a written notice stating the basis for its decision. Jointly-owned real property. Regardless of a co-owner’s refusal to sell jointly-owned real property pursuant to the resource exclusion under § 29.08(a)(5)(i), AHS presumes that a member of the financial responsibility group that owns real property jointly with another person (or persons) owns the entire equity value of the real property if the joint ownership was created less than 60 months prior to the date of the MABD application. This presumption may be rebutted by a showing, through reliable sources, that the other joint owner (or owners) purchased shares of the property at fair market value. Reliable sources include cancelled checks or property transfer tax returns. When it has been established that one or more other co-owners purchased their shares of the property, the proportional interest owned by the member is counted. U. S. savings bonds. Unless a U. S. savings bond is excluded under § 29.08(i)(11), it is counted as a resource beginning on the date of purchase. To establish the value of the bond, the Savings Bond Calculator or the Comprehensive Savings Bond Value Table on the U. S. Bureau of Public Debt’s internet website is used. Alternately, AHS obtains the value by telephone from a local bank. The following general rules apply to valuation: (i) Series E and EE bonds are valued at their purchase price. Financial Methodologies Part 5 – Page 39 (Sec.29.00, Sub.29.09) (ii) Series I bonds are valued at their face value. (iii) Service HH bonds are valued at their face value. Income-producing promissory notes and contracts (i) Unless the promissory note or other income-producing resource (contract) is excluded under § 29.08(d)(2) or, for purposes of Medicaid coverage of long-term care services and supports, treated as a transfer under § 25.03(i), the fair market value of a promissory note or contract is counted. Regardless of negotiability, fair market value equals the amount of money used to establish the note or contract and any additional payments used to fund it, plus any earnings and minus any payments already received. If evidence is furnished to AHS of a good faith effort to sell the note or contract by obtaining three independent appraisals by reliable sources which reflect that the value of the note or contract is less than fair market value, AHS will consider the note or contract available to its owner only in the amount of this discounted value. Reliable sources include banks, other financial institutions, insurance companies, and brokers, as well as any other source AHS considers, in its discretion, to be reliable. (ii) For an individual requesting Medicaid coverage of long-term care services and supports under MABD, a note or contract valued at a discount will be treated as an available resource at the discounted amount and may also be subject to a transfer penalty to the extent of the amount discounted from the fair market value, in the discretion of AHS. Where the note or contract is determined to have no value on the open market, a transfer penalty will be applied for the full value used to establish the note or contract and any additional payments used to fund it, plus any earnings and minus any payments already received. Substantial home equity (i) Counting rule A home is considered a resource, for purposes of eligibility for Medicaid coverage of long term care services and supports, when the owner’s equity in the home is substantial.26 The substantial home equity limit increases from calendar year to year based on the percentage increase in the consumer price index for all urban consumers (all items; United States city average) rounded to the nearest $1,000. Substantial home equity precludes payment for Medicaid coverage of long-term care services and supports unless one of the following individuals lawfully resides in the home: (I) The owner’s spouse; (II) The owner’s child who is under age 21; or (III) The owner’s child who is blind or permanently and totally disabled, regardless of age. A individual with excess equity in their home who is found ineligible for Medicaid coverage of 26 For the current substantial home equity limit, see Vermont’s Eligibility Standards for Healthcare Programs on the Department of Vermont Health Access website. Financial Methodologies Part 5 – Page 40 (Sec.29.00, Sub.29.10) long-term care services and supports may receive other Medicaid services besides long-term care services and supports if they meet the eligibility criteria for a coverage group that covers services other than long-term care services and supports. When an individual requesting Medicaid owns their home in a joint ownership with someone other than their spouse, absent evidence to the contrary, the individual’s equity interest in the home is reduced by the amount of the other joint owner’s equity interest when the other joint owner resides in the home. (ii) Hardship waivers. An individual who is ineligible for Medicaid coverage of long-term care services and supports due to excess equity in their home may request an undue hardship waiver based on the criteria specified at § 25.05. (iii) Home equity conversion plans (reverse mortgages) and home equity loans. An individual is permitted to use a home equity conversion plan (reverse mortgage) or a home equity loan to reduce their equity interest in their home. In such circumstances, the funds are valued as follows: The existence of a line of credit is not considered to diminish the equity value except in amounts from the line of credit actually paid to the borrower. In the month of receipt, lump-sum payments from a home equity conversion plan or from a home equity loan are excluded as a resource and proceeds paid in a stream of income are excludable income. Lump sum payments from home equity loans retained for more than a month continue to be an excluded resource. Lump sum payments and streams of income are subject to transfer penalties if given away in the month of receipt or thereafter.