2. Procedures for Implementing Short-Term Hardship Exceptions

Section 1902(xx)(3)(B)(i) of the Act directs that State determinations of short-term hardship be made “under procedures established by the State (in accordance with standards specified by the Secretary).” This language is nearly identical to the “undue hardship” language in section 1917(b)(3)(A) of the Act (relating to the estate-recovery rules), section 1917(c)(2)(D) of the Act (relating to the asset-transfer rules), and section 1917(d)(5) of the Act (relating to the trust rules). [ 85 ] We consider our policies implementing these other provisions of the Act to provide a familiar model for implementing the short-term hardship procedures for community engagement.

For the procedures relating to the estate recovery undue hardship provision, we have instructed States as follows: “These procedures must, at a minimum, provide for advance notice of any proposed recovery. They must also specify the method for applying for a[n] [undue hardship] waiver, the hearing and appeal rights, and the time frames involved.” CMS State Medicaid Manual, Section 3810(D).

For the procedures relating to the asset transfer and trust undue hardship provisions, CMS has historically ( printed page 33381) instructed States as follows: “[Y]our undue hardship provision must, at a minimum, provide for: Notice to recipients that an undue hardship exception exists; A timely process for determining whether an undue hardship waiver will be granted; [and] A process under which an adverse determination can be appealed.” CMS State Medicaid Manual, Section 3258.10(C)(5) and 3259.8(C). [ 86 87 ]

Sections 1917(b)(3)(A), (c)(2)(D), and (d)(5) of the Act are mandatory, and CMS established the policies implementing them in 1994. [ 88 ] We expect that States are experienced in applying hardship-related exceptions consistent with these standards. Thus, given the similarities in the statutory language, and the authority in section 1902(xx)(3)(B)(i) of the Act for the Secretary to specify the procedural standards for the short-term hardship exception, we are generally adopting in regulation for the short-term hardship exception the policies that apply under the undue hardship provisions, except for one difference discussed below.

One significant difference between the evaluation of undue hardship in the various provisions described in section 1917 of the Act and short-term hardship under section 1902(xx)(3)(B) of the Act is that, in the latter circumstance, the hardship will generally have an end date. For example, a short-term hardship exception for an inpatient hospital stay (which is a short-term hardship circumstance under section 1902(xx)(3)(B)(ii)(I) of the Act) will generally last through the end of the month in which the inpatient hospitalization of an applicable individual ends (as such an applicable individual would be deemed to meet community engagement under section 1902(xx)(3)(B) of the Act if the individual is only hospitalized for a part of a month). By contrast, an individual who, for example, transfers an asset for less than fair market value during the period described in section 1917(c)(B)(i) of the Act but who establishes undue hardship per section 1917(c)(2)(D) of the Act will not be ineligible (that is, not subject to a “penalty period”) for medical assistance for nursing facility services or other services (as described in section 1917(c)(1)(C) of the Act). The exception to the penalty period will not have a beginning or end date; the penalty will simply not apply to the asset transfer.

Our policies relating to the undue hardship provisions of section 1917 of the Act have not had to account for a fixed duration of the exceptions. For the community engagement requirement, we address this by requiring that States notify applicable individuals of their determination that a short-term hardship exception will or will not apply, and, if determining that it will, the date on which the exception will end. We understand that the actual calendar date may not be known to the State at the time of its determination that the exception will apply. It would be sufficient for a State to advise the applicable individual of the event that would result in the end of the exception. In the example of an applicable individual who requests a short-term hardship exception on the basis of inpatient hospitalization, it would be sufficient for the State to notify the individual, upon informing the individual that the exception will apply, that it will end on the last day of the month in which the applicable individual's inpatient hospitalization ends. Once the specific date on which the State intends to end the hardship exception for an individual or individuals is known, the State must, as explained above, provide advance notice to the individual(s) consistent with §§ 435.917 through 435.918 and 42 CFR part 431 subpart E .

We thus direct at § 435.555(c) that States electing the short-term hardship exception must provide notice informing applicable individuals that a short-term hardship exception exists and its anticipated end date for circumstances in which an applicable individual need not request an exception. For circumstances in which the applicable individual or an individual acting on their behalf must request an exception, the State must also provide: notice of the method by which an applicable individual (or individual acting on their behalf) may request a short-term hardship exception; notice of the timeframe for requesting the exception; a timely process for determining whether a short-term hardship exception will be granted; notice to an applicable individual of the State's determination that a short-term hardship exception will or will not apply, and, if the State determines that the exception will apply, the anticipated end date of the exception; and a process under which an adverse determination can be appealed.

States must comply with the notice requirement, described in § 435.555(c)(1), as part of their conformity with the noncompliance procedures in this rule. Under § 435.558(c)(1)(vii), relating to the mandatory content of a notice of noncompliance with the community engagement requirement, such a notice must include, in States that have adopted the short-term hardship exception, “the information about short-term hardships described in § 435.555(c).” We note that States electing the short-term hardship option will also provide notification of the availability of the exception when they comply with § 435.561 (relating to State outreach requirements for community engagement). Under § 435.561, States must notify individuals of the community engagement requirement, including an explanation of the exceptions to the requirement, when the State provides an individual enrolled in the adult group at § 435.119 or an applicable section 1115 demonstration an eligibility determination notice at application or renewal of eligibility, or when moving into one of these groups based on a change in circumstances. Under § 435.561(c)(1)(i), the outreach notice must include an “explanation of the exceptions to such requirement under § 435.553, including short-term hardship exceptions under § 435.555, if elected by the State[.]” In States that have elected the short-term hardship exception, such notices would therefore necessarily include information on the existence of the short-term hardship exception. Additionally, as explained previously, § 435.561(b)(3)(ii) and (iii) require that States notify applicable individuals when the State elects the short-term hardship exception and when certain short-term hardship circumstances become available or are effectuated.

In circumstances in which an applicable individual must request an exception based on a short-term hardship event (as described in section II.G.4. and II.G.7. of this IFC), States must accept the request from any of the individuals described in § 435.907(a): the applicable individual; an adult in the applicable individual's household, as defined in § 435.603(f), or family, as defined in section 36B(d)(1) of the Code; an authorized representative of the applicable individual; or, if the ( printed page 33382) applicable individual is a minor (in a State in which an individual 19 or older is a minor) or incapacitated, someone acting responsibly on the applicable individual's behalf. Section 435.907(a) requires that States accept from the particular individuals described in that regulation “any documentation required to establish eligibility.” As described above, compliance with community engagement is a condition of eligibility, which means that a request for a short-term hardship exception to the community engagement requirement helps an applicable individual establish or maintain Medicaid eligibility. We therefore believe that States must accept requests for short-term hardship exceptions from the individuals described in § 435.907(a), which we specify at § 435.555(b)(2), (c), and (d).