19.45.15 Addional Assets to Meet Community Spouse Monthly Maintenance Needs

*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***

Additional Assets to Meet Community Spouse's Monthly Maintenance Needs

The long-term care (LTC) spouse may allocate additional assets to the community spouse that are not included in the Community Spouse Asset Allowance if the community spouse does not meet his or her calculated monthly maintenance needs based on the community spouse’s income and any community spouse income allocation from the LTC spouse’s income calculation. The amount of additional assets the LTC spouse can allocate to the community spouse is limited to the amount needed to meet the community spouse’s monthly maintenance needs.

Follow the steps listed to determine if the community spouse qualifies for additional assets.

1. Identify which of the couple’s assets produce income and determine the monthly amount of income that is available to each spouse. The asset does not have to generate income each month, but it must generate income on a regular, predictable basis (quarterly, annually, etc.).

n Determine a monthly amount if income is not received monthly. Total the annual income and divide by 12.

John and Mary own a parcel of land. They receive a Conservation Reserve Payment (CRP) of $1,200 annually.

n Use the most recent monthly income received if the monthly income from the asset varies.

2. Determine how the couple would need to arrange their assets so that the Community Spouse Asset Allowance consists of assets that will provide the maximum amount of income for the community spouse.

n Use a percentage of the asset, if needed, to identify the maximum amount of income to meet the community spouse’s asset allowance.

The Community Spouse Asset Allowance is $109,560. The couple owns two income-producing assets: a $150,000 CD that earns $200 per month and a parcel of land with an EMV of $300,000 that earns $500 per month.

Determine the percentage of the asset working within the Community Spouse Asset Allowance and the corresponding percentage of income.

m 73.04% (109,560 ÷ 150,000) of the CD is within the Community Spouse Asset Allowance which would be $146.08 (200 X .7304) in monthly income.

m 36.52% (109,560 ÷ 300,000) of the land is within the Community Spouse Asset Allowance which would be $182.60 (500 X .3652) in monthly income.

The community spouse obtains the maximum possible monthly income ($182.60) from the parcel of land.

n The couple may not be able to legally transfer certain assets, such as a trust, to the other spouse. In addition, it may not be legally possible for the couple to transfer a percentage of an asset. Take this into account when determining which assets make up the community spouse asset allowance.

3. Determine what the community spouse income allocation from the LTC spouse’s income calculation would be if the couple arranged their assets as determined in Step 2.

n If the community spouse does not qualify for a community spouse income allocation, he or she does not qualify for additional assets. This is because the community spouse can meet his or her monthly maintenance needs with his or her own income.

n Continue with Step 4 if the community spouse qualifies for a community spouse income allocation.

4. Determine if the community spouse can meet his or her monthly maintenance needs with a community spouse income allocation.

Calculate the amount of the LTC spouse’s income that is available for a community spouse income allocation. The LTC spouse’s income must include any income from assets attributed to the LTC spouse in Step 2. Subtract the other allowable deductions, if applicable, that must occur prior to the community spouse income allocation.

n If the community spouse meets his or her monthly maintenance needs through a community spouse income allocation, the community spouse does not qualify for additional assets.

n If the community spouse still needs additional income to meet his or her monthly maintenance needs after a community spouse income allocation, the community spouse qualifies for additional assets. Continue with Step 5.

5. Notify the couple they have the option of transferring additional assets to the community spouse in order to bring the community spouse’s income up to the monthly maintenance needs amount. The amount of additional assets that can be used is limited to the amount that is needed to purchase an income-producing asset (such as an annuity) to produce the additional income needed so that the community spouse can meet his or her monthly maintenance needs.

Requirements to Use Additional Assets to Meet the Community Spouse’s Monthly Maintenance Needs

The couple must meet the following requirements before the LTC spouse can transfer additional assets to the community spouse beyond the Community Spouse Asset Allowance:

l The couple must arrange their assets so that the community spouse’s share includes as much income as possible (as determined in Step 2).

l The LTC spouse must make available, and the community spouse must accept, the community spouse income allocation. The couple cannot refuse to make or accept a community spouse income allocation as a way to reduce the community spouse’s income in order to qualify for additional assets.

l The purchase of an income-producing asset for the benefit of the community spouse must occur prior to approving eligibility for MA payment of LTC services for the LTC spouse.

l The amount of assets from those attributed to the LTC spouse that the community spouse can use to purchase an income-producing asset is limited to the amount needed to meet the Community Spouse's Monthly Maintenance Needs . The income generated cannot exceed the amount needed for the community spouse to meet his or her monthly maintenance needs.

l If the couple uses an asset that is already producing income to purchase another income-producing asset, the new asset and any remaining assets attributed to the LTC spouse must earn income greater than the amount of income previously generated by the assets attributed to the LTC spouse.

James is married to Marilyn, a community spouse. After counting Marilyn’s income, she needs an additional $500 to meet her monthly maintenance needs, but there is only $400 available as a community spouse income allocation from James’ LTC income calculation. Marilyn qualifies for additional assets to meet her monthly maintenance needs. The Community Spouse Asset Allowance consists of assets that produce the most income for Marilyn. The remaining assets attributed to James produce $150 per month in income which was taken into account when the community spouse income allocation was calculated.

The couple can use the assets attributed to James to purchase a new income-producing asset for Marilyn to increase her income by no more than $100. If they use assets that are currently producing income, the income generated by the new asset and the remaining assets attributed to James must earn more than $150.

l The couple must verify the income-producing asset that they purchased. It must provide at least an annual income and return income at a rate considered at least average by the financial institution holding the asset. Verify that the rate of return is an average rate of return by the financial institution holding the asset.

Alice is married to Elmer, a community spouse. Alice requested MA payment of LTC services in June 2010 because she entered a nursing home for a stay of more than 30 days. She meets all MA eligibility requirements except for the asset determination. In addition, she meets all other eligibility requirements for MA payment of LTC services. Based on the results of the asset assessment, the Community Spouse Asset Allowance is $31,094. In the time period since Alice’s asset assessment effective date, the couple sold their homestead and invested the proceeds. At the time of Alice’s request, the couple owned $85,000 in non-excluded assets:

l A jointly owned savings account with a value of $50,000 that earns $75.00 per month in interest.

l A parcel of land owned by Alice that has an EMV of $28,000 that earns $900 every six months in rent.

Alice receives $1,000 gross per month in RSDI income, and Elmer receives $790 per month in pension income. Elmer resides in an apartment and pays $500 per month in rent. Elmer is not responsible for heating and cooling costs, but he is responsible for electricity and telephone service. He pays $120 annually for renter’s insurance.

Determine if the couple qualifies for additional assets to meet Elmer’s monthly maintenance needs since Alice has more assets attributed to her than her $3,000 limit (she has $53,906 in countable assets attributed to her after subtracting Elmer’s asset allowance of $31,094).

1. Identify which assets produce income and determine the monthly amount of income. Two of the couple’s assets produce income:

2. Determine how the couple would need to arrange their assets so that Elmer receives the maximum amount of income. Elmer would need to own the parcel of land ($28,000) and $3,094 (6.188%) of the savings account.

3. Determine what the community spouse income allocation would be if the couple arranged their assets as determined in Step 2. Elmer’s monthly maintenance needs is $1,889 per month ($66 excess shelter expenses + the minimum income allowance of $1,823). Elmer would have a monthly income of $944.64 ($790 from his pension + $150 from the land + $4.64 [$75.00 X 6.188%] from the savings account).The community spouse income allocation would be $944.36 ($1,889 Elmer’s monthly maintenance needs - $944.64 Elmer’s income.)

4. Determine if the Elmer can meet his monthly maintenance needs with a community spouse income allocation. Alice has $1,070.36 in gross income ($1,000 RSDI + $70.36 which is her share of the savings account interest). Following the order of the allowable deductions in the LTC income calculation, Alice has $884.86 to allocate to Elmer ($1,070.36 income - the $96.50 Medicare premium – the $89 personal needs allowance). This does not provide all of the needed income for Elmer to reach his monthly maintenance needs, so the community spouse qualifies for additional assets. Elmer needs an additional $59.50 ($944.36 community spouse income allocation - $884.86 of Alice’s income that’s available for the allocation) to meet his monthly maintenance needs.

5. Notify the couple they have the option to purchase an income-producing asset with assets attributed to Alice.

Explain to Alice and Elmer that in order for Elmer to get additional assets they must arrange their assets as determined above so that Elmer receives the maximum amount of income. If they do, they may reduce the assets attributed to Alice by purchasing an income-producing asset for Elmer.

The amount of assets they can use to purchase the income-producing asset is limited to the amount needed to generate $59.50 in additional monthly income. In addition, since the assets attributed to Alice already earn income, the new asset and any remaining assets attributed to the LTC spouse must earn income greater than $70.36 (the amount of income the assets attributed to Alice currently earn).

Alice and Elmer report they arranged their assets as required. They reduced the assets attributed to Alice by paying off a $1,000 credit card balance and using $50,000 to purchase an annuity that they annuitized with an income stream of $125 per month. They provided the necessary verifications.

Alice is asset eligible for MA. Since she meets all other eligibility requirements, approve eligibility for MA payment of LTC services for her.

Chapter 19 - Assets	Effective: January 1, 2011
19.45.15 - Additional Assets to Meet Community Spouse's Monthly Maintenance Needs	Archived: June 1, 2016