*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016.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. ***
Effective: June 1, 2011 |
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19.10.10 - Self-Support Excluded Assets |
Archived: June 1, 2016 (Previous Versions) |
Self-Support is the use of certain property to earn wages, to produce goods and services for personal use, or to derive income from property. Self-employment is one type of self-support. See Self-Employment Excluded Assets for more information about these assets.
Note: Some non-liquid assets that could be considered self-support assets may also be excluded as household goods or personal effects. See Excluded Assets.
MinnesotaCare and MA Method A.
MA Method B, MA-EPD and Medicare Savings Programs (MSP).
Personal Property Used by an Employee.
Non-Income Producing Self-Support Assets.
Income Producing Self-Support Assets.
There are no self-support provisions other than Self-Employment Excluded Assets for MinnesotaCare and MA Method A. Follow the policies in the rest of this section for MA Method B, MA-EPD and MSP.
In addition to Self-Employment Excluded Assets, there are four different exclusions allowed for self-support assets for MA Method B, MA-EPD and MSP that are based on varying criteria.
l Assets covered in a Plan to Achieve Self-Support (PASS).
l Personal Property Used by an Employee.
l Non-Income Producing Self-Support Assets.
l Income Producing Self-Support Assets.
Personal Property Used by an Employee
Exclude the non-liquid personal property used by an applicant or enrollee in employment, whether it is required by the employer or not.
n If a client alleges owning items that are used in his or her work as an employee, require a statement from the client including:
m The name, address and telephone number of the employer.
m A general description of the personal items used for work.
m A general description of the client’s job duties.
m Whether the items are currently being used.
n Allow an exclusion for assets not in current use for reasons beyond the client’s control if the client expects to resume use within one year. To qualify for the exclusion, the client must sign a statement indicating:
m The reason the property is not in use.
m The date the property was last used.
m When the property is expected to be used again.
Note: Extend the exclusion for one additional year if the nonuse is due to a disabling condition. To qualify for the extension the client must sign a statement indicating:
q The nature of the disabling condition.
q When the activity ceased.
q When the property is expected to be used again.
If the statement indicates the client no longer intends to resume using the assets for employment, they become countable assets unless unavailable or excluded under another provision.
Example:
Hal is a maintenance worker at a large apartment complex. On snowy days he uses his personal pick-up truck that is equipped with a blade to plow the apartment’s parking lot. He also uses his personal tools for some maintenance projects around the apartment complex.
Action:
If Hal’s pick-up truck cannot be excluded under another provision, determine if it can be excluded as an asset used for self-support. Require a statement from Hal that provides the name, address and telephone number of his employer, a general description of the personal items used for work (pick-up truck), a general description of the Hal’s job duties, and whether Hal is currently using the pick-up truck. A statement is not required to exclude Hal’s tools because they may be excluded as household goods or personal effects. See Excluded Assets.
Non-Income Producing Self-Support Assets
n Exclude up to $6,000 of the equity value for each asset meeting all of the following conditions:
m The asset is non-income producing.
m The asset is real property or non-liquid personal property.
m The client currently uses the asset to produce goods, food, clothing or services needed for daily activities.
m The asset is used solely by the client’s household.
Example:
Mai owns an acre of land on which she grows vegetables solely for her family. The land is valued at $10,000 and Mai owes $3,000 to the bank resulting in an equity value of $7,000.
Action:
$6,000 of the equity is excluded for self-support. $1,000 will be counted toward Mai’s asset total.
n Do not exclude any vehicle that qualifies as an automobile with this provision. This exclusion only applies to other types of vehicles such as a boat used for sustenance fishing.
n Allow this exclusion for assets not in current use for reasons beyond the client’s control if the client expects to resume use within one year. To qualify for the exclusion, the client must sign a statement indicating:
m The reason the property is not in use.
m The date the property was last used.
m When the property is expected to be used again.
Note: Extend the exclusion for an additional year if the nonuse is due to a disabling condition. To qualify for the extension the client must sign a statement indicating:
q The nature of the disabling condition.
q When the activity ceased.
q When the property is expected to be used again.
Income Producing Self-Support Assets
This exclusion applies to non-business, non-liquid real or personal income-producing property. Some examples of this are:
n Farm land or equipment rented out by a person who is not actively farming.
n A home rented out by the owner who no longer lives there.
n Forest and meadowland rented to hunters.
Exclude up to $6,000 of the equity value of non-business, non-liquid, income-producing property that produces an annual return of at least 6% of the equity value.
n The $6,000 exclusion is limited to the combined equity value of all property meeting the 6% rule.
n If the client owns more than one piece of income-producing property, each piece must meet the 6% return on the equity value.
n If the earnings drop below 6% for reasons beyond the client’s control, continue to exclude the property for up to 24 months, to allow the property to resume producing a 6% return.
Example:
Constance inherits her mother’s home and rents it out. The home’s fair market value is $70,000 but she has a $60,000 mortgage on the property. Constance receives a net rental income of $300 per month.
Action:
1. Determine the equity value of the property. $70,000 FMV - $60,000 mortgage = $10,000 equity value.
2. Determine the annual return on the property. $300/month X 12 months = $3,600 annual return.
3. Determine 6% of the equity value. $10,000 equity X .06 = $600.
4. Determine if the property produces a net income in excess of 6% of the equity value. $3,600 annual return is greater than $600 (6% of equity).
Because the property meets the criteria for this exclusion, exclude the first $6,000 of equity. Count $4,000 of the equity toward Constance’s asset limit.
Example:
Kaleel owns three plots of land, not attached to his homestead, which he rents out. Plot One has a fair market value of $4,000 and does not have any encumbrances. Kaleel rents Plot One to his neighbor and gives him a deal on the rent. The net rental income per month is $10. Plot Two has a fair market value of $8,000 and Kaleel owes the bank $4,000. The net rental on this plot is $500 each month. Plot Three also has a fair market value of $8,000 and a $4,000 debt. As with Plot Two the net monthly rental income is $500.
Action:
1. Determine the equity value of each property.
a. Plot: One $4,000 FMV - 0 encumbrance = $4,000 equity value.
b. Plot Two and Plot Three: $8,000 FMV - $4,000 encumbrance = $4,000 equity value.
2. Determine the annual return on each property.
a. Plot One: $10/month X 12 months = $120 annual return.
b. Plot Two and Plot Three: $500/month X 12 months = $6,000 annual return.
3. Determine 6% of the equity value for each property.
a. Plot One, Two and Three: $4,000 equity X .06 = $240.
4. Determine if the property produces a net income in excess of 6% of the equity value.
a. Plot One: $120 annual return is less than $240 (6% of equity).
b. Plot Two and Three: $6,000 annual return is greater than $240 (6% of equity).
Based on the above calculations, Plot One cannot be excluded and the entire $4,000 of equity will be counted in Kaleel’s asset total. Plots Two and Three will be able to use this exclusion. Only $6,000 total combined equity for these properties can be excluded. Exclude the $4,000 equity on Plot Two and $2,000 equity of Plot Three. Count the remaining $2,000 of Kaleel’s equity on Plot Three toward Kaleel’s asset limit.