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Effective: December 1, 2006 |
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19.45.10ar1 - Spousal Asset Determination (Archive) |
Archived: February 1, 2008 |
The spousal asset allowance figure is the amount of assets the community spouse is able to retain once the LTC spouse has applied and been determined eligible for MA.
This manual section explains how to divide assets between the LTC spouse and community spouse, and what to count toward the LTC spouse asset total.
Asset Calculation - Initial Application.
Community Spouse Contributions.
Transferring Income-Producing Assets.
Asset Calculation - Initial Application
At the time of MA application, consider all non-excluded assets owned by either or both spouses that are not included in the community spouse asset allowance as available to the LTC spouse.
Note: See Dividing Assets for more information on how assets for the community spouse asset allowance are divided.
The community spouse is only allowed to have assets that total the community spouse asset allowance at the time of the LTC spouse’s MA approval.
l The assets the community spouse retains are the protected spousal assets.
l The community spouse may not exceed the protected spousal asset amount at the time of application.
l If the community spouse has excess assets above the spousal asset allowance a community spouse contribution is required.
Community Spouse Contributions
When a community spouse’s own assets are in excess of the community spouse asset allowance, the community spouse must contribute the excess assets toward the cost of care of the LTC spouse.
l The contribution amount is the dollar value of the assets owned which exceed the spousal asset allowance amount.
If the community spouse refuses to make the assets available for the cost of care of the LTC spouse, eligibility for the LTC spouse is still possible if one of the following conditions is met:
n The LTC spouse cannot use the funds without the consent of the community spouse.
n The LTC spouse assigns rights to support from the community spouse to DHS.
n The LTC spouse is unable to assign rights to support because of a physical or mental impairment.
n The county agency determines that denying eligibility would cause an imminent threat to the health and well being of the LTC spouse.
If MA is approved with one of the conditions, a cause of action exists against the community spouse for the dollar value of assets over the community spouse asset allowance or the amount of MA expended, whichever is less. Refer the case to the county attorney’s office.
Once the LTC spouse has applied and been approved for MA, and the final spousal asset allowance has been determined, a division of assets must take place. It is at this point that:
l Jointly owned assets must be divided into one or the other spouses’ names.
l Assets may be transferred to the community spouse up to the asset allowance.
n Subtract the amount of assets already owned solely by the community spouse from the spousal asset allowance. This determines the remaining amount of assets the community spouse may have transferred from the LTC spouse.
n Verify that all assets allocated to the community spouse have been legally transferred to the community spouse at the time of the first annual renewal.
n The value of retirement annuities that have been annuitized prior to MA application should not be included as part of the spousal asset allowance at MA application, it is considered income.
Example:
Paul and Susan are married, and Susan entered an LTCF two years ago on July 1. At the time the asset assessment was completed, $25,000 of Paul’s 401K plan was counted in the total countable assets because this was the portion available for emergencies. Paul retired this year on August 15 and is receiving payments from his 401K plan. Susan applies for MA on September 1.
Action:
Do not include the value of the 401K annuity as part of Paul’s asset allowance when assets are divided at the time of the MA application.
n Annuities that have been annuitized between the asset assessment determination and the MA application continue to count as part of the spousal asset allowance.
Example:
Ed enters the LTCF on May 10. His wife, Mary, resides in the community. They have $100,000 in countable assets as of the effective date of the asset assessment. Mary’s community spouse asset allowance is $50,000.
Between the date of the asset assessment and the MA application, Mary purchases an annuity using $40,000 of the marital assets. She immediately annuitizes the annuity and begins receiving payments from the annuity.
Ed applies for MA on August 15, requesting coverage effective August 1. At the time of the application the total countable assets are $92,000.
Action:
Mary’s asset allowance remains $50,000 because it remains in between the minimum and maximum asset allowance amounts. She must consider the $40,000 of the annuity toward her spousal asset allowance, and can have an additional $10,000 transferred to her. Consider $42,000 available to Ed.
l When dividing assets, the LTC spouse may transfer assets or income without a transfer penalty to either:
n The community spouse.
n Another for the sole benefit of the community spouse.
m Sole benefit means that no one but the spouse can benefit now or in the future, unless it will revert to the state to repay MA paid and that the asset will be used over the remaining estimated life expectancy of the community spouse.
m Verify that the assets transferred to the third party are for the sole benefit of the community spouse now and forever in the future.
For more information on transferring income producing assets see that subsection.
The actual transfer of the assets must occur as soon as possible but no later than the date of the first annual eligibility renewal.
l If assets are not divided, the jointly owned assets and assets owned solely by the LTC spouse will be considered available and counted toward the LTC spouse’s asset total at the first annual renewal.
Example:
Ulysses applies for MA in March 2005. His wife, Helen, has a community spouse asset allowance of $26,898. The couple’s total combined assets on the date of application are $30,000. Of the $30,000 asset total, a vehicle with an equity value of $10,000 is in Helen’s name.
Action:
The worker advises Ulysses and Helen that up to $26,898 of their $30,000 must be transferred to Helen’s name alone, if they are not in her name already, before the first annual renewal in March 2006. Helen already owns $10,000 of the total counted assets. She can transfer an additional $16,898 of joint assets into her name only. Any assets that are not transferred into Helen’s name only will be counted toward Ulysses’ asset total at his first annual renewal.
Notify the community spouse, at the time the LTC spouse’s MA is approved, of the required division of assets. The notice should include the following information:
l Assets must be divided between the community spouse and LTC spouse so that each asset is in only one spouse’s name.
l The division of assets must take place as soon as possible but no later than the date of the first annual renewal.
l Available assets not divided will be counted toward the LTC spouse’s asset total.
l Indicate the date of the first annual renewal on the notice.
Transferring Income-Producing Assets
The LTC spouse may transfer income producing assets to the community spouse if after transferring the LTC spouse’s income to the community spouse, the community spouse’s income remains less than the maximum monthly income allowance. See Long-Term Care (LTC) and Elderly Waiver (EW) for more information on determining the monthly income allowance.
Examples of income-producing assets are:
l An annuity which has been annuitized.
l Rental property.
l Stocks that pay dividends.
l Certificates of Deposit.
l Savings accounts.
Rules for transferring income producing assets:
l The transfer of these assets is permitted only if either:
n The LTC spouse entered an LTCF on or after October 1, 1989.
n A person received EW services, the later of:
m The LTCC date, if the date is on or after July 1, 1991.
m The beginning date of home and community-based services, anticipated to last for at least 30 consecutive days beyond the LTCC date.
l The amount of income producing assets transferred to the community spouse may exceed the spousal asset allowance but is limited by the amount of additional income needed to bring the community spouse up to the maximum monthly income allowance.
Example:
The community spouse owns $10,000 in excess of the spousal asset allocation at MA application for the LTC spouse. The spousal asset allowance is $20,000 and the community spouse has a certificate of deposit in his name with a value of $30,000.
Action:
The community spouse in this case has a maximum monthly income allowance of $700 but is short $100 after the LTC spouse allocated $200 of her income.
The LTC spouse has a $10,000 annuity that she annuitized several months after the initial asset assessment. The monthly payment of the annuity is $100.
Action:
The LTC spouse can transfer the annuity to the community spouse because the $100 monthly payment will bring the community spouse up to the maximum monthly income allowance. This can be done even though the annuity’s $10,000 value was counted toward the total countable assets for the asset assessment.
l This type of transfer can only take place at initial application by the LTC spouse.
l The couple’s assets must be arranged so that the community spouse’s share includes as many income producing assets as possible.
Note: At a minimum an annual income payment must be available from the transferred asset.
l The transferred income producing asset must return income at a rate considered at least average by the financial institution holding the asset. This requires verification.
l Once an income producing asset is transferred to the community spouse consider it to be unavailable to the client throughout the continuous LTC/EW period, except if specified in the community spouse contribution section.
Once you have approved the LTC spouse's initial MA application:
l Do not consider the community spouse's assets available to the LTC spouse again unless there is a 30-day break in institutionalization or receipt of EW services.
Note: If MA is closed and the LTC spouse continues to reside in the LTCF or receive EW services and then later reapplies, do not consider the community spouse's assets in determining eligibility.
Example:
Alisa enters an LTCF and applies for MA. The asset assessment is completed and assets are divided between her and her community spouse. Two years after her MA eligibility is approved Alisa’s MA is closed because she received an inheritance. Her husband reapplies for her a year later after the money has been reduced to within asset limits.
Action:
Consider only Alisa's assets in determining her MA eligibility because there has not been a break in her residence in the LTCF.
l There is no limit on the amount of assets the community spouse can have unless there is a break in institutionalization or receipt of EW services of over 30 days.
l If the LTC spouse acquires assets in excess of the asset limit after MA eligibility has been approved, the LTC spouse may transfer the asset(s) to either:
n The community spouse.
n Another for the sole benefit of the community spouse.
Note: Sole benefit means that no one but the spouse can benefit now or in the future, unless it will revert to the state to repay MA paid and that the asset will be used over the remaining estimated life expectancy of the community spouse.
Example:
Truman enters an LTCF and applies for MA. The asset assessment is completed and assets are divided between him and his community spouse. Five years after his MA eligibility is approved Truman receives an inheritance. Truman has the inheritance reassigned to his wife so that his asset total remains under the MA asset limit.
Action:
The transfer of the inheritance to Truman’s wife is not improper. Truman remains eligible for MA.