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Effective: February 1, 2008 |
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19.45.10ar2 - Spousal Asset Determination (Archive) |
Archived: January 1, 2011 |
The spousal asset allowance figure is the amount of non-excluded marital assets the community spouse is able to retain based on the asset assessment and the calculation of the community spouse asset allowance described in asset assessment determination once the LTC spouse has requested and been determined eligible for MA payment of LTC services.
This manual section explains how to divide non-excluded marital assets between the LTC spouse and community spouse, and what non-excluded marital assets to count toward the MA asset limit for the LTC spouse. This is the final step in the asset assessment process.
Asset Calculation - Initial Application.
Treatment of Retirement Funds and Annuities.
Community Spouse Contributions.
Transferring Income-Producing Assets.
Asset Calculation - Initial Application
At the time the LTC spouse requests MA payment of LTC services, consider all non-excluded assets owned by either or both spouses that are not included in the community spouse asset allowance as belonging to the LTC spouse for purposes of determining if the LTC spouse meets the MA asset limit.
Note: See Dividing Assets for more information on how assets for the community spouse asset allowance are divided.
If the community spouse has excess assets above the community spouse asset allowance a community spouse contribution is required.
Treatment of Retirement Funds and Annuities
Do not count the value of employer-funded retirement funds that have been annuitized before the MA application as part of the community spouse asset allowance. Treat the annuity payments as income.
Continue to count assets, including annuities, that have been converted to an income stream between the asset assessment determination and the MA application as part of the non-excluded marital assets.
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. The couple spends $8,000 on Ed’s care in the LTCF.
Ed applies for MA on August 15, requesting coverage effective August 1. At the time of the application the couple’s total countable assets are $92,000.
Action:
The total marital assets on the date of application are $92,000, including the $40,000 used to purchase the immediate annuity. Mary’s community spouse asset allowance is still $50,000 because it remains in between the minimum and maximum asset allowance amounts. Consider the remaining $42,000 of non-excluded marital assets available to Ed.
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 exceeds the community spouse asset allowance.
If the community spouse refuses to make the excess assets available for the cost of care of the LTC spouse, eligibility for the LTC spouse is still possible if the LTC spouse cannot use the funds without the consent of the community spouse and one of the following conditions is met:
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 requested and been approved for MA payment of LTC services, and the final community spouse asset allowance has been determined, a division of assets must take place if the LTC spouse owns assets that need to be transferred to bring the community spouse up to the community spouse asset allowance. It is at this point that:
l Jointly owned assets must be divided into one or the other spouses’ names.
l When necessary, 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 community spouse asset allowance. This determines the amount of assets the LTC spouse may transfer to the community 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.
The actual transfer of the ownership 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 counted toward the LTC spouse’s asset total at the first annual renewal.
Example (Part 3 of 3):
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.
At the time the LTC spouse’s MA payment of LTC services is approved, notify the community spouse 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 in excess of the community spouse asset allowance if the community spouse’s income, including the community spouse allocation from the LTC spouse’s income, is insufficient to meet the community spouse’s income allowance. See MA Payment of Long-Term Care (LTC) Services for more information on determining the monthly income allowance. This type of transfer can only take place at the time of the LTC spouse’s initial request for MA payment of LTC services.
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.
The transfer of income-producing assets is permitted only if:
l The LTC spouse entered an LTCF on or after October 1, 1989, OR
l Received EW services beginning the later of:
n The LTCC date, if the date is on or after July 1, 1991.
n The beginning date of home and community-based services anticipated to last for at least 30 consecutive days beyond the LTCC date.
Apply the following rules to the transfer of income-producing assets:
l The amount of income-producing assets transferred to the community spouse is limited by the amount of additional income needed to bring the community spouse up to the community spouse income allowance.
l The couple’s assets must be arranged so that the community spouse’s share includes as many income-producing assets as possible.
l The transferred income-producing asset(s) must provide at least an annual income payment.
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 LTC spouse throughout the continuous LTC/EW period.
Example:
Alice and Elmer own a total of $42,000 in non-excluded marital assets on the effective date of their asset assessment (May 12, 2007, the date on which Alice entered a nursing home.) Elmer’s community spouse asset allowance is the minimum amount of $28,589. Alice has a total of $13,411 available to her.
Elmer’s community spouse income allowance is $1,755 per month. His own income is $1,200 per month. Alice has $400 per month in income available to allocate to Elmer. He is still $155 short of his monthly income allowance ($1,755 - his income of $1,200 - the $400 allocation = $155.)
The assets are divided so that Elmer retains as many income-producing assets as possible.
Action:
Allow Alice to use $10,000 of her assets to purchase an immediate annuity and transfer it to Elmer to bring him closer to his community spouse income allowance.
Once you have approved the LTC spouse's initial request for MA payment of LTC services:
l Do not consider the community spouse's assets available to the LTC spouse again.
l There is no limit on the amount of assets the community spouse can have unless the community spouse assets must be deemed to the LTC spouse because 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 for the sole benefit of 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 subject to a penalty period. Truman remains eligible for MA.
If MA is closed and the LTC spouse continues to reside in the LTCF or receive EW services and then later reapplies, assess marital assets and deduct the community spouse asset allowance from the amount of assets considered to belong to the LTC spouse when determining eligibility.