*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016.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: September 1, 2011 |
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23.15.10.15 - Medical Expense Deduction in the LTC Income Calculation |
Archived: June 1, 2016 (Previous Versions) |
Certain medical expenses incurred by the client, which are the client’s obligation to pay, may be deducted in the LTC income calculation.
Charges Not Allowed as a Medical Expense Deduction.
When to Deduct Medical Expenses.
Carry Forward of Medical Expense Deduction.
Tracking the Medical Expense Deduction.
Medical expenses must meet the following conditions to be deducted in the LTC income calculation:
1. The medical expense must be medically necessary and recognized under state law.
A necessary medical expense is an expense rendered for any of these situations:
l In response to a life-threatening condition or pain.
l To treat an injury, illness or infection.
l To achieve a level of physical or mental function consistent with prevailing community standards for the diagnosis or condition.
l To care for a mother and child through the maternity period.
l To provide preventive health service.
l To treat a condition that could result in physical or mental disability.
The medical provider's professional peer group must recognize the service as the prevailing standard or current practice and as consistent with the client's diagnosis or condition.
Only a medical professional can determine if an expense is medically necessary. Medical expenses which are provided by a medical provider, such as a pharmacist or medical facility, are assumed to be medically necessary. See Verification of Medical Expenses, for information about when to verify that an expense is medically necessary.
2. The medical expense must not be covered by MA.
A medical expense cannot be deducted if it is an MA covered service and is incurred in a month for which MA eligibility is or will be approved. See Minnesota Health Care Programs Benefit Summary (DHS-3860) for a list of MA covered services.
Assume a medical expense incurred in a month for which MA eligibility is approved to be an MA covered service unless the client provides documentation that it is not.
When an MA client resides in a Skilled Nursing Facility (SNF) or an Intermediate Care Facility for the Developmentally Disabled (ICF/MR), DHS pays the facility a daily rate (also referred to as a ”per diem rate”) to cover the client’s care. A medical expense cannot be an item or service that is included in the daily rate DHS has paid, or will pay, for the client’s cost of care within the facility.
Generally, the items and services included in the daily rate include nursing services, food, wheelchair, laundry and linen services, housekeeping services, routine over-the-counter medications and supplies, and personal care items (such as, shampoo and soap). The items and services included in the daily rate vary based on an individual’s situation. Contact the facility to clarify if a reported expense is an item or service that is included in the daily rate.
3. The medical expense must not be eligible for payment by a third party.
A medical expense cannot be deducted if it is subject to payment by a third party. Third parties are individuals, entities or benefits that are, or may be, liable to pay the expense. This includes:
l Other health care coverage, such as coverage through Medicare, private or group health insurance, long-term care insurance or through the Veterans Administration (VA) health system.
l Automobile insurance.
l Court judgments or settlements.
l Workers’ compensation.
Do not delay an eligibility determination beyond the processing period if the actual amount of a third party payment is unknown.
l Use information from the third party or other sources (such as an insurance policy) to anticipate the amount a third party will pay.
l Use the anticipated amount to estimate the amount of the medical expense the client will be responsible to pay.
l Use the estimated amount as a medical expense deduction.
l Adjust the LTC income calculation when the actual amount of the third party payment is known.
When using anticipated third party payments to determine the medical expense deduction in the LTC income calculation, follow-up with the client at the next scheduled renewal to determine the actual amount of the third party payment. The client must provide verification of the exact amount of the third party payment, such as an Explanation of Medical Benefits (EOMB) statement, or sign a release form so the third party can be contacted directly.
l If the client does not provide verification or a signed release form to contact the third party, adjust the LTC budget for the month in which the estimated expense was deducted by removing the deduction.
l If the client verifies the actual amount of third party payment, adjust the LTC income calculation in the month the expense was originally deducted, based on the actual amount of the expense for which the client is responsible.
Example:
Maxine has resided in a nursing home for the past year. She submitted a request for MA payment of LTC services in November. She has other health insurance that pays 75% of day surgery costs. Maxine submits an unpaid bill for $2,500 from a day surgery procedure she had in October. The other health insurance has not paid its portion of the bill by the time Maxine is determined eligible for MA payment of LTC services.
Action:
Anticipate the other health insurance will pay 75% ($1,875) of the $2,500 bill. Allow $625 ($2,500 - $1,875) of the bill as a deduction in Maxine’s LTC income calculation for October. Follow-up with Maxine at her next renewal to determine if the other health insurance paid its portion of the bill and verify the actual amount paid.
In April, an EOMB shows the allowed amount between the insurance company and the provider for the surgery was $2,000; the insurance paid $1,500 and Maxine is responsible for the remaining $500.
Action:
Allow $500 as a medical expense deduction in October instead of $625. Adjust the LTC income calculation to reflect the actual amount of the medical expense for which Maxine is responsible.
l If the actual amount of a third party payment is not known, do not adjust the LTC income calculation. Follow-up with the client at each renewal to determine the actual amount of a third party payment. Do not close coverage as long as the client is cooperating by providing verification of the actual third party payment or a signed release.
4. The medical expense may be incurred during a month in which the client is receiving MA payment of LTC services or during any of the three months prior to the month in which the client submitted a request for MA payment of LTC services.
The month a client submitted a request for MA payment of LTC services is based on the month in which an agency receives the request for MA payment of LTC services, regardless of whether retroactive MA coverage is requested or approved.
Example:
Alfred submits a request for MA payment of LTC services with his county agency. He has resided in an LTCF for the past six months. The agency received the Minnesota Health Care Program Application of Long-term Care Services (DHS-3531) on November 30, 2009, and Alfred is requesting MA payment of LTC services back to August 1, 2009.
Action:
Deduct allowable expenses Alfred incurred on or after August 1, 2009, three months prior to the month the agency received his request. Do not deduct any medical expenses incurred prior to August 2009.
5. An expense incurred during any of the three months prior to the month the client submitted a request for MA payment of LTC services must be unpaid as of the date the agency received the request, unless it was incurred in a month that MA is approved.
6. An expense incurred in a month for which the client is approved for MA may be paid or unpaid.
7. A medical expense cannot be deducted for an LTC service incurred during a penalty period for MA payment of LTC services.
A medical expense for a long-term care (LTC) service incurred during a period of ineligibility for MA payment of LTC services due to an uncompensated transfer or failure to name the state as a preferred remainder beneficiary of certain annuities cannot be deducted in the LTC income calculation.
Note: Non-LTC medical expenses incurred during a period of ineligibility may be an allowable medical expense.
8. The medical expense must not have been paid to reduce excess assets.
A medical expense paid by a client to reduce excess assets in order to achieve MA eligibility cannot be deducted in the LTC income calculation.
9. The medical expense must not have been previously used:
l as a deduction in an LTC income calculation. However, the amount of a medical expense that exceeds the amount of the individual’s income remaining after all other deductions can be carried forward to future months. See Carry Forward of Medical Expense Deduction.
l to meet a medical spenddown.
Exception: Medical expenses used to meet a previous spenddown when eligibility was denied for the entire certification period may be used as a medical expense deduction if the expense meets all other criteria.
l to meet an LTC spenddown or waiver obligation.
Example:
Betty applied for MA in May while living in the community. She was approved for MA effective May 1 with a $1,000 monthly medical spenddown for each month of her certification period. In June, Betty incurred $700 in expenses. These expenses were applied toward her $1,000 medical spenddown in June. In July, Betty enters a nursing home and requests MA-LTC.
Action:
Do not deduct the $700 Betty incurred in June as a medical expense deduction in her LTC income calculation since it was used toward meeting her medical spenddown in June.
Example:
John receives MA-LTC and resides in a nursing home. His LTC spenddown is $1,500 per month.
Action:
Do not deduct the $1,500 John pays each month to the nursing home as a medical expense deduction in his LTC income calculation.
10. A medical expense must be verified.
Charges Not Allowed as a Medical Expense Deduction
The following services for which a provider has billed an LTCF resident are not an allowable medical expense deduction:
l Personal Care Items for MA enrollees. Personal care items such as shampoo, toothpaste or dental floss are included in the daily rate (also referred to as a “per diem rate”) paid through MA.
l Oral Hygiene Instruction. Oral hygiene instruction is the responsibility of the LTCF and not the individual.
l Certain House/Extended Care Facility Call Charges. A charge for a provider to travel to an individual’s residence is not an allowable medical expense deduction unless the provider delivers a medical service on the same day. In addition, a dental provider cannot charge for a house/extended care facility charge when seeing an individual for:
n fitting appointments leading up to the fabrication of a denture/partial.
n fitting/adjustment appointments for six months following the fabrication of a denture/partial.
A charge for a provider to travel to an individual’s residence is also not an allowable medical expense deduction if the LTCF pays a charge for the provider to travel to the LTCF through an agreement between the LTCF and the provider. Contact the LTCF to determine if an agreement exists.
Allowable medical expenses can be deducted in the LTC income calculation for the month in which the expense is incurred. Expenses that were incurred in the three months prior to the month the individual submitted a request for MA payment of LTC services can be deducted beginning in the first month an LTC income calculation is used. In addition, when allowable medical expenses exceed the amount of the individual’s income that remains after all other deductions, the excess amount can be carried forward and used as a deduction in future months. See Carry Forward of Medical Expense Deduction.
The excess amount of a medical expense can be carried forward and used as a deduction in future months when the amount of allowable medical expenses exceeds the amount of income remaining after all other deductions.
Example:
Susanna is an MA enrollee receiving MA payment of LTC services. Her LTC spenddown, the amount of income remaining after all applicable deductions in the LTC income calculation, is $600 per month. In December, she incurred a $1,500 bill for a medical expense verified as medically necessary, but not covered by MA. Susanna paid for the expense with her assets. Her assets were not over the MA limit so she was not reducing excess assets. The medical expense meets all of the requirements to be deducted in the LTC income calculation.
Action:
Deduct $600 as a medical expense in the LTC income calculation beginning in December. Carry forward the remaining $900 as a medical expense deduction until all of the $1,500 has been used as a deduction, that is, deduct $600 in January and $300 in February.
Example:
Joaquin filed a request for MA-LTC in December and was approved for MA-LTC effective December 1. He incurred $2,000 of verified medical expenses in the three months prior to the month of his request for MA-LTC. The medical expenses meet all of the requirements to be deducted in the LTC income calculation. Joaquin has $500 of income remaining for each month of his certification period after applying all other applicable deductions in the LTC income calculation.
Action:
Deduct $500 as a medical expense deduction in the LTC income calculation beginning in December. Carry forward the remaining $1,500 as medical expense deductions until the $2,000 has been used as a deduction, that is, deduct $500 in January, February and March.
The MHCP Request for Payment of Long-Term Care Services (DHS-3543) has a question to identify medical expenses. If the client did not complete this form, send a Medical Care Received (DHS-6059A) to each client who will be subject to an LTC income calculation when a request for MA payment of LTC services is submitted. Enter the period during which the client may have incurred allowable medical expenses on the DHS-6059A. Enter the first day of the third month prior to the month the agency receives the request for MA payment of LTC services.
Do not allow a medical expense deduction until the client:
l returns the DHS-6059A, and,
l the agency reviews the medical expenses, and
l all allowable medical expenses have been verified.
Process the request for MA payment of LTC services without allowing a medical expense deduction if the client does not return the DHS-6059A by the end of the processing period.
If eligibility is approved and the client has a medical spenddown, long-term care spenddown or waiver obligation, the Important Information about MA for Enrollees who have a Spenddown or Waiver Obligation (DHS-5792C) is included with the approval notice that is mailed. The form instructs enrollees on how to report medical expenses.
Tracking the Medical Expense Deduction
Complete the Medical Expense Tracking Worksheet for the LTC Income Calculation (DHS-6059B) to document which medical expenses have been deducted and the amount of medical expenses, if any, that can be carried forward. Update the DHS-6059B if the client reports allowable medical expenses incurred while receiving MA payment of LTC services.
Notify clients who report medical expenses of the following information when an eligibility determination is made:
l Medical expenses that are not allowed as a deduction and the reason(s) why they are not allowed.
l Medical expenses that are deducted in the LTC income calculation based on anticipated third party payments.
l The amount of the medical expense deduction (this is the amount of the client’s income available to pay any allowable medical expense).
l The amount of medical expenses that can be carried forward as a deduction into the next budget period.
Complete the Reported Medical Expenses Notice of Action (DHS-6059C) if the required information cannot be added to the MAXIS system notice.