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Effective: October 1, 2008 |
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23.15.10ar1 - Deductions from LTC Countable Gross Income (Archive) |
Archived: September 1, 2009 |
Certain deductions are allowed from countable gross income in the LTC income calculation. Deductions, like income, count in the month in which they occur.
Allowable LTC Income Deductions
Verify deductions at each request for MA payment of LTC services, at renewal, and when a change is reported.
Note: Do not close or deny eligibility for failure to provide verifications needed to determine deductions. Do not allow a deduction when verification is not provided.
Allow deductions according to the order listed in this section to arrive at the LTC spenddown or waiver obligation.
Deduct the following from the gross earned and unearned income in the LTC income calculation in the order listed below:
1. Special Supplemental Security Income (SSI) Deduction.
2. Special Personal Allowance from earned income.
3. Medicare premiums paid by the enrollee.
4. Applicable LTC Needs Allowance.
5. Fees paid to a guardian, conservator, or representative payee.
6. Community Spouse Allocation.
8. Court-ordered child support.
9. Health insurance premiums, including dental and LTC insurance.
1. Special Supplemental Security Income (SSI) Deduction
Deduct SSI payments received by an enrollee when the Social Security Administration (SSA) approves continued community level SSI benefits for a LTCF resident because either:
l The person is expected to reside in the LTCF for less than three months and continues to maintain a home in the community; or
l The person had 1619(a) or 1619(b) status in the month prior to the first full month of LTCF residence. These payments only apply for the first two full months of LTCF residence.
2. Special Personal Allowance from Earned Income
Deduct the Special Personal Allowance from the earned income of a person who is:
l certified disabled by SSA or the State Medical Review Team (SMRT); and
l employed under an Individual Plan of Rehabilitation; and
l residing in a LTCF.
Deduct the following in the order listed:
Note: Do not reduce earned income to less than $0.
l The first $80 of earned income.
l Actual FICA tax withheld.
l Actual transportation costs.
l Actual employment expenses, such as tools and uniforms.
l State and federal taxes if the person is not exempt from withholding.
3. Medicare Premiums Paid by the Enrollee
Deduct Medicare premiums that are paid by the enrollee.
Do not deduct Medicare premiums that are:
l reimbursed to the enrollee as cost effective health insurance.
l paid through the Medicare Buy-In.
l paid through Medicare Part D Extra Help.
4. Applicable LTC Needs Allowance
There are four LTC needs allowances that can be deducted in the LTC income calculation. Deduct only one of the LTC needs allowances in the LTC income calculation in a given month.
Clothing and Personal Needs Allowance (PNA)
Use the clothing and personal needs allowance (PNA) when the enrollee is not eligible for any of the other LTC needs allowances. The PNA is adjusted annually on January 1 of each year. See LTC Allowances for exact figures.
The $90 veteran’s improved pension is available to people who are:
n veterans, but who do not have a spouse or dependent child(ren).
n the surviving spouse of a veteran who does not have a dependent child(ren).
Example:
Charles resides in a LTCF. In June, he receives notification that he has been approved for a veteran’s improved pension. He will receive $90 a month beginning in July.
Action:
Deduct the $90 veteran’s improved pension of $90 in the LTC income calculation instead of the PNA beginning in July.
Home Maintenance Needs Allowance
The home maintenance needs allowance deduction is available for up to three consecutive calendar months. Allow the home maintenance needs allowance deduction from income equal to 100% of the federal poverty guidelines (FPG) for a household size of one when a person:
n resides in a LTCF; and
n is expected to be discharged from the LTCF within three calendar months (based on a physician’s statement) from date the person is eligible for MA payment of LTC services; and
n has expenses to maintain a community residence (owned or rented); and
n did not reside with a spouse, child under age 21, or certain tax dependents (children over age 21, parents, or siblings or the person or person’s spouse) at the time he or she was admitted to the LTCF.
Only one spouse can receive the home maintenance needs allowance when both spouses reside in a LTCF. The other spouse receives either the clothing and personal needs allowance (PNA) or the veteran’s improved pension, whichever is applicable.
A person must be discharged from a LTCF for a full calendar month before the home maintenance needs allowance may be used again.
The home maintenance needs allowance is adjusted annually on July 1 when the FPG standards are increased. See LTC Allowances for exact figures.
Example:
Susanna was admitted to a LTCF in March 2008 following hospitalization for a stroke. She anticipated remaining in the LTCF for a nine-month rehabilitation program through November 15, 2008. She intends to return to her home upon discharge from the LTCF. Susanna requests MA payment of LTC services in August 2008 when she can no longer pay for her LTCF charges. Susanna has a mortgage payment that includes her insurance and property tax payments. The LTCF confirms that Susanna’s anticipated date of discharge is November 15, 2008.
Action:
Deduct a home maintenance needs allowance from Susanna’s income for the months of August, September, and October.
SIS-EW Maintenance Needs Allowance
Use the SIS-EW maintenance needs allowance in the LTC income calculation for persons who have income at or below the SIS.
The SIS-EW maintenance needs allowance is updated annually in July. See LTC Allowances for exact figures.
Do not use the SIS-EW maintenance needs allowance for a person with income above the SIS.
When an SIS-EW enrollee is moving to or from a LTCF:
n Use either the PNA or veteran’s improved pension allowance beginning the month following the month the SIS-EW enrollee moves into a LTCF
n Use the SIS-EW maintenance needs allowance beginning the month following the month a LTCF resident is discharged from the LTCF and begins receiving EW services.
Example:
Marge, a SIS-EW enrollee, is admitted to a LTCF in November after breaking her leg. She expects to return home in January and resume receiving EW services. Marge lived alone in her home before entering the LTCF and was responsible for paying property taxes, homeowners insurance, and utilities.
Action:
Deduct the home maintenance needs allowance for the months of December and January instead of the SIS-EW maintenance needs allowance. Deduct the SIS-EW maintenance needs allowance beginning in February if Marge begins receiving EW services when she returns home in January.
5. Fees Paid to a Guardian, Conservator, or Representative Payee
Allow fees paid by the enrollee to a guardian, conservator, or representative payee and authorized by the Social Security Administration (SSA) as a deduction in the LTC income calculation subject to the limitations described below.
The amount of the deduction is the actual amount paid to all guardians, conservators, or representative payees or 5% of the enrollee’s gross monthly income up to a maximum of $100, whichever is less. Do not deduct amounts paid in excess of this limitation even if allowed by SSA or a court.
6. Community Spouse Allocation
An allocation may be made to a community spouse when the community spouse’s income is insufficient to meet his or her monthly maintenance needs. Deduct the community spouse allocation in the LTC income calculation in each month where:
l there is a community spouse at any time during the month; and
l the calculation of the allocation results in a need; and
l the allocation is made available to the community spouse. The LTC spouse may choose not to make an allocation to the community spouse.
Note: The community spouse allocation counts as unearned income to a community spouse who is an MA, GAMC, or MCRE enrollee. The community spouse may choose to accept a reduced allocation or end the allocation for the purpose of reducing his or her unearned income. A change in the community spouse allocation amount will cause an increased LTC spenddown for the LTC spouse.
The community spouse must provide verification of income and expenses at the time of the request for MA payment of LTC services and at each renewal.
Do not allow a deduction for a community spouse allocation if verification of income and expenses are not provided.
Recalculate the community spouse allocation when a change is reported between renewals.
Inform clients that they must report changes in the income or expenses of the community spouse but do not require the community spouse to report income and expenses monthly.
See Community Spouse Allocation for instructions on how to calculate the community spouse allocation.
In addition to the community spouse allocation, allocations may be made to certain other family members. Deduct a family allocation in the LTC income calculation in each month where:
l there is a family member eligible to receive an allocation at any time during the month; and
l the calculation of the allocation results in a need.
Deduct the family allocation regardless of whether or not it is made available to the family member.
Note: Count a family allocation as unearned income to a family member who is an MA, GAMC, or MCRE enrollee if the allocation is available to that family member.
The family member must provide verification of income and expenses at the time of the request for MA payment of LTC services and at each renewal.
Do not allow a deduction for a family allocation if verification of income and expenses are not provided.
Recalculate the family allocation when a change is reported between renewals.
Inform clients that they must report changes in the income of the family member but do not require the family member to report income and expenses monthly.
Who May Receive a Family Allocation?
There are two types of family allocations:
n A family allocation to a minor child, who does not live with a community spouse.
n A family allocation to certain relatives who live with a community spouse:
m A child under age 21.
m A child age 21 or older who is claimed as a tax dependent.
m Parents who are claimed as tax dependents.
m Siblings who are claimed as tax dependents.
See Family Allocations for instructions on how to calculate the two types of family allocations.
8. Court-Ordered Child Support
Deduct court-ordered child support that is garnished from income up to a maximum of $250 per month. The garnishment can be for current child support or arrearages.
Exception: This deduction does not apply when a family allocation is deducted for the child for whom the court-ordered child support obligation is due unless the calculated family allocation is less than $250. The difference between the calculated family allocation and $250 may be deducted.
Example:
Simon is court-ordered to pay $500 per month in child support for his daughter, Paula. This amount is being garnished from his disability insurance payment. A family allocation in the amount of $150 is being deducted in Simon’s LTC income calculation for Paula.
Action:
Deduct an additional $100 from Simon’s LTC income calculation as court-ordered child support because only $150 of the maximum $250 deduction was used in the family allocation.
9. Health Insurance Premiums, including Dental and LTC insurance
Deduct the cost of health insurance premiums, including premiums for dental and LTC policies, incurred by the client. Only allow that portion of the premium that reflects coverage for the client. Allow this deduction even if the coverage is not cost-effective.
Do not deduct the cost of premiums if:
l the county agency pays the premiums or reimburses the client for the cost of the premiums; or
l the client is subject to a combination LTC/Medical spenddown (health insurance premiums will be used to meet the client’s medical spenddown).
Deduct reasonable and necessary medical expenses incurred by the client in the month the LTC income calculation is applied that are not covered by MA. Do not deduct medical expenses incurred in prior months.
This deduction also includes the following:
l Co-payments.
Co-payments a client is responsible to pay may be deducted as a medical expense. This includes Medicare Part D co-payments unless the co-payments are paid by the Extra Help Program.
MA enrollees expected to reside in a LTCF for 30 consecutive days or more are not required to pay MA co-payments.
l Remedial Care Expense.
EW enrollees who reside in a residential living arrangement may be eligible to deduct the remedial care expense deduction in the LTC income calculation or in the community income calculation, whichever is applicable.