SR 08-17 Dated 02/06

STATE OF NEW HAMPSHIRE

INTER-DEPARTMENT COMMUNICATION

/Á*This SR releases the following policy changes mandated by the Deficit Reduction Act of 2005 impacting applicants and recipients of Nursing Facility (NF) and Home and Community-Based Care (HCBC) services:

§   the look-back period for all transfers of assets is 60 months;

§   the penalty period for all transfers for less than (FMV) begins:

-   for applicants, on the date the individual would otherwise be eligible; or

-   for recipients, on:

1. the first day of the month after the asset was transferred; or

2. the date the individual initially became eligible for NF/HCBC services, if later.

§   all annuity-related transactions, including the purchase of, or a change in, the conditions of an annuity:

-   require the applicant’s spouse to disclose their financial interest and name the state as the primary beneficiary; and

-   will not be considered a transfer of assets for less than FMV if the annuity meets certain financial criteria;

§   individuals whose equity value in their home exceeds $500,000 are ineligible for NF/HCBC services;

§   the definition of assets is revised to include:

-   funds an individual used to make a personal loan, promissory note, or mortgage; and

-   the purchase of a life estate in another individual’s home;

§   certain entrance fees for Continuing Care Retirement Communities (CCRC) are a counted resource for all categories of medical assistance.

New Forms 788A, Long-Term Care/HCBC Face Sheet, and 788B, Asset Transfer Checklist, were created as a result of these policies.

This SR also releases revisions to the following DFA forms as a result of new policy, suggestions made by the Error Reduction Advisory Team, and a computer matching agreement with the IRS:

§   Form 800, Application for Assistance;

§   Form 800R, Application for Continued Eligibility for Financial, Medical, and Food Stamp Benefits;

§   Form 811R, Application: Your Rights and Responsibilities; and

§   Form 811S, Statements of Understanding.

BACKGROUND

The Director’s Memo (DM) dated March 7, 2006, subject line, Implementation of Medicaid Eligibility-Related Policy Changes re: DRA 2005, released most of the policies described in this SR. However, the following policies have been further revised as a result of final regulations and adoption of associated administrative rules:

·   the start date of a penalty period for recipients;

·   the financial criteria that annuities must meet to be considered a transfer of assets for FMV; and

·   the determination of the penalty period for assets transferred into annuities.

The hardship waiver policy that was additionally addressed in the DM identified above will be released under separate cover.

POLICY

Look-back Period For Asset Transfers

The look-back period for all asset transfers on or after 2/8/06 is 60 months. Policy related to the look-back period for assets transferred prior to 2/8/06 remains unchanged.

New Form 788B, Asset Transfer Checklist, has been created to assist Family Services Specialist (FSS) in tracking and monitoring all assets transfers.

Penalty Periods

Determining the Penalty Period

For assets transferred on or after 2/8/06, the total value of all transfers that occurred during the look-back period is used to calculate the penalty period.

Example:

On 3/1/06, an individual transfers $36,000 to a family member for less than FMV. Two months later the same individual transfers another $36,000 for less than FMV. On 12/1/06 the individual applies for NF services. The total amount transferred during the look-back period, $72,000, is used to establish a single penalty period.

Determining the Start Date of the Penalty Period

Determining the start date of a penalty period for an asset transferred for less than FMV on or after 2/8/06 is different for applicants and recipients.

·   Applicants: The start date of the penalty period is the date on which the individual would otherwise be determined financially and medically eligible for NF or HCBC services but for the penalty period.

Example:

An individual transfers $30,000 on 2/1/07 for less than fair market value. The same individual applies for NF/HCBC services on 5/1/07 and is deemed eligible. The penalty period begins on 5/1/07 because this is the first day the individual is eligible for services but for the penalty period. The applicant may still be eligible for Medicaid.

·   Recipients: The start date of the penalty period is the later of the following:

-   the first day of a month after which assets have been transferred for less than FMV; or

-   the date in which the individual initially became financially and medically eligible for HCBC/NF services.

Example:

An individual is determined eligible for NF/HCBC services on 7/1/06. During the individual’s redetermination it is discovered that an asset was transferred on 5/17/07 for less than FMV. The start date of the penalty period will be 6/1/07 because the date the asset was transferred was later than the date the individual initially became eligible for NF/HCBC services. The start date of the penalty period is 6/1/07 because it is the first day of the month after the individual transferred assets for less than FMV.

Annuities

This section applies to all annuity-related transactions occurring on or after 2/8/06. Transactions include the purchase or a change in the conditions of an annuity.

Disclosure

As a condition of eligibility for NF/HCBC services, spouses of applicants and recipients, in addition to the applicants and recipients themselves, must disclose any interest they have in an annuity or similar financial instrument. This disclosure is mandatory, even if the annuity in question is not considered a countable resource or a transfer of assets.

Both Form 800, Application for Assistance, and Form 800R, Application For Continued Eligibility, now include a section for the applicant or recipient, and their spouse, to disclose the total amount of all annuities in which they hold an interest.

Naming the State as the Beneficiary of Spouse’s Annuity

The purchase of an annuity by the community spouse is automatically treated as a disposal of an asset for less than FMV unless the State is named as:

·   the primary beneficiary for at least the total amount of medical assistance paid on behalf of the institutionalized individual(s); or

·   the contingent beneficiary after the minor or disabled child, if a representative of such child disposes of any remaining benefit for less than FMV, the State must then be named as the primary beneficiary.

Form 811S, Statements of Understanding, and Form 800R, Application For Continued Eligibility, have both been revised to include a statement that informs applicants and recipients of this requirement for receiving HCBC/NF services.

Evaluation of Assets Transferred into Annuities

Annuities purchased by or on behalf of an applicant or recipient of NF/HCBC services (including settlements of litigation) must meet the criteria of at least one of the following three scenarios. Annuities will be considered a transfer of assets for less than FMV if the applicant or recipient fails to provide adequate information about the annuity or if the annuity does not meet one of the three scenarios below.

Scenario 1 (Current Policy)

The annuity:

·   is irrevocable and non-assignable;

·   is actuarially sound; and

·   provides payments in equal amounts during the term of the annuity, with no deferral or balloon payments made.

Scenario 2 (New Policy)

The annuity meets the definition of:

·   an Individual Retirement Annuity; or

·   a Deemed Individual Retirement Account under a Qualified Employer Plan.

For specific definitions, see the annuity reference sheet attached to this SR.

Scenario 3 (New Policy)

The annuity was purchased with proceeds from either a:

·   Traditional Individual Retirement Account;

·   Trust or account created by an employer for the exclusive benefit of his or her employees or their beneficiaries, if that trust:

-   meets the criteria of a Individual Retirement Account; and

-   has separate accounting for the interest of each employee or member;

·   Simplified Retirement Account;

·   Simplified Employee Pension; or

·   ROTH Individual Retirement Account.

Life Expectancy Tables

The life expectancy tables used to determine if an annuity is actuarially sound have been updated to reflect the current tables published by the Office of the Chief Actuary of the Social Security Administration.

Penalty Periods

The original purchase price of an annuity is used to determine the length of the penalty period for any annuity that was transferred for less than FMV on or after 2/8/06.

Equity Value of Homes

All applicants and recipients for NF or HCBC services who have an equity interest exceeding $500,000 in their homes, are ineligible for services unless any of the following individuals are lawfully residing in the home:

·   the spouse;

·   a child under 21; or

·   child who is blind or disabled.

The equity interest of the home is the current market value of the home minus any encumbrance. An encumbrance is a legally binding debt against the resource. This can be a mortgage, reverse mortgage, home equity loan, or other debt that is secured by the home.

For jointly owned property, the fractional interest held by the applicant or recipient of long-term care services minus any encumbrances cannot exceed $500,000.

Note: Individuals must verify the equity value they hold in their home at application and recertification. Property assessments should be requested; however, a real estate tax bill can be used as verification even though they are frequently valued at less than 100% FMV.

New Assets Transfers That Must be Assessed For Potential Asset Transfer Penalties

Promissory Note, Loan, and Mortgage

Funds used to make personal loans, promissory notes, or mortgages are considered a transfer of assets for less than FMV unless the terms of these instruments:

·   are actuarially sound,

·   require repayments that are made in equal amounts during the term of the loan (no balloon payments); and

·   prohibit the cancellation of the balance upon the death of the lender.

Instruments that do not meet these criteria must be evaluated as transfers of assets for less than fair market value. In determining the amount of the asset transfer, the value of the note, loan, or mortgage is the outstanding balance as of the date of the individual’s application for NF/HCBC services.

Life Estate Interest

A life estate interest purchased in a child or another individual’s home is automatically considered a transfer of assets for less than fair market value unless the purchaser of the life estate interest has resided in the home for at least 1 year after the date of the purchase. The amount of the transfer is the entire amount used to purchase the life estate interest.

Individuals who have resided in the home for one year after the date of the purchase and retain a life estate interest in another individual’s home, must still have the life estate evaluated to ensure fair market value was received for this transfer of assets.

Note: Policy remains unchanged regarding a life estate an individual retains in his or her own home.

Continuing Care Retirement Communities (CCRC)

Entrance fees for CCRC are a counted resource for determining eligibility for all categories of medical assistance if the:

·   entrance fee may be used to pay for care should other resources or income be insufficient to pay for such care;

·   individual is entitled to a refund of any remainder entrance fee when the individual dies or terminates the CCRC or life care community contract and leaves the community; or

·   entrance fee does not confer an ownership interest in the CCRC or lifecare community.

FORM REVISIONS

New Form 788A, Long-Term Care/HCBC Face Sheet, and its associated instructions have been created to assist both the:

·   FSS:

-   in conducting mandatory procedures that are not automated by New HEIGHTS; and

-   in summarizing the main components of a NF or HCBC application that are required in determining eligibility; and

·   DO supervisors in monitoring each NF or HCBC application for completeness.

Form 788A is completed for every applicant of NF/HCBC services and is retained indefinitely in the case file as a part of the permanent record.

The form will be electronically transmitted to each District Office with the electronic release of this SR. Contact Linda White, DFA State Office, at 271-4580 with any questions related to transferring the electronic version of this form to your PC.

New Form 788B, Asset Transfer Checklist, and its associated instructions have been created to assist the FSS in summarizing the following components of an applicant or recipient’s asset transfer:

·   date of the transfer;

·   description and FMV of the asset;

·   amount received and the amount less FMV;

·   the individual’s interest in the asset;

·   whether the asset was transferred for the purposes of qualifying for assistance; and

·   the assessment, start date, and length of a penalty period.

Form 788B is completed for every asset transfer, whether or not the transfer warrants a penalty period. Once the form is completed and the FSS has retained a copy of the packet in the case file as a permanent part of the record, the FSS sends Form 788B with copies of all relevant documentation about the asset transfer to DFA State Office. For cases in which the FSS has determined a penalty period, the State Office Program Specialist will contact the FSS to confirm if the penalty period was correctly calculated. Following this contact, the FSS will then apply the penalty period, using current procedures.

Form 788B will be electronically transmitted to each District Office with the electronic release of this SR. Contact Linda White, DFA State Office, at 271-4580 with any questions related to transferring the electronic version of this form to your PC.

Form 800, Application for Assistance, was revised to:

·   add a new question in section G, to inform District Office staff if the applicant is receiving Medicaid or any other form of Medical insurance. An additional line has been included for applicants to provide the name of their insurance provider and their policy number;

·   clarify question 9 in section G, to ensure that applicants and recipients are providing the correct number of absent parents to assist FSS and support staff in initial eligibility screening;

·   replace the following categories in section E:

-   "Other Stocks/Bonds/CDs" with the more frequently used category "Life Insurance"; and

-   "Other IRA" with the category "Your or Your Spouse’s Annuity" to assist applicants in disclosing any interest they or their spouse have in an annuity;

·   refine language on page one of the tear off sheet of the application to better align with IRS computer matching requirements. Although text under the header "Social Security Numbers (SSN)" adequately indicated to applicants that we asked for SSNs to share earned and unearned income and resource information between DHHS and other agencies, the following additional text (italicized for reference in this SR only) was added to explain why we share this information and participate in computer matching: "This information may be shared with various offices within DHHS as allowed by federal law, used to determine or redetermine eligibility for or amount of benefits, identify or verify any errors in your eligibility and benefits, or used in an investigation of suspected abuse of program law or rules;" and

·   also include Form 811R, Rights and Responsibilities, and Form 811S, Statements of Understanding, back in the application packet. Form 811R and Form 811S were originally a part of the application but feedback from the field indicated that applicants were not completing the application due to its size and complexity. As such, Form 811R and Form 811S were removed from Form 800 during a previous revision to simplify and reduce the size of the application and make the application less daunting to clients. The two forms were still supposed to be provided to clients, but provided separately along with the Form 800. However, there has been no indication that since the removal of these two forms from the application packet, there has been an increase in the number of applications being fully completed. Although adding these forms back to the actual application will increase the size of the application, it is federally mandated that the Department provide this information to clients. Adding the two forms back to the application will eliminate the extra step in which District Office workers must remember to provide the two forms along with the application, and will ensure that all individuals receive this necessary information. Form 800(SP), the Spanish version of the application, was similarly expanded to include the Spanish versions of Form 811R(Sp) and Form 811S(Sp).

Form 800R, Application for Continued Eligibility for Financial, Medical, and Food Stamp Benefits, was revised to:

·   better allow a recipient who needs help completing the reapplication relay that information to District Office staff. On the first page of the revised form, recipients requiring assistance with the application are instructed to sign the back of the form in the appropriate space, mark new "I need help completing this form" checkbox that was added to the last page of the reapplication under the signatures, and return the form prior to the 15th of the month of redetermination;

·   relocate the information in the gray box titled "Food Stamp Recipients Only" away from the application signature box to better clarify that all individuals must sign the form;

·   add a new field "In Annuities" to the question "How much total cash money does your household have?" in section 4, to assist applicants in disclosing any interest they or their spouse have in an annuity;

·   notify recipients that annuities purchased after 2/8/06 are transfers of assets for less than FMV if the state is not named the beneficiary for at least the amount of Medicaid paid for long term services, by adding an additional statement to the Statements of Understanding page of the application; and

·   refine language on the last page of the reapplication to better align with IRS computer matching requirements. The following additional text (italicized for reference in this SR only) was added to the second "statement of understanding" listed on the last page: "All of the information I have provided on this Review Form is true to the best of my knowledge. I understand and agree to give proof of my statements as requested. I also understand and give permission to DHHS to contact other persons or organizations to get additional proofs of my eligibility and understand that the information I have provided will be used in computer matching with other agencies and that information obtained through matching programs may be used to determine continued eligibility for and/or amount of my benefits."

Form 811R, Application: Your Rights and Responsibilities, was revised to add the following text into the "Attention" box on the backside of this form to better align with IRS computer matching requirements:

·   a new bullet specifying "computer matching with other agencies" was added to the following lead-in sentence: "The information that you tell us and provide in this application will be subject to;" and

·   the following new sentence was added to the second paragraph in this section: "We do this to confirm your eligibility for our programs and determine your benefits."

Although this information is repeated on the application and redetermination forms, adding this information to the Form 811R will ensure that everyone who receives a copy of this form is fully aware that computer matching with other agencies occurs regularly and is used in determining or redetermining eligibility and benefit amounts.

Form 811S, Application: Statements of Understanding, was revised to:

·   reference "Financial Assistance To Needy Families" as released in SR 08-04, dated April, 2008;

·   clarify that the third party medical payments that recipients of Medicaid assign to the Department can be insurance payments;

·   notify applicants and recipients of NF/HCBC services that any interest the institutionalized individual or the community spouse has in an annuity must be disclosed; and

·   inform applicants and recipients requesting NF/HCBC services that any annuity purchased after 2/8/06 will be considered a transfer of assets for less than FMV if the state is not named the beneficiary.

PROCEDURES

Asset Transfers and Penalty Periods

For all assets transferred on or after 2/8/06:

1. Complete New Form 788B, Asset Transfer Checklist.

2. Manually determine all penalty periods (if appropriate), and include this information on Form 788B. Do not take action to apply any penalty period at this time.

3. Place a copy of the form in the case file and send the original Form 788B, along with a copy of all relevant documentation about the asset transfer to DFA State Office.

4. Await correspondence from the appropriate Program Specialist, who will confirm if the penalty period has been correctly calculated.

Once contacted by the State Office Program Specialist, apply the penalty period using the current Long-Term Care procedures and the current New HEIGHTS workarounds for improper asset transfers.

Note: A manual NOD will no longer be sent through New HEIGHTS when an individual must serve a penalty period for transferring assets for less than FMV. The applicant or recipient will be notified about all pertinent information through the Asset Transfer Penalty Letter that will be released shortly in SR 08-07.

Annuities

If an annuity is determined to be an asset transfer for less than FMV, follow the "asset transfer and penalty periods" procedures listed above. When determining the penalty period in step 2, use the original purchase price of the annuity.

When an applicant or recipient’s spouse does not identify his or her interest in an annuity, terminate or deny NF/HCBC services in New HEIGHTS as follows:

1. Go to the "Long Term Care" – "Nursing Facility" or "HCBC" screen and end-date the current screen.

2. Rerun SFU/EDBC and confirm the results.

3. Suppress the system-generated Notice and manually issue a notice of decision with an appropriate denial message on the same day the case is processed.

4. Choose "Failed To Provide" as the "Explanation" for the NOD.

5. Add the following free-form text in the "Note From Your Case Worker" section:

You failed to provide information about an annuity or a similar device in which you or your spouse hold an interest. As a result, [a. or b. below]

a. (For denials) you have been denied [Nursing Facility or Home and Community-Based Care] services. However, you may still be eligible for regular Medicaid. See the Medical Assistance Summary section of this notice.

b. (For closings) your [Nursing Facility or Home and Community-Based Care] services are ending. However, you may still be eligible for regular Medicaid. See the Medical Assistance Summary section of this notice.

6. Enter detailed case comments regarding the denial or termination of NF/HCBC services due to the applicant or recipient’s spouse failing to disclose their interests in an annuity.

Equity Value of Homes

Deny or terminate NF/HCBC services in New HEIGHTS as follows when an applicant or recipient of NF or HCBC services has equity in a home that exceeds $500,000:

1. Go to the "Long Term Care" – "Nursing Facility" or "HCBC" screen and end-date the current screen.

2. Rerun SFU/EDBC and confirm the results.

3. Enter detailed case comments regarding the denial or termination of NF/HCBC services due to the applicant or recipient having equity in a home that exceeds $500,000.

Note: A manual NOD will not be generated through HEIGHTS when an individual has an equity interests in a home that exceeds $500,000. The applicant or recipient will be notified about all pertinent information through the Excessive Home Equity Letter that will be released shortly in SR 08-07.

POLICY MANUAL REVISIONS

Revised Family Assistance Manual Topics

Section 415.05   Transfers to Monitor

Revised Adult Assistance Manual Topics

Section 411   INDIVIDUAL RETIREMENT ACCOUNT

Section 411   REAL PROPERTY

Section 413   CONTINUING CARE RETIREMENT COMMUNITIES (CCRC)

Section 415.03   Look-back Period for Transfers of Assets

Section 415.07   Transfers by an Institutionalized Individual

Section 415.09  Transfers by the Community Spouse of an Institutionalized Individual

Section 415.17   Transfer of Assets into a Life Estate

Section 415.19   Transfer of Assets into an Annuity

Section 415.23   Determining and Applying the Penalty Period

Section 420   SSA LIFE EXPECTANCY TABLES MALE

Section 420   SSA LIFE EXPECTANCY TABLES FEMALE

Glossary   D Words

Glossary   I Words

Glossary   R Words

Glossary   S Words

TRAINING

A remote training, via Centra, was conducted on March 9, 2006 for District Office Supervisors and Family Service Specialists that work with Nursing Facility cases.

FORMS POSTING INSTRUCTIONS

IMPLEMENTATION

The previous versions of Form 800, Form 800R, Form 811R, and Form 811S, may continue to be provided to applicants and recipients until the current stock is exhausted. As such, a certificate of destruction has not been included in the SR as the current stock is not to be destroyed or recycled. When the current stock is depleted, the new versions will be printed.

DISPOSITION

This SR may be destroyed or deleted after its contents have been noted and the revised manual topics released by this SR have been posted to the On-line manuals.

DISTRIBUTION

This SR will be distributed according to the electronic distribution list for Division of Family Assistance policy releases. This SR, and revised On-Line Manuals, will be available for agency staff in the On-Line Manual Library, and for public access on the Internet at http://www.dhhs.nh.gov/DHHS/DFA/LIBRARY, effective July 28, 2008.

This SR, and printed pages with posting instructions, will be distributed under separate cover to all hard copy holders of the Forms, Adult Assistance, and Family Assistance Manuals.

DFA/MPM:s