13-440 Code Vt. R. 13-170-440-X
The following spenddown, patient share and transfer of resources provisions apply to individuals requesting SSI-related and ANFC-related Medicaid depending on their living arrangement (M401-M401.2). They are calculated using an accounting period of either one or six months, depending on the type of Medicaid services requested (M402-M402.2).
When a Medicaid group's total countable income or resources exceed the applicable income or resource standard for eligibility after allocations are made, and exclusions and disregards are applied, a person requesting Medicaid may use spenddown provisions to attain financial eligibility (M410-M423).
The department requires individuals requesting long-term care to apply their available income to the cost of their care through payment of a patient share (M430-M433.3).
The department considers whether individuals otherwise eligible for long-term care, including waiver and hospice services, have transferred resources that should be subject to penalty period before eligibility begins. The rules at M440 apply to transfer of resources after July 1, 2002 and the rules at M450 apply to transfers before July 2, 2002.
The length of the accounting period used to compute spenddown requirements and patient share payments depends on the living arrangement of the person requesting Medicaid. For the purposes of Medicaid eligibility, a person may be in a community or long-term care living arrangement.
Community living arrangements include any residence, such as a house, apartment, residential care facility, boarding house, rooming house. Persons requesting Medicaid coverage of long-term care services, including waiver and hospice services, are not considered to be in a community living arrangement.
In a community living arrangement, the person requesting Medicaid obtains and pays for basic maintenance items, such as food, shelter, clothing, personal needs, separately from medical care. The person requesting Medicaid may live alone, as a member of a family, or with non-relatives.
Persons requesting Medicaid coverage of long-term care, including waiver and hospice services, are considered to be in a long-term care living arrangement. Medicaid eligibility and patient share payments are determined according to long-term care rules for persons living in an institution or receiving waiver or hospice services.
Institutional living arrangements include nursing facilities, rehabilitation centers, and intermediate care facilities for the mentally retarded.
Individuals receiving waiver services are considered to be in a long-term care living arrangement. Individuals receiving Medicaid waiver services would be eligible for Medicaid if they lived in an institution and need enhanced residential care, home-and-community-based care, traumatic brain injury services, developmental disability services, or children's mental health services to live in the community.
Individuals receiving hospice services are considered to be in a long-term care living arrangement. Individuals receiving Medicaid hospice services are terminally ill and would be eligible for Medicaid if they live in an institution and need additional interdisciplinary medical care and support services to enable them and their families to maintain personal involvement and quality of life in their choice of care setting and site of death.
Accounting period means the one-month or six-month span of time the department uses to budget the income of a person requesting Medicaid.
The department uses a six-month accounting period to determine spend-down requirements for persons in a community living arrangement.
The six-month period begins with the first month for which Medicaid coverage is requested, usually the month of application. If Medicaid coverage is requested for expenses incurred during any one or more of the three months preceding the month of application, the six-month period begins with the earliest of these three months in which expenses were incurred and the applicant met all other eligibility requirements.
To determine the amount of income a person must spend down, the department shall make reasonable estimates of future income, subject to review and adjustment if the applicant's circumstances change during the remainder of the six-month period.
The department uses a one-month accounting period to determine spend-down requirements and patient share payment amounts for persons in waiver, hospice, or institutional living arrangements.
A one-month accounting period begins with the first calendar month during which the person lives in long-term care for any part of the month, applies for Medicaid coverage for that month, and meets the general and categorical requirements for Medicaid eligibility.
A one-month accounting period ends with the last calendar month during which the person lives in long-term care for any part of the month and passes all other Medicaid eligibility tests.
Individuals who pass all nonfinancial eligibility tests may qualify for Medicaid coverage by spending down the income or resources in excess of applicable maximums. The department specifies the income and resource maximums for each eligibility category in the benefit program descriptions found at M200.2 and M300.2, as well as in the Medicaid procedures manual.
Spending down is the process by which a Medicaid group incurs allowable expenses to be deducted from its income or spends resources to meet financial eligibility requirements, according to the rules in M410-M412.1 and M420-M423.
A resource spenddown is the amount a Medicaid group must spend to reduce its excess resources to the resource standard applicable to the appropriate Medicaid coverage category. The department determines that a person requesting Medicaid with excess resources has passed the resource test upon proof that the excess resources are no longer held as a resource and have actually been spent or given away. A person with excess resources requesting long-term care services, including waiver and hospice services, is subject to the transfer of resource provisions specified in M440.
Medicaid may be granted for the month of application if the resource test is passed at any point in the month and all other eligibility criteria are met. A Medicaid group's resources may rise above the resource maximum, for example, due to interest added to bank accounts or failure to use the full monthly income amount protected for maintenance expenses during the month it is received. The recipient may maintain Medicaid eligibility for any month in which the Medicaid group's resources exceed the resource maximum by taking any action that reduces the excess amount, including giving the excess to the department to repay department expenditures on the individual's care. As long as resources are reduced to the resource maximum before the end of the month during which resources exceed the limit, Medicaid coverage continues without interruption.
In addition, when a third party who handles any resources of a member of the Medicaid group is unaware of a resource or its value, the department will provide uninterrupted Medicaid coverage as long as the excess amount is paid to the department as a recovery of Medicaid payments. Excess resources reimbursed to the department in these situations will not result in ineligibility.
Individuals seeking long-term care coverage may be subject to a transfer penalty if they spend or give away excess resources within the penalty period specified in M440.4 and its subsections.
One or more of the following actions may be taken to reduce excess resources in order to qualify for Medicaid up to three months prior to the month of application as long as all other eligibility test are passed:
An income spenddown is the amount of qualifying medical expenses a Medicaid group must incur to reduce its income to the maximum applicable to their Medicaid coverage category. The department determines that a person requesting Medicaid with excess income has passed the income test upon proof that the Medicaid group has paid or incurred medical expenses (M420-M423) at least equal to the difference between its countable income and the applicable income maximum for the accounting period.
The medical expenses of the financial responsibility group, whether they are paid or incurred but not paid, may be used for individuals requesting Medicaid to meet the spenddown requirement (see (M243.5 and M330-M339).
The amount of a Medicaid group's spenddown is the amount by which their countable income or resources exceed the applicable standard for the accounting period.
An individual with income greater than the protected income level (PIL) may spend the excess down to the PIL on medical expenses following the methodology specified below to receive community Medicaid as part of the medically needy coverage group. An individual with income greater than the institutional income standard (IIS) may spend the excess income down to the PIL on medical expenses following the methodology specified below to receive long-term care Medicaid as part of the medically needy coverage group.
The spenddown methodology is the same for all living arrangements, except that a one-month accounting period applies to long-term care living arrangements and a six-month accounting period applies to those in the community living arrangement.
Medicaid groups with excess income meet the spenddown requirement on the first day within the accounting period that their deductible medical expenses meet or exceed the spenddown requirement. Sometimes this allows for retroactive coverage as specified in M113.
. Eligibility becomes effective on the first day of the month when a spenddown requirement is met using health insurance and noncovered medical expenses.
. Eligibility becomes effective later than the first day of the month when a spenddown requirement is met using covered medical expenses.
. Special eligibility dates apply, as set forth in M421.24 for Medicaid groups who meet their spenddown requirement using noncovered assistive community care services (ACCS).
. Medicaid groups remain responsible for medical expenses incurred before the date of eligibility.
When they receive services from more than one provider on the day that coverage begins, Medicaid groups must decide which services they will be responsible for paying and which ones Medicaid will cover. Medicaid pays for covered services on the first day that the group's expenses exceed the amount of the group's spenddown. Medicaid continues until the end of the accounting period, unless the Medicaid group's situation or protected income level changes.
Eligible medical expenses are deducted from countable income in the following order:
Deductible expenses include medical expenses incurred by the financial responsibility group:
. during the current accounting period, whether paid or unpaid;
. before the current period and paid in the current period, or
. before the current period, remaining unpaid, and for which continuing liability can be established.
In addition, deductible expenses include medical expenses paid during the current accounting period by a state or local program other than those that receive Medicaid funding.
Medical expenses incurred before or during the accounting period and paid for by a bona fide loan may be deducted if the expense has not been previously used to meet a spenddown requirement and the financial responsibility group establishes continuing liability for the loan and documents that all or part of the principal amount of the loan remains outstanding at any time during the accounting period. A bona fide loan means an obligation, documented from its outset by a written contract and a specified repayment schedule. Only the amount of the principal outstanding during the accounting period, including payments made on the principal during the accounting period, may be deducted.
In general, an expense is incurred on the date liability for the expense begins. Only four types of predictable medical expenses may be deducted before they are incurred, if it can be reasonably assumed that the expense will continue during the accounting period:
. health insurance premiums (M421.1);
. medically necessary over-the-counter drugs and supplies (M421.21);
. ongoing, noncovered personal care services (M421.23); and
. assistive community care services provided to residents in a level III residential care home either not enrolled as a Medicaid provider or with admission agreements specifying the resident's financial status as private pay (M421.24).
Continuing liability for unpaid medical expenses or a loan used to pay medical expenses incurred before the current accounting period will be established when any of the following conditions is met. The liability was incurred:
. within six months of the date of application or the first day of the accounting period, whichever is later.
. more than six months before the date of application or the first day of the accounting period, whichever is later, and there is a bill for the liability dated within 90 days of that date.
. more than six months before the date of application or the first day of the accounting period, whichever is later, and the service provider or lender has confirmed that the unpaid liability has not been forgiven and is not expected to be forgiven at any time within the current accounting period.
The following deductions apply to spenddowns when excess income exceeds the applicable income maximum. Medical expenses that are the current liability of the Medicaid group and for which no third party is legally liable may be deducted from total excess income or resources for the accounting period. No medical expense may be used more than once to meet a spenddown requirement. A medical expense may be used to spend down either income or resources. If only a portion of a medical expense is used to meet the spenddown requirement for a given accounting period, that portion of the medical bill that was not used and remains a current liability may be applied toward a spenddown requirement in a future accounting period. Upon receiving coverage, the Medicaid group remains directly responsible to providers for expenses incurred before the spenddown was met.
Health insurance means insurance to meet costs of medical care and services, such as Medicare Part B, and similar group or individual policies. Premiums for the following types of insurance are not deductible:
. Income protection or similar insurance plans designed to replace or supplement income lost due to sickness or accident; or
. Automobile or other liability insurance, although these may include medical benefits for the insured or his family.
Health insurance expense also includes any enrollment fees, deductibles or coinsurance imposed by Medicare or other health insurance not subject to payment by a third party (such as another insurance policy).
This deduction is allowed for premium payments by a member of financial responsibility group if it can be reasonably assumed that coverage will continue during the accounting period. Coverage and premium or other expense amounts must be verified.
A deduction from excess income is allowed for necessary medical and remedial expenses recognized by state law but not covered by Medicaid in the absence of an exception for Medicaid coverage under M108. In determining whether a medical expense meets these criteria, the commissioner may require an individual Medicaid group to submit medical or other related information to verify that the service or item for which the expense was incurred was medically necessary and was a medical or remedial expense. The patient's physician shall verify medical necessity with a written statement or prescription specifying the need, quantity, and time period covered. These medical expenses, when not covered by Medicaid, include but are not limited to expenses for the services and items listed below:
. over-the-counter drugs and supplies (M421.21);
. transportation (M421.22);
. personal care services for recipients age 21 and older (M421.23);
. assistive community care services provided to residents in a level III residential care homes either not enrolled as a Medicaid provider or with admission agreements specifying the resident's financial status as private pay (M421.24);
. dental services in excess of the allowable annual maximum; and
. private duty nursing services for recipients age 21 and older.
Any medical bills, including those incurred during a period of Medicaid eligibility, that are the current liability of the Medicaid group and have not been used to meet a previous spenddown requirement may be deducted from excess income. Generally, the Medicaid group is required to present a bill or receipt to verify that medical expenses have been incurred or paid. Special requirements for certain medical expenses are specified in M421.21 -- M421.24.
Either a standard deduction or actual costs, if greater, may be used to deduct noncovered over-the-counter drugs and supplies from excess income.
Documentation verifying medical necessity is not required when the department determines that an over-the-counter drug or supply is a common remedy for the medical condition of a member of the Medicaid group and the usage is within the maximum amount for common over-the-counter drugs and supplies. Documentation verifying medical necessity may be required whenever one or both of the following two situations apply: when the drug or supply is not a common remedy for the medical condition or when the reported usage exceeds the maximum amount.
Instead of actual expenses, a reasonable estimate of ongoing expenses for over-the-counter drugs and supplies may be applied prospectively to the six-month accounting period. Reasonable estimates of unit sizes, costs and maximums for common over-the counter drugs and supplies used to meet the spenddown requirement are found in the Medicaid procedures manual. If the Medicaid group uses the expense to meet the spenddown requirement, they shall not be eligible to receive Medicaid coverage dur-ing that accounting period for the same expenses.
Noncovered commercial and private transportation costs may be deducted from excess income.
The actual cost of commercial transportation, verified by receipt, may be deducted.
Either a standard deduction or actual costs, if greater, may be used for deducting the cost of private transportation. These costs may be deducted from excess income without verification of medical necessity, provided that:
. the transportation was essential to secure the medical service; and
. the Medicaid group was responsible for the cost and was charged an agreed-upon fee or purchased fuel to use a family-owned vehicle or other non-commercial vehicle.
The process set forth in Medicaid procedures shall determine the deductible expense for private transportation.
The department will allow a deduction for noncovered personal care services provided in an individual's own home or in a level IV residential care home when they are medically necessary in relation to an individual's medical condition.
Deductible personal care services include those personal care services described in M740.3 and assistance with managing money. They also include general supervision of physical and mental well-being where a physician states such care is required due to a specific diagnosis, such as Alzheimer's disease or dementia or like debilitating diseases or injuries. Room and board is not a personal care service.
Services may be deducted when performed by a home health agency or other provider identified by the physician as qualified to provide the service with the following exceptions. When the service provider is living in the home, deductions may not be based on payments for personal care services provided to an individual:
. under age 21 by the individual's parent, stepparent, or legal guardian, unless the individual is 18, 19, or 20 years old and payment for personal care services is made from and does not exceed the individual's own income or assets;
. by the individual's spouse;
. by the individual's sibling, child, or grandchild when the person providing the services is under age 18; or
. by a parent of the individual's minor child.
To document the need for personal care services, the physician must submit:
. a plan of care (PATH 288B);
. a list of the personal care services required;
. a statement that the services are necessary in relation to a particular medical condition; and
. a statement that the level of care provided by the particular level IV residential care home is appropriate or, if the individual is not living in a level IV residential care home and the services are not provided by a home health agency, that the provider is qualified to provide the service.
Upon the initial submission of a plan of care (PATH 288B), it is assumed that the individual will continue to need the personal care services for the entire six-month period, unless the plan of care has specified a date by which the individual's need for services is expected to change.
A new plan shall be submitted:
. whenever the service provider changes, unless the service is performed by a home health agency; and
. whenever the need for services in relation to the individual's condition is expected to change, according to the current plan of care.
In addition, a new plan shall be submitted:
. once every six months, when the physician has not specified an ongoing need for personal care services in the current plan; or
. once every two years, when the physician has specified an ongoing need for personal care services in the current plan.
Either a standard deduction or actual costs, if greater, may be used for deducting personal care services from excess income. Expenses that have not been incurred yet may be deducted if they are predictable and meet the requirements in M420.31. Expenses also may be deducted if they have actually been incurred by the Medicaid group and are not subject to payment by Medicaid or any other third party.
The standard monthly deduction for personal care services shall be deducted for each full or partial calendar month in the accounting period during which the plan of care documents the need for services. The actual documented costs of personal care services may be deducted if they exceed the monthly standard deduction. Deductions may be made for anticipated need through the end of the accounting period.
All changes to these standards that result in lower standard deductions will be made via the Administrative Procedures Act.
The department will allow a deduction for noncovered assistive community care services provided to individuals residing in a licensed level III residential care home. In addition, these individuals may deduct medically necessary personal care services included under the list at M740.3 but not part of the list at M781.2.
Qualified service providers include all level III residential care homes licensed by the Vermont Department of Aging and Disabilities.
When a resident becomes eligible for Medicaid by projecting the cost of ACCS across part of the six-month accounting period, the residential care home may agree to function as a Medicaid provider for ACCS with respect to that resident for the remainder of the accounting period. In these cases, the provider may bill for ACCS services no sooner than the ACCS coverage date given to the resident and the provider in a notice from the department.
When a privately paying resident becomes eligible for Medicaid after having met a spenddown requirement by projecting the cost of ACCS across the entire six-month spenddown period, the home shall not function as a Medicaid provider of ACCS with respect to that resident during that the period when the resident is meeting the spenddown requirement.
Documentation verifying medical necessity is not required for assistive community care services. If an individual claims a deduction for medically necessary personal care services included under the list at M740.3 but not part of the list at M781.2, the physician must submit:
. a plan of care (PATH 288B);
. a list of the personal care services required;
. a statement that the services are necessary in relation to a particular medical condition; and
. a statement that the level of care provided by the particular level III residential care home is appropriate and that the provider is qualified to provide the service.
Upon the initial submission of a plan of care (PATH 288B), it is assumed that the individual will continue to need the personal care services for the entire six-month period, unless the plan of care has specified a date by which the individual's need for services is expected to change.
Beneficiaries with approved personal care services deductions must submit new plans at the frequencies specified in M421.23.
The deduction for assistive community care services (ACCS) may be used for the entire accounting period or part of it. Whether the standard daily or monthly deduction is used depends on the size of the spenddown requirement. The actual documented costs of ACCS may be deducted if they exceed the monthly standard deduction. Deductions may be made for anticipated need through the end of the accounting period. All changes to these standards that result in lower standard deductions will be made via the Administrative Procedures Act.
If the Medicaid group's excess income and resources after deduction of all expenses for which Medicaid coverage is not available equal or exceed the deduction for ACCS for the entire accounting period, for the purposes of meeting a spenddown requirement, ACCS are projected and deducted as if they were not Medicaid-covered services for the entire accounting period. Medicaid eligibility for services other than ACCS becomes effective on the day the spenddown requirement is met. Expenses for which Medicaid coverage is not available are:
. medical expenses excluded from coverage listed at M421.1 through M421.24;
. covered medical expenses incurred prior to the accounting period, not used to meet a previous spenddown requirement, and remaining unpaid; and
. covered medical expenses incurred and paid during the current accounting period.
If the Medicaid group's excess income and resources after deduction of all expenses for which Medicaid coverage is not available are less than the deduction for ACCS for the entire accounting period, ACCS expenses are not projected. Instead, they are deducted as covered expenses on a daily basis. In this case, Medicaid eligibility for all covered services other than ACCS becomes effective the first day of the accounting period. Medicaid coverage for ACCS begins later. It starts the day cumulative daily ACCS deductions exceed the group's remaining excess income and resources. The Medicaid group is not responsible for payment of a portion of the ACCS expense on the first day of ACCS eligibility.
In addition, the amount of the deduction for any services included under the list at M740.3 but not part of the list at M781.2 documented as medically necessary by the plan of care shall be determined based on the number of hours times minimum wage, or actual costs, if greater.
Covered medical expense means any medical service that Medicaid would pay for if the person were an eligible Medicaid recipient (see Sections M500-M999).
Deductions are not limited to the Medicaid reimbursement for the service. The Medicaid group member's actual cost paid or incurred must be allowed. A standard deduction may be taken for assistive community care services, M781.2, as specified in Medicaid procedures.
No deduction is allowed if the medical expense is subject to payment by a third party such as health insurance, worker's compensation, liability award, or other benefit program unless the third party is a state or local program other than Medicaid.
When a third party is liable for all or some medical expenses, only the portion owed by those requesting Medicaid may be deducted from their applied income. The department is required to take reasonable measures to determine the legal liability of third parties to pay for incurred expenses. Estimates of payment by the third party may be used if actual third party liability cannot be ascertained within the period for determining Medicaid eligibility. The department cannot delay an eligibility determination simply because actual third party liability cannot be ascertained or payment by the third party has not been received.
If an applicant or recipient is pursuing a liability award but liability has not yet been established, a deduction should be allowed. Eligibility must be based on the department's estimate of the amount the applicant owes for the bill. The Third Party Liability (TPL) Unit in the Office of Vermont Health Access should be notified of the pending potential liability award when the applicant is found eligible for Medicaid.
Once the department determines individuals are eligible for long-term care, including waiver and hospice services, it computes how much of their income must be paid to the long-term care provider each month for the cost of care (patient share). A patient share is computed for an individual in a medical institution or who qualifies for home-based waiver services as part of the special income group (M200.23(b)) or as medically needy (M200.3). The department determines the patient share amount at initial eligibility, eligibility redeterminations, and when changes in circumstances occur.
An individual's patient share is determined by computing the maximum patient share and deducting allowable expenses. Sections M431-M431.2 describe how the department determines the maximum patient share. Sections M432-M432.32 describe allowable deductions from the patient share. The actual patient share equals the lesser of either the balance of a patient's income remaining after computing the patient share or the cost of care remaining after the third party payment.
In cases in which allowable deductions exceed the individual's income, the patient share payment is reduced by the deductions, sometimes resulting in no patient share obligation. When monthly income and medical expenses are stable, the patient share amount remains constant. When income or allowable deductions fluctuate, the patient share payment usually varies.
Individuals owe their patient share by the last day of the month in which they receive the income. Payment is made either to the facility in which they resided or the highest paid provider of long-term care waiver services. The department may adjust patient share payments to long-term care providers when a patient transitions from one living arrangement to another, as specified in M433-M433.3.
When monthly income and medical expenses are stable, the patient share payment remains constant. When deductions fluctuate, the patient share payment is likely to vary. When allowable deductions exceed the individual's income, the patient share payment is zero for as many months needed to exhaust the medical expenses against the patient's available income. The month when the remaining medical expense deductions no longer exceed the patient's income, the balance is the patient share payment for that month.
The department assesses a patient share obligation in the month of admission to long-term care as long as the individual is expected to remain in long-term care for at least 30 consecutive days. If long-term care is expected to be needed for fewer than 30 consecutive days, the department does not assess any patient share. Instead, the department covers these services through community Medicaid or VHAP Managed Care, if the individual meets those eligibility rules.
The long-term care residence period in a general hospital setting begins with the first day that the utilization review committee finds acute hospital care is no longer medically necessary and skilled nursing care is medically necessary.
The long-term care residence period in long-term care settings, other than a general hospital, begins with the first day that the utilization review committee finds medical need for long-term care or the date of admission, whatever is later.
A long-term care residence period ends with the earliest of the date of death; the date of discharge from a long-term care living arrangement (see rule M401. 2); or the last day medical need for long-term care is established by utilization review committee.
A long-term care residence period is not ended by a leave of absence from the current setting (see rule M930. 1) .
A long-term care residence period also continues despite transfer from either:
. one long-term care setting to another long-term care setting;
. a general hospital setting (where skilled nursing care has been continuously authorized while awaiting transfer) to another long-term care setting; or
. a long-term care setting to a general hospital setting followed by return to the long-term care setting without an intervening residence period in a community living arrangement (see rule 401. 1) .
Determine the percentage of the month individuals were in long-term care using the appropriate table below.
All Months Except February |
Day of the month admitted to long-term care | Percentage of month in long-term care |
1 | 100% |
2 | 97% |
3 | 93% |
4 | 90% |
5 | 87% |
6 | 83% |
7 | 80% |
8 | 77% |
9 | 73% |
10 | 70% |
11 | 67% |
12 | 63% |
13 | 60% |
14 | 57% |
15 | 53% |
16 | 50% |
17 | 47% |
18 | 43% |
19 | 40% |
20 | 37% |
21 | 33% |
22 | 30% |
23 | 27% |
24 | 23% |
25 | 20% |
26 | 17% |
27 | 13% |
28 | 10% |
29 | 7% |
30-31 | 3% |
February |
Day of the month admitted to long-term care | Percentage of month in long-term care |
1 | 100% |
2 | 96% |
3 | 93% |
4 | 89% |
5 | 86% |
6 | 82% |
7 | 79% |
8 | 75% |
9 | 71% |
10 | 68% |
11 | 64% |
12 | 61% |
13 | 57% |
14 | 54% |
15 | 50% |
16 | 46% |
17 | 43% |
18 | 39% |
19 | 36% |
20 | 32% |
21 | 29% |
22 | 25% |
23 | 21% |
24 | 18% |
25 | 14% |
26 | 11% |
27 | 7% |
28 | 4% |
29 | 0% |
To determine the maximum patient share, the department considers the individual's gross income less allowable deductions as specified in M432. This is the most that a long-term care recipient is obliged to pay toward the cost of long-term care. If an individual was in long-term care for less than a full month, multiply the maximum patient share by the applicable percentage in the table in M431.1.
When determining the patient share amount, the department deducts the following from gross income:
. SSI/AABD, AABD only and ANFC benefit payments still being received when the person first enters long-term care;
. SSI/AABD payments intended to be used to maintain the community residence of persons temporarily (not to exceed 3 months) in institutions;
. Austrian Reparation Payments;
. German Reparation Payments;
. Japanese and Aleutian Restitution Payments;
. Payments from the Agent Orange Settlement Funds; and
. Radiation Exposure Compensation.
. VA payments for aid and attendance paid to a veteran residing in a nursing home or to the veteran's surviving spouse residing in a nursing home.
Then the department deducts the following items from the individual's patient share specified in the subsections below in the following order:
Unpaid patient share obligations may not be used to reduce a current patient share obligation.
The department deducts a reasonable amount for clothing and other personal needs of the individual from monthly income. For institutionalized individuals, the department applies a standard personal needs deduction. For individuals receiving waiver or hospice services, the department applies a standard community maintenance deduction. Unlike the institutionalized individual, whose room and board are covered by Medicaid, persons in the waiver and hospice living arrangements have higher allowances to provide a reasonable amount for food, shelter, and clothing to meet their personal needs.
The department deducts expenses from the monthly income of an individual receiving long-term care services in a nursing facility or receiving enhanced residential care (ERC) services to help maintain their owned or rented home in the community. This deduction is allowed for three months, renewable for up to an additional three months. It is available for each separate admission to long-term care, as long as the criteria listed below are met. The home upkeep standard deduction equals three-fourths of the SSI/AABD payment level for a single individual living in the community.
The department grants the deduction when the Medicaid group has income equal to or greater than the standard home upkeep deduction and the Medicaid group has income greater than the personal needs allowance (PNA). Individuals who have less income than the standard home upkeep deduction may deduct an amount for home upkeep equal to the difference between the individual's income and the personal needs allowance.
This deduction may be applied at any point during the institutionalization as long as all criteria for the deduction are met:
If the situation changes during this period, the Medicaid group's eligibility for the home upkeep deduction must be redetermined. The department will deny or end the deduction when:
. the home is sold or rented,
. rented quarters are given up, or
. the individual's health requires the long-term care admission period to last longer than six months.
The department allows individuals to allocate their income to certain family members as described in the following subsections.
The department may deduct a community spouse income allocation for the needs of spouses living in the community (community spouse) from the incomes of individuals receiving long-term care, including waiver and hospice services, (institutionalized spouse). The term community spouse applies to the spouse of an individual receiving long-term care services, even if the community spouse is also receiving waiver or hospice services. When one spouse in a nursing facility and the other is receiving waiver services, the waiver spouse may receive an allocation. When both spouses are receiving waiver services, either may allocate to the other.
Institutionalized spouses may allocate less than the full amount to their community spouse or may allocate nothing. The allocation is reduced by the gross income, if any, of the community spouse. Community spouses, as well as institutionalized spouses, have a right to request a fair hearing on the amount of the income allocation.
The standard community spouse income allocation equals 150 percent of the federal poverty level for two. The actual community spouse income allocation equals the standard community spouse allocation plus any amount by which actual shelter expenses exceed the standard allocation, up to the maximum. The maximum community spouse income allocation equals a maximum provided by the federal government each year by November 1.
The department applies the following presumptions to ownership of income when determining the community spouse allocation, unless an institutionalized spouse establishes by a preponderance of the evidence that the ownership interests in income are other than as follows:
. income paid in the name of the spouse is considered available only to the named spouse;
. income paid in the name of both spouses is considered available in equal shares to each;
. income paid in the name of either spouse and any other person is considered available to that spouse is proportion to his or her ownership interest;
. income paid in the name of both spouses and any other person is considered available to each spouse in an amount of one-half of the joint interest.
The department allows a deduction for the following family members, unless the member's countable resources exceed $ 12,000:
. any child under age 18; and
. any dependent children, parents, or siblings of either spouse, as specified below.
For the purposes of this subsection, the department considers individuals dependents if they meet each of the following three criteria:
. they have been or will be a member of the household of the beneficiary for at least one year;
. more than one half of their total support is provided by the beneficiary; and
. they have gross annual income below $ 2500 or are a child of the beneficiary under age 19 or under age 24 and a full-time student during any five months of the tax year.
When family members live with the community spouse of a person living in a nursing facility, the deduction equals the maintenance income standard reduced by the gross income of each family member and dividing by three. The resulting amount is the maximum allocation that may be made to each family member.
When family members do not live with the community spouse of the person living in a nursing facility, the deduction equals the applicable protected income level for the number of family members living in the same household as the family member, reduced by the gross income, if any, of the family members in the household.
The department may require the family members described above to apply for SSI, AABD or Reach Up, as long as this would not disadvantage them financially.
Individuals receiving long-term care sometimes move from one facility to another, such as from one nursing home to another or from a nursing home to a hospital and back to the same or another nursing home. Patient share payments must be paid toward the cost of the individual's care from income received by the individual during each month of a continuous period of receiving long-term care Medicaid services.
As a general rule, the provider giving long-term care services to the individual on the last day of the preceding month sends the individual a bill for the patient's share of the cost for that month. Payment is made to the nursing facility if the individual was receiving long-term care in a nursing facility on the last day of the preceding month. Payment is made to the highest paid provider of waiver services if the individual is active on a waiver program on the last day of the preceding month. Exceptions to this rule are specified in the subsections below.
If payment of a patient share results in a credit to the provider then the provider sends the excess to the Office of Vermont Health Access.
Long-term care Medicaid recipients who are hospitalized remain long-term care recipients and their patient share amount is not redetermined. The department allocates payment of the patient share to the providers as follows:
The department adjusts the patient share amount when individuals are in a nursing facility for more than one full calendar month and discharged to waiver services. After the patient share payment is redetermined using the community maintenance allowance, the first month's patient share is paid to the nursing facility because the individual resided in the facility on the last day of the previous month. Thereafter it is paid to the highest paid provider of waiver services.
The department excludes all income long-term care recipients receive during the month of discharge from long-term care and any month after discharge when long-term care Medicaid recipients leave a long-term care living arrangement (M401.2). Long-term care providers must refund patient share payments made by long-term care Medicaid recipients when they pay their patient share from income received in the month of their discharge.
Long-term care Medicaid recipients become fully responsible for the total cost of any care they receive after the effective date of the decision when they remain institutionalized after a medical review team decision that they no longer need skilled nursing or intermediate care, or they become ineligible for other reasons. Recipients usually must pay in advance for such care as a private patient. They incur no patient share obligation for the calendar month that the review decision takes effect.
The long-term care providers must credit payment toward the cost of private care furnished after the effective date of the decision to end Medicaid long-term care coverage when long-term care Medicaid recipients have already paid their patient share to the institution during the calendar month the review decision takes effect.
The department counts income received during the calendar month of the death of a long-term care Medicaid recipient and applies it to the cost of their care received during the prior month. For example, if a long-term care Medicaid recipient dies on June 26, the patient share payment from income received during June is due for care provided in May. If a long-term care Medicaid recipient dies on July 1, the patient share payment from any income received during July is due for care provided in June.
The department shall determine whether transfers of income or resources made by applicants and recipients requesting Medicaid coverage of long-term care expenses, or by any member of their financial responsibility group, are allowable transfers under the rules set forth in this section. This section applies to applicants and recipients in a medical institution or who qualify for home-based waiver services as part of the special income group (M200.23(b)) or as medically needy (M200.3). This section also applies to the spouses of applicants and recipients in a medical institution or who qualify for home-based waiver services as part of the special income group (M200.23(b)) or as medically needy (M200.3). If the department determines that such transfers are not allowable, the person requesting long-term care coverage shall not be eligible for such coverage until a penalty period has expired. The beginning and duration of the penalty period shall be based upon the date and value of the disallowed transfers.
The department shall make this determination concerning transfers occurring before the individual requests coverage of long-term care services, including waiver and hospice services, as part of its determination of initial eligibility for such coverage. Once the department has determined that a transfer is disallowed and has established a penalty period, that transfer is not reconsidered unless the department obtains new information about the transfer. If the department discovers that the individual has made additional transfers after the initial determination, the department shall also determine whether these are allowable, whether the dates of transfer are before or after the initial determination, and establish penalty periods as required. After the month in which an individual is determined eligible for long-term care Medicaid, no resources of the community spouse shall be determined available to the institutionalized spouse.
M440.1 sets forth a definition of transfers.
Sections M440.2 and M440.3 specify the criteria for allowable transfers, to which no penalty period applies, effective for all initial long-term care Medicaid eligibility determinations and redeterminations. No other transfers are allowable.
A transfer of income or resources, for the purposes of this section, means any action taken by a member of the financial responsibility group (see rules M200. 1(d); and M221) or by any other person with lawful access to the income or resources (see rule M440. 35) that disposes of the member's income or resources. The date of the transfer is the date this action was taken. It also applies to certain income and resources to which the member is entitled but does not have access because of an action taken by:
. a member of the financial responsibility group entitled to the income or resources;
. a person, including a court or administrative body, with legal authority to act in place of or on behalf of the member or the member's spouse, entitled to the income or resources; or
. a person, including a court or administrative body, acting at the direction or upon the request of the member or the member's spouse, entitled to the income or resources.
No penalty period is applied to income or resources transferred for fair market value.
Fair market value means an amount equal to the price of an item on the open market in the individual's locality at the time of a transfer, or contract for sale, if earlier. The department determines whether an individual received fair market value for a transfer of income or resources by determining the difference, if any, between the fair market value of any asset reduced by any applicable deductions at the time of the transfer and the amount received for the asset.
Any of the following deductions may be used to reduce fair market value:
. personal services;
. payments for medical care;
. funeral expenses of the individual's deceased spouse;
. taxes, mortgage payments, property insurance, or normal repairs on the transferred property; or
. support and maintenance (e.g., food, clothing, incidentals, fuel and utilities) provided in the individual's own home or in the home of the person who received the income or resource.
If the value of a transferred resource is scheduled for receipt after the date of transfer, the department considers it a transfer for fair market value only if the individual or spouse can expect to receive the full fair market value of the resource within the expected lifetime of the individual or spouse. Expected lifetime is determined by the department as specified in subsections (a) and (b) below.
Pursuant to the authority granted in Vermont Act 71 § 303(7)(2005), the department is developing alternate actuarial tables that will be consistent with federal law and adopted by rule.
The department does not impose a penalty period for transfers made by members of the financial responsibility group for less than fair market value that meet one or more of the following criteria.
. the transfer was not within the individual's control (e.g., was ordered by a court);
. the individual could not have anticipated long-term care eligibility on the date of transfer (e.g., the individual became disabled due to a traumatic accident after the date of transfer); or
. a diagnosis of a previously undetected disabling condition leading to long-term care eligibility was made after the date of transfer.
The department does not impose a penalty period for transfers involving trusts that meet one or more of the following criteria.
The department does not impose a penalty period for transfer of a home that meets the definition at M232.11, provided that title was transferred by a member of the financial responsibility group to one or more of the following persons:
The department also does not impose a penalty period for the purchase of a life estate interest in another individual's home when it is the purchaser's residence and the purchaser resides in the home for a period of at least one year after the purchase.
The department does not impose a penalty period for transfers that meet any of the following criteria.
Annuities purchased by the institutionalized individual or community spouse on or after February 8, 2006 must name Vermont Medicaid as the first remainder beneficiary up to the amount of long-term care and community service Medicaid payments made by the state on behalf of the institutionalized individual. In cases where a minor or disabled child, or a community spouse is named as a beneficiary ahead of the state, Vermont Medicaid must be named as the secondary beneficiary. If Vermont Medicaid is not named as a remainder beneficiary in the correct position, the purchase of the annuity will be considered a transfer for less than fair market value. When Vermont Medicaid is a beneficiary of an annuity, issuers of annuities are required to notify Vermont Medicaid of any changes in the disbursement of income or principal from the annuity as well as any changes to the State's position as remainder beneficiary.
The department does not impose a penalty for the purchase of an annuity when it meets one or more of the four alternatives described below. To determine that an annuity is established under any of the various provisions of the Internal Revenue Code that are referenced in items 3 and 4 below, the department relies on verification from the financial institution, employer or employer association that issued the annuity. The burden of proof is on the individual to produce this documentation. Absent such documentation, the department will consider the purchase of the annuity a transfer for less than fair market value which is subject to a penalty.
Annuities that do not meet the criteria in M440.34(a) shall be assessed a transfer penalty based on their fair market value. The fair market value equals the amount of money used to establish the annuity and any additional amounts used to fund the annuity, plus any earnings and minus any early withdrawals and surrender fees.
For joint ownerships established after January 1, 1994, the portion of jointly held assets subject to penalty is evaluated by the department based on the specific circumstances of the situation. The department presumes individuals own the value of the resource using rules in M233 and its subsections. Individuals may rebut the presumption of ownership by establishing to the department's satisfaction that the amount withdrawn was, in fact, the sole property of and contributed to the account by the other person, and thus did not belong to the individual. In the case of accounts in financial institutions (M231.21), for example, the portion subject to transfer penalty is the amount withdrawn by a joint owner. In the case of life estates, for example, individuals may transfer their home and retain a life estate without being subject to penalty if they have retained the right to sell the property. In this situation their ownership interest has not been reduced or eliminated.
For joint ownerships established before January 1, 1994, the date of the transfer is the date the other person became a joint owner. The value of the transfer equals the amount that the resource available to the individual or the individual's spouse was reduced in value.
Promissory notes or similar income-producing resources (contracts) shall be assessed a transfer penalty based on their fair market value unless they:
Fair market value equals the amount of money used to establish the contract and any additional payments used to fund it, plus any earnings and minus any payments already received as of the date of the Medicaid long-term care application.
If a transfer is disallowed, the department imposes a penalty period of restricted Medicaid coverage to an otherwise eligible individual. During this period, no Medicaid payments are made for long-term care services, including waiver and hospice services. Medicaid payments are made for all other covered services provided to the recipient during the period of restricted coverage.
The penalty date is the beginning date of each penalty period imposed for a disallowed transfer.
For applications filed before February 1, 2007, the period of restricted coverage begins the first day of the month following the date the asset was transferred if that does not occur in any other period of restricted coverage.
For applications filed after February 1, 2007 the period of restricted coverage is dependent upon the date of the transfer.
Penalty periods for transfers occurring in different months run consecutively rather than concurrently, in the order in which the transfers occurred. If, after establishing a penalty period for disallowed transfers, the department determines that additional disallowed transfers were made in a subsequent month but before the end of the first penalty period, the department shall designate the first day following the end of the first penalty period as the penalty date for the subsequent penalty period.
For transfers that occurred before July 1, 2002, the number of months in a penalty period shall be equal to the total value of all disallowed transfers made during a given calendar month divided by the average monthly cost to a private patient of nursing facility services as of the date of application. When a fraction of a month results, the months are rounded down to the nearest whole number.
For transfers that occurred on or after July 1, 2002, the number of days in a penalty period shall be equal to the total value of all disallowed transfers made during a given calendar month divided by the average daily cost to a private patient of nursing facility services in the state as of the date of application or the date of discovery, if the department discovered additional disallowed transfers after the initial determination of eligibility for long-term care coverage.
Penalty periods for transfers in different calendar months shall be consecutive and established in the order in which the disallowed transfers occurred.
A penalty period runs continuously from the first date of the penalty period, even if the individual stops receiving long-term care services, including waiver and hospice services.
The department applies the following rules to the assignment of penalty periods when both members of a couple are requesting or receiving Medicaid coverage of long-term care services, including waiver and hospice services.
The department does not establish a penalty period resulting from an improper transfer when it determines that restricted coverage will result in an undue hardship. Undue hardship is considered only in cases where the department has first determined that a transfer has been made for less than fair market value and that no transfer exception applies (M440.3-M440.34).
For the purposes of this section the term individual refers to the long-term care applicant or recipient as well as a long-term care service provider. Providers may file a request for undue hardship on behalf of the individual with the consent of the individual or the personal representative of the individual.
Undue hardship means depriving the individual: of medical care such that the individual's health or life would be endangered; or of food, clothing, shelter, or other necessities of life such that would be at risk of serious deprivation. Undue hardship does not exist when the application of a transfer penalty merely causes an individual or individual's family member(s) inconvenience or restricts their lifestyle. Undue hardship does not exist when the individual transferred the assets to the community spouse and the community spouse has countable or excluded resources in excess of the community spouse resource allocation standard.
The department shall inform the individual of the right to request an undue hardship exception through written notice of a penalty period of ineligibility for Medicaid payment of long-term care services because of an impermissible asset transfer. The notice shall specify the factual and legal basis for the imposition of the penalty, and shall explain how the individual may request a hardship exception. Individuals may receive an undue hardship exception to the transfer of assets penalty if they can show that the penalty will cause an undue hardship to them. Undue hardship shall be established when the individual demonstrates by a preponderance of the evidence that denial of Medicaid payment for long-term care services will cause actual and not merely possible undue hardship. The department's decision may waive all or a portion of the penalty period.
Individuals subject to a transfer penalty may request an undue hardship within 20 days of notification of the transfer penalty by providing documentation supporting the request to the department. Once the department determines that it has received complete documentation, the department shall inform the individual within 10 business days of the undue hardship decision and of the right to request a fair hearing. The department may extend these periods if the department determines that extenuating circumstances require additional time. If no request for undue hardship is received within 20 days after notification of the transfer penalty, or if the request is denied, the department shall issue an eligibility determination specifying the applicable penalty period. If the individual is a recipient, the notice shall include the date of Medicaid long-term care termination and include the right to request a fair hearing and continuing benefits.
When undue hardship requests are made for the first time at the time of requesting a fair hearing, individuals challenging the penalty period must raise all claims and submit all evidence permitting consideration of undue hardship at least 10 business days in advance of the fair hearing. Undue hardship shall be referred to the department for consideration and the department shall inform the Human Services Board of its decision on undue hardship within 10 business days of receipt.
Undue hardship requests also may be filed at any time during the penalty period if new circumstances leading to undue hardship arise during the duration of a transfer penalty period. If granted, the undue hardship request shall be prospective from the date of the request.
The department shall have no obligation to pay for long-term care services during the penalty period unless it grants an undue hardship exception or the beneficiary prevails at the fair hearing.
In determining the existence of "undue hardship", the department shall consider all circumstances involving the transfer and the situation of the individual. Undue hardship is established when one or more of the following circumstances, or any other comparable reasons, exist.
. A copy of the tax return for the preceding calendar year;
. All earnings pay stubs for the past 12 months;
. All bank books, stocks, bonds, certificates, life insurance policies (e.g. bank books must include those before and after receipt of the transferred resource); and
. All documents associated with the proceeds of the transferred resource which will show the value of any purchase of new resources from the sale proceeds of the transferred property.
When the transfer is made to a relative who is a minor, a family member with financial responsibility for the minor must be asked to provide the required facts and verification.
13-440 Code Vt. R. 13-170-440-X
EFFECTIVE DATE: October 1, 2008 Secretary of State Rule Log #08-040 [Bulletin #08-20; amended, renumbered and reorganized, see rule 13 170 000 for prior history and section conversion table.]