WHAT ARE THE ELIGIBILITY REQUIREMENTS?

* For couples who are married, one spouse must live in a nursing home; or one spouse must be determined to be eligible for Home and Community Based Services after July 1, 2000.
* Individual must be in an institution for at least 30 consecutive days
* Individual must pass the "level of care" screen which certifies that the individual needs nursing home or hospital care (ULTC 100)
* Income of the institutionalized spouse must be less than 300% of the Supplemental Security Income level (for 2000, $1656 per month)
* The institutionalized spouse's countable resources must be less than $2,000
* The Community Spouse Resource Allowance or countable resources of the community spouse can not be more than $90,660

HOW TO APPLY FOR BENEFITS?

Call or visit the local County Department of Social Services, the case management agency or the Single Entry Point in the County where the nursing home or hospital is located. Regardless of the amount of resources of the couple and if the income of the institutionalized spouse is more than $1656, the community spouse should visit the local County Department of Social Services, the case management agency or Single Entry Point and request the Community Spouse Resource Allowance be calculated to avoid delays in future eligibility for Medicaid benefits for the institutionalized spouse.

The local County Department of Social Services, case management agency or Single Entry Point must assess the couple's resources within 45 days at two points in time a) when the individual enters an institution; and b) when the institutionalized spouse applies for Medicaid. A reasonable fee may be charged by the local County Department of Social Services for the assessment.

WHAT DOCUMENTS ARE REQUIRED TO PROVE ELIGIBILITY?

* Proof of Social Security income
* Proof of income from stocks, bonds, or interest
* Copies of recent bank statements
* Copies of bills or statements for house payments, rent, utilities, property taxes and insurance
* Maintenance fees charged by condominium associations
* Copies of insurance premiums for health, life, car and burial
* Copies of monthly medical bills
* Other regular monthly expenses of the community spouse
* Proof that no transfer of property has occurred within the previous 36 to 60 months
* Copies of burial policies

HOW MUCH WILL BE RECEIVED FROM SPOUSAL PROTECTION?

The community spouse will receive a maximum of $1473 per month. The community spouse may receive an additional allowance up to $4480 per month up to a maximum of $2267. Additional income may be received for dependents and for exceptional circumstances.

TO WHAT OTHER PROGRAMS MIGHT A SPOUSAL PROTECTION RECIPIENT BE ENTITLED?

* Food stamps and other food programs
* Medicaid
* Supplemental Security Income/Old Age Pension
* Pensions (especially veterans benefits)
* Rent/Tax Rebates
* Utility Assistance
* Subsidized Housing
* Burial Assistance
* Emergency Assistance Payments
* Weatherization
* Special Low Income Medicare Benefit

WHAT CHANGES NEED TO BE REPORTED TO THE LOCAL COUNTY DEPARTMENT OF SOCIAL SERVICES, CASE MANAGEMENT AGENCY OR SINGLE ENTRY POINT?

* New mailing address if the community spouse or the institutional spouse moves
* Another individual moves in or out of the household
* Individual goes to work
* Income goes up or down
* Divorce or separation of spouses
* Property is bought or sold, including the home or car

TIPS FOR PRACTITIONERS

1. Asset Transfers to Community Spouse. If the institutionalized spouse is eligible for Medicaid and the community spouse is not already in possession of assets equal to the community spouse resource allocation, the assets must be transferred from the institutionalized spouse to the community spouse within 90 days.

2. Rules prior to 9/30/89. The rules apply for new admissions, as well as those already residing in a nursing home. If a spouse was in a nursing home prior to September 30, 1989, other rules will apply to resources, but the community spouse should still apply for Spousal Protection of income.

3. Veterans Benefits. Couples applying for Spousal Protection may be required to apply for Veterans or other benefits for the institutionalized spouse prior to receiving a determination of eligibility.

4. Treatment of Income Property. Couples who own income property may be eligible for Spousal Protection, if the income from the income property is needed to contribute to the MMMNA (Minimum Monthly Maintenance Needs Allowance).

5. Confidentiality. Spousal protection calculations are usually made from the date of entry to the nursing home, however, records are usually started at the time discussions begin with the Single Entry Point, local County Department of Social Services or Case Management Agency. Therefore, when calling the Single Entry Point, the local County Department of Social Services or the Case Management Agency, disclose only the information which is needed. Be sure to protect the confidentiality of your client if you are only seeking information to determine potential eligibility.

6. Purchasing Burial Policies. Couples who own a whole life insurance policy and who cash that policy in to purchase a burial plan, marker or plot, may be subject to private pay to the nursing home during the period the whole life insurance policy is being redeemed. It may be better to redeem the whole life policy and purchase an irrevocable burial policy, marker or plot, prior to applying for Medicaid at the Single Entry Point, Case Management Agency or the local County Department of Social Services. Unless the institutionalized spouse is receiving Medicare Part A coverage or is hospitalized during this time period, the individual will be charged at the private pay rate as part of the spend down of resources. Medicaid benefits are retroactive to the date of admission to the nursing home, however, records are usually started at the time of initial discussions with the Single Entry Point, local County Department of Social Services or the Case Management Agency. If the individual is going from the private home to the nursing home, it is advisable to make these changes prior to nursing home placement.

7. Medicaid Qualifying Trust Pay-outs to Community Spouse. In instances where the institutionalized spouse is the beneficiary of a Medicaid Qualifying Trust and has been approved for Medicaid benefits, the community spouse may receive Spousal Protection payments.

8. Medicaid Lien. Individuals who are eligible for Spousal Protection may be subject to the Medicaid Estate Recovery Act if they own real property. If the community spouse continues to live in the home, a lien will not be placed on the home. (See Section on Medicaid Estate Recovery Act). Another way to protect against a lien is to transfer ownership of the home to the community spouse with a quit claim deed within 90 days Medicaid benefits having started.

9. How Do You Spend Down?

You may spend down resources in any of the following ways:

* Pay for nursing home care
* Purchase a primary residence and household furnishings
* Purchase items for the nursing home spouse such as a television, clothing, etc.
* Purchase an irrevocable burial policy
* Make home improvements such as a new roof, insulation, refrigerator,etc.
* Pay off indebtedness
* Purchase an annuity (under some terms and conditions)
* Purchase of medical equipment

The following types of transfers are exempt and qualify as a spend down of resources:

* Transfers to the Medicaid recipient's spouse
* Transfers to a child who is determined to be blind or permanently and totally disabled
* Transfers of a home to a) child who is under twenty-one years of age or b) a
sibling who has an equity interest in the home and who has resided in the home for at
least one year immediately before the date the individual becomes institutionalized; or
c) a son or a daughter of any age who was residing in the home for a period of at least
two years immediately before the date the individual becomes institutionalized, and who
provided care to the individual to allow him or her to remain in his or her own home,
rather than in a nursing home * Purchase of an annuity 36 months prior to a Medicaid application (NOTE: only the income
from the annuity is counted toward the Minimum Monthly Maintenance Needs Allowance - MMMNA).

Transfers to trusts which are exempt and qualify for spend down without a penalty are:

* Supplemental needs trusts which are drafted to provide for the individual's supplemental care (ie anything that is not covered by public or private benefits, including, for example, the cost differential between a private and semi-private room, television, hair care, outings, etc).

* Disability trusts established by a parent, grandparent, legal guardian or court for a disabled person (as defined under Supplemental Security Income standards) under age sixty-five, and which designate the state as the remainderman. In addition, Colorado (unlike the federal regulations) requires that these funds originate from a personal injury settlement or from Zebley settlements (retroactive SSI benefits paid pursuant to a class action lawsuit entitled Sullivan v Zebley);

* Pooled Trusts, which are supplemental needs trust set up by non-profit associations for disabled persons of any age, provided that, the state must be the remainder man to the extent of medical assistance paid to the Medicaid applicant or recipient, and, as in the prior example, funds must originate from personal injury or Zebley settlements.

* Miller Trusts (or Medicaid Qualifying Trusts) which are trusts for individuals whose income exceeds the state Medicaid income cap, but is less than the average monthly cost of nursing home care in the geographic region in which the individual lives. These persons are often referred to as being in the "Utah gap".

* Transfer made prior to 36 months before the Medicaid application is submitted or 60 months if the transfer is made to a trust.

10. Transfers Without Fair Consideration.

Transfers that are disallowed and do not follow the guidelines above are considered a Transfer With Fair Consideration (TWFC).

a. To determine eligibility for spousal protection, the rules related to transfer of property, without receiving fair market value in return are applied. Assets which have been transferred 36 months prior to application for Medicaid are applied when determining eligibility for Spousal Protection. These include gifting money to relatives or friends (although the Internal Revenue Service allows gifts of $10,000 per year per person to another individual without tax consideration, Medicaid does not honor these gifting rules); transferring title in rental property, recreation vehicles or other investment instruments.

b. In some cases, such as trusts, assets which have been transferred during the past 60 months can be reviewed. If individuals have transferred assets, they may be subject to a variety of penalties, including loss of Medicaid reimbursements in the nursing home. The Medicaid applicant may be required to seek a return of assets which have been transferred to another individual.

c. If a person purchases an irrevocable annuity and transfers the benefit to a third party (other than the spouse), the entire amount of the annuity would be considered as a transfer of assets.

d. If a person purchases an annuity that is not irrevocable, the entire amount of the annuity is considered a countable resource and the person would not be eligible for Medicaid until the resource was reduced to the allowable resource limit for Medicaid.

e. Annuities may be considered a transfer of assets without fair consideration. A transfer without fair consideration has occurred if:

1). The length of time the annuity was purchased exceeds the reasonable life expectancy of the annuitant using the Life Expectancy Tables above.

2). The amount of money used to purchase the annuity increases the Minimum Monthly Maintenance Needs Allowance (MMMNA) -- only that portion of the annuity that causes the MMMNA to be in excess of the MMMNA ($1493 or $2267 in hardship cases)

3). The return on the annuity over its lifetime exceeds the life expectancy of the annuitant; then that portion of the annuity that exceeds the annuitant's life expectancy is counted as a transfer without fair consideration

4). The return on the annuity over its lifetime is less than the original purchase price, the difference shall be considered a transfer without fair consideration.

5). If an irrevocable annuity is purchased by the Medicaid applicant or the community spouse and the return or the benefit is transferred to a third party, the total amount of the annuity is a transfer without fair consideration.

For example: An straight life annuity (exempt resource) purchased by a 65 year old male for $40,000 pays $306 a month (the payment in this case is based on a life expectancy of 15 years for a 65 year old male). However, the same annuity purchased as a "15 year certain with life thereafter" is a non-exempt resource which pays $282 and is considered a transfer without fair consideration. Since the annuitant is not maximizing the investment through a straight life annuity, a transfer of assets without fair consideration exists for the difference between the $306 and $282 payment. The difference in this case of $4,320 ($24 difference x 12 months x 15 years = $4,320) would be considered as a transfer of assets. This would result in a transfer penalty period of one month (we divide the $4,320 by $4,424 = approximately one month). The percentage is not counted in the calculation.

f. If a person makes a life estate after July 1, 1995, the transfer of title will be considered a transfer without fair consideration. To figure the amount of the transfer in the life estate:

1). Determine the equity value of the property at the time the life estate is transferred (ie the sales price, the market value or the assessed value) minus any liabilities, mortgages, or liens.

2). Multiply the equity value by the "remainder factor" that corresponds to the person's age at the time the life estate is transferred using the following table.

3). The result is the amount of property that is transferred without fair consideration.

For example: If a 75-year-old individual sets up a life estate on January 2, 1999, and the actual value of the property is determined to be $75,000. To determine the amount of transfer without fair consideration, multiply .47851 (taken from the Life Estate Remainder Interest Table) by $75,000 which results in $35,888.25. For 1999, the penalty amount is $4,424 per month. The amount of time the individual would not be eligible for Medicaid assistance ($35,888.25 divided by $4,424) is 8.11 or almost 8 ½ months of ineligibility for Medicaid assistance from the date of the transfer.

If the period of ineligibility for a transfer has already been served, it will not be added to the other transfers. For example, an individual transferred $4,000 on March 31 and $10,000 on May 1. An application for Medicaid is placed on May 10. The transfer penalty for March has already been served before the May transfer occurs ($4,000 divided by $4,424 = .90. The calculation begins on March 1 (the first day of the month in which the transfer occurred) and would end prior to March 31. In this case, only the $10,000 transferred in May would be used to calculate the transfer penalty.

d. There is no maximum period of ineligibility. If an individual transferred $100,000 on March 20, the total penalty period would be 22.60 months of ineligibility starting from the date of the transfer ($100,000 divided by $4,424 = 22.60 months). NOTE: if the application for Medicaid is made after the penalty period has expired, there will not be a problem applying for Medicaid.

e. The exact period of disqualification is determined by dividing the amortization rate (currently $4,424) into the amount of transfer. This will result in a disqualification period that will usually be a whole number with a percent after it (ie 3.07). The three represents the number of months and the .07 represents a number of days within the month. To determine the number of days the .07 represents, multiply the .07 by 30 (used as a standard month). In the example given, the number of days is 2 (.17 x 30 = 2.10 days - any decimal is dropped). This leaves a total disqualification of 3 months and 2 days calculated from the date of the transfer.

f. The period of ineligibility may be waived if a "hardship" is determined by the county. A hardship may be considered if the following conditions as given in State Manual section 8.110.54, #9 are met:

1). the individual has no alternative living arrangement other than the nursing home;

2). all resources through the transfer have been irretrievably lost;

3). the county department may apply other hardship criteria to other situations that are deemed as a valid hardship.