Medicaid Policy
Medicaid Policy
Definition
Exempt assets are assets that do not count as an available resource to decide Medicaid eligibility. An individual, his or her spouse, or the parents of a minor individual may own the asset. The asset must meet the criteria defined in this section about that type of asset to be excluded as a resource.
Some assets may be excluded indefinitely while others are excluded only for a set period of time. A dollar limit may apply or the asset may have to be separated from non-excluded assets. Determine what limitations apply to the exclusion of certain assets.
Interest earned on excluded funds may not always be excluded from available resources. If it is not excluded, count the accumulated interest as a resource. When the interest counts as a resource, but the principal is excluded, always assume the individual withdraws the interest from the account before the principal. Some interest earned on certain assets may be excluded from income, but not resources. (See also Sec. 415-7.)
Assets that must be separated
Certain types of assets that can be excluded from available resources must be separated from non-excluded assets. The funds only have to be separated if the amount would put the person over the asset limit when added to countable resources. If total resources, including the excluded resources, are under the asset limit, the excluded funds do not have to be separated.
In general, funds with an unlimited exclusion period must be separated. The following types of funds must be separated from countable funds to be excluded:
Agent Orange Settlement funds
Austrian Social Insurance funds
Crime Victims Compensation
Dedicated accounts containing retroactive SSI for a child
Disaster Relief funds
Excluded benefits received under the Older American’s Act
German Reparation funds or Nazi Persecution payments
Hemophilia Settlement payments
Individual Development Accounts
Japanese-American, Japanese-Canadian and Aleutian Restitution funds
Netherlands WUV payments
Payments to former prisoners of North Vietnam
Radiation Exposure Compensation funds
VA Payments for Veterans' Children Born with Spina Bifida or Other Birth Defects
Funds received after September 21, 2005 for flood mitigation projects for the individual's real property paid under the National Flood Insurance Act
Applicants. When an applicant claims to have one of the above resources, request information to verify the source and amount of the asset only if the amount causes resources to exceed the asset limit. (See specific policy sections; sometimes a client’s signed statement of the source of funds can serve as verification.)
If the excluded funds are not separated from other funds, give the individual 30 days to separate the funds from non-excluded funds. If the 30th day is a non-business day, give the individual until the following business day to separate the funds from non-excluded funds. Do not delay eligibility while the applicant separates the funds.
Give the individual more time to separate funds if there is a reason they cannot be separated quickly. For example, more time may be needed if excluded and countable funds are held together in an account like a time certificate (CD). If the individual has not separated the funds by the due date, count the funds as an available resource for the month after which you can provide 10-day notice. Do not process an overpayment for the months during which you had given the individual time to separate the funds.
Current Recipients. If a current recipient reports receipt of funds or you find that a recipient has unreported funds from one of the above sources, verify the source. If the funds are not separated, give the individual at least 30 days to separate the funds. Give the individual more time if needed as described in #1 above. If the funds are not separated by the due date, proceed as described in #1 above.
Assets that do not have to be separated
Assets that are only excluded as a resource for a limited time do not have to be separated from non-excluded assets. This applies to the following types of funds:
SSI, SSA and Railroad Retirement retroactive payments that are excluded for nine months, or when received before March 2, 2004, are excluded for six months
Payments to replace lost, stolen or damaged property
Student benefits
Payments for medical or social services
Proceeds from sale of a home
Resources set aside as part of a PASS plan
Relocation assistance payments from a state or local government
Earned income tax credits and Child Tax Credits
Any other resources excluded from available resources for a limited amount of time under policy.
When the individual has any of these excluded funds co-mingled with other funds, determine how much of the combined funds are excluded. Always assume that the individual uses non-excluded funds before using the excluded funds. At the end of the applicable exclusion period, remaining amounts of these funds count as an available resource.
Burial funds and retirement accounts
Burial funds must always be separate from other funds and identified as burial funds. Refer to Sec. 590-596 for more information. Retirement accounts must also be separate from other funds.
Self-employment assets
Assets of self-employment should be separated from personal assets; however, policy does not require that they be separated. To exclude assets of self-employment, the individual must be able to identify the assets (type and amount or value) used for self-employment. When assets are co-mingled, it may be difficult to identify assets of self-employment. If an individual cannot provide reasonable evidence that an asset is for self-employment, count it as an available resource.