Current through Register Vol. 35, No. 6, March 26, 2024
Some types of resources can be excluded from the calculation
of countable resources if they meet the specific criteria listed below.
A.
Burial fund exclusion: Up to
$1,500 can be excluded from the countable liquid resources of an applicant or
recipient if designated as their burial fund. An additional amount of up to
$1,500 can be excluded from countable liquid resources if designated as burial
funds for the spouse of the applicant or recipient. The burial fund exclusion
is separate from the burial space exclusion.
(1)
Retroactive designation of burial
funds: An applicant or recipient can retroactively designate funds for
burial back to the first day of the month in which the applicant or recipient
intended the funds to be set aside for burial. The applicant or recipient must
sign a statement indicating the month the funds were set aside for
burial.
(2)
Limit on
exclusion: An applicant or recipient can designate as much of their
liquid resources as they wish for burial purposes. However, only one burial
fund allowance of up to $1,500 each for the applicant or recipient and their
spouse can be excluded from countable resources. A burial fund exclusion does
not continue from one period of eligibility to another (i.e., across a period
of ineligibility). For each new period of eligibility, any exclusion of burial
funds must be developed as for an initial application.
(3)
Removal of designation: An
applicant or recipient cannot "un-designate" burial funds, unless one of the
following occurs:
(a) eligibility
terminates;
(b) part, or all, of
the funds can no longer be excluded because the applicant or recipient
purchased excluded life insurance or an irrevocable burial contract which
partially or totally offsets the available burial fund exclusion; or
(c) the applicant or recipient uses the funds
or any portion of the funds for another purpose; this action makes the funds
countable; any designated burial funds used for another purpose will be counted
as income in the month withdrawn and as a resource
thereafter.
(4)
Reduction of burial fund exclusion: The $1,500 burial fund
exclusion is reduced by the following:
(a)
the face value of excluded life insurance policies;
(b) assets held in irrevocable burial trusts;
irrevocable means the value paid cannot be returned to the applicant or
recipient;
(c) assets that are not
burial space items held in irrevocable burial contracts;
(d) assets held in other irrevocable burial
arrangements; and
(e) assets held
in an irrevocable trust available to meet burial expenses.
(5)
Interest from burial fund:
Interest derived from a burial fund is not considered a countable resource or
income if all the following conditions exist:
(a) the original amount is
excluded;
(b) the excluded burial
fund is not commingled with non-excluded burial funds;
(c) the interest earned remains with the
excluded burial funds.
(6)
Commingling of burial funds:
Burial funds cannot be commingled with non-burial funds. If only part of the
funds in an account are designated for burial, the burial fund exclusion cannot
be applied until the funds designated for burial expenses are separated from
the non-burial funds. Countable and excluded burial funds can be
commingled.
(7)
Life
insurance policy designated as burial fund: An applicant or recipient
can designate a life insurance policy as a burial fund at the time of
application. The ISD caseworker must first analyze Subsection H of 8.281.500.13
NMAC.
(8)
Burial
contracts: If an applicant or recipient has a prepaid burial contract,
the ISD caseworker determines whether it is revocable or irrevocable and
whether it is paid for. Until all payments are made on a burial contract, the
amounts paid are considered burial funds and no burial space exclusions apply.
(a) An applicant or recipient may have a
burial contract which is funded by a life insurance policy. The life insurance
may be either revocably or irrevocably assigned to a funeral director or
mortuary.
(b) A revocable contract
exists if the value can be returned to the applicant or recipient. An
irrevocable contract exists when the value cannot be returned. If the contract
or insurance policy assignment is revocable, the following apply.
(i) If the burial contract is funded by a
life insurance policy, the policy is the resource which must be evaluated. The
burial contract itself has no value. It exists only to explain the applicant's
or recipient's burial arrangements.
(ii) No exclusions can be made for burial
space items because the applicant or recipient does not have a right to them if
the contract is not paid for or the policy is not paid up.
(c) If the assignment is irrevocable, the
life insurance or burial contract is not a countable resource, because the
applicant or recipient does not own it.
(i)
The burial space exclusions can apply if the applicant or recipient has the
right to the burial space items.
(ii) The value of the irrevocable burial
arrangement is applied against the $1,500 burial fund exclusion only if the
applicant or recipient has other liquid resources to designate for
burial.
B.
Burial space exclusion: A
burial space or an agreement which represents the purchase of a burial space
held for the burial of an applicant or recipient, their spouse, or any other
member of their immediate family is an excluded resource regardless of value.
Interest and accruals on the value of a burial space are excluded from
consideration as countable income or resources.
(1) When calculating the value of resources
to be deemed to an applicant or recipient from their parent(s) or spouse, the
value of spaces held by the parent(s) or spouse which are to be used for the
burial of the applicant or recipient, or any member of the applicant's or
recipient's immediate family, including the deemer parent or spouse, must be
excluded.
(2) The burial space
exclusion is separate from, and in addition to, the burial fund
exclusion.
(3)
Burial space
definitions: "Burial space" is defined as a burial plot, gravesite,
crypt, mausoleum, casket, urn, niche, or other repository customarily used for
the deceased's bodily remains.
(a) A burial
space also includes necessary and reasonable improvements or additions, such as
vaults, headstones, markers, plaques, burial containers (e.g., caskets),
arrangements for the opening and closing of a gravesite, and contracts for care
and maintenance of the gravesite, sometimes referred to as endowment or
perpetual care.
(b) Items that
serve the same purpose are excluded once per applicant or recipient, such as
excluding a cemetery lot and a casket, but not a casket and an
urn.
(4)
Burial
space contract: An agreement which represents the purchase of a burial
space is defined as a contract with a burial provider for a burial space held
for the eligible applicant or recipient or a member of their immediate family.
(a) Until all payments are made on the
contract, the amounts paid are considered burial funds and no burial space
exclusions apply.
(b) An
applicant's or recipient's immediate family includes:
(i) spouse;
(ii) natural or adoptive parents;
(iii) minor or adult children, including
adoptive and stepchildren;
(iv)
siblings, including adoptive and stepsiblings; and
(v) spouse of any of the above
relatives.
(c) If a
relative's relationship to an applicant or recipient is by marriage only, the
relationship ceases to exist upon the dissolution of the marriage.
(5)
Burial space "held" for
an applicant or recipient: A burial space is considered held for an
applicant or recipient if:
(a) someone has
title to or possesses a burial space intended for the use of the applicant or
recipient or a member of their immediate family; or
(b) someone has a contract with a funeral
service company for a specified burial space for the applicant or recipient or
a member of their immediate family, such as an agreement which represents the
applicant's or recipient's current right to the use of the items at the amount
shown.
(6) Until the
purchase price is paid in full, a burial space is not considered "held for" an
applicant or recipient under an installment sales contract or similar device
if:
(a) the applicant or recipient does not
currently own the space;
(b) the
applicant or recipient does not currently have the right to use the space;
and
(c) the seller is not currently
obligated to provide the space.
C.
Life estate exclusion: The
value of a life estate interest in the applicant's or recipient's own home or
in the home of another is excluded if the applicant or recipient has
continuously resided in the home for a period of 12 months or more from the
date of the life estate purchase. The value of the remainderman's interest when
a life estate is retained in one's own home is considered a transfer of
resources to be evaluated in accordance with
8.281.500.14
NMAC.
D.
Settlement
exclusions: Agent orange settlement payments made to applicant or
recipient veterans or their survivors are excluded from consideration as
resources.
(1) Payments made under the
Radiation Exposure Compensation Act are excluded from consideration as
resources.
(2) Payments received
from a state-administered fund established to aid victims of crime are excluded
for nine months beginning the month after the month of receipt.
(3) Payments under the foundation called
'remembrance, responsibility and the future', excluded from consideration as
resources.
E.
Exclusions for real property and home: A home is any shelter used
by an applicant or recipient, or their spouse, as the principal place of
residence. The home is not considered a countable resource while in use by the
applicant, recipient, or their spouse as a principal place of residence. If an
applicant's or recipient's home equity value exceeds the amount allowed under
8.200.510 NMAC, then the entire valued amount of their home is a countable
resource. An applicant or recipient with home equity of more than the amount
specified shall be placed on restricted coverage for as long as they own the
home. The home includes any buildings and contiguous land used in the operation
of the home. If the amount is equal to or less than allowed under 8.200.510
NMAC, then their home is excluded during the periods when they reside in an
acute care or long-term care medical facility when the applicant or recipient,
or their authorized representative, states that the applicant or recipient
intends to return to their home.
F.
Exclusion of home: If the applicant or recipient or their
authorized representative states the applicant or recipient does not intend to
return to the home, but the home is the residence of the applicant's or
recipient's spouse or dependent minor child or adult disabled child, the home
is an excluded resource.
G.
Income-producing property exclusion: To be excluded from
consideration as a countable resource, income-producing property that does not
qualify as a bona fide business (e.g., rental property or mineral rights) must
have an equity value of no more than $6,000 and an annual rate of return of at
least six percent of the equity value. See Subsection F of 8.281.500.13 NMAC if
the equity value exceeds $6,000 but the rate of return is at least six percent
annually. The $6,000 and six percent limitation does not apply to property used
in a trade or bona fide business, or to property used by an applicant or
recipient as an employee which is essential to the applicant's or recipient's
self-support (e.g., tools used in employment as a mechanic, property owned or
being purchased in conjunction with operating a business). Existence of a bona
fide business can be established by documentation such as business tax returns.
(1)
Determination of rate of
return: To calculate the annual rate of return for income producing
property when the $6,000 and six percent limits apply, the previous year's
income tax statement, or at least three months earnings is used to project the
rate of return for the year.
(a) If the
income is sporadic or has decreased from that needed to maintain a six percent
rate of return for the coming year, the property is reevaluated at appropriate
intervals.
(b) If the annual rate
of return is at least six percent of the equity value but the equity value
exceeds $6,000, only the excess equity is a countable resource.
(c) If the annual rate of return is less than
six percent but the usual rate of return is more, the property is excluded as a
countable resource if all the following conditions are met:
(i) unforeseeable circumstances, such as a
fire, cause a temporary reduction in the rate of return;
(ii) the previous year's rate of return, as
documented by the income tax statement or several months receipts, is at least
six percent; and
(iii) the property
is expected to produce a rate of return of at least six percent within 18
months of the end of the year in which the adverse circumstances occurred; the
ISD caseworker records in the case narrative the plan of action which is
expected to increase the rate of return.
(d) The ISD caseworker notifies the applicant
or recipient in writing that the property is excluded based on its expected
increase in return and that it will be reevaluated at the end of the 18 month
grace period. When this period ends, the property must be producing an annual
rate of at least six percent to continue to be excluded as a countable
resource.
(2)
Types
of income-producing property: Income-producing property includes:
(a) a business, such as a farm or store,
including necessary capital and operating assets such as land and buildings,
inventory or livestock; the property must be in current use or have been used
with a reasonable expectation of resumed use within a year of its most recent
use; the ISD caseworker must account for the cash actually required to operate
the business; liquid business assets of any amount are excluded;
(b) non-business property includes rental
property, leased property, land leased for its mineral rights, and property
producing items for home consumption; property which produces items solely for
home use is assumed to be producing an annual rate of return of at least six
percent;
(c) employment-related
property, such as tools or equipment; the applicant or recipient must provide a
statement from their employer to establish that tools or equipment are required
for continued employment when the applicant or recipient leaves the
institution; if the applicant or recipient is self-employed, only those tools
normally required to perform the job adequately are excluded; the applicant or
recipient must obtain a statement from someone in the same line of
self-employment to establish what is excludable.
H.
Vehicle exclusion: The term
"vehicle" includes any mode of transportation such as a passenger car, truck or
special vehicle. Included in this definition are vehicles which are
unregistered, inoperable, or in need of repair. Vehicles used solely for
purposes other than transportation, such as disassembly to resell parts, racing
or as an antique, are not included in this definition. Recreational vehicles
and boats are classified as personal effects and are evaluated under the
household goods and personal effects exclusion. One vehicle is totally excluded
if regardless of value if it is used for transportation for the applicant or
recipient or a member of their household. Any other automobiles are considered
to be non-liquid resources. Equity in the other automobiles is counted as a
resource.
I.
Life insurance
exclusion: The value of life insurance policies is not considered a
countable resource if the total cumulative face value of all policies owned by
the applicant or recipient does not exceed $1,500. A policy is considered to be
"owned" by the applicant or recipient if the applicant or recipient is the only
one who can surrender the policy for cash.
(1)
Consideration of burial insurance and term insurance: Burial
insurance and term insurance are not considered when computing the cumulative
face value because this insurance is redeemable only upon death.
(2)
Calculation when value exceeds
limit: If the total cumulative face value of all countable life
insurance policies owned by the applicant or recipient exceeds $1,500, the ISD
caseworker:
(a) verifies the total cash
surrender value of all policies and considers the total amount a countable
resource;
(b) informs the applicant
or recipient that the insurance policies can be converted to term insurance or
ordinary life insurance of lower face value at their option, if the cash
surrender value, alone or in combination with other countable resources,
exceeds the resource standard.
J. Qualified State Long-term Care Insurance
Partnership (QSLTCIP) program: A resource exclusion equal to the amount of the
qualified long-term care insurance benefit payments is made to or on the behalf
of the applicant or recipient as determined during their eligibility process.
(1) In order to be considered a QSLTCIP
policy it must meet the requirements set forth in 1917(a) of the Social
Security Act.
(2) The applicant or
recipient:
(a) must have been a beneficiary
of a QSLTCIP that was purchased on or after August 15, 2015; or
(b) must have a QSLTCIP policy established in
another state with a CMS approved state plan for state long-term care insurance
partnerships and the beneficiary must have been a resident of such a state on
the date the policy was purchased; or
(c) must be a current New Mexico resident and
after August 14, 2015 have purchased a long-term care policy that was converted
to a QSLTCIP through an endorsement, exchange, or rider.
(3) Long-term care insurance does not qualify
as a QSLTCIP.
(4) Resources
excluded in the amount of benefits paid out are also excluded in the estate
recovery process.
(5) Resources can
be designated for protection when a MAP category of eligibility for either
institutional care services or home and community based services is
established, while receiving MAD benefits provided through institutional care
or home and community based waiver programs, or during the estate recovery
process after a recipient dies.
(6)
An applicant or recipient may protect assets up to the amount of QSLTCIP
benefit payments made to or on the behalf of an applicant or recipient; this is
the eligible applicant or recipient's protected asset limit (PAL). If the value
of protected assets exceeds the PAL, the excess value is counted against the
asset limit and is not protected in estate recovery.
(7) The following conditions may apply to
assets protected under a QSLTCIP:
(a) an
applicant or recipient may keep protected resources;
(b) the value of protected assets is updated
each year at the MAP eligibility review; the updated value is the counted
towards the PAL;
(c) an applicant
or recipient may transfer a protected asset to another person without a
transfer penalty; a transferred asset is counted against the PAL based on the
value of the asset on the day it was transferred;
(d) an applicant or recipient may use a
protected asset to obtain another protected asset, which then becomes the
protected asset;
(e) an applicant
or recipient can spend or deplete a protected asset; the asset continues to be
protected and is counted against the PAL even though the applicant or recipient
no longer has it;
(f) once an asset
is officially designated for protection, it cannot be undesignated in favor of
designating another asset;
(g)
changes in the status of protected assets must be reported at the recipient's
annual re-determination for MAP eligibility; some examples of changes are
transferring, spending, depleting, or replacing an asset; and
(h) new countable assets that are reported
in-between MAP eligibility renewals must be evaluated when reported to
determine if they can be protected under the QSLTCIP program's PAL;
(i) the following assets cannot be protected
under the QSLTCIP program and must be made available after the death of the
recipient to reimburse HSD up to the amount of the paid MAD benefits on the
deceased recipient behalf;
(i) special and or
supplemental needs, pooled charitable trusts, irrevocable trusts with a
reversionary state interest, or income diversion trusts; and
(ii) annuity interest where HSD has been
named a reminder beneficiary.
(8) Unused asset protection may result
because all available asset protection was not used at the time of designation
or when an applicant or recipient PAL has increased because the applicant or
recipient continues to receive benefits from a QSLTCIP while receiving MAD
benefits.
(9) Unused asset
protection will automatically apply to protect assets already officially
indicated for protection when the value of the asset has increased and there is
unused asset protection.
(10)
Unused asset protection may also be used to more fully cover an asset that is
only partially protected, protect additional assets that have become available
during a recipient's lifetime, or to protect assets in a recipient's estate
after they die.
K.
Produce for home consumption exclusion: The value of produce for
home consumption is totally excluded.
L.
Exclusion of settlement payments
from the federal department of housing and urban development: Payments
from the department of housing and urban development (HUD) as defined in
Underwood v. Harris are excluded as income and resources.
These one-time payments were made in the spring of 1980 to certain eligible
tenants of subsidized housing (Section 236 of the National Housing Act).
(1)
Segregation of payment: To
be excluded as a resource, payments retained by an applicant or recipient must
be kept separate; these payments must not be combined with any other countable
resources.
(2)
Income from
segregated funds: Interest or dividend income received from segregated
payment funds is not excluded from income, or, if retained, is not an excluded
resource; this interest or dividend income must be kept separate from
excludable payment funds.
M.
Lump sum payments exclusion:
SSI and social security lump sum payments for retroactive periods are excluded
as countable resources for nine months after the month in which they are
received. See Subsection B of
8.281.500.15
NMAC for instructions regarding SSI and social security lump sums which are
placed into the ownership of a MAD qualifying trust. Social security lump sum
payments are considered infrequent income. See Subsection C of
8.281.500.19
NMAC.
N.
Home replacement
exclusion: The proceeds from a reverse mortgage from the sale of an
excluded home is excluded. Additionally, the value of a promissory note or
similar installment sales contract which constitutes proceeds from the sale of
an excluded home is excluded from countable resources if all of the following
conditions are met:
(1) the note results from
the sale of the applicant's or recipient's home as described in Subsection E of
8.281.500.13 NMAC;
(2) within three
months of receipt (execution) of the note, the applicant or recipient purchases
a replacement home which meets the definition of a home in Subsection E of
8.281.500.13 NMAC;
(3) all
note-generated proceeds are reinvested in the replacement home within three
months of receipt;
(4)
additional exclusions: in addition to excluding the value of the
note itself, the down payment received from the sale of the former home, as
well as that portion of any installment amount constituting payment on the
principal are also excluded from countable resources;
(5)
failure to purchase another
excluded home timely: if the applicant or recipient does not purchase
another home which can be excluded under the provisions of Subsection E of
8.281.500.13 NMAC and the following paragraphs within three months, the value
of the promissory note or similar sales contract received from the sale of an
excluded home becomes a countable resource as of the first moment of the first
day of the month following the month the note is executed; if the applicant or
recipient purchases a replacement home after the expiration of the three month
period, the value of the promissory note or similar installment sales contract
becomes an excluded resource effective the month following the month of
purchase of the replacement home provided that all other proceeds are fully and
timely reinvested;
(6)
failure to reinvest proceeds timely: if the proceeds from the sale
of an excluded home under a promissory note or similar installment sales
contract are not reinvested fully within three months of receipt in a
replacement home, the following resources become countable as of the first
moment of the first day of the month following receipt of the payment:
(a) the fair market value of the
note;
(b) the portion of the
proceeds, retained by the applicant or recipient which was not timely
reinvested;
(c) the fair market
value of the note remains a countable resource until the first moment of the
first day of the month following the receipt of proceeds that are fully and
timely reinvested in the replacement home; failure to reinvest proceeds for a
period of time does not permanently preclude exclusion of the promissory note
or installment sales contract; however, previously received proceeds that were
not timely reinvested remain countable resources to the extent they are
retained;
(7)
interest payments: if interest is received as part of an
installment payment resulting from the sale of an excluded home under a
promissory note or similar installment sales contract, the interest payments
are considered countable unearned income in accordance with Subsection A of
8.281.500.19
NMAC;
(8)
when the home
replacement exclusion does not apply: if the home replacement exclusion
does not apply, the market value of a promissory note or sales contract as well
as the portion of the payment received on the principal are considered
countable resources.
O.
Household goods and personal effects exclusion: Household goods
and personal effects are excluded if they meet one of the following four
criteria:
(1) items of personal property,
found in or near the home, which are used on a regular basis; items may include
but are not limited to furniture, appliances, recreational vehicles (i.e. boats
and RVs), electronic equipment (i.e. computers and television sets), and
carpeting;
(2) items needed by the
householder for maintenance, use and occupancy of the premises as a home; items
may include but are not limited to cooking and eating utensils, dishes,
appliances, tools, and furniture;
(3) items of personal property ordinarily
worn or carried by the applicant or recipient; items may include but are not
limited to clothing, shoes, bags, luggage, personal jewelry including wedding
and engagement rings, and personal care items;
(4) items otherwise having an intimate
relation to the applicant or recipient; items may include but are not limited
to prosthetic devices, educational or recreational items such as books or
musical instruments, items of cultural or religious significance to an
applicant or recipient; or items required because of an applicant or recipient
impairment.
