Adult Medicaid Manual MA-2230 FINANCIAL RESOURCES

VII. REAL PROPERTY ASSETS

Real property consists of land and any attachments such as dwellings and other buildings. Property other than the home site may be a countable resource unless it can be excluded for one of the reasons in VII.A. below. Please review the following for definitions of types of ownership and property interest.

Single Ownership - Property owned by one individual

Tenancy-By-Entirety - Property owned jointly by husband and wife

Most property owned by a husband and wife is held by them as tenants-by-the-entirety. If the conveyance of the property is made to the couple during the marriage, they hold the property as tenants-by-the-entirety even if it is not specifically stated in the deed. If the couple divorces, the tenancy-by-the-entirety is dissolved and the former spouses become tenants-in-common of the property and either person can market his half-share. Legal separation does not dissolve tenancy-by-the-entirety.

Tenancy-In-Common - Property owned jointly by two or more individuals who generally are not husband and wife. Property owned by 2 or more persons who generally are not married to one another or given to 2 or more persons by gift, will, or by intestate succession is held as tenancy-in-common. These related or unrelated persons have an undivided fractional interest in the whole property for the duration of the tenancy. An individual owner may sell or give his individual interest in the property to another without the consent and participation of the other owners, and he may file suit with the court for partition of the property.

Though property owned jointly by husband and wife is owned by tenancy-by-entirety, a legally binding agreement can be made that creates tenancy-in-common between husband and wife.

Life Estate Interest

An individual may transfer his property to another and retain certain rights in the property, such as the right of possession and use of the property, the right to obtain profits from the property, and the right to sell his life estate interest for his lifetime. Its duration is measured by the lifetime of the tenant or of another person, or by the occurrence of some specific event, such as remarriage of the tenant. The contract establishing the life estate may restrain one or more rights of the individual. He does not have title to the property, and he does not have the right to sell the property.

Remainder Interest

Upon the death or occurrence of a previously designated specific event of the life estate holder, the remainder interest holder ("remainder man") will hold full title in fee simple. An owner of real property may designate several individuals as remainder men who would hold ownership in common by will or agreement. The remainder man can generally sell his remainder interest in the property during the life estate holder's tenancy.

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(VII)

Fee Simple Interest

The owner(s) who hold(s) a fee simple title to the property has no restrictions or limitations on that ownership. The owner(s) may sell or transfer the ownership interest without time conditions imposed by others.

Dower rights

A type of life estate interest once granted to a widow in her husband's real property. If the a/r has a dower interest in real property it is probably life estate only. If questionable, consult with county attorney.

Property agreement

A pledge, or security of a particular property, for the payment of a debt or the performance of some other obligation within a specified time. On real property usually called mortgage, land contract, deed of trust, or promissory note. On personal property known as, chattel mortgages.

A. Non-Countable Real Property

Exclude the following when determining countable resources:

1. The Home site - equity of the home site used as the a/r principal place of residence is not counted. An a/r can have only one home site exclusion.

a. The home site is any property in which the a/r or financially responsible person has an ownership interest and which is used as his principal place of residence.

b. The home site may be either real or personal property, fixed or mobile, and located on land or water (i.e. motor home, houseboat).

NOTE: If the a/r requests institutional services, see MA-2242, Home Equity Value & Eligibility For Institutional Services.

c. Do not count the value of the home site if one of the following is true:

(1) It is the a/r’s (or financially responsible person’s) principal place of residence.

(2) The a/r (or financially responsible person) is not currently living in the home, but his legal spouse or his dependent relative lives there, regardless of whether the spouse or dependent relative lived there when the a/r left the home.

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(VII.A.1.c.(2))

(a) Dependency may be of any kind. The relative may depend on the a/r for housing, financial support, food, clothing etc. Accept the a/r’s statement or if the a/r is unable to state his intent, the written statement of his representative (guardian, power of attorney, spouse, or Medicaid representative as defined in MA-2301, Conducting a Face-to-Face Interview, II.B.) regarding who lives in the home and their dependency.

(b) Relative means the following:

1) Natural child, adopted child, stepchild, grandchild;

2) Parent, stepparent, grandparent;

3) Aunt, uncle, niece, nephew;

4) Brother, sister, stepbrother, stepsister, half-brother, half-sister;

5) Cousin, or

6) In-law.

(c) The written statement must specify:

1) Who lives in the home,

2) How they are related, and

3) How the person is dependent on him.

Complete the DMA-5160, Statement of Spouse or Dependent Relative in The Home, and file the completed and signed form in the Medicaid case record.

(3) The a/r (or financially responsible person), spouse, or dependent relative does not live in the home, but the a/r (or financially responsible person) states in writing his subjective intent to return home. The term “subjective intent” means that it is his intent, regardless of the circumstances of his absence from the home, to return home.) If the a/r is unable to state his intent, obtain the written statement of his representative (guardian, power of attorney, spouse, or Medicaid representative as defined in MA-2301, Conducting a Face-to-Face Interview, II.B.).

d. If an a/r (or financially responsible person) has left his home and it is not excluded under VII.A.1.c., it ceases to be his home site the month after he leaves the home. It remains the home site during the month he leaves.

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(VII.A.1.(2))

e. Once ownership is established by the a/r or financially responsible person in a new principal place of residence, the former principal place of residence becomes non-home site property.

f. Temporary Absence from the Home by the Spouse or Dependent Relative

The home site remains excluded if the spouse or dependent relative is out of the home but intends to return. (See VII.A.1.c.(3) and VII.A.2.)

g. Exclude the home site when the home is damaged or destroyed by disaster and the a/r intends to repair/rebuild and return. Accept his statement of intent to repair/rebuild and return.

h. Home site out of state – Exclude the home site of a person who is in North Carolina with North Carolina residence (For example he is here for employment purposes, in an nursing facility or staying with a family member for an indefinite period of time.) if any one of the criteria in VII.A.1.c. is met.

2. Intent to Return Home

NOTE: Refer to MA-2242, Home Equity Value & Eligibility For Institutional Services.

Do not count the value of property that was the a/r’s home site if he states his subjective intent to return to the home. (The term “subjective intent” means that it is his intent, regardless of the circumstances of his absence from the home, to return home.) Do not consider other factors, such as the a/r’s age or physical condition, condition of the home or whether it is currently rented, or other circumstances when determining intent to return home. If he is mentally competent, age and physical condition are not factors in evaluating intent. The time of return may be indefinite, and there is no time limit on this exclusion. (See c. below if the a/r is unable to make a statement or makes a self-contradictory statement.)

a. Verify at application and each redetermination the a/r’s intent to return home. Use the DMA-5159, Statement of Intent to Return Home. File the completed and signed form in the Medicaid case record.

Always accept the a/r’s statement unless it is self-contradictory or the a/r has been determined legally incompetent. If the statement is self-contradictory or the a/r is incompetent, refer to c. below.

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(VII.A.2.)

b. If the a/r is competent and his statement is not self-contradictory, the statement supersedes all other statements made by any other individuals. Do not request statements of others as to the a/r’s intent and ignore any that are volunteered.

c. If the a/r’s statement is self-contradictory, he is legally incompetent, or if he is unable to make a statement, obtain the signed statement (See VII.A.2.a.) from his representative (guardian, power of attorney, spouse, or Medicaid representative as defined in MA-2301, Conducting a Face-to-Face Interview, II.B.), as to the a/r’s intent to return home.

Examples of self-contradictory statements:

“Sometimes I want to go home and sometimes I don’t.”

“I intend to go home, but I want to stay here.”

“Yes, I want to go home, but I really don’t know if I should.”

3. Property Contiguous to the Home site – All or some of the tax value of property contiguous to the home site and the buildings located on that property, regardless of value, is excluded.

a. Contiguous means a shared boundary.

(1) Contiguous property is real property with boundaries that touch the principal place of residence.

(2) The presence of streets, roads, lakes, rivers, or streams is to be disregarded in determining whether property is contiguous.

b. If the a/r or financially responsible person has an ownership interest in the principal place of residence, the value of all contiguous property is excluded from countable resources. This is part of his home site and is excluded from countable resources as such.

c. If the a/r or financially responsible person has no ownership interest in the principal place of residence but does have ownership in the contiguous property, exclude up to $12,000.00 in the tax value of contiguous property. Refer to VII.B.1. below, to determine that portion that is countable. This exclusion is separate and apart from the home site exclusion.

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(VII.A.)

4. Non-Countable Ownership Interests

Do not count the following types of ownership interest in real property:

a. Life estate interest in real property.

NOTE: Income produced from a life estate is countable to the life estate holder regardless of who receives the income.

b. Remainder interest if there is more than one remainder holder, unless the remainder interest is owned by a married couple as tenancy by the entirety.

c. Tenancy-in-common ownership in real property, including tenancy-in-common remainder interest. (Refer to MA-2240, Transfer of Assets, for possible sanctions resulting from a transfer of tenancy-in-common interest in real property.)

5. Non-Home site Property Which Meets Current Use Requirements

Property that meets the home site exclusions in VII.A.1., 2., 3. does not have to meet the current use requirements.

If “currently in use” for certain purposes, property may be excluded.

a. If the non-business property produces a net annual income of at least 6% of its equity, as calculated by the 6% test in Item IX., exclude up to $6,000 in its equity. The 6% income requirement may be waived if the lower return is for reasons beyond the a/r’s control. (See IX.H.2.)

Non-business property cannot be made income-producing for a period of time which has already passed if there was no prior arrangement.

Real property that is excluded as the home (See VII.A.1., 2., and 3.) or that is otherwise excluded, may produce income. However, it is not subject to the 6% income test.

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(VII.A.5.)

b. Property Used in Trade or Business (e.g. a family farm)

The property is excluded if actively involved in a trade or business regardless of value and amount of profit. However, it must be in current use as trade or business property or, if not in use for reasons beyond the individual’s control, there must be a reasonable expectation that the required use will resume (Refer to VII.A.5.d.). The property maybe excluded if used in trade or business when:

(1) Active involvement exists—the a/r or financially responsible person must be actively involved in the business operation on a day to day basis. The information reported on the Schedule E, Supplemental Income and Loss, should be checked to determine whether the individual is actively engaged in the business. If the income is listed as Non-Passive Income (27k), the individual is actively engaged in the business. If it is listed as Passive Income (27h), he is not actively engaged in the business.

(2) Consider the following when determining if a trade or business exists in newly formed LLC’s and/or questionable situations:

(a) Does the IRS regard it as a trade or business?

(b) Does the individual have documents to support the claim of trade or business? Examples include tax reports/returns SS-4.

(c) Does the individual have business licenses, permits, registration?

(d) Is the individual a member of a business or trade association?

(e) The good faith intention of making a profit or producing income.

(f) Continuity of operations, repetition of transactions, or regularity of activities.

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(VII.A.5.b.(2))

(g) Regular occupation.

(h) Holding out to others as being engaged in the selling of goods or services.

(3) Verification

Obtain a copy of the business tax return (i.e., Form 1040 and the appropriate Schedules) for the tax year prior to the application or redetermination. If the current tax return is not available, obtain a copy of the latest tax return or business records. Obtain the a/r’s statement describing the trade or business, business assets and the number of years in business.

c. Property Used to Produce Goods/Services for Home Consumption

Exclude up to $6,000 equity in non-business real or personal property used to produce goods or services solely for home consumption (i.e. land or equipment used to produce vegetables or livestock solely for home consumption). There is no requirement that the property produce a certain rate of return.

(1) The equity is the tax value less any encumbrances on the property.

(2) From the equity, deduct $6,000. The remainder is a countable resource.

This $6,000 exclusion is separate and apart from the $6,000 exclusion of non-business income producing property that produces a net annual income of 6% of its equity.

EXAMPLE: A/r owns 10 acres and uses 1 acre and a tractor to grow food - exclude the tractor and one acre in determining the equity value. The equity value in the acre is $3,000, and the equity in the tractor is $1,500. The total equity is $5,500, which is less than $6,000. The equity of the acre and the tractor is excluded.

d. Property Which Does Not Meet Current Use Requirements

Exclude property which does not meet current use requirements in a.-c. above if:

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(VII.A.5.d.)

(1) It has been in use within 12 months, and

(2) That use will resume within 12 months.

6. Burial Spaces

Burial spaces include grave sites, crypts, mausoleums, urns, or other repositories customarily used for the remains of a deceased person.

Exclude the value of all burial spaces owned by the a/r or person financially responsible for the a/r in determining eligibility for MAABD, MQB-Q, MQB-B, MQB-E, and MWD.

7. Rights of Use

The a/r or financially responsible spouse/parent(s) may own rights of use in non-business real property. Rights of use are tied to land or the natural resources of land and may have countable value separate from the land.

Exclude $6,000 in equity of the right of use, if owned separately from the land by the a/r if it meets the 6% income producing criteria.

NOTE: Land is also income-producing if the a/r owns the land and rents or leases a right of use which produces net income. Up to $6,000 in equity in the land is excluded if it produces a net annual income of at least 6% of its equity based on criteria in Item IX.

Types of rights of use:

a. Mineral Rights – ownership interest in certain natural resources, such as coal, oil, sulfur, gas, etc., coming from the ground.

b. Timber Rights – ownership of timber growing on land, with or without ownership of the surface of the land.

c. Hunting or fishing rights

d. For every one acre of a farm’s tobacco allotment, two acres of cleared land are tied to the tobacco allotment.

EXAMPLE: Farmer allotted 5 acres of tobacco. Farmer must have 10 (2X5) acres of cleared land.

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(VII.A.7.)

e. The a/r may provide verification from the Tobacco Transition Payment Program of a different number of acres than the common 2:1 ratio.

f. Exclude up to $6,000 of equity in real property that is tied to a tobacco allotment (not already excluded due to being contiguous to the home site) if

(1) The allotment is rented to another individual, and

(2) The income produced by the tobacco allotment produces a net annual income of 6% of the equity in the acreage tied to the allotment. Refer to IX. below for determining if the property meets the 6% income test.

g. If an individual rents his tobacco allotment to someone else, consider the rental payment as annual rental income. Prorate for 12 months to determine monthly income.

8. The Tobacco Transition Payment Program (TTPP)

On October 22, 2004, Congress enacted the “Fair and Equitable Tobacco Reform Act of 2004” which repealed the tobacco quota system for certain types of tobacco grown in the United States and provides for compensating tobacco quota owners and quota growers with the value of lost quota. USDA established the Tobacco Transition Payment Program (TTPP), also known as the Tobacco Buy-Out. TTPP allowed eligible quota owners and quota growers who apply for the program to receive annual installment payments over a 10 year period (2005-2014) as compensation.

The TTPP does not provide a lump sum payment instead of the installment payments, however effective October 14, 2005, it allows the quota owner/grower to enter into an assignment or successor-in-interest contract with an approved financial institution and receive a discounted cash payment in exchange for the installment payments. The successor-in-interest option to sell to a family member was effective March 20, 2006.

Note: An individual could have multiple contracts if he owned quota or grew eligible tobacco in different counties.

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(VII.A.8.)

Follow these procedures for the quota owners/growers participating in the TTPP:

a. Determine if the balance of the tobacco allotment contract can be sold to an approved financial institution for a lump sum cash payment. Contact one of the approved financial institutions listed on the National Tobacco Processing Center Participant List website at: http://www.fsa.usda.gov/Internet/FSA_File/siimasterlist2007.pdf and document the following.

(1) Quota Type, Grower or Owner

(2) Name of TTPP Contract Holder

(3) Financial Institution Contacted

(4) Date of Contact

(5) Name/Title of Individual Contacted

(6) Telephone Number

(7) Outcome- Whether Contract is Salable or Not Salable

The caseworker must document this information on the DMA-5030, Reserve History Sheet.

b. Once the balance of the allotment contract is verified as salable to an approved financial institution, the remaining discounted contract value is counted as a resource.

(1) Determine the cash value of the TTPP contract by completing the following steps:

(a) Does the quota holder have a copy of the Commodity Credit Corporation, CCC-960 document? If yes, using their CCC-960 document, verify his eligibility for the installment payments, whether the quota holder is a quota owner or a quota grower, and the total remaining amount payable in installment payments.

If no, contact the local USDA office to obtain the pertinent information. A list of the local USDA offices is available at www.fsa.usda.gov. Click on “contact us” in the tool bar. On the next screen, scroll down to the heading, “County Offices” and click on “Locate the Service Center closest to you.”

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(VII.A.8.b.(1))

(b) Subtract from the total (10 year) amount due in installment payments the amount for all installment payments that the quota holder has already received or has assigned to a third party.

(c) Apply the current month CCC maximum discount rate in effect to the installment payment balance remaining on the USDA contract. To obtain the monthly discount rate for each month in the current year, go to the USDA’s website at www.fsa.usda.gov. On the home page, click on “more” to the right of “News Releases: and scroll down to find the specific monthly release entitled, “USDA Announces CCC Lending Rates for (select month needed). To find monthly rates for previous years, on the home page enter the year in the “View News Releases by Year” field, and scroll down to the specific monthly release. Click on the item to open it.

(d) To compute the discounted amount, subtract the CCC discount rate for the current month from 100 percent. Multiply the total amount due in installment payments times the remaining percentage.

Example:

Ms. Jade applied for Medicaid on 09/15/2008. During the interview, she provided a copy of her CCC-960 document, indicating a notification date of 01/04/2005, and states she has 6 installment payments remaining since she has received 4 payments. The contract total is for $8,888.00. $8,888.00 divided by 10 payments equal $888.00 per payment. She has already received 4 payments totaling $3552.00. $8,888.00 minus $3552.00 equals $5,336.00 total for the remaining payments. The worker checks the USDA website for the current CCC maximum discount rate and determines it is 10 percent. 100 percent – 10 percent = 90 percent. The worker then multiplies $5,336.00 by .9 to determine the current resource value for the TTPP contract. $5,336.00 x .9 = $4,802.40.

c. If the balance of the allotment contract for a tobacco quota owner has been verified as non-salable to an approved financial institution for a lump sum payment:

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(VII.A.8.c.)

(1) The annual payments received by the quota owner are counted as annual unearned income for the year in which they are received.

(2) The annual payments received by the quota grower are counted as annual self-employment income in each year of receipt. Refer to MA-2250, Income.

d. If you verify that the balance of the allotment contract has been sold to an approved financial institution by a tobacco quota owner, this is considered a conversion of a resource in the transaction month. If there is any cash payment remaining in the following month it is a countable resource.

Any cash payment received from entering into an assignment or successor-in interest contract with an approved financial institution by a tobacco quota grower or those who rent the land is considered net earned self-employment income for the year in which the assignment or contract was completed. Refer to MA-2250, Income.

Since each contract must meet the TTPP guidelines, the cash received is considered fair market value for the installment payments, and would not require an evaluation for a Transfer of Assets.

Follow these steps for tobacco quota owners/growers who have entered into an assignment or completed a successor-in-interest contract to receive lump sum cash payment from an approved financial institution for the tobacco transition installment payments.

(1) Verify that the Commodity Credit Corporation approved the assignment by obtaining a copy of CCC assignment form from the a/r or financially responsible person or by contacting the local USDA office. To verify a successor-in-interest contract, if a copy is not available from the a/r or financially responsible person, contact the National Tobacco Processing center at 1-800-673-2331.

(2) Determine the parties involved, the amount assigned, and obtain a copy of the third party agreement between the a/r or financially responsible person and the financial institution to verify the amount and when the cash payment was received.

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(VII.A.8. (2))

e. The TTPP does not apply the maximum discount rate to contracts made between a participating quota owner/grower with family members, transfers upon death of a tobacco quota owner or grower, individuals who entered into an assignment or successor-in-interest contract prior to 10/22/2004, and one year contracts made with TTPP approved financial institutions. Evaluate for a potential Transfer of Assets using fair market value. Refer to MA-2240, Transfer of Assets.

f. For an assignment contract made with a third party in exchange for other property, the property obtained is a conversion of a resource in the month

the contract is completed, and becomes the new resource as of the first moment of the month following the assignment month. Refer to MA-2240, Transfer of Assets, as a sanction may apply.

9. Uncleared Land, Woodlands, Forests

Exclude up to $6,000 in equity as income-producing if the property meets the 6% net income criteria in Item IX. and:

a. The a/r has a written contract to sell the timber on a specified date,

AND

b. The a/r can produce documentation that the timber is cut on a regular basis. Examples of such evidence include but are not limited to:

(1) Old contracts for cutting/sale of timber, or

(2) Evidence of purchase of seedlings for replanting of cut timberland, or

(3) Statements of forest service personnel or other such officials that the individual is engaged in tree farming.

10. Property Agreements/Promissory Notes

Exclude the value of any property agreement which is not legally negotiable (cannot be sold). This includes promissory notes, loan agreements, etc. (Refer to MA-2240 Transfer of Assets, IX.C.)

a. Examine the terms of the agreement or note to determine if the owner has the legal right to sell his interest without the participation of the buyer/borrower. If salable, the note is a countable resource.

b. If there is a clause which prevents sale or transfer of the note, it is not a countable resource.

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(VII.A. 10)

c. Contact the agency/county attorney for assistance if negotiability cannot be determined from the terms of the agreement.

d. Count any payments as unearned income.

B. Countable Real Property

The following are countable resources:

1. Property Contiguous to the Principal Place of Residence

a. When the a/r or financially responsible person has no ownership interest in the principal place of residence but does have ownership interest in contiguous property, count the tax value of contiguous property in excess of $12,000.

FOR EXAMPLE: An applicant lives in the home of his son. His son owns the house and lot. The applicant owns the lot next to his son. The applicant’s lot has a tax value of $30,000. Exclude up to $12,000 in tax value of the applicant’s lot. The remaining tax value, $18,000, is a countable asset unless otherwise excluded. Refer to VII.A. for exclusions.

b. Property contiguous to the principal place of residence with a tax value of $12,000 or less is excluded.

2. Former Home site

a. Count the former home site as a resource when it can no longer be excluded for reasons listed in A.1., above or cannot be excluded as income producing property.

b. Transfer of home site or former home site

Transfer of a home site or former home site, even after it is made income producing, may result in a sanction for transfer of assets if the a/r or ar’s spouse is requesting or receiving assistance with institutional services or in-home health services and supplies after institutional care. Refer to MA-2240, Transfer of Assets.

3. Non-home site Property

a. Count the value of non-home site real property owned solely by the a/r or financially responsible spouse or parent, unless it meets current use requirements in VII.A.5. above. Refer to MA-2260, Financial Eligibility Regulations – PLA, for procedures to deem resources from a parent to a child a/r.

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(VII.B.3.)

b. If a single owner dies without leaving a will, property may be unavailable to a spouse until released by the clerk of court. See item IV.C.1.

4. Remainder Interest in Real Property

a. Count the remainder interest in real property. A remainder interest in real property is created when a person owns real property but another individual retains the right to use the property for the remainder of his life (a life estate). The person to whom the property was transferred has a remainder interest in the property. Refer to VII above, for definitions of types of property interest.

b. To determine the value of a remainder interest, multiply the total tax value of the real property on the date the life estate is transferred by the Remainder % from the Life Estate and Remainder Interest Tables, based on the age of the individual whose life determines the length of the life estate. The resulting amount is the tax value of the remainder interest. Refer to https://secure.ssa.gov/poms.nsf/lnx/0501140120

5. Unused Tobacco Allotment

Count the value of the land if the allotment is not being used, unless it can be excluded another way.

6. Time Shares

a. A time share is the right to use property, such as a resort property, for a specific time period, usually no more than a few weeks.

b. A time share interest is a fee simple property interest.

c. If the time share is an available asset, it is countable as a resource. If there is an individual deed to the property, it is considered available. Obtain a copy of the deed.

d. Count 15% of the purchase price as the established value.

7. Salable Property Agreement/Promissory Note

A property agreement (usually a promissory note) which can be sold is a countable resource. (Refer to MA-2240, Transfer of Assets, IX.C.)

a. Count the balance due on the note as an available resource.

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(VII.B.7.)

b. The a/r may rebut the value of the agreement. See procedures in VII.E. below.

C. Verify Ownership of Real Property

During the interview question the a/r about real property. Use the Resource Interview Guide, located at http://www.ncdhhs.gov/dma/county/medicaidtraining.htm.

Search the following county records. Document the description and tax value of all property listed:

1. County tax listings – Check tax listings as follows:

a. At every application; and

b. Redeterminations – check tax listings once per year (in the first redetermination of the year) and at the first redetermination which follows an increase in tax rates or property values.

2. Grantee/Grantor books - Registrar of Deeds

a. Check at application.

b. Redeterminations

(1) PLA – Check annually. At every other review, ask if property has been given or received since the date of the last Grantee/Grantor check and obtain verification, if needed. Document the change/transfer on the Reserve History Sheet.

(2) LTC – Check at each review. Check at change in situation from PLA to LTC. Determine if any property has been transferred to or from the a/r or the financially responsible person since the last tax listing.

c. Search under the names of all financially responsible persons and their parents and spouses, particularly if deceased. Check in the county where the person last lived and check variations of names, (i.e. John Doe for Jon Doe).

d. Check Clerk of Court records for recorded wills or probated estate files if a budget unit member has died or if the budget unit member is a possible heir.

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(VII.C.)

3. Copy of the Deed – Verify ownership interest in real property by a copy of the deed. A deed does not have to be registered or notarized to be valid. It must be signed by the grantor, delivered, and accepted by the grantee. However, a deed of gift must be registered within two years of the date the deed is signed to remain valid.

4. Look for the following leads that ownership interest may exist in the eligibility record: copies of wills, tax bill or statement, evidence of judgments, liens, or boundary disputes.

D. Calculate the Value of Real Property to Include in Resource Total

Calculate the value of all property which is not excluded from the resource determination process.

1. Determine the Current Market Value

a. Verify and record tax value of real property by using county tax office records. For Medicaid determinations, the tax value is the current market value (CMV), unless rebutted according to VII.E.

b. Deduction for Individual Over Age 65 - If the person was age 65 or older, or permanently disabled on January 1 of the current tax year, county tax offices make a deduction from the assessed value before taxes are computed. For resources, the tax assessed value, before any such deduction, is the CMV.

2. Verify Encumbrances

For property that is not excluded, verify encumbrances by written or verbal statement of the creditor. Also, verify encumbrances for income producing property when determining if it meets 6% requirement. See Section IX.

a. Encumbrances reduce the a/r’s equity in a countable asset. Examples of encumbrances are:

(1) Liens and mortgages by banks or loan companies,

(2) Lien by a hospital, nursing home or other medical provider. Must specifically identify the asset which is attached and there must be an outstanding bill for a/r. County dss must see lien.

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(VII.D.2.)

b. It is the a/r’s responsibility to provide a dated, signed written statement or provide the name of creditor, loan number, or other information necessary to verify encumbrances.

c. Verify the amount needed to pay off the mortgage or lien as of the date of the verification, rather than the sum of the remaining payments.

d. Remainder Interest - Multiply any amount needed to pay off the mortgage/lien on the property by the Remainder % from the Life Estate and Remainder Interest Tables, based on the age of the life estate holder. (If there is more than one life estate holder, use the age of the youngest life estate holder.) Deduct this amount from the value obtained in VII.B.4.b. to establish equity. Refer to the chart at, https://secure.ssa.gov/poms.nsf/lnx/0501140120

3. Deduct Encumbrances

Subtract encumbrances from the CMV of the countable property interest to arrive at countable equity.

a. Count equity in the resource total unless otherwise exempt.

b. Encumbrance on Excluded and Countable Property

If there is a single encumbrance (loan, etc.) on both excluded and countable real property:

(1) Divide the CMV of the countable property by the total CMV of everything which is mortgaged. The result is the percentage of the total encumbrance that applies to the countable property.

(2) Multiply the amount needed to pay off the mortgage by this percentage.

(3) Subtract this amount from the tax value of the countable property to determine equity.

EXAMPLE: Applicant owns two tracts of land which are mortgaged together. They are not contiguous to the home site. One tract consists of 5 acres used to produce goods and services for home consumption. It has a CMV of $13,000. The other tract is 10 uncleared acres that are not used in any way. The CMV of this property is $20,000. Mortgage pay-off amount is $15,000 on the first day of the month of application.

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(VII.D.3.b.(3))

CMV of 5 acres $13,000

CMV of 10 acres (counted) 20,000

Total CMV of encumbered land 33,000

Determine the encumbrance on the countable acres by dividing the CMV of countable acres by total CMV of encumbered land and applying the resulting percentage to the total payoff amount:

$20,000 divided by $33,000 = .606 or 61% of land is countable. (Round down if .49 or lower, round up if .50 or over).

61% of the $15,000 pay-off amount is $9,150.

CMV of countable acres; $20,000

Encumbrance on these acres -9,150

Countable equity 10,850

4. Count the Equity of Real Property

a. Determine equity for all types of interest or estate in countable real property by following steps 1. - 3. above.

b. Document verification source and amount of liens on the eligibility form.

c. Do not count the value of any property which is excluded.

d. The remaining equity in countable real property is countable resources for Medicaid. If countable assets exceed the resource limit, the value of the real property may be rebutted.

E. Rebuttal

The current market value of real property, based on its tax value (See VII.D.1.), may be rebutted by documentary evidence to establish a lesser value.

NOTE: Also follow these instructions for rebuttal of the current market value of a promissory note. (Refer to MA-2240, Transfer of Assets, IX.C.)

1. Documentary evidence is a statement from a knowledgeable source located in the same geographic area as the property. (For rebuttal of personal property, see VIII.E.)

NOTE: Geographic area is the same area as covered by local radio, television, newspaper and other media.

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(VII.E.)

2. The statement from the knowledgeable source must be written, signed and have enough information to identify the source easily. It must:

a. Be specific as to the value and the point in time for which the estimate is made,

b. Provide a reason for the value of the resource being less than the value established by the policy in this section, and

c. Include the basis for his knowledge or expertise.

3. If the statement is questionable, the county must obtain an estimate from another knowledgeable source and use the average value.

The county must use its judgment as to whether or not a statement of lesser value is questionable. It must document in the record the reason for doubting the statement. The statement may be questionable if:

a. The value of the resource provided in the statement is substantially lower (more than half) than the value determined following the policy in this section,

b. The reason given for the lower value does not seem to support the lower value,

c. The source providing the statement of a lesser value does not have experience with valuing real property in the county or surrounding counties,

d. The source providing the statement of a lesser value has an interest in the property or stands to gain from the property’s valuation, e.g. is one of the tenants-in-common, is the remainder interest holder, stands to inherit the property, etc., or

e. For other reason that causes the county to doubt the statement.

4. Examples of types of knowledgeable sources are:

a. Licensed real estate brokers;

b. Local Farm Service Agency office;

c. Local office of the Farmer’s Home Administration;

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(VII.E.4.)

d. Commercial banks, savings and loan association, mortgage companies and similar lending institutions;

e. An official of the local real property tax jurisdiction, or

f. County Agricultural Extension Service;

g. Professional appraisers;

h. For promissory notes, companies which are in the business of buying and selling promissory notes.

5. Applications

See MA-2303, Verification Requirements for Applications and MA-2304, Processing the Application, for processing time frames and requirements for providing rebuttal evidence.

6. Redeterminations

Allow a recipient twelve calendar days to provide evidence to establish a lesser value. If at the end of the 12 calendar days, he has not provided the evidence, send a timely notice proposing termination for excess resources.

7. Updating Rebuttal Evidence

a. Real property - Verify the rebuttal value in the first redetermination of the year and at the first redetermination which follows an increase in tax rates or property values. This is the same timeframe for verifying the tax value of the real property.

b. Promissory note - Verify the rebuttal value at each redetermination. This is necessary due to the potential for change for a liquid asset.