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The purpose of this section is to outline procedures for reducing resources to establish eligibility for Special Assistance. If countable resources exceed the SA limit on the first moment of the first day of the month, the a/r does not meet resource requirements until the next calendar month. The exception to this rule is if the burial exclusion is sufficient to reduce resources to the allowable limit.
The a/r may reduce resources by spending down excess liquid assets, designating certain types of resources for burial, meeting the $6,000/6% test for income-producing property, making a reasonable effort to sell excess personal or real property, and rebutting the established value of resources.
A. Reduction of Liquid Assets (Spending Down)
The a/r can reduce cash resources by paying for goods and services at fair market value that benefit the a/r (e.g., paying for room and board at an adult care home, purchasing needed items, or paying off debts).
(1) Ask a/r to provide receipts for purchases.
(2) A/R’s written statement.
(1) Determine the amount of any outstanding checks. Do not consider a check as outstanding if it is more than six months old.
(2) Evaluate whether checks were written and either mailed or delivered to the payee prior to the first moment of the verification month BUT had not cleared the bank prior to the first moment of the verification month.
(3) Once the check has cleared the bank, verify the date it cleared from the bank statement or by written or verbal contact with the bank.
(4) If available, compare the checkbook register (or check stubs) to the bank statement.
(a) Use the a/r’s checkbook register (or check stubs) to verify the:
1) Date the outstanding check was written,
2) Check number,
3) Payee of the check, and
4) Sequential order of dates and check numbers.
(b) Use the bank statement to verify that the check did not clear the bank prior to the first day of the month.
(5) If the checkbook register (or check stubs) is not available, incomplete, or the order of dates and check numbers is not clearly sequential, verify outstanding status of the check by:
(a) Written or verbal verification from the bank that a stop payment against the check has not been requested, and
(b) A signed, dated statement from the a/r (or the person who actually signed the check) which includes:
1) Check number,
2) Date the check was mailed or hand delivered,
3) Amount of the check, and
4) That the check is for payment of a valid expense.
2. Determine the countable resource amount.
a. Use the verified checking account balance.
b. Subtract verified outstanding checks from the balance.
c. Do not deduct a check written in advance for prepayment of cost of care.
d. If the a/r’s Social Security and/or SSI is direct deposited and either one or both checks are deposited early (prior to the first day of the month in which the check counts as income), deduct the early payment(s).
e. Count the remainder as the countable resource amount from the checking account.
f. It there is excess resources, and the a/r uses the account to deposit income from rental property or self-employment, deduct outstanding or future expenses incurred to produce the income using the following guidelines:
(1) Convert the gross income and expenses to a monthly amount per SA-3210, Income.
(2) Deduct from the opening balance any portion that is counted as income or can be deducted as an operational expense for the current month and any future month.
(3) Do not deduct any portion that was income or expenses for past months.
For example, the a/r receives $240/month countable rental income. His operational expense is $600/year in property taxes, which converts to $50/month. Deduct from the first moment balance the $240 income and the $50 for property taxes.
g. Document the SA case file with the countable amount and the verification of the account balance and outstanding checks.
Burial exclusion is used only when the a/r has excess countable resources. It is a method to exclude up to $1500 of otherwise countable liquid resources for burial expenses of the a/r.
a. Always ask the a/r if there are resources that are intended to be used for burial purposes.
b. Use the $1500 burial exclusion to reduce countable resources when the a/r has excess liquid resources in:
(1) A revocable burial contract for his/her burial expenses,
(2) CV of life insurance on his/her own life, or
(3) Cash/bank accounts.
c. Do not use the burial exclusion if the a/r has irrevocable burial arrangements valued at $1500 or more. Irrevocable contracts are not a countable resource but they are applied to and use up the burial exclusion.
d. If excluding $1500 of the a/r’s countable resources listed above is sufficient to reduce countable resources to the limit:
(1) Inform the a/r that liquid resources (except life insurance) designated as a burial asset cannot be excluded if commingled (held in the same account) with non-burial resources. Request proof that resources have been separated.
(2) When burial resources are no longer commingled, exclude $1,500 of the value of liquid resources for the a/r's burial expenses.
(3) Exclude the liquid resources in the burial exclusion back to the first month assistance is requested.
e. If applying the $1,500 burial exclusion does not reduce resources below the limit, resources must be reduced within the 45/60-day standard for applications. In this case, eligibility cannot begin until the month after the month in which resources are reduced.
2. Burial Exclusion Procedures
Follow the steps in this section to apply the burial exclusion. Always deduct the value of burial resources until the burial exclusion is depleted (you reach zero dollars) or all resources have been deducted. Deduct resources in the order specified in the Burial.
Burial Exclusion Guide
Deduct from the $1,500 burial exclusion: |
If the total value is more than $1,500 or more than the amount remaining in burial exclusion: |
Value of irrevocable arrangements |
Do not count excess. |
FV of life insurance when less than $1,500 . (The excludable FV changed from $10,000 to $1,500 for applications taken on after December 1, 2009). |
Reduces $1,500 exclusion but never counts. |
Value of revocable contract |
Count excess, ignore interest earned once designated and excluded at application. |
CV of life insurance (greater than $1,500 FV). (The excludable FV changed from $10,000 to $1,500 for applications taken on after December 1, 2009). |
Count excess at application, ignore increases once designated for burial. |
Cash or funds in a bank account (separately identifiable) |
Count excess. If result is excess resources, a/r must reduce resources.
|
3. Irrevocable Burial Arrangements
Follow these steps to determine if there is an irrevocable arrangement. Deduct any irrevocable burial arrangement from the $1,500 burial exclusion. If there is any amount of exclusion left, continue to the next excludable item.
a. Irrevocable Trust/Contract/Absolute Assignment
(1) Review the contract or contact the funeral home or burial company to determine the value of the plan, the name of the beneficiary and that it is irrevocable.
(2) Do not require that the contract include a listing of goods and services to be provided unless the information is needed for evaluation for transfer of resources. Refer to SA-3205 for transfer rules.
b. Irrevocable Designation of Beneficiary
(1) The designation may be made when the policy is taken out, or
(2) The beneficiary may be irrevocably changed by a rider filed with the insurance company.
(3) Verify with the insurance company that:
(a) The designation has been filed with the company,
(b) The designation is irrevocable, and
(c) The client cannot access the CV of the policy.
(4) The services purchased do not have to be selected in advance.
4. FV of Life Insurance – Recipient Eligible for and Received SA Prior to December 1, 2009 and Ongoing
The excludable FV of cash accruing life insurance changed from $10,000 to $1,500 for applications taken on after December 1, 2009. Eligibility for SA is not affected for recipients who were eligible for SA prior to December 1, 2009 and ongoing, who had cash accruing life insurance policies purchased prior to December 1, 2009, with a FV over $1,500.00, but less than $10,000.00. SA does not count the CV unless the FV exceeds $10,000.00.
For redeterminations, if a recipient is eligible for, or receiving SA prior to December 1, 2009 and ongoing, continue to exclude up to $10,000.00 FV in cash accruing life insurance purchased prior to December 1, 2009, before counting the CV.
A new Case Level Special Use code ‘LI’ (Life Insurance Face Value Over $1500) was created in EIS for the SAA and SAD programs only and is valid with ambulation capacity codes ‘B’, ‘C’, ‘E’, and ‘H’ in order to track these individuals and identify them for redeterminations and for State reporting purposes. Make certain the new Case Level Special Use code ”LI” is keyed in EIS, identifying the recipient as an SA recipient who was eligible for SA prior to December 1, 2009, with cash accruing life insurance purchased prior to December 1, 2009, with a total FV over $1,500.00 and a FV up to $10,000.00.
a. Beginning December 1, 2009, if an ongoing recipient buys cash accruing life insurance with a total FV that exceeds $1,500.00 treat it as a change in situation. Verify the available cash value and count toward the individual resource limit of $2,000.00.
b. If SA terminates and the client later reapplies for SA, beginning December 1, 2009 the applicant will be subject to the new resources policy, counting the CV of face value of all cash accruing life insurance polices if the FV exceeds $1,500.00.
After deducting irrevocable burial arrangements, if the total FV of all life insurance policies owned by the a/r does not exceed $1,500.
a. Deduct the FV of all whole life policies that insure the life of the a/r from the amount left in the a/r’s $1,500 burial exclusion.
b. FV is not a countable resource, but it must be applied to the burial exclusion.
c. Term life and burial association policies do not generally accrue CV. If they do not accrue CV, they are not a countable resource and are not deducted from burial exclusion.
d. If there is any amount of exclusion left, continue to the next excludable item.
5. Revocable Burial Arrangements
After deducting irrevocable burial arrangements and FV of non-countable life insurance, deduct the value of a revocable burial contract with a funeral home or other revocable trust or annuity established for burial expenses from the amount left in the $1,500 burial exclusion.
a. Revocable means the funds are available and can be withdrawn.
b. A revocable trust or annuity that is not limited to payment of burial expenses within the body of the agreement cannot be excluded under burial exclusion policy.
c. Deduct the value of the revocable burial arrangement from the amount left in the $1,500 burial exclusion.
d. A revocable burial trust may appreciate in value or accumulate interest.
(1) Verify the value at application. At redetermination, ignore any subsequent increase in value due to interest/accumulation of a revocable burial trust that has been excluded through burial exclusion.
(2) If the case is later terminated and the a/r reapplies, count the full value of the revocable trust in the verification month.
e. If the value of the revocable burial arrangement exceeds the amount left in the $1,500 burial exclusion:
(1) Burial exclusion is used up; AND
(2) The excess amount of the revocable arrangement counts in reserve.
f. In the record, document the amount of the revocable arrangement that was counted in resources and continue counting this amount in resources at subsequent reviews unless the revocable arrangement is changed to irrevocable.
g. If there is any amount of exclusion left, continue to the next excludable item.
6. Cash Value (CV) of Life Insurance
When total FV of all whole life policies owned by the a/r exceeds $1,500 (the excludable FV changed from $10,000 to $1,500 for applications taken on after December 1, 2009):
a. After deducting irrevocable burial arrangements, FV of non-countable insurance and revocable burial arrangements, deduct the CV of whole life policies designated for burial on the life of the individual from the amount remaining in that a/r's $1,500 burial exclusion.
b. Accept the verbal statement of the policy owner or his/her representative that the policy is designated for burial.
c. If there is any amount of exclusion left, continue to the next item.
d. If burial exclusion is used up:
(1) At application, CV which exceeds the $1,500 burial exclusion limit of a designated policy is a countable resource;
(2) At redetermination, the original amount of CV that exceeded the $1,500 burial exclusion (counted at application and not excluded as part of the $1,500 burial exclusion) continues to count in resources. However, increases in CV are ignored as long as the policy(s) is designated for burial.
Example: The a/r has one life insurance policy with FV of $13,000 and a CV at application of $3,000. The a/r stated it is intended and needed for burial expenses. There are no other resources.
$3,000 |
CV of insurance intended for burial |
-1500 |
Burial exclusion (no other burial asset) |
$1500 |
Excess counts in resources. |
At review the CV has increased to $3,500. The a/r continues to state that it is needed for burial and has acquired no other resources to be applied to the burial exclusion. Continue to count only $1,500 of CV as a countable resource. Increases in CV after SA eligibility begins are ignored.
e. An applicant may designate remaining CV for burial when there is an existing loan on the policy or it is collateral on an outstanding loan. If a new loan/cash withdrawal occurs after designation for burial, designated status is lost. That policy cannot be re-designated for burial. Any CV remaining on that policy counts in reserve at that time and in the future. Once the loan is paid off the policy can be re-designated.
f. Once an application has been dispositioned and there is a policy designated for burial expenses, any action that reduces or depletes the CV of life insurance (except to pay the premium), revokes the burial designation. Burial exclusion can no longer be applied to the policy. Stop excluding the CV when:
(1) A loan has been taken against the CV subsequent to designation; or
(2) The policy has been used as collateral subsequent to the exclusion
(3) A policy is “designated” and action is taken during the application processing period to reduce the value. Do not consider the policy as having been designated for any period of time for which eligibility is being determined.
g. Always count the CV of policies owned by the a/r, regardless of the insured, if the a/r’s total FV of all cash accruing policies exceeds $1,500. (The excludable FV changed from $10,000 to $1,500 for applications taken on after December 1, 2009).
h. A revocable change in beneficiary of an insurance policy to a funeral home does not make the CV unavailable to the a/r.
Example 1: Mr. Brown owns a whole life insurance policy with a FV of $1,500 on himself, a whole life insurance policy with a FV of $1,500 on his grandson, and a $1,000 term life (non-cash accruing) on himself. The total FV of all whole life policies owned by Mr. Brown is $11,500, which exceeds $1,500 so CV is countable. Only the CV of the a/r’s (Mr. Brown) whole life policy can be deducted from his burial exclusion. The $1,500 whole life on his grandson cannot be applied to Mr. Brown’s burial exclusion because he is not the insured. The $1,000 term life insurance policy is not applicable to burial exclusion.
Example 2: Mr. Jones has a whole life insurance policy with FV of $15,000 and no other burial resources. The current CV on the policy is $2,500. Mr. Jones has changed the beneficiary of the policy to be the local funeral home. The change is revocable. $1,500 of the CV of the designated policy can be excluded through burial exclusion, but the remaining $1,000 CV counts in resources.
7. Cash/Funds Held in a Bank Account
a. These countable liquid resources:
(1) May be used to purchase burial assets to reduce resources in any amount within the 45/60 day processing time; BUT
(2) May be excluded under burial exclusion only when $1,500 burial exclusion will reduce resources and establish eligibility.
b. If exclusion of the amount remaining in burial exclusion is enough to reduce resources:
(1) Inform the a/r of the amount of funds that can be designated for burial.
(2) Obtain a/r's written statement as to whether he intends to use the funds for burial expenses.
(3) Inform the a/r that cash funds intended for burial expenses must not be commingled with other funds.
(4) For an application, the funds must be separated and proof must be provided within the 45/60 day processing time.
(5) For a recipient, proof must be provided prior to the effective date of termination.
(a) Send a timely notice informing the recipient of the amount of excess resources.
(b) Inform the recipient that a signed statement that the funds will be designated and separated for burial expenses must be received within the 10-day notice period.
(c) Proof that action has been taken to separate the funds must be provided within 30 days of the timely notice.
(d) If proof is not received within 30 days, send an adequate notice and terminate the case.
(e) Proof must show, at a minimum that the necessary paper work was submitted to the insurance company or funeral home, or funds held in a bank are designated and separated.
c. If the applicant dies before the application is disposed, the amount of countable resources excluded for burial expenses is $1,500 regardless of the actual cost of burial. If excess funds have not been separated, burial exclusion does not apply.
d. Once cash/funds have been designated for burial, any interest accrued is not a countable resource. It is not necessary to reverify at redetermination.
8. If the amount remaining in the burial exclusion is not enough to reduce resources to the allowable limit, inform the a/r of the amount of excess resources and any other methods to reduce, including purchasing an irrevocable burial resource.
Example:
Mrs. Stanly applied on June 4 for ongoing SAA and for retroactive Medicaid benefits for May. She has one life insurance policy with FV of $1,000 and a savings account with $2,500 which she states is intended and needed for burial expenses.
$1,500 |
Burial exclusion |
- 1000 |
FV of life insurance |
$ 500 |
Amount left for burial exclusion |
$2,500 |
Liquid resources designated for burial |
- 500 |
Amount which can be excluded through burial exclusion |
$2,000 |
No excess resources |
Even though there is no excess, the applicant must separate the excess funds. Because eligibility is established using the $1,500 burial exclusion, the applicant has until the processing deadline to provide proof that at least $500 in liquid resources is separately identifiable.
C. Exclusion of Income Producing Real/Personal Property ($6,000/6% Test)
This test is used to determine if real or personal property (usually rental property) that cannot otherwise be excluded is exempt from countable resources because it is "income producing." To exclude property, it must produce a net annual income of at least 6% of its equity after all expenses related to producing the income are deducted. Any countable equity value in excess of $6,000 is countable in resources.
Even though all or a portion of property that meets the $6,000/6% rule may be excluded, the a/r is subject to a sanction if income producing property is transferred. Refer to SA-3205, Transfer of Resources.
1. Determine the Equity Value of the Property:
Tax Value - Encumbrances/liens = Equity Value.
a. Real Property Value
Tax Value - Always use the tax value when counting real property as a resource and to calculate the countable equity value.
Use the tax assessed value to determine the equity.
(1) The a/r 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.
(2) The value of the right of use, if owned by the a/r, is exempt if it meets the $6000/6% income producing criteria.
(3) Land is also income-producing if the a/r owns the land and rents or leases a right of use which produces net income based upon $6000/6% test.
2. Determine Net Annual Income
a. Calculate the gross annual income.
(1) If the same amount is received monthly, multiply this amount by 12 months (amount x 12 months = gross annual income).
(2) If received other than monthly, calculate a gross annual income amount according to instructions in SA-3210, Income.
(3) If gross annual income has changes in the past 12 months (base period), use the amount currently being received to determine gross annual income.
b. Determine the gross annual allowable operational expenses.
(1) Verify operational expenses for the previous calendar year based on expenses on the tax form if using tax statements to determine income.
(2) Verify operational expenses for the twelve months prior to the application or redetermination interview for a business if using business records.
(3) Allowable Expenses
Deduct predictable expenses paid by the a/r which are necessary for the production or collection of income. Unexpected expenses are not included as part of the 6% test for reserve.
Allowable expenses include but are not limited to the following:
(a) The interest portion of a mortgage payment,
(b) Property taxes,
(c) Insurance,
(d) Maintenance,
(e) Utility costs paid by the a/r,
(f) Labor costs,
(g) Real estate agent's fees,
(h) Sales taxes,
(i) Advertising for tenants,
(j) Verified transportation costs related to a rental property operation,
(k) Interest payments on loans for equipment necessary to produce the rental income.
(4) Non-Allowable Expenses
Do not deduct the following expenses from rental income:
(a) Expenses paid by a third party unless reimbursed by the a/r.
(b) The principal portion of a mortgage payment. The principal is deducted from the tax value as an encumbrance in reserve.
(c) A capital expenditure. This is an expense for an addition to or increase in the value of the property and is subject to depreciation for tax purposes (e.g., principal portion of mortgage payment, additions to existing structure).
(d) The property depreciation amount claimed as a federal income tax deduction.
(e) Replacement of an existing feature of the property which could have been repaired. (e.g., furnace could be repaired but is replaced with new heating system).
(f) Replacement of an existing feature of the property which could not be repaired with one that is greater in value (e.g., replacement of shingle roof with brick tile roof) which results in improvement and increases the value of the property.
c. Calculate net annual income.
Gross Annual Income
– Gross Annual Allowable Operational Expenses
= Net Annual Income (DO NOT ROUND)
d. Determine $6000/6% net annual income test.
The equity value of property multiplied by 6% equals the net annual income that must be produced to exclude property. DO NOT ROUND.
(Equity value x .06)
e. Compare net annual income amounts.
Compare V.C.2.c. , net annual income to V.C.2.d., net annual income that must be produced to exclude property.
(1) If the net annual income is equal or greater than the net annual income that must be produced, then the property produces 6% net annual income. Proceed below to determine the equity value to exclude for each classification.
(2) If the verified net annual income is less than the net annual income that must be produced, then the property does not produce 6% net annual income. The property is not excludable and the total equity value is counted towards the resource limit.
Example: A/R pays all expenses himself. There is no mortgage on the property.
Tax value of property |
$7,000 |
Property tax per year |
$ 95 |
Other operational expenses per month |
$ 10 |
Insurance per year |
None |
Monthly gross rent |
$75 |
*Determine equity for $6000/6% test.
$7000 |
Tax Value |
- $0 |
Encumbrances (if any) |
$7000 |
Equity |
*Determine annual income.
$75 |
Gross monthly rent ( x 12 months) |
$900 |
Gross annual rent |
- $95 |
Property taxes |
- $0 |
Insurance |
- $120 |
Other expenses annualized ($10 X 12=$120) |
$ 685 |
Net annual income ($900 - $95- $120) |
*Determine the $6000/6% net annual income that must be produced.
$7000 |
Tax Value |
x .06 |
|
$ 420 |
= 6% Net annual income that must be produced |
*Compare annual income to 6% of equity to determine if property produces 6% net annual income. In this case, $685 is greater than $420 so the property meets the $6000/6% test. $1000 (equity amount above $6000) is countable resources.
NOTE: If income is verified according to instructions in SA-3210, Income, and included in the monthly budget, then the income is considered received for purposes of the $6000/6% income test. This is true even if it is discovered that the income was not actually paid to the a/r. The income is counted in the a/r’s budget.
3. The net annual income requirement is waived when property that has formerly produced annual income produces no income due to natural disaster such as storms, drought, fire, hurricanes, etc.
a. A statement to this effect from the local FSA office (for crop damage), insurance company, FEMA, or county extension agent is necessary as verification.
b. The property would have to produce an income in the next 12 months for the income producing exemption to continue, unless the conditions that prevented the production of income were beyond the a/r's control.
4. The resource is income-producing on the day that a contract for rental/lease is signed or a verbal agreement is made (rent may be paid monthly, quarterly, semi-annually, annually, etc., and may be due at some point after the date of the contract/verbal agreement). If there is no contract or prior agreement, the resource is income producing on the day that the first payment is paid.
D. Reasonable Efforts to Sell Personal or Real Property
An a/r who meets all non-resource eligibility requirements, but is ineligible solely due to excess personal or real property, may receive SA for a limited period of time while attempting to sell the excess property.
1. Requirements for Exclusion of Property Due to Reasonable Efforts to Sell
To exclude personal or real property while the a/r attempts to sell it, both of the following conditions must be met:
a. The a/r’s countable liquid resources may not exceed the $2,000 resource limit.
b. The a/r must agree in writing to make reasonable efforts to sell excess personal or real property at current market value (as established using procedures in SA-3200, Resources) within a specified period, and to use the proceeds of sale to refund the benefits received during the period the resources are excluded.
2. Explanation of Exclusion of Property Due to Reasonable Efforts to Sell
Explain these provisions to any anyone who could take advantage of the provision if aware of it. This includes:
a. Individuals who inquire about eligibility and who may have excess resources.
b. Applicants with excess non-liquid resources whose liquid resources do not exceed the resource limit or are close to the resource limit.
c. Recipients whose benefits are about to be terminated due solely to excess non-liquid resources.
3. Exclusion Period for Real Property
a. The initial exclusion period for real property is 9 months.
b. After the initial 9 months, real property that an recipient has made reasonable but unsuccessful efforts to sell throughout a 9-month period continues to be excluded for as long as:
(1) The individual continues to offer the property for sale; and
(2) Including the property as a countable resource would result in a determination of excess resources.
4. Exclusion Period for Personal Property
a. The initial exclusion period for personal property is 3 months.
b. The recipient is allowed an additional 3 months exclusion period for personal property for good cause. Good cause exists when circumstances beyond a recipient's control prevent him/her from making reasonable efforts to sell. Good cause is defined as:
(1) No Offer to Buy - The recipient makes reasonable efforts to sell the property throughout the initial 3 month exclusion period but receives no offer to buy them.
(2) Offer That Does Not Result in a Sale - A legitimate or apparently legitimate offer to buy the personal property stops further efforts to sell it for a prolonged period of time, and the prospective buyer subsequently cannot or will not complete the purchase.
(3) Sale Begins But Closing Does Not Take Place Within Initial Exclusion Period - The recipient accepts an offer to buy, which precludes acceptance of another offer, but the sale (at which full or partial payment and transfer of title are exchanged) does not take place within the initial exclusion period.
(4) Incapacitating Illness or Injury - The recipient becomes ill, injured and/or hospitalized for a prolonged period and cannot take the steps necessary to sell the resource or to arrange for someone to sell it on his/her behalf.
(5) Joint Owner Dies - A joint owner dies, and administration or probate of the estate delays efforts to sell the resource (assuming that the property continues to be a resource).
5. The exclusion period begins:
a. Only after it is determined that the a/r meets all non-resource eligibility requirements, including disability/blindness, if applicable; and
b. The dss accepts the a/r’s signed Agreement to Sell Property form.
(1) Send a written notice once all non-resource eligibility requirements are met.
(2) Acceptance of the agreement is defined as the date the a/r receives written notice that the agreement is in effect.
(a) Allow 5 days for the a/r to receive the notice. The date of acceptance is 5 days from the date on the notice unless the individual proves he/she did not receive it within the 5-day period.
(b) If the written notice is handed to the individual, the date of acceptance is that date.
6. The exclusion period ends at the earliest of the following:
a. Sale of the property;
b. The month after the month in which continued reasonable efforts to sell end, absent good cause;
c. The a/r signs a written request for cancellation;
d. Countable resources fall within the applicable limit (e.g., the individual depletes resources); or
e. The a/r reaches the end of the full exclusion period including any allowable extensions.
7. Effective Dates of the SA Payment During the Exclusion Period
a. The SA payment can begin no earlier than the month after the month in which the exclusion period begins.
c. The SA payment ends the month in which the exclusion period ends.
Example: Mr. Vance’s exclusion period for selling his $12,000 boat begins on January 12. He sells the boat on March 20, which ends the exclusion period. He is eligible for SA for February and March.
If no sale had occurred, the exclusion period would have ended on April 11 and he could have received SA for the 3 months of February, March and April. The boat would have become a countable resource on May 1(unless the period was extended due to good cause).
8. Signing the “Agreement to Sell Property”
a. Complete an “Agreement to Sell Property” (Figure 4). Have the a/r or representative sign the form once you determine that the a/r meets all but the resources requirements for eligibility (including disability/blindness).
b. Give or mail the a/r or representative a copy and file the original in the case record.
c. Advise the a/r or representative about the requirement to make continuing reasonable efforts to sell, including not refusing any reasonable offer to buy; the types of evidence required; and the necessity for periodic follow-up contacts.
d. Request For Cancellation Of The “Agreement To Sell Property”
The a/r may at any time cancel the agreement and keep the excess resources. Make sure the a/r understands that he/she will be ineligible and will have to refund all benefits received during the exclusion period. If possible, obtain the a/r’s written statement that he/she wishes to cancel the Agreement to Sell Property stating that he/she understands the consequences of cancellation. Terminate the SA with timely notice and begin recovery action.
9. Reasonable Efforts To Sell Real Or Personal Property
The a/r must make reasonable efforts to sell excess real or personal property by taking all necessary steps to sell it through media serving the geographic area in which the property is located.
a. Within 30 days of signing the agreement to sell, the a/r must:
(1) List the property with an agent or begin to advertise in at least one of the appropriate media, or
(2) Place a "For Sale" sign on the property, or
(3) Begin to conduct open houses or otherwise show the property to interested parties on a continuing basis, or
(4) Attempt any other appropriate methods of sale such as posting notices on community bulletin boards, distributing fliers, etc.
b. Except for gaps of no more than 1 week, the a/r must maintain efforts to sell as described in this section. The a/r must not reject any reasonable offer to buy the property and must accept the burden of demonstrating to the county’s satisfaction that he rejected an offer because it was not reasonable. An offer to buy property is reasonable if it is at least two-thirds of the estimated CMV, or two thirds of the value established through the rebuttal process.
c. Contacts With A/R To Verify Reasonable Efforts to Sell
(1) For personal property, make a contact every 30 days during the 3 month exclusion period (and the extension if applicable).
(2) For real property, make a contact 35 days following the date of acceptance of the agreement to sell, and every 60 days thereafter until the end of the 9 month period.
(3) Remind the a/r of the responsibility for selling the property and the time remaining in the exclusion period. Verify and document the efforts being made to accomplish a sale whether there has been an offer to buy since the prior contact, and good cause in the absence of reasonable efforts to sell if applicable.
(4) Document the a/r's allegations regarding ads, listings, consignments, and other efforts to sell the resources. Obtain any supporting evidence or third party evidence available to support the a/r’s allegations. These may include a copy of the listing agreement with the real estate agency in current use, dated advertisements indicating the property is for sale, contracts with media to advertise the property, a photograph of the "For Sale" sign on the property, copies of fliers or posted notices; and/or any other evidence of reasonable efforts to sell property.
(5) Verify only those allegations necessary to establish that the a/r is making reasonable efforts to sell. Verifying duration of an ad, listing or consignment at the outset will prevent the need to verify its continuing existence at subsequent follow-up contacts.
d. Document the following at each contact:
(1) Whether there have been any offers to buy since prior contact;
(2) The amount of the offer and whether the a/r accepted it; and
(3) If the a/r has refused an offer that was at least two-thirds of the estimated CMV, his explanation for refusal.
e. If the a/r is making continuing reasonable efforts to sell, flag the case for follow-up contact.
f. If the a/r is not making continuous reasonable efforts to sell:
(1) Investigate whether there is good cause. Record the a/r’s allegations as to why he/she is not making reasonable efforts to sell. Obtain any evidence the a/r or a third party has to support allegations of good cause.
(2) If you determine the a/r is not making reasonable efforts to sell and there is no evidence to establish good cause, send timely notice to terminate SA effective with the month following the month in which reasonable efforts cease. Begin recovery action following procedures in V.D.13.
10. Documentation of Sale
Obtain evidence of:
a. The gross purchase price (whether in cash, on a contract, or both),
b. Any encumbrances on the property (taxes due and payable by seller, mortgage or other lien balance, etc.), and
c. Any expenses incurred in connection with the sale (advertising costs, realtor or other listing fees, consignment or auction fees, attorney fees, etc.).
11. Real Property Unsold
a. If real property remains unsold at the end of the 9 month exclusion, and the recipient continues to make reasonable efforts to sell, continue to exclude the property the real property until one of the conditions in V.D.6. ends the exclusion.
b. No further regular follow up is required except at the regular eligibility redetermination. At that time, ask the recipient if he/she still has the property and if it is still available for sale. If so, continue to exclude the property.
c. If the property is sold after the end of the 9 month exclusion, the exclusion ends. Redetermine eligibility based on resources held the month after the month in which the property is sold. Refer to Overpayment Procedures V.D.13. to begin recovery. The recipient must refund only the first 9 months of benefits.
12. Personal Property Unsold
If the personal property remains unsold at the end of the 3 month exclusion, and any applicable extension, add the equity value of the excess personal property to the value of other countable resources at the beginning of the payment period to determine the overpayment. Refer to Overpayment Procedures in V.D.13.
When an exclusion of real or personal property ends, compute an SA overpayment. This is the amount of SA that would not have been paid had the resource not been excluded. The total overpayment also includes amounts still due from any prior exclusion periods.
a. Disposal At or Above Current Market Value
Consider the net proceeds to be available to repay the overpayment. Net proceeds are the sale price minus any encumbrances on the property and the expenses of sale.
b. Disposal At Less Than CMV
Calculate the overpayment the same as for disposal at current market value, but include the uncompensated value as well as the net proceeds. However, the a/r has the right to provide rebuttal evidence to establish a value less than current market value. If the property sells for less than current market value but there is evidence to support a lesser value, do not include the uncompensated value in the overpayment.
c. Property Not Sold
(1) Personal Property - Calculate the overpayment using the current market value rather than the net sale proceeds.
(2) Real Property - The exclusion may continue. Do not calculate an overpayment unless or until the exclusion period ends for one of the reasons outlined in V.D.6..
d. Amount of the Overpayment
(1) Recalculate total countable resources. Add the net sale proceeds from the sale (or the current market value if unsold) to the countable resources in the first month of the exclusion period. If the property was sold for less than the current market value, add the uncompensated value.
(2) The overpayment is the lesser of:
(a) The amount by which the revised total countable resources exceeds the resources limit in effect at the beginning of the exclusion payment period; or
(b) The amount of SA benefits actually paid during the exclusion period.
(3) Establishing a Lesser CMV
Before computing the overpayment, remind the recipient of the right to rebut the value of the property.
(4) Burial Exclusion
When recalculating the amount by which total countable resources exceeded the limit at the beginning of the payment period, you can exclude up to $1,500 of funds set aside to meet burial expenses. Apply this exclusion only if the a/r alleged having such funds set aside at the beginning of the exclusion period.
(5) Sale For Other Than Cash
(a) If the a/r sells property on a contract for sale, promissory note, installment payment contract or other property agreement, this satisfies the terms of the agreement to sell. For overpayment purposes, the purchase price is the down payment in cash (if any) plus the principal amount of the contract.
(b) In determining the value of the contract for continuing eligibility purposes, consider any amount that must be refunded as an encumbrance on the contract. Evaluate the availability of the contract or promissory note. If the contract is an excess resource, the a/r may enter into another agreement to sell the contract subject to the 3 month disposal period for personal property.
(6) Exchange of Excess Property
The exchange or trade of property does not satisfy the terms of the Agreement to Sell Property. If the newly acquired property is an excluded resource, the recipient no longer has excess resources so the exclusion period ends. Calculate an overpayment based on the benefits received during the exclusion period.
If the newly acquired property is a countable resource and the recipient still has excess resource, the a/r can still satisfy the agreement by selling the new property within what remains of the exclusion period. The new property cannot qualify for a new conditional benefits agreement.
e. Refunding Overpayments
(1) Complete the DSS-1656, Refund Receipt, when a refund of an overpayment is made either by cash or personal check. Refer to EIS-3250, Processing Cash Overpayment Collections.
(2) Deposit the payment into the DSS account. Prepare a county DSS check in the amount of the refund and submit with the DSS-1656.
(3) Mail to:
Program Benefits Payment Section
2019 Mail Service Center
Raleigh, NC 27699-2019
14. Resources Within Limit
If, at any time during the exclusion period, the a/r reduces or converts resources so that there are no longer excess resources, without the exclusion:
a. Calculate an overpayment using the original current market value (unless the a/r establishes a lower value through rebuttal); and
b. Determine ongoing eligibility for SA based on countable resources after the refund of the overpayment.
15. Transfer of Resources During the Exclusion Period
Transfers of real or personal property that is excluded under “Reasonable Efforts to Sell” provisions are non-allowable transfers and are subject to transfer sanctions. Refer to SA-3205, Transfer of Resources.
The a/r may rebut the value of countable resources including real property (sole or partial ownership interest), promissory notes, and personal property.
The tax value of real property and the current market value of a promissory note may be rebutted by documentary evidence to establish a lesser value.
If the a/r wishes to rebut the value of real property, the rebuttal applies to the value of the entire parcel. However, the a/r may rebut the market value of a life estate separately from the value of the entire parcel.
1. Documentary evidence is a statement from a knowledgeable source located in the same geographic area as the property. Geographic area is the same area as covered by local radio, television, newspaper and other media.
2. The statement from the knowledgeable source must be written, signed and have enough information to identify the source easily.
a. It must be specific as to the value and the point in time for which the estimate is made; and
b. It must include the basis for his/her knowledge or expertise.
3. If the statement is questionable, the county may obtain an estimate from a knowledgeable source and use the average value.
4. Examples of types of knowledgeable sources are:
a. For real property and promissory notes:
(1) Licensed real estate brokers;
(2) Local Farm Service Agency office;
(3) Local office of the Farmer's Home Administration;
(4) Commercial banks, savings and loan association, mortgage companies and similar lending institutions;
(5) An official of the local real property tax jurisdiction, or
(6) County Agricultural Extension Service;
(7) Professional appraisers;
(8) Companies which are in the business of buying and selling promissory notes.
b. For personal property a statement from a car dealer or dealer of the item in question. The statement must include the make, model, year, color, and general description of the vehicle/personal property, as well as the market value.
a. Real Property/Promissory Notes – reverify at each redetermination
b. Personal Property – do not reverify the rebuttal value at redetermination unless the DMV/tax value has increased or there is some indication of a change in the value of the property.
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For questions or clarification on any of the policy contained in these manuals, please contact your local county office.
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