Wisconsin Department of Health and Family Services
Obsolete Medicaid Eligibility Handbook
188.8.131.52 Personal Property
184.108.40.206.1 Reverse Mortgage
220.127.116.11 HUD Payments
18.104.22.168.1 Annuities purchased after March 1, 2004
22.214.171.124.2 Annuities Purchased before March 1, 2004
126.96.36.199 Life Insurance
188.8.131.52 Endowment to CCRC
184.108.40.206 Income Tax Refunds
220.127.116.11 Earned Income Tax Credit (EITC)
18.104.22.168.1 Determining Equity Value
22.214.171.124.2 When to Count, When to Exempt
126.96.36.199 Property Settlement
188.8.131.52 Lump Sums Payments
184.108.40.206.1 Retroactive SS Payments
220.127.116.11 Land Contract
18.104.22.168 Wisconsin Higher Education Bonds
22.214.171.124 Wartime Relocation of citizens
126.96.36.199 Agent Orange Settlement Fund
188.8.131.52 Radiation Exposure Compensation Act
184.108.40.206 Institutionalized Person’s Assets
220.127.116.11 Blind/Disabled Set-Aside
18.104.22.168 Replacing and Repairing Exempt Assets
22.214.171.124 Retirement Benefits
126.96.36.199 U.S. Savings Bonds
188.8.131.52 Zebley Payments
184.108.40.206 Indian Judgment Fund Purchases
220.127.116.11 Payments to Nazi Victims
18.104.22.168 Spina Bifida Child
22.214.171.124 Uniform Gifts to Minors Act
126.96.36.199 Individual Development Accounts ( IDA ) Programs
188.8.131.52 Crime Victim Restitution Program
Do not count household goods as an asset.
Items needed by the household for maintenance, use and occupancy of the premises as a home.
Examples of household goods include but are not limited to:
furniture, appliances, electronic equipment such as personal computers and television sets, carpets, cooking and eating utensils, and dishes.
Do not count personal effects as an asset.
Items of personal property originally worn or carried by the individual; and
Articles otherwise having an intimate relation to the individual.
Examples of personal effects include but are not limited to:
Note: Items that are acquired or held because of their value or as an investment are not considered personal effects.
Other personal property items include, but are not limited to:
Example: Mr. Hollenback received $10,000 from an insurance settlement. Mr. Hollenback paid back creditors with $7,000 and purchased $3,000 in jewelry. Mr. Hollenback does not wear the jewelry. The IM workers must determine whether the jewelry is excluded from resources as a personal effect or is a countable resource in the form of other personal property. Mr. Hollenback's statements establish that the jewelry has no family significance and that he purchased the jewelry for its value as a means to spend down the $10,000. The IM workers correctly determines that the jewelry is not an excludable personal effect because an item purchased for its value cannot be a personal effect.
The IM worker correctly determines the jewelry as a countable asset.
If an AG member receives a loan and it is available for current living expenses, count it as an asset. Do this even if there is a repayment agreement. If it is not available for current living expenses, disregard it.
If an AG member makes a loan (except a land contract), treat the repayments as follows:
Count any repayments toward the principal of the loan, whether it is a full payment, a partial payment, or an installment payment, as an asset.
Count any interest payment on the loan as unearned income Income is anything you receive in cash or in kind that you can use to meet your needs for food, clothing, and shelter. in the month received, and as an asset in the months following the month it was received.
A reverse mortgage loan is a loan, or an agreement to lend, which is secured by a first mortgage on the borrower’s principal residence. The terms of the loan specify regular payments to the borrower. Repayment (through sale of the residence) is required at the time all the borrowers have died, or when they have sold the residence or moved to a new one.
Treat reverse mortgage loan payments to the borrower as assets in the month received and thereafter. Do not count undisbursed funds (not yet paid to the borrower) as assets. They are considered equity in the borrower’s residence.
Disregard reimbursements resulting from federal regulatory changes in computing U.S. Department of Housing and Urban Development ( HUD ) housing rent as income in the month paid and assets in the next month.
An annuity is a written contract under which, in return for payment of a premium or premiums, an individual will receive a series of payments at regular intervals for a specified time period.
The annuitant is the person entitled to the payments. A purchaser can name himself/herself or another person as the annuitant. The purchaser may also name a beneficiary to receive annuity payments after the annuitant's death.
Treat Annuities purchased after March 1, 2004 as available assets in accordance with the following:
Annuities that can be surrendered:
If the annuity’s cash value is available for withdrawal (minus any penalty) the annuity can be “surrendered.”
To determine the value of annuities that can be surrendered (for example, an annuity in the accumulation phase), use the following formula:
1. Total deposits made to the annuity.
2. Earnings on the deposits not previously paid out.
3. Withdrawals and surrender costs charged for withdrawal.
4. Annuity’s value
Annuities that cannot be surrendered.
Determine the value of annuities that cannot be surrendered ( e.g. immediate annuities in the payout phase) as follows
1. Total deposits made to the annuity.
2 Earnings on the deposits not previously paid out
4. Annuity’s Value
Applicants/recipients who own annuities that cannot be surrendered will be provided an opportunity to prove that the annuity is unavailable. ( Note: This does not apply to annuities that can be surrendered) The annuity will be considered to be an unavailable asset only if documentation is provided from at least three companies active in the market stating their unwillingness to purchase the annuity. Payments from an annuity that is considered to be unavailable must be counted as income. Annuities that are considered to be unavailable must also be evaluated for possible divestment, in accordance with (4.7.11).
The applicant/recipient may prove that the annuity has a fair market value lower than the initial value determined by the worker. The applicant/recipient must provide documented offers from at least three companies active in the market and do so within the regular timeframe. The fair market value of the annuity will be established as the highest of the documented offers. An offer from someone not active in the market will be considered legitimate only if it meets or exceeds the three offers from companies active in the market.
To provide proof that the annuity is unavailable or has a fair market value lower than the initial value determined by the worker, the applicant must demonstrate that (s)he has made reasonable attempts to obtain a fair market price for the annuity contract or annuitized payments. The actual fair market value would be established by offering the annuity for sale in an “arms-length transaction” to at least three companies active in the annuities market.
An “arms length transaction” is one in which the buyers and sellers of a product act independently of each other and have no personal relationship.
Example 1: Cynthia is 83 years old and applying for MA. She owns an annuity purchased after March 1, 2004. The annuity is paying out and cannot be surrendered. It is irrevocable and non-transferable. Still, the annuity will be treated as an available asset, unless Cynthia shows that it cannot be sold on the open market (i.e. has no fair market value). The worker determines an initial value for the annuity by applying the following formula:
Rather than use this value to determine her MA eligibility, Cynthia prefers to establish a fair market value. She does so by offering her annuity for sale to three companies active in the annuities market. She obtains three written offers and provides this documentation to her worker. Her worker establishes the fair market value of the annuity as the highest of the three offers. The fair market value of the annuity is used to determine Cynthia’s MA eligibility. Enter the value on AALA with the MQ code.
When Cynthia originally applies, calculate the value of the annuity using the formula described above. Enter the amount on the liquid asset screen AALA as type MQ and mark it as available. The asset will count for EBD MA subprograms only.
Market Value Pursued:
When Cynthia returns with the three written offers, tran to AALA for the previously entered MQ asset and change the amount to the highest of the three offers.
Example 2: Sam is 66 years old and applying for Medicaid. He owns an annuity purchased after March 1, 2004. The annuity is paying out and cannot be surrendered. It is irrevocable and non-transferrable. Still, the annuity will be treated as an available asset, unless Sam shows that it cannot be sold on the open market (i.e. has no fair market value). The worker determines an initial value of the annuity by applying the following formula:
Rather than use this value to determine his eligibility, Sam prefers to establish a fair market value for the annuity. He attempts to do so by offering the annuity for sale to three companies active in the annuities market, but none of the companies is willing to purchase the annuity. Sam obtains letters from each of the three companies documenting their unwillingness to purchase the annuity. He provides the letters to his worker and, in doing so, has shown that the annuity cannot be sold. His worker treats the annuity as an unavailable asset in determining his Medicaid eligibility.
When Sam originally applies, calculate the value of the annuity using the formula described above. Enter the amount on the liquid asset screen AALA as type MQ and mark it as available. The asset will count for EBD Medicaid subprograms only.
Market Value Pursued:
When Sam returns with the three letters declining to purchase, tran to AALA for the previously entered MQ asset and mark the asset as unavailable. Enter the monthly payment on AFUI as unearned income as type AN.
Example 3: Sherrie is 43, has a disability and is applying for MA. She owns an annuity purchased after March 1, 2004. The annuity is paying out and cannot be surrendered. It is irrevocable and non-transferrable. Still, the annuity will be treated as an available asset, unless Sherrie shows that it cannot be sold on the open market (i.e., has no fair market value). The worker determines an initial value of the annuity by applying the following formula:
1. Total deposits made to the annuity.
2. Earnings on the deposits not previously paid out.
4. Annuity’s Value
Rather than use this value to determine her MA eligibility, Sherrie prefers to establish a fair market value. She attempts to do so by offering her annuity for sale to two companies active in the annuities market, plus Frank, her nephew. She obtains three written offers (two from companies active in the market and one from Frank) and provides this documentation to her worker. Frank’s offer is the highest of the three, however it may not be used to establish a fair market value for the annuity because it has not been compared to three offers from companies active in the market. Sherrie’s MA eligibility is determined using the value of the annuity as initially established by the worker using the above formula.
When Sherrie originally applies, calculate the value of the annuity using the formula described above. Enter that amount on the liquid asset screen AALA as type MQ and mark it as available. The asset will count for EBD MA only.
Market Value Pursued
Since Sherrie can only provide two offers from companies active in the annuities market her MA eligibility is determined using the value of the annuity as initially established. So, the offers are not considered and the same amount calculated previously and entered on AALA is still valid and not changed.
Annuities that can be surrendered (In the accumulation phase)
The accumulation phase of an annuity is the period when the purchaser puts money into the annuity. During the accumulation phase, an annuity is an available asset because the annuitant can cash it in for its cash value.
Cash value (also known as surrender value) equals:
Total deposits made to the annuity.
Earnings on the deposits not previously paid out.
Withdrawals and surrender costs charged for withdrawal.
In determining the cash value, do not deduct income tax withheld or tax penalties for early withdrawal.
The pay-out ( annuitization ) phase begins at the time payments start going to the annuitant in accordance with the settlement option. The settlement option specifies the way the funds from the annuity will be paid out. It involves choosing the amount of each payment, how often payments will be made, and the length of time over which the payments will be made.
An annuity becomes an unavailable asset on the date the settlement option is made final. This means even if the payment starts months later, it is unavailable on the date the settlement option is made final.
Face value is the basic death benefit of the policy exclusive of dividend additions or additional amounts payable because of accidental death or under other special provisions. Cash value means the net amount of cash for which the policy could be surrendered after deducting any loans or liens against it.
Count the cash value of all life insurance policies. For persons age 65 or over, blind or disabled, count it only when the total face value of all policies owned by each person exceeds $1,500. Do this calculation for each EBD person. In determining the face value, do not include any life insurance which has no cash value.
Life insurance policies always have a face value, but do not always have a cash value. Term life insurance is limited to a defined time period as stated in the policy and does not usually have cash value. Group life insurance is usually term insurance and usually has no cash value. An endowment insurance plan generally has cash value.
NOTE: VA Term Life Insurance Policies were assigned a cash value as of 2000. The cash value amount is a countable asset.
Frequently, in order to enter a continuing care retirement community ( CCRC ), a person must pay a large, one-time entrance fee as an endowment. In exchange for this and, sometimes, an additional monthly payment, the person is promised care for the rest of his/her life, unless s/he chooses to move.
Endowments such as this are unavailable assets.
Federal and state income tax refunds are available assets.
Disregard all Earned Income Tax Credit ( EITC ) payments in the month received and in the month after receipt.
After the “month received’ and the “month after receipt” have passed, count the EITC payment as an available asset.
Vehicle or automobile means any registered or unregistered vehicle used for transportation. Vehicles used for transportation include but are not limited to cars, trucks, motorcycles, boats, snowmobiles. A temporarily broken down vehicle used for transportation meets the definition of an automobile.
Equity value is:
The vehicle's wholesale value as given in a standard guide on motor vehicle values (blue book), or the value as estimated by a sales representative at a local dealership,
Minus any encumbrances (loans or mortgages) that are recorded on the vehicle’s title as liens.
Do not increase a vehicle's value by adding the value of low mileage or other factors, such as optional equipment or apparatus for the handicapped.
Occasionally, a vehicle has more than one owner. Some of the owners may be in the fiscal test group, others not. To find what the fiscal test group’s equity value in the vehicle is, do the following:
Find the vehicle’s wholesale value.
Subtract the encumbrances (loans or mortgages) that are recorded as liens on the vehicle’s title. The result is the equity value.
Divide the equity value by the total number of owners.
Add up the prorated equity values of the owners who are in the fiscal test group. The result is the fiscal test group’s equity value in the vehicle.
Count vehicle values as follows:
One automobile per household is excluded regardless of the value if it is used for transportation of the eligible individual/couple or a member of the eligible individual's/couple's household. Assume the automobile is used for transportation, absent evidence to the contrary.
When an individual owns more than one automobile apply the exclusion as follows:
Apply the exclusion in the manner most advantageous to the individual.
Apply the total exclusion to the automobile with the greatest equity value if the eligible individual/couple own more than one automobile used for transportation of the eligible individual/couple or a member of the individual's/couple's household.
The equity value of any automobile, other than the one wholly excluded is a resource when it:
Is owned by an eligible individual/couple; and
Cannot be excluded under another provision (e.g. property essential to self-support, plan to achieve self-support.)
Do not apply the vehicle exclusion to the following vehicles:
A vehicle that has been junked;
A vehicle that is used only as a recreational vehicle ( e.g.., a boat used for pleasure).
The equity value of such a vehicle is a resource.
When an individual owns two or more automobiles, apply the following rules.
If only one automobile is used for transportation, totally exclude the value of that automobile.
If more than one automobile is used for transportation, totally exclude the automobile with the greatest equity value.
For any automobile that cannot be excluded for transportation reasons, consider excluding it under the provisions for property essential to self-support, plan to achieve self support. If the automobile does not qualify for the exclusion, count the equity value of the automobile as a resource.
If an individual who owns an automobile that is temporarily inoperable (e.g., needs repairs) and states that the automobile will be repaired and used for transportation within the next twelve calendar months, exclude the total value of the automobile.
If an individual states that the vehicle will not be repaired and used for transportation in the next 12 calendar months, count the equity value of the automobile as a resource.
Money received as a property settlement is always an asset regardless of whether it is paid in one payment or in installments. It is never income.
Lump sum payments (rather than recurring payments) from
such sources as insurance policies, sale of property, Railroad Retirement, Unemployment Compensation benefits, and retroactive corrective financial aid payments are counted as an asset when received.
The unspent portion of retroactive SSI and Retirement Survivors Disability Insurance (RSD)I benefits received on or after March 2, 2004 is excluded from resources for the nine calendar months following the month in which the individual receives the benefits.
Do not count a retroactive social security or SSI payment as an asset either in the month of receipt or nine months following the month the payment is received. A retro-active payment means it is paid later than the month in which it is due. After nine months, treat any remaining available portion as an asset.
During the nine months in which it is not counted, the unspent portion of the payment can be mingled with other funds, provided it can be distinctly and separately identified.
The unspent portion of retroactive SSI and RSDI benefits received before March 2, 2004 is excluded from resources for the six calendar months following the month in which the individual received the benefits.
When a land contract is executed, the purchaser builds equity in the property through the payments s/he makes. The seller keeps legal title to the property until it is paid for. The seller's interest in the land contract is personal property, not real property.
The seller's legal title to the property can be sold and converted to cash for support and maintenance. To determine the value of the seller's legal interest in the land contract:
Find the original sale price or the fair market value (as determined by a qualified real estate appraiser). Of these two amounts choose the one which more accurately reflects the contract's true value on the date it was originated.
From this amount subtract:
Payments which the purchaser has already made on the principal.
Example 1: The fair market value of the land contract is $50,000. The purchaser has already paid $10,000 on the principal.
$ 50,000 Fair Market Value
-10,000 Already Paid
$ 40,000 Outstanding Balance
Encumbrances on the contract, for example, a personal loan.
The amount lost to a discount.
Example 2: Milton Rokeach wants to buy up Mr. Graham’s land contract. He asks for a 10% discount.
$40,000 Outstanding Balance
- 4,000 10% Discount Given by Mr. Graham to Milton Rokeach
$36,0000 Value of Mr. Graham’s Interest in the Land Contract
The remainder, after subtracting a., b., and c. from the original sale price, is the value of the seller's interest in the land contract. Count this as an available asset.
If the land contract is not an available asset, the person must document its unavailability by showing that either:
The terms of the land contract prohibit its sale, or
No one is willing to purchase it from him/her.
When the claim is that no one will purchase the land contract, it must be offered for sale to at least one individual or organization active in the land con-tract purchasing market. A written statement from the individual or organization that they will not buy it is sufficient to establish the land contract as an unavailable asset.
Notice that if it has been offered only to an individual or organization that never purchases land contracts, it remains an available asset.
Treat any mortgage held by and owed to a client the same as a land contract.
The State of Wisconsin sells Wisconsin Higher Education Bonds to the public as a way to save for higher education. To determine their net value, subtract broker's fees from market value.
The bonds may be sold back to the State, under certain time restraints:
Before the maturity date, a portion of their value is withheld. The amount withheld equals the school's tuition and fees. Any excess goes to the person.
On or after the maturity date, the value is the total amount received.
The bonds may be sold on the "secondary" bond market at any time. Since they can be disposed of on the market with no time limit they are an available asset. To determine their net value, subtract broker's fees from market value. (Verify the amounts through a broker.)
Disregard restitution paid under PL 100-383 to Japanese-Americans and Aleuts or their survivors who were interned or relocated during World War II.
Disregard payment received from the Agent Orange Settlement Fund or any other fund established in settling “In Re: Agent Orange product liability Settlement Fund litigation, M.D.L. No. 381 (E.D.N.Y.)”. Disregard as income in the month received and as an asset thereafter.
Disregard payments from any program under the Radiation Exposure Act (PL 101-426) paid to persons to compensate injury or death resulting from exposure to radiation from nuclear testing ($50,000) and uranium mining ($100,000).
When the affected person is dead, payment is made to his/her surviving spouse, children, parents, or grandparents. The federal Department of Justice reviews the claims and makes the payments.
Apply this disregard retroactively to October 15, 1990 and continue to disregard the payment for as long as it is identified separately.
An institutionalized person 's personal allowance may accumulate to where s/he may lose eligibility due to excess assets. To prevent this, s/he can spend money on personal needs or make a refund to the agency. If s/he chooses to refund the agency, calculate what a year's accumulation will be and work out a payment schedule. When the payments equal MA benefits received, have the person stop the payments until s/he receives more benefits.
If the person refuses to refund, discontinue eligibility when the asset limit is exceeded. S/he remains ineligible until the assets are again at or below the limit. At that point s/he may reapply.
These instructions apply to all institutionalized MA recipients, whether certified by your agency or by the Social Security Administration.
Disregard the following for a blind or disabled person:
Assets essential to the continuing operation of her/his trade or business .
Other income-producing property.
Assets set aside to carry out an approved self-support plan (184.108.40.206.2). The set-aside must be segregated from other funds. Disregard interest that accumulates, provided the set-aside does not exceed the provisions of the plan.
Vehicles and homes are examples of exempt assets. If an exempt asset is lost, stolen, or damaged, disregard any cash (and interest earned) or in-kind replacement received from any source to repair or replace it.
The cash or in-kind payment must be used within nine months of the date it is received. After the end of the ninth month, count as an asset leftover cash not used for the repairs or replacement.
Extend the nine-month period for up to another nine months if the person has good cause for not repairing or replacing the thing. Good cause means circumstances beyond the person's control to prevent repair or replacement. This includes not being able to contract it out. When there is good cause, count as an asset any amount not used for repairs or replacement. Begin with the month after the end of the extension.
If, during a good cause extension, the person no longer intends to replace or repair the exempt asset, count the amount for replacement or repair as an asset. Begin with the month the person reports his/her change of intent.
Retirement benefits include work-related plans for providing income when employment ends (e.g. pension disability or retirement plans administered by an employer or union).
Other examples of retirement funds include accounts owned by the individual, such as Individual Retirement Accounts ( IRA ) and plans for self-employed individuals, sometimes referred to as KEOGH plans.
Employment related pension plans should be treated as follows.
If an applicant/recipient has the ability to cash in a work related benefit, the net amount of the benefit (after any penalties but before any tax withholding) available to the applicant/recipient should be treated as an available asset. Some retirement benefit plans allow employees to cash in their benefits as a lump sum payment when they leave their job instead of waiting until they reach retirement age to get the pension. However, do not count retirement funds as an available asset if the applicant/recipient has to quit a job to get at the retirement funds, or if the applicant/recipient is receiving periodic payments from the retirement benefit plan.
If the applicant/recipient does not have access to the account’s principal in his/her retirement benefit plan, the principal should be treated as an unavailable asset.
Periodic payments made from a work-related retirement benefit plan should be counted as income in the month of receipt.
Individually owned retirement funds, such as IRA’s Keogh plans, etc., that are owned by the applicant/ recipient should be counted as available non-exempt assets (minus any early withdrawal penalty) for the Medicaid applicant/recipient. The applicant/recipient always has access to the principal in these accounts, subject to an early withdrawal penalty.
Any periodic payments from these accounts should not be counted as income in the months of receipt. These payments are considered assets. They are considered the same as withdrawals from an applicant’s saving account. Only interest earned on the funds in a retirement fund is to be counted as income (220.127.116.11).
Disregard work-related retirement benefit plans or individually owned retirement accounts, such as IRAs or Keoghs, of an ineligible spouse in an EBD case. Disregard work-related retirement benefit plans or individually owned retirement benefit plans or individually owned retirement accounts, such as IRAs or Keoghs, of an ineligible parent in a Disabled Minor case (18.104.22.168.2) This policy includes the disregard of retirement funds held by the community spouse in spousal impoverishment cases.
Consider IRAs, Keoghs, or other retirement funds that are completely cashed in as a conversion from one asset form to another.
Example 1: Mike withdraws $2,000 he has in an IRA, and deposits it into a savings account. Continue to treat the $2,000 as a countable asset. This is just a conversion from one form of an asset to another. Treat any interest that Mark receives as income in the month received.
A gift is something a person receives which is not repayment for goods or services the person provided and is not given because of a legal obligation on the giver’s part. To be a gift, something must be given irrevocably (that is, the donor relinquishes all control).
Treat non-cash gifts as an asset, as you would an asset of a similar type. A cash gift is income in the month of receipt. It is an asset in the months after the month of receipt. Disregard cash gifts (such as for birthdays, graduation, and Christmas) that total $30 or less, for each assistance group member, for each calendar quarter.
Count the cash value of a U.S. Savings Bond unless it is
unavailable. A bond is unavailable only if the MA group proves it tried to cash the bond and was refused.
Disregard all SSI payments received by anyone as a result of the Zebley v. Sullivan decision. Do not count it as income or a lump sum in the month received. Do not count it as an asset even if the family keeps the money and does not spend it.
Disregard assets purchased with Indian judgment funds (22.214.171.124, #10). But do not disregard:
Proceeds from the sale of these initial purchases.
Subsequent purchases made with the proceeds from the sale of these initial purchases.
Disregard payments made under PL 103-286 to victims of Nazi persecution.
Disregard payments made under PL 104-204 to any child of a Vietnam veteran for any disability resulting from the child's spina bifida.
Count funds held in an account for the benefit of a minor that are the result of transfers under the Uniform Gifts to Minors Act. This act is also called the Uniform Transfers to Minors Act. The funds are available when determining eligibility for the minor unless a court determines otherwise.
Individual Development Accounts ( IDA ) are restricted accounts owned by low-income people. The IDA program provides matching funds for buying a home, starting a business, or post-secondary education. Client savings and interest are a countable asset if the IDA was established using the Assets for Independence Act or Refugee Assistance Act funds. However, if W-2 or Community Reinvestment funds support the IDA program, the assets are exempt.
Disregard any payments received from a state established fund to aid victims of a crime. These payments are an excluded resource for 9 months following the month of recipient.
This page last updated in Release Number: 08-01
Release Date: 01/07/08
Effective Date: 01/07/08