Par. 1.  Material Transmitted and Purpose --Transmitted with this Manual Letter are changes to Service Chapter 510-05, Medicaid Eligibility Factors. This manual letter also incorporates IM 4955.

Par. 2. Effective Date – This manual letter is effective for the benefit month of August 2005, unless otherwise indicated.

05-05.  Definitions 
A clarification was added to the definition of “Good faith effort to sell” to insure it is understood that any public advertisement must include the selling price.  There is also a policy change in the definition of “Living independently”, from six months to three months, to match that of the Healthy Steps program.

Good faith effort to sell
An honest effort to sell in a manner which is reasonably calculated to induce a willing buyer to believe that the property offered for sale is actually for sale at a fair price. A good faith effort to sell includes, at a minimum, making the offer at a price based on an appraisal, a market analysis by a realtor, or another method which produces an accurate reflection of fair market value, in the following manner:

1.	To any co-owner, joint owner, possessor, or occupier of the property, and, if no buyer is thereby secured;
2.	To the regular market for such property, if any regular market exists, or, if no regular market exists;
3.	By public advertisement for sale in a newspaper of general circulation, the circulation area of which includes the location of any property resource offered for sale, which advertisement was published successively for two weeks if the newspaper is a weekly publication and for one week if the newspaper is a daily publication, and which includes the selling price, a plain and accurate description of the property and the name, address, and telephone number of a person who will answer inquiries and receive offers.
 
Living independently
In reference to a single individual under the age of twenty-one, a status which arises in any of the following circumstances:

3.	The individual has lived separately and apart from both parents for at least six three consecutive full calendar months after the date the individual left the parental home, continues to live separately and apart from both parents, and has received no support or assistance from either parent while living separately and apart… 

05-10-15.  Confidentiality
The Healthy Steps program was added to this section, as information provided will be used to determine eligibility for both Medicaid and Healthy Steps.

All applications, information and records concerning any applicant or recipient of Medicaid shall be confidential and shall not be disclosed or used for any purpose not directly connected with the administration of the Medicaid or Healthy Steps programs. Application, information and records may not be released to elected officials or to any other person not directly connected with the administration of the Medicaid or Healthy Steps programs. Refer to Service Chapter 449-05-30 for additional guidelines.

05-25-05.  Application and Redetermination
The reference to the application form was corrected to use the same name used in e-forms, and because the application form covers more programs than just those previously listed.

1.	Application.

c.	An application is a request for assistance on SFN 405, "Application for Medicaid, Temporary Assistance for Needy Families (TANF), Food Stamps, and Child Care Assistance Economic Assistance Programs"; SFN 502, "Application for HealthCare Coverage for Children, Families, and Pregnant Women"; SFN 641, "Title IV-E/Title XIX Application-Foster Care"; SFN 854, "Adoption Subsidy Application"; the Department’s system generated "Statement of Facts"; or if within one calendar month of when an applicant's Medicaid case was closed, one of the prescribed redetermination forms (see subsection 2(b)). Applications provided by disproportionate share hospitals or federally qualified health centers are SFN 405 with "HOSPITAL" stamped on the front page.

05-25-25.  Decision and Notice
Language was added to paragraph 4(c)(i) to clarify that when a recipient reports a change on the change report or redetermination forms it meets the requirement to allow an adequate notice instead of requiring a ten-day advance notice.

i.	The recipient provides a signed, clearly written statement providing information that requires a termination or reduction in benefits, and the recipient indicates that he or she understands that benefits will be reduced or terminated (changes reported on the change report form, the TANF monthly report, and the redetermination form meet this requirement);

05-35-15.  Caretaker Relatives
Language was added to clarify that a child is not considered to be living with a caretaker relative if either the child or the caretaker are residing in a nursing care facility, an ICF-MR, or a specialized facility on other than a temporary basis.

2.	A child is considered to be living with a caretaker relative when away at school or when otherwise temporarily absent from the home. A child is not considered to be living with a caretaker relative when either the child or the caretaker is residing in a nursing care facility, an intermediate care facility for the mentally retarded, or a specialized facility on other than a temporary basis.

05-35-80.  Social Security Numbers
A correction was made, as Social Security no longer uses the forms previously indicated.

3.	A copy of the enumeration at birth form (SSA 2853) that is completed at the hospital, or any other receipt from the Social Security forms SSA-5028 and SSA-2853-OP1 are considered Administration is adequate verification of application for SSN.

05-35-100.  Blindness and Disability
Language was added to this section to address the State Review Team’s process for the Workers with Disabilities coverage, and to incorporate IM 4955.
3.	SSA and SSI final determinations of blindness and disability are binding (42 CFR 435.541) and serve as evidence of the presence or absence of statutory blindness or of disability. An exception to this provision is if the individual has applied for Workers with Disabilities coverage and Social Security’s decision established that the individual is not disabled due to substantial gainful activity.  In these situations, the State Review Team may make an independent decision.
4.	If the applicant is requesting assistance for a month prior to the SSI application, if the applicant is not eligible for SSI because of the SSI income and resource levels, if the applicant refuses to apply for SSI, if the applicant is not eligible for SSA disability due to not being insured, if the applicant is applying for Workers with Disabilities coverage and is not eligible for SSA disability due to substantial gainful activity, or the applicant is within six months of reaching age 65, the county agency will need to obtain and submit medical and social information to the State Review Team for their evaluation.  The medical and social information is generally submitted along with SFN 451, "Eligibility Report on Disability/Incapacity" (Appendix H 05-100-40), and if the individual is applying for Workers with Disabilities coverage, SFN 228, “Workers with Disability Report Part II” (05-100-41).  
An individual refusing to apply for SSI should be informed of potential eligibility for SSI and that receipt of SSI may yield a larger amount of total income for the family.
The State Review Team shall decline to determine blindness or disability for a period of time that such a determination is made for SSI (Title XVI) or Title II disability benefits by the Social Security Administration, except that the State Review Team shall make a decision in those situations in which the individual has applied for Workers with Disabilities coverage and Social Security’s decision established that the individual is not disabled due to substantial gainful activity.

6.    Any medical bills incurred by an applicant upon request of the State Review Team to obtain medical information to determine eligibility will be paid through Medicaid.  If the applicant is determined to be ineligible for Medicaid, the medical bills, which are sent to the State Review Team, will be paid through administrative costs.

7.   If an applicant or recipient of SSA/SSI disability is determined by the Social Security Administration to not be disabled or no longer continues to meet the disability criteria, the county agency must then deny or send a ten-day advance notice to close the Medicaid case.

05-40-15.  Cooperation -- Child Support
A correction was made to identify that current processing does not require the eligibility worker to inform Child Support when a recipient is pregnant, and that services do not actually stop, but that the pregnant woman doesn’t have to cooperate.

1.	Pregnant women are not required to cooperate with Child Support and may remain eligible for Medicaid while pregnant and through the month in which the sixtieth day after pregnancy falls. A pregnant woman must be informed of this exception at the time of application or, in the case of a recipient, at the time the pregnancy becomes known. When Child Support must be is informed immediately to stop that an applicant or recipient is pregnant, Child Support services for any pregnant recipient unless will continue to be provided, however, any non-cooperation by the pregnant woman requests that services continue will not affect her eligibility for Medicaid.

05-57-10.  Individuals Covered (Workers with Disabilities)
This is a change in policy based on federal and state law to allow disabled individuals age 16 through age 64 to participate in the Workers with Disabilities coverage.  This change is effective July 1, 2005.

1.	An individual may be enrolled under the Workers with Disabilities coverage if he or she:

a.	Is gainfully employed;
b.	Is at least eighteen sixteen, but less than sixty-five, years of age;
c.	Is disabled;
d.	Is not in receipt of any other Medicaid benefits under this chapter other than coverage as a QMB or SLMB; and
e.	Pays a one-time, per lifetime, enrollment fee of $100.

2.	An individual may be eligible under this coverage for the entire month in which the individual turns age eighteen sixteen. An individual may not be eligible under this coverage during the month the individual turns age sixty-five.

05-57-19.  Asset Limit for Workers with Disabilities
This is a new section covering a change in policy that eliminates the need for an approved PASS plan for Workers with Disabilities, but now simply allows for a higher asset limit.  This change is effective July 1, 2005.

The medically needy asset limits apply except that each Workers with Disabilities recipient in the Medicaid unit is allowed an additional $10,000 in assets.

05-57-20.  Assets which are Excluded for Workers with Disabilities - Repealed
This section has been repealed.  The section dealt solely with the PASS plan provisions for Workers with Disabilities, which are no longer required.  This change is effective July 1, 2005.
 
The medically needy exempt and excluded assets are excluded except that a Workers with Disabilities recipient is also allowed to maintain funds under a county approved plan to achieve self-support.

1.	A plan to achieve self-support must be written and shall be approved, and remain approved, for so long as the plan:

a.	Describes a purpose consistent with self-support; and
b.	Is followed by the individual.

A plan to achieve self-support is any plan for the purpose of obtaining items, services, or skills needed for self-support, and can include setting funds aside as savings to provide for the individual’s support for future unanticipated expenses, or to meet general living expenses.  The purpose of plans to achieve self-support is to allow individuals to set assets aside, but does not require that they do so. There need not be any time limit established for a plan.  Assets set-aside for a plan to achieve self-support are not required to be in a separate account, or otherwise identified as part of the approved plan.  

2.	The amount allowed to be set-aside for an approved plan is based on the earnings of the recipient while receiving Medicaid benefits under this section, but cannot exceed $10,000.  For each month an approved plan to achieve self-support is in effect, the individual’s asset limit will increase by the amount of the individual’s gross earned income from the previous month.  The individual will remain eligible if the value of the individual’s countable assets is not more than the medically needy asset limit plus the amount excluded under the approved plan to achieve self-support.

EXAMPLE:  A single individual is found eligible for Workers with Disabilities in June, and has an approved plan to achieve self-support.  The individual earns $800 gross per month.  In July, the individual’s asset limit will be $3800.  By September, the individual’s asset limit would be $5400. ($3000 asset limit plus an additional $800 for June, July, and August).

A plan may be submitted with a new application and approved for the three prior months.

3.	A plan to achieve self-support is only for the individual, and is only excluded for this coverage.   If an individual who is eligible under Workers with Disabilities is financially responsible for others in the Medicaid unit, assets excluded under the approved plan to achieve self-support are counted in determining eligibility for the other individuals.  Likewise, if an individual becomes ineligible for Workers with Disabilities coverage, and is eligible under another Medicaid coverage, assets excluded under the plan are countable assets when determining eligibility for the other Medicaid coverage.  Such excluded assets are also counted when establishing eligibility for QMB or SLMB coverage.

4.	If an individual re-establishes eligibility under Workers with Disabilities coverage after being ineligible for a period, the amount of assets that were previously excluded because of a plan to achieve self-support continue to be excluded.  If the previous plan to achieve self-support remains in effect, or a new plan is created, the asset limit  continues to increase, until it reaches the maximum of $10,000 that is allowed.
 
05-60-30.  Income Considerations for the Medicare Savings Program
This is a change in policy, based on a change in federal law, to disregard the earned income of any blind or disabled student under age 22.  The earned income is disregarded even if the individual is a caretaker.  This policy change only applies to the Medicare Savings Program.

Income calculations must consider income in the manner provided for in the medically needy income considerations; unearned income; earned income; disregarded income; and income deductions; except:
 
1.	Married individuals living separate and apart from a spouse (for the full calendar month) are treated as single individuals;

2.	The income disregards in 05-85-30 are allowed regardless of the individuals living arrangement. ;

3.	The earned income of any blind or disabled student under age 22 is disregarded;

4.	The $20 income deduction (described in 05-85-35(9) and the $65 plus one-half income deduction (described in 05-85-35(11)(e)) are allowed regardless of the individual’s living arrangement; and

5.	The following income deductions are not allowed:

05-70-05.  General Information 
Language has been added to clarify that the asset provisions do not apply to eligibility determinations for individuals applying under the children and family categories. 

These medically needy asset provisions apply to all aged, blind, and disabled applicants and recipients of Medicaid unless otherwise specified in this chapter.  

There is no asset test for applicants and recipients who are applying, or are eligible, under the children and family categories, so the asset provisions do not apply to those individuals.
 
05-70-30.  Excluded Assets
Three changes were made to this section. First, language was moved from subsection 1(d), to the first paragraph of subsection 1 for clarification that rental or lease income, other than from CRP, is not considered property essential to earning a livelihood. 

1.	Property which is essential to earning a livelihood. Property which is essential to earning a livelihood means property that a member of a Medicaid unit owns, and which the Medicaid unit is actively engaged in using to earn income, and where the total benefit of such income is derived for the Medicaid units needs. A member of a Medicaid unit is actively engaged in using the property if a member of the unit contributes significant current personal labor in using the property for income-producing purposes. The payment of social security taxes on the income from such current personal labor is an indicator of the active use of the property.  Except for property enrolled in the Conservation Reserve Program (CRP), other property is not essential to earning a livelihood if the Medicaid unit is merely receiving rental or lease income.

[Subsection 1 (d)]
d.	Property enrolled in the Conservation Reserve Program (CRP) is considered property essential to earning a livelihood. Any other property from which the Medicaid unit is merely receiving rental or lease income is not essential to earning a livelihood.

Second, the burial exclusion is changed from $3000 to $5000.  A new subdivision (b) has also been added to reflect new policy that funds, insurance, or other property given to someone else, but that is intended for the applicant or recipient’s burial, is still considered to be owned by the applicant or recipient. Regardless of who owns the burial, it will be counted as available to the client and will be applied against their burial exclusion.  Any excess amount will count as the client’s assets.  Clients will need to reduce any such plans that cause them to be over the asset limit before they can continue to be eligible for Medicaid in August and beyond.  Any known cases need to be acted on in July.  If a case is not known, the case needs to be dealt with as soon as it is known, but no later than the next redetermination.  Language has been added to the application and redetermination forms to capture this information.  The remaining subdivisions in subsection 3 were renumbered, and examples in subdivisions (c) and (i) have been updated to reflect the new burial exclusion amount.

3.	Any prepayments or deposits, regardless of ownership, which total $3000 $5000 or less, which are designated by an applicant or recipient for their burial. An applicant or recipient designates a prepayment or deposit for his or her burial by providing funds that are used for that purpose.

Earnings accrued on the total amount of the designated burial fund are excluded.

A burial plot for each family member (eligible or ineligible) will also be excluded. (Effective July 1, 1996.)

a.	The value of an irrevocable burial arrangement must be considered towards the burial exclusion.

b.	Any funds, insurance or other property given to another person or entity in contemplation that its value will be used to meet the burial needs of the applicant or recipient must be considered towards the burial exclusion.  This includes any funds set aside in a separate account or used to purchase insurance or any other burial product.  Any amount in excess of the $5000 burial exclusion is a countable asset if the fund, insurance, or other property has a cash value, fair market value, or surrender value.

Example:  An individual with no burial plan living in a nursing facility gives his daughter $3945 per month for five months, and asks that the money be used for his funeral.  His daughter purchases a $20,000 single premium life insurance policy that designates a funeral home as beneficiary, to the extent necessary to pay for the individual’s funeral and burial expenses, with the individual’s children named as contingent beneficiaries.  The individual applies for Medicaid in the fifth month.  The insurance policy has a surrender value of $17,500 in the month of application.  The policy is intended for the individual’s burial, so $5000 of the value of the policy is excluded.  The remaining $12,500 of the value of the policy is an asset held in trust, and is considered to be available to the individual (05-70-50, Trusts).  To the extent that the $19,725 paid to the daughter is neither excluded nor available under 05-70-50, a disqualifying transfer has occurred ($19,725 - $5000 (burial set-aside) - $12,500 (countable asset) = $2225 transfer).

	[Example in subdivision c]

Example 2: An applicant has an annuity with a face value of $5000 $7000. The annuity cost basis is $3200 $5200 and the surrender value is $3500 $5500. Only $3000 $5000 of the cost basis is excluded for burial. The remaining $200 is counted toward the asset limit. The excess surrender value of $300 is considered accrued earnings and is excluded.

	[Example in subdivision i]
For example: A savings account of $3000 $5000 designated for burial has grown to $5000 $7000. The owner withdraws $1000 before application for Medicaid. All $4000 $6000 is now considered to be the principle amount designated.

$3000 $5000 would be excluded for burial and the remaining $1000 would be applied to the $3000 asset limit.

Third, an additional asset exclusion was added to identify that certain annuities are excluded.  

16.	An employee benefit annuity, or an annuity purchased by a community spouse, as long as the annuity meets the requirements specified in 05-70-45 that allow that annuity to be excluded.   

05-70-45.  Annuities
This section has been revised for clarification and to add new policy.  Key changes include: the definition of “life expectancy” will no longer consider an individuals specific health condition, but will rely solely on the life expectancy table; all annuities except excluded community spouse annuities annuitized on or after August 1, 2005 will be considered assignable; the maximum payment allowed for a community spouse annuity increases beginning August 1, 2005; and community spouse annuities annuitized on or after August 1, 2005 have new requirements.

1.	An annuity is a financial instrument, identified as such, that is established to provide periodic income payments over a defined period of time (see "annuity").  Most annuities are sold by organizations such as insurance companies (see "issuing entity"), though individuals sometimes assume the responsibility to pay annuity contracts. An annuity may be purchased with a single lump sum payment or through periodic payments.  Annuities have long been used as a means of creating retirement income, and many established retirement plans involve the use of annuities. Annuities are also used in an attempt to convert countable assets into income so as to avoid consideration of those assets in eligibility determinations.  

This section describes the effect of any annuity on any application for Medicaid benefits. This section identifies annuities that are not countable assets; annuities that are countable assets and how to establish their value; and how to determine if the purchase or annuitization of an annuity is a disqualifying transfer, and if so, how to determine the amount of the disqualifying transfer. This section takes into consideration the requirements of North Dakota law, including asset considerations (510-05-70-10), valuation of assets (510-05-70-60) and N.D.C.C. 50-24.1-02.8, which governs transfers involving annuities and purchases of annuities by community spouses. This section recognizes the extent to which annuities may be returned to the issuing entity for a cash settlement, transferred to another individual as payee, or have the payee's rights to income sold to another without the permission, or even the knowledge, of the issuing entity.

2.	For purposes of this section:

a.	"Annuitant" means the individual whose life is considered in determining the price and payment schedule of an annuity, and who is usually the payee of the annuity;

b.	"Annuitized annuity" means an annuity subject to a contractually established schedule of payments to be made by the issuing entity, other than an immediate lump sum payment of all of the annuity's value;

c.	"Annuity" means a policy, certificate, contract, or other arrangement between two or more parties whereby one party pays money or other valuable consideration to the other party in return for the right to receive payments in the future for a fixed period of time;

d.	"Community spouse" has the same meaning as in 05-65-10, Definitions for Spousal Impoverishment.

e.	"Home and community based services spouse" has the same meaning as in 05-65-10, Definitions for Spousal Impoverishment.

f.	"Institutionalized spouse" has the same meaning as in 05-65-10, Definitions for Spousal Impoverishment.

g.	"Issuing entity" means the individual or entity that issues and undertakes a promise to make payments provided in an annuity;

h.	"Level monthly payments" means substantially equal monthly payments such that the total annual payment in any year varies by five percent or less from the total annual payment of the previous year and does not provide for a balloon or deferred payment of principal or interest;

i.	"Reasonable estimate of Life expectancy" means the anticipated lifetimes of individuals of a given age and sex according to the life expectancy table at Appendix O 05-100-75 or, as of the date on which an annuity is annuitized, if an individual suffers from a condition that requires long term care, is anticipated to require long term care within twelve months, or has been diagnosed with a disease or condition likely to reduce the individual's life expectancy, that individual's actual life expectancy as established by a reliable medical statement that estimates the remaining duration of life.  

Example 1:  Mr. White has a condition that will likely require him to enter a nursing home within the next 12 months.  He decides to set up an annuity that will pay benefits for a specific time period based on his life expectancy.  The life expectancy table is not used to estimate his life expectancy, but a reliable medical statement is needed.

Example 2:  Ms. Green decides to set up and annuitize an annuity that will pay benefits for a specific time period based on her life expectancy. At that time she is not in long term care and is not expected to require such care within the next 12 months, and she has not been diagnosed with any disease or condition that is likely to affect her life expectancy.  Nine months later she has a stroke, ends up in a nursing home, and applies for Medicaid.  The life expectancy table is used to determine whether the annuity she annuitized was set up to pay within her life expectancy because her condition was not anticipated when the annuity was annuitized.

3.	Any annuity is a countable asset unless this section provides otherwise if a member of a Medicaid unit or the spouse of a member of a Medicaid unit is a payee.  An annuity may not be excluded from consideration as an asset on the basis that it is not saleable without working an undue hardship.

a.	An annuity in which a payment option was selected before August 1, 2005 may indicate that it is non-assignable and irrevocable, however, the income stream from the annuity may be sold. 

b.	An annuity in which a payment option is selected on or after August 1, 2005 is considered assignable by state law unless the annuity meets all of the requirements of subsection 7.  This provision applies even if the annuity indicates that it is non-assignable.  An assignable annuity is usually easier to sell, and may bring a higher offer, than the previously mentioned income stream from a non-assignable annuity.

4.	The value of a countable annuity is:

a.	If the annuity may be surrendered to its issuing entity for a refund or payment of a specified amount or provides an available lump-sum settlement option, an amount equal to the total available proceeds from that refund, surrender, or settlement;

b.	If the annuity may be assigned, an amount equal to its value as a contractual right to receive money payments; and

c.	If the annuity may not be surrendered or assigned, an amount  equal to the highest amount offered by a buyer ready and able to complete the purchase of the right to receive a stream of income consisting of the payments yet to come due under the terms of the annuity.  

  i.	"Receivables" are the legal right to be paid money due under the terms of a contract.  The income stream produced by an annuity is such a receivable. Any person may purchase the right to this income stream. 

 ii.	A "factor" is someone who buys receivables at a discount. 

iii.	The “factors' market” is one place that an annuity’s income stream may be sold. Companies and individuals nationwide will pay a lump sum in return for the right to receive the remaining annuity payments.  This income stream may be sold regardless of whether the annuity is irrevocable or not assignable.   Several offers must be sought in order to establish the fair market value of the annuity.

5.	An annuity is not countable as an available asset if it constitutes an employee benefit that qualifies for favorable tax treatment under the Internal Revenue Code or is a plan described in the Internal Revenue Code as a retirement plan under which contributions must end and withdrawals begin by age seventy and one-half, but any payment derived from that annuity is income.  These annuities are considered “qualified” annuities.

6.	An annuity purchased by for a community spouse in which a payment option was selected before August 1, 2005 is not countable as an available asset for purposes of making an assessment or determining eligibility in a spousal impoverishment case, but any payment derived from that annuity is income, if:

a.	To The annuity is irrevocable and cannot be assigned to another person;

b.	The issuing entity is an insurance company or other commercial company that sells annuities as part of the normal course of business;

c.	The annuity provides for level monthly payments;

d.	The annuity will return the full purchase price and interest within a reasonable estimate of the purchaser’s life expectancy; and

e.	The monthly payments from the annuity do not exceed $2267 Unless specifically ordered otherwise by a court of competent jurisdiction acting to increase the amount of spousal support paid on behalf of a community spouse by an institutionalized spouse or a home and community based services (HCBS) spouse.:

i.	For eligibility periods before August 1, 2005, the monthly payments from the annuity do not exceed $2267; and

ii.	For eligibility periods on or after August 1, 2005, the monthly payments from the annuity do not exceed $2378.

7.	An annuity for a community spouse, purchased on or after August 1, 2005, is not countable as an available asset for purposes of making an assessment or determining eligibility in a spousal impoverishment case, but any payment derived from that annuity is income, if:

a.	The annuity is irrevocable and cannot be assigned to another person;

b.	The issuing entity is an insurance company or other commercial company that sells annuities as part of the normal course of business;

c.	The annuity provides for level monthly payments;

d.	The annuity will return the full principle and has a guaranteed period that is equal to at least 85% of the community spouse’s life expectancy;

e.	The monthly payments from all annuities that meet the requirements of this subsection do not exceed $2378 and, when combined with the community spouse’s other income, at the time of application for Medicaid, does not exceed $3567; and

f.	If the applicant for Medicaid is age 55 or older, the Department of Human Services is irrevocably named as the primary beneficiary of the annuity following the death of the applicant and the applicant’s spouse, not to exceed the amount of benefits paid by Medicaid.  If a minor or disabled child survives the applicant and spouse, any payments from the annuity will be provided to those individuals.

8.	Annuities as disqualifying transfers.  A determination shall be made whether the irrevocable annuitization of an annuity constitutes a disqualifying transfer upon application for Medicaid for coverage of nursing care services, and upon any subsequent irrevocable annuitization, of an annuity.  Except as provided in subsection 9, the irrevocable annuitization of an annuity constitutes a transfer with an uncompensated value equal to the proceeds that would have been available from the surrender of the annuity immediately before annuitization if the annuity was not immediately annuitized, or the purchase price if the annuity was immediately annuitized, reduced by the total of:

a.	All payments made to members of the Medicaid unit under the terms of the annuity prior to the time the calculation is made; and

b.	The value of the annuity at the time the calculation is made.

9.	Annuitization of an annuity by a community spouse is not a disqualifying transfer for purposes of determining eligibility in a spousal impoverishment case if the annuity meets all of the requirements of subsections 5 6 or 7.

10.  For additional information concerning spousal impoverishment prevention, see 510-05-65.  For additional information concerning the treatment of disqualifying transfers, see 510-05-80.  

10.	Annuities shall be submitted to the Medicaid Eligibility unit for assistance in determining whether the annuity is countable as an asset or whether a disqualifying transfer occurred.  A copy of the entire annuity policy, the date of birth of the annuitant, and verification of the annuity purchase price and, if applicable, date of annuitization, and, when appropriate, the annuitant's actual life expectancy as established by a reliable medical statement that estimates the remaining duration of life must be secured and submitted with the inquiry.

05-80-05.  Definitions (Disqualifying Transfers)
Language, and an example, was added to the definition of “Someone in a confidential relationship” to provide information and clarification.  We have been seeing a number of questions relating to transfers to, or by, an applicant or recipient’s power of attorney.  The new language clarifies the legal responsibilities of individuals with a confidential relationship (which includes POAs); that transfers by, or approved by, an applicant or recipient are transfers; and identifies when transfers made by someone with a confidential relationship are allowed, and when the property is still considered available to the applicant or recipient.

5.	"Someone in a confidential relationship" includes an applicant or recipient’s power of attorney, guardian, conservator, legal custodian, caretaker, trustee, attorney, accountant, or agent, and may include a relative or other person with a close and trusted relationship to the individual.

State law prohibits individuals with a confidential relationship from personally benefiting from transactions involving the applicant or recipient’s income or assets. They also have a duty to act in the highest good faith and not obtain any advantage over the applicant or recipient; to not use or deal with an applicant or recipient’s property for their own profit; to refrain from transactions adverse to the applicant or recipient; and to refrain from using undue influence to obtain any advantage from the applicant or recipient.  

Accordingly, transfers of an applicant or recipient’s real or personal property from the made by an applicant or recipient to the person with the confidential relationship must be at 100% of estimated fair market value. Transfers for less than 100% may be subject to the disqualifying transfer provisions.

Transfers of an applicant or recipient’s property made by someone with a confidential relationship, for which 100% of fair market value was not received, are not considered to be transfers without adequate compensation when an applicant or recipient is not competent, or if competent, does not approve.  In these situations the uncompensated value is considered to be available to the applicant or recipient because the person who made the transfer must account for and replace any amounts lost by the applicant or recipient.  

For example:  Ms. Smith has a power of attorney to act on behalf of her mother who is incompetent.  She transfers property owned by her mother, and valued at $60,000, to herself and her two siblings.  Medicaid will still consider $60,000 as available to Ms. Smith’s mother as Ms. Smith did not act in the best interest of her mother.  Ms. Smith’s mother has the legal ability to make the funds available, or to affect the return of the property.

05-80-15.  Penalty Periods
Language was added to subsection 3 to provide clarification that only the remaining penalty period (and not any portion of the period that has already passed) can be divided between the spouses when both are in receipt of nursing care services and are otherwise eligible for Medicaid.  

3.	If a transfer results in a period of ineligibility for an individual receiving nursing care services, and the individual’s spouse begins receiving nursing care services and is otherwise eligible for Medicaid, the remaining period of ineligibility shall be apportioned equally between the spouses if the transfer was made on or after the individual's spouse's look-back date. Any months remaining in the period of ineligibility must be assigned or reassigned to the spouse who continues to receive the nursing care services if one spouse dies or stops receiving nursing care services.

05-85-15.  Unearned Income
The Healthy Steps program was added because if a lump sum is received while a family is covered by Healthy Steps, and is now applying for Medicaid, the lump sum continues to be prorated.  Likewise, if a Healthy Steps case closed and a Medicaid case is later opened and it is still within a period in which a lump sum was prorated for the Healthy Steps case, or in the following proration period, the lump sum continues to be prorated for Medicaid.  This existing policy has been extended to include Healthy Steps.

1.	Recurring unearned lump sum payments received after application for Medicaid are prorated over the number of months the payment is intended to cover. When a payment is received and prorated in an ongoing case, or after a period of Medicaid or Healthy Steps eligibility, and the case closes and then reopens during the prorated period, or within the following proration period, the lump sum payment must continue to be used. This prevents cases from being closed temporarily to avoid using the lump sum income. All other recurring unearned lump sum payments received before application for Medicaid or Healthy Steps are considered income in the month received and are not prorated.

05-85-30.  Disregarded Income
Three clarifications have been added to this section.  First, the lead in paragraph was changed to provide emphasis that the section does not apply to Transitional Medicaid Benefits or to individuals receiving LTC. 

This section applies to an individuals residing in their his or her own home or in a specialized facility, and to the Medicare Savings Programs, and to the Workers with Disabilities coverage,. but It does not apply to Transitional Medicaid Benefits.  For (refer to 05-50-05), or to an  individuals receiving nursing care services in a nursing facility, the state hospital, the Anne Carlsen facility, the Prairie at St. John's center, the Stadter Psychiatric Center, an intermediate care facility for the mentally retarded (ICF-MR), or receiving swing-bed care in a hospital, (refer to the Post Eligibility Treatment of income, Section 05-85-25).

Second, the senior companion program was added to the list of volunteer programs covered by the Domestic Volunteer Service Act of 1973.

16.	Compensation received by volunteers participating in the action program as stipulated in the Domestic Volunteer Service Act of 1973, including foster grandparents, older American community service program, retired senior volunteer program, service corps of retired executives, volunteers in service to America (VISTA), senior companion program, and university year for action;

Third, subsection 42 was clarified to identify that interest and dividend income that is disregarded is that from liquid assets.

42.	Interest or dividend income from liquid assets; and

05-90-25.  Budgeting Procedures for Pregnant Women
A policy change has been made to no longer require pregnancy to be medically verified.  The pregnant woman may confirm that the pregnancy was confirmed by medical personnel, a public health agency, or a home pregnancy test.  Other verification of pregnancy is no longer required.  

The Omnibus Budget Reconciliation Act of 1990 provided for continuous eligibility for pregnant women effective July 1, 1991.
 
When a pregnant woman, whose pregnancy has been medically verified confirmed, becomes eligible for Medicaid, she continues eligible, without regard to any increase in income of the Medicaid unit, for sixty days after the day her pregnancy ends, and for the remaining days of the month in which the sixtieth day falls. Decreases in income, however, will be considered to further reduce any recipient liability. Likewise, a pregnant woman can move from one coverage type to another (e.g. from Family Coverage to poverty level); however, if poverty level eligible and income increases, the pregnant woman remains poverty level eligible. All other Medicaid eligibility factors continue to apply.
 
Pregnancy is medically confirmed if the woman confirms that she has been determined to be pregnant by medical personnel, a public health agency, or a home pregnancy test. Pregnancy must be medically verified confirmed for all eligibility determinations made during pregnancy, however, for determinations made after the birth of the baby, the child’s birth certificate may be used as verification of pregnancy.

05-90-40.  Budgeting Procedures for Unmarried Parents with Children
A paragraph was added to clarify how expenses for children in common are divided between unmarried parents.

When budgeting for children whose parents are living together, but are not married:

1.	If paternity has not been legally established, but the father's name is on the birth certificate or he has signed the "North Dakota Acknowledgment of Paternity" form, SFN 8195, with a revision date of 4/98 or later, the income of the father must be used to determine Medicaid eligibility. The assets of the father must also be used if the child is eligible as a disabled individual.

For the month of birth a child’s eligibility follows that of the mother.  If the mother is eligible for the 60 free days after birth, the child is too. The father's income and, if appropriate, assets are used beginning with the month of birth, however, if they would cause Medicaid ineligibility for the child, the child will remain eligible through the month in which the 60th day falls.

Child care expenses for the child are split between the two parents; however, if half of the deduction is more than one parent’s available income, the unused amount of the expense can be deducted from the other parent’s income.

05-95-35.  Caring for Children
This new section was added to provide referral information about the Caring for Children program.

Caring For Children is a program, operated by the North Dakota Caring Foundation, that provides health and dental benefits to eligible children, at no cost to the children or their families.  Children from birth through age 18 who are ineligible for Medicaid, Healthy Steps, or other health insurance may qualify for coverage.  For information or to apply, call 1-800-342-4718 (277-2227 in Fargo).

05-95-40.  Children’s Special Health Services 
This new section was added to provide referral information about Children’s Special Health Services.

Children's Special Health Services provides services for children with special health care needs and their families. Services include coverage for diagnosis and treatment for children who have disabilities or chronic conditions.  The program supports family-centered, community-based, coordinated services and systems of health care that meet the diverse needs of families.  For information, contact the Children’s Special Health Services Program, North Dakota Department of Health, Division of Maternal and Child Health, 600 East Boulevard Ave, Dept 301, Bismarck ND 58505, or call 1-800-472-2286.  

05-100-41. SFN 228, “Workers with Disability Report Part II”
This new section was added to incorporate the SFN 228.

This manual letter also included several changes to correct:

•	Appendix references (from appendix letters to section cites).
•	Typographical corrections.
•	Chapter 449 reference corrections.