16.7 Liquid Assets

Items of personal property, found in or near the home, that are used on a regular basis; and
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.

Note: Items that are acquired or held because of their value or as an investment are not considered household goods (see Section 16.7.1.3 Other Personal Property).

16.7.1.2 Personal Effects

Do not count personal effects as an asset.

Personal effects are:

Items of personal property originally worn or carried by the individual, or
Articles otherwise having an intimate relation to the individual.

Examples of personal effects include but are not limited to:

Personal jewelry including wedding and engagement rings,
Personal care items,
educational or recreational items such as books or musical instruments,
Items of cultural or religious significance to an individual, such as ceremonial attire, or
Items required because of an individual's physical or mental impairment, such as prosthetic devices or wheelchairs.

Note: Items that are acquired or held because of their value or as an investment are not considered personal effects.

16.7.1.3 Other Personal Property

Personal property that an individual acquires or holds because of its value or as an investment:

Is a countable resource (asset); and
Is not considered to be a household good or personal effect.

Other personal property items include, but are not limited to:

Gems acquired or held because of their value or as an investment,
Jewelry that is not worn or held for family significance, and
Collectibles acquired or held because of their value or as an investment.

Example 1: 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.

16.7.2 Loans

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 in the month received, and as an asset in the months following the month it was received.

16.7.2.1 Reverse Mortgage

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.

16.7.3 HUD Payments

Disregard reimbursements resulting from federal regulatory changes in computing HUD housing rent as income in the month paid and assets in the next month.

16.7.4 Annuities

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 or herself or another person as the annuitant. The purchaser may also name a beneficiary to receive annuity payments after the annuitant's death.

16.7.4.1 Annuities Purchased After March 1, 2004

(For annuities purchased before March 1, 2004, refer to Section 16.7.4.2 Annuities Purchased Before March 1, 2004).

Treat annuities purchased after March 1, 2004, as available assets in accordance with the following:

16.7.4.1.1 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.

Plus

2. Earnings on the deposits not previously paid out.

Minus

3. Withdrawals and surrender costs charged for withdrawal.

Equals

4. Annuity’s value

16.7.4.1.2 Annuities That Cannot Be Surrendered (this subsection effective 03-01-09)

It has been established that a market exists for annuities that cannot be surrendered. Some companies have purchased such annuities. Check the annuity contract to see if it can be sold. If it is capable of being sold, consider it to be an available asset unless the applicant or member demonstrates that he or she has made reasonable attempts to obtain a fair market price by offering the annuity for sale to companies active in the annuities market.

If it appears that the annuity cannot be sold, verify this by having the annuity contract reviewed by a company active in the annuities market for an opinion of its value to the company. If the company documents an amount at which it values the annuity, that amount will be considered an available asset.

The annuity will be considered to be an unavailable asset if documentation is provided from the company stating that it places no value on 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 Section 17.11 Annuities.

Example 2: Cynthia is 83 years old and applying for Medicaid. She owns an annuity purchased for $110,000 after March 1, 2004. The annuity is paying out and cannot be surrendered. It is irrevocable and non-transferable. The agency has the annuity contract reviewed by a company in the annuities market. The company provides the agency with a written statement that it would value Cynthia’s annuity contract at $82,000. Cynthia’s annuity is therefore considered to be an available asset with a value of $82,000 which is the amount used to determine Cynthia’s Medicaid eligibility.

Example 3: Sam is 66 years old and applying for Medicaid. He owns an annuity purchased for $110,000 after March 1, 2004. The annuity is paying out and cannot be surrendered. It is irrevocable and non-transferrable. It appears from the contract that it cannot be sold. The agency verifies this by having the annuity contract reviewed by a company in the annuities market. The company provides the agency with a written statement that it places no value on Sam’s annuity contract. Sam’s annuity is therefore considered to be an unavailable asset in determining his Medicaid eligibility.

16.7.4.2 Annuities Purchased Before March 1, 2004

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:

1. Total deposits made to the annuity.

2. Earnings on the deposits not previously paid out.

3. Withdrawals and surrender costs charged for withdrawal.

In determining the cash value, do not deduct income tax withheld or tax penalties for early withdrawal.

Annuities in the Pay-Out Phase (can not be surrendered)

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.

16.7.5 Life Insurance

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, including riders and attachments, 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.

Face value is the basic death benefit of the policy including the value of riders and other attachments.

Cash value means the net amount of cash for which the policy could be surrendered after deducting any loans or liens against it.

Workers should enter the total of the face value plus any riders or other attachments as the “Face Value” on the Life Insurance Assets page.

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: In calendar year 2000, some VA Term Life Insurance Policies were assigned a cash value. The Department of Veteran’s Affairs put into effect a regulation to provide paid-up life insurance on term policies. When the veteran chooses this option to purchase paid-up insurance with their term insurance, the policy at that point has a cash surrender value . The cash value amount is a countable asset.

16.7.6 Treatment Of Continuing Care Retirement Community Entrance Fees

A Continuing Care Retirement Community (CCRC) or Life Care Community (LCC) typically provides a variety of living arrangements, from independent living through skilled nursing care. Potential residents frequently must pay substantial entrance fees and sign detailed contracts before moving to the community.

Entrance fees paid by an individual to a CCRC or LCC are counted as an available non-exempt asset of the individual for Medicaid eligibility determinations when all of the following conditions apply:

The person has the ability to use the entrance fee, or the contract provides that the entrance fee may be used, even in part, to pay for care if the person’s other resources or income are insufficient to pay for their care. It is not necessary for the CCRC or LCC to provide a full, lump sum refund of the entrance fee to the resident. If even a portion of the fee can be refunded or applied to pay for care as required, this condition would be met,
The person is eligible for a refund of any remaining entrance fee when the person dies or terminates the contract and leaves the community. It is not necessary for the resident to actually receive a refund of the entrance fee or deposit. This second condition is met as long as the resident could receive a refund were the contract to be terminated or if the resident dies, and
The entrance fee does not confer an ownership interest in the continuing care retirement community or life care community. An ownership interest generally means the right to possess and convey property, but recognize that it might not be an all-inclusive definition. Therefore, the resident will be required to verify whether or not they have an ownership interest in the CCRC or LCC by presenting documentation from the facility to that effect. If the CCRC or LCC confirms that the entrance fee does not confer an ownership interest to the resident, then this third condition is met.

Entrance fees which meet all three conditions described above will be counted as an available non-exempt asset for all Medicaid eligibility determinations for the elderly , blind, and disabled, regardless of whether or not the individual is requesting long term care services. An entrance fee which does not meet all three conditions described above is an unavailable asset.

For Medicaid eligibility determinations, all normal spousal impoverishment rules regarding income and asset allocations for a community spouse are applicable to married couples who reside in a CCRC or LCC, when one spouse resides in the skilled nursing care section of the facility, and the other spouse (the community spouse) resides in a more independent living setting. CCRC and LCC contracts are required by federal law to account for spousal impoverishment income and asset allocations to a community spouse, before determining the amount of resources that a resident must spend on his or her own care.

16.7.7 Income Tax Refunds

Federal and state income tax refunds are available assets.

16.7.8 Earned Income Tax Credit

Disregard all EITC in the month received and for 12 months following the month of receipt.

After the 12 month disregard period has passed, count any remaining EITC payments as available, non-exempt assets.

16.7.9 Vehicles (Automobiles)

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.

16.7.9.1 Determining Equity Value

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.

16.7.9.2 When to Count, When to Exempt

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:

1. A vehicle that has been junked;
2. A vehicle that is used only for recreational purposes.

When an individual owns two or more automobiles, apply the following rules:
1. If only one automobile is used for transportation, totally exclude the value of that automobile.
2. 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 12 calendar months, exclude the total value of the automobile until the repairs are completed. At that point, apply the rules for determining if the automobile should be excluded.

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.

16.7.10 Property Settlement

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.

16.7.11 Lump Sums Payments

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.

16.7.11.1 Retroactive SS Payments

The unspent portion of retroactive SSI and Retirement Survivors Disability Insurance (RSDI) 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 retroactive 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.

16.7.12 Land Contract

When a land contract is executed, the purchaser builds equity in the property through the payments he or she 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 5: 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

1. Encumbrances on the contract, for example, a personal loan.

The amount lost to a discount.

Example 6: Company ABD purchases land contracts. They have offered to buy Mr. Graham’s land contract at a 10 percent discount.

$40,000 Outstanding Balance

- 4,000 10%

$36,000 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 or 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.

16.7.13 Mortgage

Treat any mortgage held by and owed to a member the same as a land contract.

16.7.14 Wisconsin Higher Education Bonds

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.)

16.7.15 Wartime Relocation of Citizens

Disregard restitution paid under PL 100-383 to Japanese-Americans and Aleuts or their survivors who were interned or relocated during World War II.

16.7.16 Agent Orange Settlement Fund

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.

16.7.17 Radiation Exposure Compensation Act

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 or 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.

16.7.18 Self-Support Plan Assets

Disregard assets set aside to carry out an approved self-support plan (see Section 15.7.2.2 Self-Support Plan). 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.

16.7.19 Replacing and Repairing Exempt Assets

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 or her change of intent.

16.7.20 Retirement Benefits

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 IRA s and plans for self-employed individuals, sometimes referred to as Keogh plans.

Employment related pension plans should be treated as follows.

If an applicant/member 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/member 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/member has to quit a job to get at the retirement funds, or if the applicant/member is receiving periodic payments from the retirement benefit plan.
If the applicant/member does not have access to the account’s principal in his or 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/ member should be counted as available non-exempt assets (minus any early withdrawal penalty) for the Medicaid applicant/member. The applicant/member 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 (see Section 15.4.9.1 EBD Interest/Dividend Income).

Disregard work-related retirement benefit plans or individually owned retirement accounts, such as IRAs or Keoghs, of an ineligible spouse in an EBD case. 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 7: 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.

16.7.21 Gifts

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.

16.7.22 U.S. Savings Bonds

Count the cash value of a U.S. Savings Bond unless it is unavailable. A bond is unavailable only if the Medicaid group proves it tried to cash the bond and was refused.

16.7.23 Indian Judgment Fund Purchases

Disregard assets purchased with Indian judgment funds (see Section 15.3.14 Payments to Native Americans, #10). But do not disregard:

1. Proceeds from the sale of these initial purchases.

2. Subsequent purchases made with the proceeds from the sale of these initial purchases.

16.7.24 Payments to Nazi Victims

Disregard payments made under PL 103-286 to victims of Nazi persecution.

16.7.25 Spina Bifida Child

Disregard payments made under PL 104-204 to any child of a Vietnam veteran for any disability resulting from the child's spina bifida.

16.7.26 Uniform Gifts to Minors Act

Do not 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. There is no asset test for minors for EBD eligibility determinations.

16.7.27 Individual Development Accounts Programs

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. Member 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.

16.7.28 Crime Victim Restitution Program

Disregard any payments received from a state established fund to aid victims of a crime. These payments are an excluded resource for nine months following the month of member.

16.7.29 The American Recovery and Reinvestment Act (ARRA) of 2009

Do not count the one-time $250 payment under the ARRA as an asset either in the month of receipt or nine months following the month the payment is received.

This page last updated in Release Number: 15-01

Release Date: 06/10/2015

Effective Date: 06/10/2015