Policy History for  4.5.7 LIQUID ASSETS

Release 07-04

4.5.7 LIQUID ASSETS

4.5.7.1 Personal Property

Personal property in general includes money, goods, cause of action, damages for breach of contract, and evidences of debt.  Value of personal property means market value.  Deduct all encumbrances to arrive at a final evaluation. Count household effects, libraries, and jewels only if of unusual value.

4.5.7.2 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:
 

1. 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.
    

2. 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.

4.5.7.2.1 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.

4.5.7.3 HUD Payments

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.

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

4.5.7.4.1 Annuities purchased after March 1, 2004

(For annuities purchased before March 1, 2004  refer to subsection 4.5.7.4.2)

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:

Annuities that cannot be surrendered.

Determine the value of annuities that cannot be surrendered ( e.g. immediate annuities in the payout phase) as follows

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.  

4.5.7.4.2 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.

4.5.7.5 Life Insurance

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.

4.5.7.6 Endowment to CCRC

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.

4.5.7.7 Income Tax Refunds

Federal and state income tax refunds are available assets.

4.5.7.8 Earned Income Tax Credit (EITC)

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.

4.5.7.9 Vehicles

A vehicle is any:

1. Passenger car or other motor vehicle, and

2. Used to transport persons or goods, and

3. Owned by someone in the fiscal test group.

In all cases, log skidders (used to move logs out of the woods to market) are exempt vehicles.

4.5.7.9.1 Determining Equity Value

Equity value is:

1. 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,
    

2. 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:

1. Find the vehicle’s wholesale value.
    

2. Subtract the encumbrances (loans or mortgages) that are recorded as liens on the vehicle’s title.  The result is the equity value.
    

3. Divide the equity value by the total number of owners.
    

4. 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.

4.5.7.9.2 When to Count, When to Exempt

Count vehicle values as follows:

For EBD categorically and medically needy MA, when the fiscal group owns:

1. One vehicle, exempt it if it meets one of the following conditions:
 

1. Necessary for employment.
    

2. Necessary for medical treatment of a specific or regular medical problem.
    

3. Modified for operation by or transportation of a handicapped person.
    

4. Necessary because of climate, terrain, distance or similar factors to provide transportation to perform essential daily activities.
    

5. Disregard one vehicle for a spousal impoverishment case. (5.10.4)  

2.  One vehicle and it does not meet any of the above conditions, exempt it if its fair market value does not exceed $4,500.  Fair market value in excess of $4,500 counts toward the asset limit.
    

3. Two or more vehicles, count the full equity value of all vehicles except for the one vehicle that meets the conditions of either #1 or #2 above.

4.5.7.10 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.

4.5.7.11 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.

4.5.7.11.1 Retroactive SS Payments

The unspent portion of retroactive SSI and RSDI benefits received on or after March 2, 2004 is excluded from resources for the 9 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 9 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 9 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 6 calendar months following the month in which the individual receives the benefits.

4.5.7.12 Land Contract

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:

1.  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.
    

2. From this amount subtract:

1. Payments which the purchaser has already made on the principal.

.

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

3. The amount lost to a discount.

3. 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:  

1. The terms of the land contract prohibit its sale, or
    

2. 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.

4.5.7.13 Mortgage

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

4.5.7.14 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:

1. 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.
    

2. 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.)

4.5.7.15 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.

4.5.7.16 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.

4.5.7.17 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/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.

4.5.7.18 Institutionalized Person’s Assets

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.

4.5.7.19 Blind/Disabled Set-Aside

Disregard the following for a blind or disabled person:

1. Assets essential to the continuing operation of her/his trade or business .
    

2. Other income-producing property.
    

3. Assets set aside to carry out an approved self-support plan (4.1.3.2.2).  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.

4.5.7.20 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/her change of intent.

4.5.7.21 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 Individual Retirement Accounts ( IRA ) and plans for self-employed individuals, sometimes referred to as KEOGH plans.
 

1. Employment related pension plans should be treated as follows.

1.  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.
    

2. 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.
    

3. Periodic payments made from a work-related retirement benefit plan should be counted as income in the month of receipt.

2. 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 (4.1.4.9).

3. 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 (1.1.3.1.2)  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.

4.5.7.22 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.

4.5.7.23 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 MA group proves it tried to cash the bond and was refused.

4.5.7.24 Zebley Payments

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.

4.5.7.25 Indian Judgment Fund Purchases

Disregard assets purchased with Indian judgment funds (4.1.2.1, #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.

4.5.7.26 Payments to Nazi Victims

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

4.5.7.27 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.

4.5.7.28 Uniform Gifts to Minors Act

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.

4.5.7.29 Individual Development Accounts ( IDA ) 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.  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.

4.5.7.30   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 9 months following the month of recipient.

This page last updated in Release Number : 06-01

Release Date: 03/13/06

Effective Date: 03/13/06