No. 29073 (Amendment): R414-304. Income and Budgeting

DAR File No.: 29073
Filed: 09/20/2006, 05:44
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rulemaking is needed to set a limit on deducting from income the amount of medical and remedial care expenses an institutionalized individual incurs either during a transfer of asset penalty period or when institutional services are denied because the individual has equity in his or her home over $500,000. The amount of such expenses that can be deducted will be limited to zero. An institutionalized person includes individuals who qualify for home- and community-based services under a Medicaid waiver, as well as those in medical institutions. The intent of this rulemaking is to prevent Medicaid from indirectly paying these expenses, which can happen if the Medicaid agency were to allow the client to deduct the amount of these expenses from his income to reduce what he would have to pay for Medicaid coverage if he later becomes eligible for Medicaid-covered institutional services. It is also needed to modify the order in which the agency deducts medical expenses from income in compliance with federal regulations, and to define how the agency will refund clients who pay a cash spenddown for Medicaid and then have to pay for other medical expenses during the month. Other changes are being made to clarify deductions from income.

Summary of the rule or change:

This rulemaking limits deductions of medical expenses incurred by an institutionalized person on Medicaid. Without this limitation, such persons could indirectly transfer the costs of those expenses to Medicaid by using those expenses later to reduce what the individual would otherwise have to pay for institutional or waiver Medicaid. This change is needed to comply with federal regulations about deducting medical expenses. Other changes include making language easier to understand and clarifications.

State statutory or constitutional authorization for this rule:

Title 26, Chapter 18

This rule or change incorporates by reference the following material:

42 CFR 435.601, 435.831, 2005 ed.; 42 CFR 435.725, 435.726 and 435.832, 2005 ed.; and 1905(a), 1902(r)(1) and 1924(d) of Title XIX of the Social Security Act, 2005

Anticipated cost or savings to:

the state budget:

Some savings to the state budget is anticipated; however, it is difficult to determine what the savings may be because we do not have data on how many institutionalized individuals may have a penalty period applied due to a transfer of assets for less than fair market value. We also do not know how many applicants will have more than $500,000 in equity in their home. Historical data is limited, and would likely not be a good indicator of future trends because of the major changes affecting coverage for long-term care services required by the Deficit Reduction Act of 2005, Pub. L. No. 109-171.

local governments:

There is no impact on local governments, because local governments do not determine eligibility for Medicaid, nor do they cover the medical costs of institutionalized persons.

other persons:

The aggregate cost is based on what Medicaid clients may face in terms of increased costs for medical services because they will not be able to deduct from their income the medical expenses they incur during a penalty period or when they have excess equity in a home. This cost is difficult to determine because we do not have data about how many people may be affected by these changes.

Compliance costs for affected persons:

While it is likely that individuals may see increased costs for medical care, the costs to individual clients is difficult to determine because we do not have data on who will transfer assets, nor how much they may transfer. We also do not know how many people will have equity over $500,000 in their home.

Comments by the department head on the fiscal impact the rule may have on businesses:

The federal Deficit Reduction Act of 2005, Pub. L. No. 109-171, requires that state Medicaid programs make it more difficult for institutionalized individuals to shelter assets and remain eligible for Medicaid. This rule change is necessary to stay in compliance with federal law. Fiscal impact on businesses that serve Medicaid clients should be positive, if long-term care facilities are able to charge a market based private pay rate to anyone made ineligible for Medicaid by these rule changes. David N. Sundwall, MD, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Health
Health Care Financing, Coverage and Reimbursement Policy
CANNON HEALTH BLDG
288 N 1460 W
SALT LAKE CITY UT 84116-3231

Direct questions regarding this rule to:

Ross Martin at the above address, by phone at 801-538-6592, by FAX at 801-538-6099, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

11/14/2006

This rule may become effective on:

11/22/2006

Authorized by:

David N. Sundwall, Executive Director

RULE TEXT

R414. Health, Health Care Financing, Coverage and Reimbursement Policy.

R414-304. Income and Budgeting.

R414-304-7. A, B and D Medicaid and Family Medicaid Income Deductions.

(1) This section sets forth income deductions for non-institutional aged, blind, disabled and family Medicaid programs, except for the Medicaid Work Incentive program.

([1]2) The Department [adopts]applies the financial methodologies required by 42 CFR 435.601, and the deductions defined in 42 CFR 435.831, [2001]2005 ed., which [is]are incorporated by reference. Any additional income deductions or limitations are described in this rule.

([2]3) For aged, blind and disabled individuals eligible under 42 CFR 435.301(b)(2)(iii),(iv),and (v), described more fully in 42 CFR 435.320, .322 and .324, the Department [shall allow an income deduction]deducts from income an amount equal to the difference between 100% of the federal poverty guideline and the current BMS income standard for the applicable household size[,] to determine the spenddown amount.

([3]4) To determine eligibility for and the amount of a spenddown under medically needy programs, the[The] Department [shall allow]deducts from income health insurance premiums the client or a financially responsible family member pays providing coverage for the client or any family members living with the client [as deductions from income ]in the month of payment. The Department [shall also allow an income deduction for]also deducts from income the amount of a health insurance premium[s for] the month it is due when the Department [is paying]pays the premium on behalf of the client as authorized by Section 1905(a) of Title XIX of the Social Security Act, [2001]2005 ed., except no deduction is allowed for Medicare premiums the Department pays for or reimburses to recipients.

(a) The Department deducts the entire payment[ shall be allowed as a deduction] in the month it is due and [will not be prorated]does not prorate the amount.

(b) The Department [shall not allow]does not deduct health insurance premiums [as a deduction for determining]to determine eligibility for the poverty-related medical assistance programs or 1931 Family Medicaid.

([4]5) To determine the spenddown under medically needy programs, the Department deducts from income health[Health] insurance premiums the client or a financially responsible family member paid in the application month or during the three month retroactive period. [which are not fully used as a deduction to reduce a spenddown in the month paid may be allowed as a deduction to reduce a spenddown]The deduction is allowed either in the month paid or in any month after the month paid to the extent the full amount was not deducted in the month paid, but only through the month of application.[

(5) Medicare premiums shall not be allowed as income deductions if the state will pay the premium or will reimburse the client.]

(6) To determine eligibility for medically needy coverage groups, the Department deducts from income medically necessary medical[Medical] expenses [shall be allowed as income deductions]that the client verifies only if the expenses meet all of the following conditions:

(a) The medical service was received by the client, client's spouse, parent of [an unemancipated]dependent client or [unemancipated]dependent sibling of [an unemancipated]a dependent client, a deceased spouse or a deceased dependent child.

(b) The medical bill [shall]will not be paid by Medicaid [or be]and is not payable by a third party.

(c) The medical bill remains unpaid, or the medical service was received and paid during the month of application or during the three-month time-period immediately preceding the date of application. The date the medical service was provided on an unpaid expense does not matter if the client still owes the provider for the service. Bills for services received and paid during the application month or the three-month time-period preceding the date of application can be used as deductions only through the month of application.

(7) A medical expense [shall ]cannot be allowed as a deduction more than once.

(8) A medical expense allowed as a deduction must be for a medically necessary service. The Department [shall be responsible for deciding]decides if services are [not ]medically necessary.

(9) The Department deducts medical expenses in the order required by 42 CFR 435.831(h)(1). When expenses have the same priority, the Department deducts paid expenses before unpaid expenses.

([9]10) [The Department shall not allow as a medical expense, co-payments or co-insurance amounts required under the State Medicaid Plan that are owed or paid by the client to receive Medicaid-covered services.]A client who pays a cash spenddown may present proof of medical expenses paid during the coverage month and request a refund of spenddown paid up to the amount of bills paid by the client. The following criteria apply:

(a) Expenses for which a refund can be made include medically necessary medical expenses not covered by Medicaid or any third party, co-payments required for prescription drugs covered under a Medicare Part D plan, and co-payments or co-insurance amounts for Medicaid-covered services as required under the State Medicaid Plan.

(b) The expense must be for a service received during the benefit month.

(c) The Department will not refund any portion of any medical expense the client uses to meet a Medicaid spenddown because the client assumes responsibility to pay any expenses used to meet a spenddown.

(d) A refund cannot exceed the actual cash spenddown amount paid by the client.

(e) The Department does not refund spenddown amounts paid by a client based on unpaid medical expenses for services the client receives during the benefit month. The client may present to the agency any unpaid bills for non-Medicaid-covered services that the client receives during the coverage month. The unpaid bills may be used to meet or reduce the spenddown the client owes for a future month of Medicaid coverage to the extent such bills remain unpaid at the beginning of such future month.

(f) The Department will reduce a refund by the amount of any unpaid obligation the client owes the Department.

([10]11) For poverty-related medical assistance, an individual or household [shall be]is ineligible if countable income exceeds the applicable income limit. Medical costs [are not allowable deductions for determining ]cannot be deducted from income to determine eligibility for poverty-related medical assistance programs. [No spenddown shall be allowed to meet]Individuals cannot pay the difference between countable income and the applicable income limit to become eligible for poverty-related medical assistance programs.

(12) When a client must meet a spenddown to become eligible for a medically needy program, the client must sign a statement that says:

(a) the agency told the client how spenddown can be met,

(b) the client expects his or her medical expenses to exceed the spenddown amount, and

(c) whether the client intends to pay cash or use medical expenses to meet the spenddown.

(13) A client may meet the spenddown by paying the agency the amount with cash or check, or by providing proof to the agency of medical expenses the client owes equal to the spenddown amount.

(a) The client may elect to deduct from countable income unpaid medical expenses for services received in non-Medicaid covered months to meet or reduce the spenddown.

(b) Expenses must meet the criteria for allowable medical expenses.

(c) Expenses cannot be payable by Medicaid or a third party.

(d) For each benefit month, the client can choose to change the method of meeting spenddown by either presenting proof of allowable medical expenses to the agency or by presenting a cash or check payment to the agency equal to the spenddown amount.

[ (11) As a condition of eligibility, clients must certify on a form approved by the Department that medical expenses in the benefit month are expected to exceed the spenddown amount. The client must do this when spenddown starts and at each review when the client continues to be eligible under the spenddown program. If medical expenses are less than or equal to the spenddown, the client shall not be eligible for that month. The client may elect to use allowable medical expenses the client still owes from previous months to reduce the spenddown so that expected medical expenses for the benefit month exceed the remaining spenddown owed, if neither Medicaid nor a third party will pay the bill.

] ([12]14) The Department deducts only the amount of [P]pre-paid medical expenses [shall not be allowed as deductions]that equals the cost of services actually received in the month such expenses are paid. Payments a client makes for medical services in a month before the month services are actually received cannot be deducted from income.

[(13) The Department elects not to set limits on the amount of medical expenses that can be deducted.

(14) Clients may choose to meet their spenddown obligation by incurring medical expenses or by paying a corresponding amount to the Department.

]([15]15) [For A, B and D Medicaid, institutional costs shall be allowed as deductions if the services are medically necessary.]For non-institutional Medicaid programs, the Department deducts institutional medical expenses the client owes only if the expenses are medically necessary. The Department [shall be responsible for deciding]decides if services for institutional care are [not ]medically necessary.

([16]16) [No one shall be required]The Department does not require a client to pay a spenddown of less than $1.

([17]17) Medicaid covered medical costs incurred in a current benefit month cannot be used to meet spenddown when the client is enrolled in a Medicaid Health Plan. Bills for mental health services incurred in a benefit month cannot be used to meet spenddown if Medicaid contracts with a single mental health provider to provide mental health services to all recipients in the client's county of residence.[the client will be eligible for Medicaid and lives in a county which has a single mental health provider under contract with Medicaid to provide services to all Medicaid clients who live in that county.] Bills for mental health services received in a retroactive or application month that the client has fully-paid during that time can be used to meet spenddown [as long as the services were not provided by the mental health provider in the client's county of residence which is under contract with Medicaid to provide services to all Medicaid clients]only if the services were not provided by the Medicaid-contracted, mental health provider.

 

R414-304-8. Medicaid Work Incentive Program Income Deductions.

[(1) The Department shall allow the provisions found in R414-304-7 (1), (3) and (5).](1) This section sets forth income deductions for the Medicaid Work Incentive (MWI) program.

(2) To determine eligibility for the MWI program, t[T]he Department [shall apply the following deductions]deducts the following amounts from income [in determining]to determine countable income that is compared to 250% of the federal poverty guideline:

(a) $20 from unearned income. If there is less than $20 in unearned income, the Department deducts the balance of the $20 from earned income;

(b) Impairment-related work expenses;

([b]c) $65 plus one half of the remaining earned income;

(d) A current-year loss from a self-employment business can be deducted only from other earned income.

(3) For the [Medicaid Work Incentive Program (]MWI[)] program, an individual or household [shall be]is ineligible if countable income exceeds the applicable income limit. Health insurance premiums and medical costs [will not be]are not deducted from income before comparing countable income to the applicable limit.

(4) The Department deducts from countable income the amount of health[Health] insurance premiums paid by the [Medicaid Work Incentive Program]MWI-eligible individual or a financially responsible household member, to purchase health insurance for himself or other family members in the household [shall be deducted from income ]before determining the MWI buy-in premium.

(5) An eligible individual may meet the MWI buy-in premium with cash, check or money order payable to the [Office of Recovery Services]Department. The MWI premium cannot be met with medical expenses.

(6) [No one will be required]The Department does not require a client to pay a MWI buy-in premium of less than $1.

 

R414-304-9. A, B, and D Institutional Medicaid and Family Institutional Medicaid Income Deductions.

(1) This section sets forth income deductions for aged, blind, disabled and family institutional Medicaid programs.

([1]2) The Department [adopts]applies the financial methodologies required by 42 CFR 435.601 and the deductions defined in 42 CFR 435.725, 435.726, and 435.832, [2001]2005 ed., which are incorporated by reference. The Department [adopts]applies Subsection 1902(r)(1) and 1924(d) of the Compilation of the Social Security Laws[, in effect January 1, 2001], which are incorporated by reference. Any additional income deductions or limitations are described in this rule.

([2]3) The following definitions apply to this section:

(a) "Family member" means a son, daughter, parent, or sibling of the client or the client's spouse who lives with the spouse.

(b) "Dependent" means earning less than $2,000 a year, not being claimed as a dependent by any other individual, and receiving more than half of one's annual support from the client or the client's spouse.

([3]4) Health insurance premiums:

(a) For institutionalized and waiver eligible clients, the Department [shall allow an income deduction for]deducts from income health insurance premiums only for the institutionalized or waiver eligible client and only if paid with the institutionalized or waiver eligible client's funds. Health insurance premiums [shall be allowed as an income deduction]are deducted in the month due. The payment [shall]is not [be ]pro-rated. The Department [also allows an income deduction for]deducts the amount of a health insurance premium[s] for the month it is due if the Department is paying the premium on behalf of the client as authorized by Section 1905(a) of Title XIX of the Social Security Act[, 2001 ed.], except no deduction is allowed for Medicare premiums the Department pays for or reimburses to recipients.

(b) The Department [shall allow]deducts from income the portion of a combined premium, attributable to the institutionalized or waiver-eligible client[, as an income deduction] if the combined premium includes a spouse or dependent family member and is paid from the funds of the institutionalized or waiver eligible client.[

(4) Medicare premiums shall not be allowed as income deductions if the state pays the premium or reimburses the client.]

(5) The Department deducts medical[Medical] expenses [shall be allowed as income deductions]from income only if the expenses meet all of the following conditions:

(a) the medical service was received by the client;

(b) the unpaid medical bill [shall]will not be paid by Medicaid or [be payable ]by a third party;

(c) [the]a paid medical bill can be [allowed only in]deducted only through the month it is paid. No portion of any paid bill can be [allowed]deducted after the month of payment.

(6) The Department does not deduct medical or remedial care expenses that the Department is prohibited from paying because the expenses are incurred during a penalty period imposed due to a transfer of assets for less than fair market value. The Department does not deduct medical or remedial care expenses that the Department is prohibited from paying under Section 6014 of Pub. L. 109-171 because the equity value of the individual's home exceeds the limit set by such law. The Department will not deduct such expenses during the month the services are received nor for any month after the month services are received even when such expenses remain unpaid.

([6]7) [A]The Department does not allow a medical expense [shall not be allowed ]as an income deduction more than once.

([7]8) A medical expense allowed as an income deduction must be for a medically necessary service. The Department of Health [shall be responsible for deciding]decides if services are [not ]medically necessary.

([8]9) The Department deducts only the amount of [P]pre-paid medical expenses [shall not be allowed as income deductions]that equals the cost of services actually received in the month such expenses are paid. Payments a client makes for medical services in a month before the month the services are actually received cannot be deducted from income.

[(9) The Department shall not allow as a medical expense, co-payments or co-insurance amounts required under the State Medicaid Plan that are owed or paid by a client to receive Medicaid-covered services.

(10) The Department elects not to set limits on the amount of medical expenses that can be deducted.](10) When a client must meet a spenddown to become eligible for a medically needy program or receive Medicaid under a home and community based care waiver, the client must sign a statement that says:

(a) the agency told the client how spenddown can be met,

(b) the client expects his or her medical expenses to exceed the spenddown amount, and

(c) whether the client intends to pay cash or use medical expenses to meet the spenddown.

(11) A client may meet the spenddown by paying the agency the amount with cash or check, or by providing to the agency proof of medical expenses the client owes equal to the spenddown amount.

(a) The client may elect to deduct from countable income unpaid medical expenses for services received in non-Medicaid covered months to meet or reduce the spenddown.

(b) Expenses must meet the criteria for allowable medical expenses.

(c) Expenses cannot be payable by Medicaid or a third party.

(d) For each benefit month, the client may choose to change the method of meeting spenddown by either presenting proof of allowable medical expenses to the agency or by presenting a cash or check payment to the agency equal to the spenddown amount.

([11]12) Institutionalized clients are required to [contribute]pay all countable income remaining after allowable income deductions to the institution in which they reside as their contribution to the cost of their care.

(13) A client who pays a cash spenddown, or a liability amount to the medical facility in which he resides, may present proof of medical expenses paid during the coverage month and request a refund of spenddown or liability paid up to the amount of bills paid by the client. The following criteria applies:

(a) Expenses for which a refund can be made include medically necessary medical expenses not covered by Medicaid or any third party, co-payments required for prescription drugs covered under a Medicare Part D plan, and co-payments or co-insurance amounts for Medicaid-covered services as required under the State Medicaid Plan.

(b) The expense must be for a service received during the benefit month.

(c) The Department will not refund any portion of any medical expense the client uses to meet a Medicaid spenddown or to reduce the liability owed to the institution because the client assumes responsibility to pay any expenses used to meet a spenddown or reduce a liability.

(d) A refund cannot exceed the actual cash spenddown or liability amount paid by the client.

(e) The Department does not refund spenddown or liability amounts paid by a client based on unpaid medical expenses for services the client receives during the benefit month. The client may present to the agency any unpaid bills for non-Medicaid-covered services that the client receives during the coverage month. The unpaid bills may be used to meet or reduce the spenddown the client owes for a future month of Medicaid coverage to the extent such bills remain unpaid at the beginning of such future month.

(f) The Department reduces a refund by the amount of any unpaid obligation the client owes the Department.

([12]14) The Department deducts a personal needs allowance for residents of medical institutions[shall be] equal to $45.

([13]15) When a doctor verifies that a single person, or a person whose spouse resides in a medical institution is expected to return home within six months of entering a medical institution or nursing home, the Department [shall ]deducts a personal needs allowance equal to the current Medicaid Income Limit (BMS) for one person, defined in R414-304-11([5]6), for up to six months to maintain the individual's community residence.

([14]16) Except for an individual eligible for the Personal Assistance Waiver, an individual receiving assistance under the terms of a Home and Community-Based Services Waiver [shall be]is eligible to receive a deduction for a non-institutionalized, non-waiver-eligible spouse and dependent family member as if that individual were institutionalized. The Department applies the provisions of Section 1924(d) of the Compilation of Social Security Laws, or the provisions of 42 U.S.C. 435.726 or 435.832 to determine the deduction for a spouse and family members.

[(a) Income received by the spouse or dependent family member shall be counted in calculating the deduction if that type of income is countable to determine Medicaid eligibility. No income disregards shall be allowed. Certain needs-based income and state supplemental payments shall not be counted in calculating the deduction. Tribal income shall be counted.

(b) If the income of a spouse or dependent family member is not reported, no deduction shall be allowed for the spouse or dependent family member.

]([15]17) A client [shall not be]is not eligible for Medicaid coverage if medical costs are not at least equal to the contribution required towards the cost of care.

[(16) To determine an income deduction for a community spouse, the standard utility allowance for households with heating costs shall be equal to the standard utility allowance used by the federal food stamp program. For households without heating costs, actual utility costs shall be used. The maximum allowance for a telephone bill is equal to the amount allowed by the federal food stamp program. Clients shall not be required to verify utility costs more than once in a certification period.

]([17]18) Medicaid covered medical costs incurred in a current benefit month cannot be used to meet spenddown when the client is enrolled in a Medicaid Health Plan. Bills for mental health services incurred in a benefit month cannot be used to meet spenddown if Medicaid contracts with a single mental health provider to provide mental health services to all recipients in the client's county of residence.[the client will be eligible for Medicaid and lives in a county which has a single mental health provider under contract with Medicaid to provide services to all Medicaid clients who live in that county.] Bills for mental health services received in a retroactive or application month that the client has fully-paid during that time can be used to meet spenddown [as long as the services were not provided by the mental health provider in the client's county of residence which is under contract with Medicaid to provide services to all Medicaid clients.]only if the services were not provided by the Medicaid-contracted, mental health provider.

 

KEY: financial disclosures, income, budgeting

Date of Enactment or Last Substantive Amendment: [July 1, ]2006

Notice of Continuation: January 31, 2003

Authorizing, and Implemented or Interpreted Law: 26-18-1