TN 10 (07-10)

HI 03030.001 What are Resources for Medicare Part D?

A. Resource counting for Medicare Part D Extra Help

To be eligible for the Medicare Part D prescription drug program’s Extra Help (also known as low-income subsidy), an individual must have income and resources below the limits established by the Medicare Modernization Act (MMA). The following sections define resources and explain how to count them for purposes of determining eligibility for the Medicare Part D Extra Help in the prescription drug program.

B. Definition of resources for Medicare Part D Extra Help

Resources are cash and other assets that an individual owns that could convert to cash to be used for his or her support and maintenance.

NOTE: Public Law 110-275 (The Medicare Improvements for Patients and Providers Act of 2008), changes the rules for counting the cash surrender value (CSV) of a life insurance policy as a resource for Extra Help applications.

The CSV of a life insurance policy does not count as a resource for:

  • applications effectively filed on or after January 1, 2010; and

  • initial determinations that do not become effective before January 1, 2010.

An example of an initial determination that becomes effective on or after January 1, 2010, is a periodic or cyclical redetermination initiated in August 2009.

C. Policy for countable resources

For purposes of determining eligibility for Extra Help, the following are countable resources.

1. Liquid resources

We count liquid resources. Liquid resources are cash and other assets that can be converted to cash within 20 workdays.

Examples of resources that are ordinarily liquid are:

  • Stocks

  • Bonds

  • Annuities

  • Financial Institution Accounts (including savings, checking, and time deposits, also known as certificates of deposit)

  • Mutual fund shares

  • Mortgages

  • Retirement Accounts (including Individual Retirement Accounts (IRA), and 401(k) accounts)

  • Promissory notes

  • Life insurance policies

    (CSV not countable as a
    resource for Extra Help applications filed on or after January 1, 2010)

  • Trusts (including revocable trusts and trusts that allow the beneficiary to direct the use of the funds)

We presume that these assets (and similar financial accounts and instruments) can be converted to cash within 20 workdays and are countable as resources. If the individual alleges that a particular asset cannot be converted to cash within 20 workdays, see HI 03030.001G in this section.

2. Non-home real property

a. Equity value

Count the equity value of non-home real property as a resource whether or not it can be converted to cash within 20 workdays. If the individual is not able to provide an estimate of the equity value of the property, determine equity value following the instructions in Non-Home Real Property SI 01140.100.

NOTE: Do not count the home that serves as the individual’s principal place of residence as a resource; see Resource Exclusions HI 03030.020.

b. Undue hardship exclusion

If the individual alleges that sale of the property would cause undue hardship due to loss of housing for a co-owner, follow the instructions in SI 01130.130

REMINDER: Conditional benefits do not apply to the Medicare Part D Extra Help program (For information on conditional benefits, see SI 01150.200).

D. Policy for assets that are not liquid resources

For purposes of determining eligibility for the Extra Help, the following non-liquid assets are not countable resources:

  • all vehicles (autos, trucks, motorcycles, boats, snowmobiles, etc.);

  • household goods and personal effects;

  • irrevocable burial trusts; and

  • irrevocable burial contracts.

E. Policy for transfers of resources

For purposes of determining eligibility for the Extra Help, we do not consider transfers of resources. Therefore, it is not necessary to ask an Extra Help applicant if he or she transferred resources. If an applicant alleges a transfer, it is not necessary to develop the transfer.

F. Policy for evaluating trusts

For Extra Help purposes, a trust may be a countable resource. Generally, we follow SSI rules when determining whether a trust is a resource for Extra Help purposes. Unlike SSI, we do not consider transfers of resources when determining eligibility for Extra Help in situations where funds have been placed into trusts or disbursed from trusts.

In addition, it is necessary to consider rebuttal if the individual has a trust and alleges that the funds in the trust cannot be accessed within 20 workdays.

1. All trusts established before January 1, 2000

To determine whether the trust is a resource for trusts established before January 1, 2000, follow the instructions in SI 01120.200D. The following general rules apply in determining Extra Help eligibility:

  • The trust is not a countable resource if the trust is irrevocable under applicable State law and the individual does not have the legal authority to direct the use of the trust assets for his or her support and maintenance.

  • The trust is a countable resource if the individual has the legal authority to revoke the trust or to direct the use of the funds in the trust for his or her support and maintenance.

However, if the individual alleges that he or she cannot access the funds in the trust within 20 workdays, offer rebuttal and develop following instructions in HI 03030.001G.2.b. in this section.

2. Trusts established on or after January 1, 2000, by the individual (grantor trusts)

For trusts established on or after January 1, 2000, by the individual (i.e., grantor trusts), follow the SSI rules in SI 01120.201 and SI 01120.203. The following general rules apply for determining eligibility for the Extra Help.

The grantor trust is not a resource if it is irrevocable under applicable State law and either:

  • it meets the requirements for one of the exceptions in SI 01120.203, or

  • the individual alleges that he or she cannot access the funds in the trust within 20 workdays.

    NOTE: In this case, the presumption that the trust is a resource is successfully rebutted because it is one of the assets listed in HI 03030.001G.2.a. in this section.

The grantor trust is a countable resource if the individual has the legal authority either:

  • to revoke the grantor trust, or

  • to direct the use of the trust assets for his or her support and maintenance.

However, if the individual alleges that he or she cannot access the funds in the trust within 20 workdays, offer rebuttal and develop per HI 03030.001G.2.b. in this section.

3. Trusts established by third parties, regardless of establishment date

For trusts established by third parties (i.e., not grantor trusts), determine whether the trust is a resource following the instructions in SI 01120.200D. The following general rules apply in determining Extra Help eligibility:

  • The trust is not a countable resource if the trust is irrevocable under applicable State law and the individual does not have the authority to direct the use of the trust assets for his or her support and maintenance.

  • The trust is a countable resource if the individual has the legal authority to revoke the trust or to direct the use of the funds in the trust for his or her support and maintenance.

However, if the individual alleges that he or she cannot access the funds in the trust within 20 workdays, offer rebuttal and develop following instructions in HI 03030.001G.2.b. in this section.

4. Chart summarizing how trusts are counted as resources

The following chart summarizes the policy for determining when a trust is counted as a resource for purposes of determining Extra Help eligibility.

Type of Trust

Trust is revocable or individual can direct use of funds for support and maintenance

Trust is irrevocable and individual cannot direct use of funds for support and maintenance

Trust established before January 1, 2000

Trust is presumed to be a resource, but individual may rebut per HI 03030.001G.2.b. (Full rebuttal development required).

Trust is not a resource

Trust established by the individual (Grantor Trust) on or after January 1, 2000

Trust is presumed to be a resource, but individual may rebut per HI 03030.001G.2.b. (Full rebuttal development required).

  1. Trust is not a resource if it meets requirements for an exception in SI 01120.203.

  2. Trust is not a resource if the trust does not meet requirements for an exception, but the individual alleges that assets in the trust cannot be accessed in 20 workdays (rebuttal is successful based on list of assets in HI 03030.001G.2.a.).

Trust established by third party, regardless of date.

Trust is presumed to be a resource, but individual may rebut per HI 03030.001G.2.b. (Full rebuttal development required).

Trust is not a resource

G. Policy for rebuttal of the presumption that an asset can be converted to cash within 20 workdays

We presume that the types of resources described in HI 03030.001C.1. in this section can be converted to cash within 20 workdays and are countable liquid resources. However, in some cases, such assets may not be convertible within 20 workdays. If the individual alleges that he or she has an otherwise countable asset that cannot be sold or converted to cash within 20 workdays, the individual may seek to rebut the presumption that the asset is a countable liquid resource.

1. When you should develop rebuttal

Undertake rebuttal development during an initial application, verification, or redetermination interview, or when the individual responds to a pre-decisional or determination letter sent by SSA if:

  • the individual alleges that he or she has an asset that cannot be sold or converted to cash within 20 workdays; and

  • successful rebuttal by the individual is material to the Extra Help determination.

2. Requirements for successful rebuttal

Consider the presumption rebutted if one of the following requirements is met.

a. Assets not requiring evidence of unsuccessful effort to sell

Consider the presumption rebutted if the individual alleges that the asset cannot be sold or converted to cash within 20 workdays and it is one of the following:

  • a loan agreement or promissory note;

  • a real estate contract;

  • a time share;

  • a life estate;

  • an unprobated estate;

  • livestock;

  • machinery;

  • mineral rights;

  • a deposit required by a continuing care retirement community; or

  • an irrevocable grantor trust established on or after January 1, 2000, whether it meets the requirements for an exception in SI 01120.203 or not;

If the individual alleges that one of these items cannot be sold or converted to cash within 20 workdays, assume that the presumption is rebutted without any further development.

b. Unsuccessful effort to sell the asset

For assets not listed in HI 03030.001G.2.a. in this section, consider the presumption rebutted if the individual alleges that he or she has been trying to sell the asset or convert it to cash for at least 20 workdays and has not been able to do so; and provides either:

  • evidence of a bona fide unsuccessful effort to sell or convert the asset, or

  • a statement from a knowledgeable source that the asset cannot be converted to cash within 20 workdays.

NOTE: The allegation by the individual that the asset cannot be sold or converted in 20 workdays is not sufficient to successfully rebut the presumption that the resource is a liquid (countable) resource.

3. Rebuttal determination

If the requirements for rebuttal are met, the asset is not a resource for purposes of determining eligibility for Extra Help.

If the requirements for rebuttal are not met, continue to count the asset as a resource.

H. Procedure for documenting the rebuttal determination

When the individual alleges owning a resource that cannot be sold or converted to cash within 20 workdays, use the following procedure.

  1. Document on the MAPS Report of Contact screen, either

    • the individual’s efforts to sell, and the nature of the evidence provided by the individual to support the rebuttal; or

    • that the asset is one of those listed in HI 03030.001G.2.a. in this section, which doesn’t require evidence.

  2. Document the adjudicator’s decision on the MAPS Report of Contact screen (e.g., rebuttal successful – asset not counted as a resource, or rebuttal unsuccessful – asset is counted as a resource.)

  3. If the rebuttal is successful, make the necessary input on MAPS to delete the resource.

I. First-time homebuyer and deemed first-time homebuyer tax credit

On November 6, 2009, the President signed the Worker, Homeownership, and Business Assistance Act of 2009 (WHBA), which extends the deadline for purchasing a home under the American Recovery and Reinvestment Act of 2009 (ARRA). WHBA also established a smaller tax credit, up to $6,500, for homebuyers who have lived in their principal residence 5 out of the last 8 years and purchased a new principal residence. These individuals are “deemed” first-time homebuyers for purposes of eligibility for the tax credit.

The first-time homebuyer’s and deemed first-time homebuyer’s tax credits are countable as resources and not excluded by law for determining eligibility for Medicare Part D Extra Help.

NOTE: For more information on counting the first-time homebuyer’s or deemed first-time homebuyer’s tax credit as a resource, see the SSI instructions in GN 02820.025N.

J. References


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HI 03030.001 - What are Resources for Medicare Part D? - 09/25/2012
Batch run: 09/25/2012
Rev:09/25/2012