Article 9, Section 1 Types of Property, Property Reserve, and Reduction of Property

 

Table of Contents

TITLE

MPG CITE

Types of Property

09.01.01

Encumbrances

09.01.02

Exemption Status

09.01.03

MFBU Property Evaluation

09.01.04

Availability & Ownership

09.01.05

Verifications

09.01.06

Differentiation of Property & Income

09.01.07

Property Reserve

09.01.08

Reduction of Excess Property

09.01.09

Retroactive Spenddown on Medical Bills

09.01.10

Property Computations

09.01.11

 

09.01.01 Types of Property

 

A.
Overview

This section describes types of property, differentiation of property and income, property reserve limits, and reduction of excess property regulations. Instructions for completion of form MC 176P, Property Worksheet, are also included in this section.

 

B.
Real Property

Real Property is land or improvements. Improvements generally include any immovable property attached to the land and any oil, mineral, timber, or other rights related to the land. Time shares, campground memberships, etc., which have a real property deed and assessment are treated as real property. Otherwise, they are treated as personal property.

MEM

50074

 

C.
Personal Property

Personal property includes possessions or interests, exclusive of real property, that may be easily transported or stored; including but not limited to cash on hand, bank accounts, notes, mortgages, deeds of trust, cash surrender value of life insurance, motor vehicles, uncollected judgments, an interest in a firm in receivership, a lawsuit, patents, and copyrights.

MEM

50073

 

09.01.02 Encumbrances

 

A.
Encumbrances

Any type of property may have an encumbrance. Encumbrances of all non-exempt property that is considered in the property determination must be verified.

MEM

50167

 

09.01.03 Exemption Status

 

A.
Exemption Status

Property may be either exempt or non-exempt depending on specific conditions that may apply according to MPG Article 9, Sections 2 through 14.

 

NOTE: Property that has been determined exempt based upon specific conditions loses its exempt status once the conditions are no longer met.

MEM

50401

50403

 

09.01.04 MFBU Property Evaluation

 

A.
MFBU Property Evaluation

Property of all members of the MFBU, as determined in accordance with MPG Article 8, Section 1, must be evaluated to determine:

 

   which property is to be included in determining Medi-Cal eligibility (exempt status)

   the value of the non-exempt property

   whether the total value of the non-exempt property exceeds the property limits

 

09.01.05 Availability & Ownership

 

A.
Availability & Ownership

Property must be evaluated to determine its ownership and availability. Basically, property must be owned by and available to a person in order to affect Medi-Cal eligibility. MPG Article 9.2 and 9.3 explain special situations to assist workers in the determination of ownership and availability of property.

 

09.01.06 Verifications

 

A.
When to Verify

The verifications required for each type of property are listed in each section.Non-exempt property must be verified:

 

   At initial application and reapplication prior to granting.

   When a change is reported.

   At redetermination as outlined in MPG 4.15.1d.

MEM

50167

 

B.
Why Verification is Necessary

Verification is required in order to:

 

   Determine if the property is exempt or nonexempt.

   Determine the net market value of non-exempt property

 

C.
Applicant/Beneficiary Responsibilities

Applicant /beneficiary responsibilities and worker responsibilities in obtaining verifications are explained in MPG Article 4, Section 7.

 

09.01.07 Differentiation of Property and Income

 

A.
Overview

Funds that are counted as income in the month received are not counted as property in the same month. The unexpended portion of income is considered property on the first of the month following the month of receipt. Any exceptions to this are noted in the specific items contained in MPG Article 9, Sections 2 through 12.

 

09.01.08 Property Reserve

 

A.
Overview

The property reserve is the net market value of the nonexempt property of all persons whose property is considered in determining the eligibility of the MFBU.

ACWD

89-90

B.
Property Limit

The property reserve cannot exceed the following limits:

 

Number of Persons Whose Property is Considered

Property Limit 1988

Property Limit 1989 and ongoing

QMB Property Limit 1989 and Ongoing

1

$1,900

$2,000

$4,000

2

$2,850

$3,000

$6,000

3

$3,000

$3,150

 

4

$3,150

$3,300

 

5

$3,300

$3,450

 

6

$3,450

$3,600

 

7

$3,600

$3,750

 

8

$3,750

$3,900

 

9

$3,900

$4,050

 

10 or more

$4,050

$4,200

 

NOTE: Maximum size of QMB MFBU is two persons when evaluating property.See MPG Article 5, Section 13 for QMB property rules.

 

C.
Property Ineligibility

Property ineligibility will be determined as follows:

 

If the property limits exceeds the limit during...

Then the MFBU will be...

An entire month

Ineligible to Medi-Cal benefits.

During the month

Eligible as long as the following conditions are met:

   The property reserve is reduced if it falls within the property limit by the last day of the month.

   All other conditions of eligibility are met.

 

09.01.09 Reduction of Excess Property

 

A.
Overview

Reduction of excess property is the process of reducing one's nonexempt property to within the property reserve limits by the end of the month to qualify for benefits. The worker must explain this right whenever property computation or form MC 176P is reviewed with the applicant/beneficiary regardless of whether he/she thinks the applicant/beneficiary has nonexempt property which might exceed the limits and regardless of whether he/she thinks the property reserve could be brought below the limits by the end of the month (see MPG 9.1.10 for retroactive reduction of excess property under Principe v. Belshe)

MEM

Proc. 91

 

B.
Ways to Reduce Excess Property

Allowable ways to reduce excess property include:

 

   Paying medical bills or other debts. This process is explained in MPG 9.1.9c.

   Using the excess funds to buy an asset which would be exempt (clothing, home furnishings, burial trusts, etc.).

   Paying for some service or benefit.

   A person in long term care may voluntarily pay an amount in excess of the property limit to the Department of Health Care Services to avoid discontinuance from Medi-Cal.This process is described in MPG Article 9, Section 12.

DHCS

Clarifica-tion

 

ACWDL

92-18

MEM

Proc. 91

C.
Paying Medical Bills or Other Debts

There must be a legal obligation to pay medical bills or other debts at the time the payment is made.The applicant/beneficiary may prepay rent, mortgage, other bills or debts.

 

NOTE:Applicants/beneficiaries cannot prepay future medical expenses.

 

D.
Medical Bills Paid or Obligated to Meet a SOC

Medi-Cal will not reimburse the medical bills paid or obligated by an applicant/beneficiary to meet his/her SOC or establish eligibility.In these situations workers shall:

 

Step

Action

1

Complete the Medi-Cal Information Notice to Providers Clarification of Liability Form MC174

2

Send the original MC174 to the provider.

3

Give the applicant/beneficiary a copy of the MC174.

4

Scan a copy of the MC174 in DoRes.

 

Example

 

A single father of two children went into the hospital and incurred $10,000 worth of medical bills in that month. He had $5,000 in a savings account. He was discharged in that same month. He withdrew his money and paid his hospital bill in that month. The following month he applied for retroactive coverage. On the Statement of Facts and during the interview he states, and provides verification, that he was in the hospital, that the total bill was $10,000, and that he paid $5,000 of the bill with the money from his savings account. In addition, the person had a $10,000 life insurance policy with a cash value of $300 and a checking account with $500, for a total of $800 of nonexempt property in the retroactive month.

 

The property reserve limit is $3,150 for a MFBU of three. The family is under the appropriate property limit. However, had the father not spent the $5,000, he would have been over the property limit in that retroactive month. The county must determine what portion of the $5,000 spent on medical expenses represented excess property.

 

Step

Action

Calculation

1

Determine property spent on medical care

$5,000.00

2

Determine cash surrender value & checking

$800.00

3

Add Steps 1 & 2 to obtain total

$5,800.00

4

Determine property limit

$3,150.00

5

Subtract property limit to determine what would have been excess property

$2,650.00

Therefore, of the $5,000 this person paid toward his medical expenses, only $2,650 was excess property which may not be reimbursed to the person. If the person is determined eligible for Medi-Cal, the county should complete the MC 174 informing the hospital that Medi-Cal is not liable for $2,650 of the $10,000 bill. If the family has no share-of-cost, the hospital must bill Medi-Cal for the services minus the $2,650 of the $5,000 which the beneficiary paid. The hospital must reimburse $2,350 ($5,000 - $2,650) to the beneficiary once Medi-Cal pays the claim.

 

NOTE: None of the $2,650 in medical expenses in the example above, may be used to meet the applicant/beneficiary's share-of-cost should there be one. If the applicant/beneficiary in the example above had a share-of-cost, all or a portion of the $2,350 which the applicant/beneficiary paid the hospital could have been applied toward the applicant/beneficiary's share-of-cost. If any were used toward the share-of-cost, that portion could not be billed to Medi-Cal or reimbursed to the applicant/beneficiary.

 

E.
Verification

If the applicant/beneficiary has verification of expenses (receipts, etc.), a copy should be filed in the case folder under the "property" tab. However, verification is not mandatory. If no verifications are available, a signed and dated statement by the applicant/beneficiary is acceptable evidence.

 

09.01.10 Retroactive Spend Down on Medical Bills

 

A.
Principe v. Belshe

Under the Principe v. Belshe court settlement, effective with Medi-Cal applications dated February 1, 1998 or after, the Medi-Cal program allows Medi-Cal applicants to spend excess property retroactively on qualified medical expenses to establish eligibility for Medi-Cal beginning with the month of application.

ACWDL

97-41

 

B.
Qualified Medical Expenses

Qualified medical expenses are bills incurred in any month by those listed below that are unpaid in the same month in which there is also excess property for the entire month beginning with the month of application.

 

   The individual or spouse.

   Any member of the individualís MFBU.

   The individualís children who are not members of the individualís MFBU but who are living with the individual.

 

NOTE: The same medical expenses cannot be applied under both Principe and used to meet the SOC or applied to SOC under Hunt v. Kizer.

 

C.
Principe Property Exemption

An exemption applied to otherwise excess property after that excess property has been spent in a later month on qualified medical expenses. The otherwise excess property must have existed for an entire month or months beginning with the month of application.

 

   The otherwise excess property may have to be converted to cash before it may be spent on qualified medical expenses. In those cases, the cash conversion receives the same exemption for the period of time before it is applied to the qualified medical expenses.

   Once steps are taken to liquidate property, it is to be considered unavailable and it may be possible to establish eligibility for the current month and ongoing at that point if otherwise eligible.

   The exemption does not exceed the amount of otherwise excess property. If an individual spent property which was not in excess of his/her property limit on medical expenses, the individual may be entitled to reimbursement from the medical provider if Medi-Cal eligibility is eventually established for the month in which the service was rendered.

 

D.
Principe Month(s)

A month or months beginning with the month of application during which the Principe property exemption has been allowed.

 

NOTE: The exemption may not be applied to any of the three months immediately preceding the month of application.

 

E.
Principe v. Belshe Provision

The Principe v. Belshe provision:

 

   Applies to individuals who have otherwise excess property for the entire month but who are otherwise eligible.

   Limits the month in which the Principe property exemption may occur to no earlier than the month of application.

   ∑ Allows these individuals to spenddown retroactively on qualified medical expenses by applying a Principe property exemption in a month where there is otherwise excess property if:

-  Payments of those qualified medical expenses occur in a later month; and

-  Verification of payments is provided to the worker.

   Does NOT apply to beneficiaries who have received Medi-Cal for some time and who are suddenly found to have excess property which results in an overpayment. Workers are required to continue to follow the overpayment procedures in MPG Article 16, Section 2 for these granted cases.

 

F.
Current Month Spenddown and Principe Retroactive Spenddown

The Principe provision does not affect those individuals who have excess property and who are able to reduce excess property during the same month. Whenever an individual provides verification of spenddown, under the regular current month spenddown or the Principe retroactive spenddown, the worker must ensure that the form MC 174 is completed. This form lists the medical expenses, the provider who was paid and contains a warning that is against the State law for the provider to bill Medi-Cal or to reimburse the beneficiary for the expenses listed, since the payment was made by the applicant/beneficiary to establish eligibility. This form is triplicate. One copy is sent to the provider, one is provided to the applicant/beneficiary and one is to be retained in the case file (under the medical tab).

 

G.
Examples of Principe v. Belshe Cases

Example 1

 

A single father with two children went into the hospital and incurred $10,000 medical bills in that month. An outstationed hospital worker took his application for Medi-Cal during the month of admission, advised him of the appropriate property limit and options of spenddown including the Principe v. Belshe provision. He was not discharged from the hospital until the month following the month of admission. He had $5,000 in a savings account. He withdrew his money and paid part of his hospital bill in that second month. During a subsequent interview, he provided verifications of his $10,000 medical costs and the $5,000 payment. In addition, he had a $10,000 life insurance policy with a cash value of $300 and a checking account with $500, for a total nonexempt property of $5,800 in the month of application.

 

The property limit is $3,150 for a MFBU of three. The family was over the property limit for the entire month of application. However, the excess property was spent down by the end of the second month by paying $5,000 toward the hospital bill. The worker must determine what portion of the $5,000 spent on medical expenses represents otherwise excess property.

 

Step

Action

Calculation

1

Determine Savings balance in the month of application.

$5,000.00

2

Determine insurance cash value & checking in the month of application.

$800.00

3

Add Steps 1 & 2 to obtain total.

$5,800.00

4

Determine property limit.

$3,150.00

5

Subtract property limit to determine what would have been excess property (This amount is included on MC174).

$2,650.00

6

Determine amount spent on medical bills.

$5,000.00

7

Subtract Step 6 from Step 5 to determine excess property remaining (Principe requirement met).

$0.00

8

Take the amount spent on medical bills.

$5,000.00

9

Subtract the Principe portion.

$2,650.00

10

The remainder is the amount that may be reimbursed by the provider or used to meet the SOC (this amount shall not be included on the MC174).

$2,350.00

In this case, the client only needs to spend $2,650 to bring his nonexempt property within the limit. Since he paid $5,000 toward his hospital bill (which is greater than $2,650), the worker will exempt $2,650 from his nonexempt property for the month of application. If the client is otherwise eligible, the worker should complete the MC 174 informing the hospital that Medi-Cal is not liable for $2,650 of the $10,000 bill. If the family has no SOC, the hospital will bill Medi-Cal for the services provided in excess of the $2,650, and reimburse the client for the amount he paid in excess of the $2,650 ($5,000 - $2,650 = $2,350) once Medi-Cal pays the claim.

 

NOTE: If the provider does not agree to reimburse the amount paid in excess the beneficiary should be provided with the Department of Health Care Services information provided below for Medi-Cal out-of-pocket expense reimbursement known as Conlan.

California Department of Health Care Services/Beneficiary Services Center

P.O. Box 13008

Sacramento, CA 95813-9998

Phone: (916) 403-2007 TDD: (916) 635-6491

 

Example 2

 

A single mother with one child applies for Medi-Cal in the middle of a month because her child was injured and incurred medical expenses amounting to $800. The district provides the MC 007 at the time of application.

 

During the face-to-face interview which occurs in the second month, the applicant provides verification indicating $4,000 in a bank account during the month of application. This balance was reduced to $2,400 in the second month. When asked what she spent the excess property on, the applicant states that at the end of the application month, she paid $600 for rent, $100 for utilities and $100 for groceries. She also paid the medical bill of $800 in the second month.

 

The property limit for this MFBU of two is $3,000. The remaining nonexempt property in the second month is $2,400. The MFBU meets the property requirement in the second month. Now, the worker needs to determine whether the MFBU also meets property requirements under the Principe provision in the month of application.

 

Step

Action

Calculation

1

Determine bank account balance in the month of application.

$4,000.00

2

Determine rent paid in the application month.

$600.00

3

Determine utilities paid in the application month.

$100.00

4

Determine groceries cost in the application month.

$100.00

5

Subtract Steps 2, 3, & 4 from Step 1 to obtain the remaining balance.

$3,200.00

6

Determine the property limit.

$3000.00

7

Subtract Step 6 from Step 5 to determine the otherwise excess property which is to be included on MC174.

$200.00

8

Determine the amount spent on medical bills.

$800.00

9

Subtract Step 8 from Step 7 to determine excess property and/or if Principe requirement is met.

$0.00

10

Take the amount spent on medical bills.

$800.00

11

Determine the Principe exemption.

$200.00

12

Subtract Step 11 from Step 10 to obtain the Amount that may be reimbursed or used to meet SOC. (Do not include this amount on the MC174)

$600.00

 

In this case, the client only needs to spend $200 to bring her nonexempt property within the limit. Since she paid $800 toward the hospital bill (which is greater than $200), the worker will exempt $200 from her nonexempt property for the month of application. If the client is otherwise eligible, the worker should complete the MC 174 informing the hospital that Medi-Cal is not liable for $200 of the $800 bill. If the family has no SOC, the hospital will bill Medi-Cal for the services provided in excess of $200, and reimburse the client for the amount she paid in excess of the $200 ($800 - $200 = $600) once Medi-Cal pays the claim.

 

If the applicant paid all her medical and non-medical expenses in the second month (instead of paying the non-medical bills in the month of application as shown above), she would not be eligible for Medi-Cal for the month of application. Under the Principe provision, only payments to medical expenses can be applied retroactively. Therefore, only the $800 paid toward the hospital bill in the second month may be used to reduce her property in the application month. This will leave her a remaining property balance of $3,200 ($4,000 - $800) for the application month.

H.
Procedure

In addition to explaining the regular excess property spend down policy, workers will also inform applicants of their right to reduce excess property by retroactive spenddown on medical bills under the Principe provision during the face-to-face interview, whether or not the applicant appears to have excess property. Workers may use language in the following paragraph to provide Principe information:

 

If you have property which exceeds the property limit for an entire month for which Medi-Cal is requested, you may still be able to receive Medi-Cal for that month or months if you meet all other eligibility requirements, and you reduce your excess property by paying qualified medical expenses. Qualified medical expenses are bills incurred in any month by you, your spouse or any member of your Medi-Cal Family Budget Unit, or your children who are living with you but who are not members of your Medi-Cal Family Budget Unit. These bills are unpaid in the same month in which there is also excess property for the entire month beginning with the month of application. You may not establish eligibility for Medi-Cal in this way for any of the three months immediately preceding the month of application.

 

When the applicant provides verification of retroactive excess property spend down on medical bills, the worker will determine whether the spend down has reduced the excess property to under the limit (see examples above). If yes and the MFBU also meets other eligibility requirements, the MFBU may be eligible for Medi-Cal from the month of application.

 

Workers will apply the Principe exemption to whichever is the most beneficial or whichever the family chooses; the MFBU or MBU(s) if Sneede applies.

 

Workers will continue to complete eligibility determinations within the 45 and 60-day time limits and deny the application if excess property has not been reduced. However, if the individual provides verification at a later date (up to three years from the date of the notice of action denying benefits) that excess property was spent on qualified medical expenses, the district which denied the application must rescind the denial and grant the case if other eligibility requirements are met. If a MC 180 is needed for a month which is more than one year old, the worker will check the second box on the form which states ďa court order requires that a card be issued.Ē

 

09.01.11 Property Computations

 

A.
Use of Form MC 176P

The CalWIN system will complete the property computation when the data collection windows are complete and EDBC is run.Workers shall review the wrap up windows and ensure the system has properly completed the property computations.

 

Form MC 176P may be used to manually determine which property is included in the property reserve, whether the property is below the property limit, and the period of ineligibility for transfers made without adequate consideration. It may also be used to manually compute income from property. (See MPG Article 10, Section 5 for treatment of income from property.) For computation examples of current month spenddown and Principe retroactive spenddown see MPG 9.1.10g.

 

MPG LTR 757 (06/2012)

 

 

 

 

 

 

 

MEM

Forms