County of San Diego Health and Human Services Agency HHSA MediCal Program Guide Types of Property Property Reserve and Reduction of Property Number Page 0901 1 of 6 Revision Date June 1 2022 Background Eligibility for MediCal is determined on a means tested basis As a condition of eligibility for NonModified Adjusted Gross Income MAGI MediCal customers must have a property reserve that is below the property reserve limit Purpose The purpose of this section is to provide guidance on differentiating property and income property reserve limits and reduction of excess property regulations This section has been revised to incorporate changes regarding the property reserve limit with the passing of Assembly Bill AB 133 Budget Act of 2021 PolicyEffective July 1 2022 a single person may have up to 130000 in countable property reserves and another 65000 for each additional household member up to 10 individuals A Types of Property Property is divided into real property and personal property Real property is land or improvements Improvements include any immovable property attached to the land as well as any oil timber mineral or other rights related to the land o Property which has a real property deed and assessment such as timeshares and campground memberships are treated as real property Personal property includes possessions or interests which are exclusive from real property and may be easily transported or stored Below are some examples of personal property o Cash on hand o Bank accounts o Notes o Mortgages o Deeds of trust o Cash surrender value of life insurance o Motor vehicles o A lawsuit o Patents o Copyrights B Property Exemption StatusProperty may be considered either exempt or nonexempt depending on specific conditions that may apply Property that is determined to be exempt based on specific conditions may lose its exemption status if the conditions are no longer met See MediCal Program Guide MPG 0902 through 0914 for more information on specific conditions C Encumbrances An encumbrance is a claim against a property or asset by an entity that is not the owner Any type of property may have an encumbrance The following are examples of an encumbrance County of San Diego Health and Human Services Agency HHSA MediCal Program Guide Types of Property Property Reserve and Reduction of Property Number Page 0901 2 of 6 Property lien Lease Mortgage Encumbrances of all nonexempt property that is considered in the property evaluation must be verified D Differentiation of Property and IncomeFunds that are counted as income in the month received are not counted as property in the same month Any unused income is considered property on the first of the month following the month it was received Refer to MPG 0902 through 0912 for any exceptions E MediCal Family Budget Unit MFBU Property EvaluationProperty of all members of the MFBU must be evaluated to determine If the property is nonexempt or if it meets exemption criteria The value of the nonexempt property If the total value of nonexempt property exceeds property reserve limits Ownership and availability of the property Property must be owned by and available to a person to affect MediCal eligibility Refer to MPG 0902 and 0903 for guidance on determining ownership and availability of property Refer to MPG 0801 for guidance on determining who is considered a member of a NonMAGI MFBU F Verification of PropertyNonexempt property must be verified at application when a change in circumstance is reported and at redetermination to determine the following Identify if the property is exempt or nonexempt The net market value of nonexempt property Refer to MPG 041501D for further guidance on when to verify property and MPG 0407 for guidance on obtaining verifications G Property ReserveProperty reserve is the net market value of the nonexempt property of all individuals whose property is considered when determining eligibility for NonMAGI MediCal Effective July 1 2022 the asset limits are as follows Number of Asset Limit Household Members 1 130000 2 through 10 Add 65000 for each additional household member When a customer exceeds the asset limits and is a NonMAGI MediCal eligible or potentially eligible customer a Human Services Specialist HSS will determine eligibility as follows County of San Diego Health and Human Services Agency HHSA MediCal Program Guide Types of Property Property Reserve and Reduction of Property Number Page 0901 3 of 6 If the customer exceeds Then the customer will be the asset limits for An entire month Ineligible to NonMAGI MediCal benefits During the month Eligible if the following conditions are met The property reserve is reduced if it falls within the property reserve limit by the last day of the month All other conditions of eligibility are met H Reduction of Excess PropertyThe reduction of excess property is the process of a customer reducing their nonexempt property to within the asset limits by the end of the month to qualify for NonMAGI MC benefits Refer to MPG 0901I for retroactive reduction of excess property under Principe vs Belshe When evaluating a customer for NonMAGI MediCal the HSS must provide the customer with the MC 007 MediCal Information Notice and inform the customer of the following The right to reduce their nonexempt property regardless of whether the HSS agrees the customer can reduce their property reserve below the limits by the end of the current month The right to reduce excess property by retroactive spenddown on medical bills under the Principe V Belshe provision Refer to MPG 0901I for guidance on retroactive spenddown Ways to Reduce Excess Property Allowable ways to reduce excess property include Using the excess funds to buy an asset which would be exempt such as clothing home furnishings or burial trusts Paying for home repairs or a home mortgage A person in long term care LTC may voluntarily pay an amount more than the asset limit to the Department of Health Care Services to avoid discontinuance from MediCal Refer to MPG 0912 for more information on this process Paying medical bills or other debts Note There must be a legal obligation to pay medical bills or other debts at the time the payment is made The customer may prepay rent mortgage other bills or debts Customers cannot prepay future medical expenses Medical Bills Paid or Obligated to Meet a Share of Cost SOC MediCal will not reimburse medical bills which are paid or obligated by a customer to meet their SOC or to establish eligibility When a customer has paid medical bills to meet their share of cost or establish eligibility the HSS must complete form MC 174 MediCal Information Notice to Providers Clarification of Liability This form lists medical expenses the provider who was paid and informs the customer and provider that it is against State law for the provider to bill MediCal or to reimburse the customer for the expenses listed as they were already used to meet SOC or establish eligibility HSS must complete the form as follows County of San Diego Health and Human Services Agency HHSA MediCal Program Guide Types of Property Property Reserve and Reduction of Property Number Page 0901 4 of 6 Step Action 1 Complete the form MC 174 2 Send the original MC 174 to the provider 3 Provide the customer with a copy of the MC 174 4 Upload a copy of the MC 174 into the CalWIN Electronic Case Management System CERMS Verification Reduction of Excess Property If a customer has verification of expenses paid such as receipts a copy must be imaged to CERMS If no verification is available a sworn statement signed under penalty of perjury is acceptable I Retroactive Spend Down on Medical Bills Under the Principe V Belshe court settlement customers are allowed to spend excess property retroactively on qualified medical expenses to establish eligibility for MediCal for any applications dated February 1 1998 or after Qualified Medical Expenses Qualified Medical Expenses are bills incurred in any month by the customer or their spouse any member of the customers NonMAGI MFBU that are unpaid for the same month in which the customer also has excess property for the entire month beginning with the month of application Note The same medical expenses cannot be applied under Principe V Belshe if they were used to meet SOC or applied to SOC under Hunt V Kizer Principe V Belshe Provision Applies to customers who have otherwise excess property for the entire month but who are otherwise eligible to NonMAGI MediCal Limits the month in which the Principe property exemption may occur to no earlier than the month of application Allows customers to spend down retroactively on qualified medical expenses by applying a Principe property exemption in a month where there is otherwise excess property if both of the following conditions are met o Payments of those qualified medical expenses occur in a later month o The customer provides verification of payments made This provision does not apply to the following Customers who have received MediCal for some time and are suddenly found to have excess property resulting in an overpayment Refer to MPG 1602 for overpayment procedures Customers who reduce excess property during the same month they are found to be over the property limit Note Whenever a customer provides verification of the spend down under the regular current month spend down provisions or the Principe retroactive spend down HSS must complete the MC 174 as outlined in MPG 0901H County of San Diego Health and Human Services Agency HHSA MediCal Program Guide Types of Property Property Reserve and Reduction of Property Number Page 0901 5 of 6 Principe Property Exemption This exemption is applied to otherwise excess property after the 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 can be spent on qualified medical expenses o The cash conversion receives the same exemption for the period before it is applied to qualified medical expenses Once steps are taken to liquidate property it is to be considered unavailable Eligibility must be established for the current and ongoing months at this time if otherwise eligible This exemption does not exceed the amount of otherwise excess property If a customer spent property which was not more than their property limit on medical expenses the customer may be entitled to reimbursement from the medical provider if MediCal eligibility is eventually established for the month in which the service was provided Note The months during which the Principe property exemption was allowed is known as the Principe months This exemption may not be applied to any of the three months immediately preceding the month of application J Property ComputationsCalWIN will complete the property computation when the pertinent data collection windows are complete and Eligibility Determination and Benefit Calculation EDBC is run HSSs must review the Perform Data Collection WrapUp windows to ensure CalWIN completed the property calculations properly Form MC 176 P Property Reserve Work Sheet can be used to manually determine which property is included in the property reserve if nonexempt 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 and property Refer to MPG 1005 for guidance on the treatment of income and property Action When evaluating customers for NonMAGI MediCal the HSS will complete a property evaluation using the policy outlined above Program Impacts Automation CalWIN Project 60783Increase of Asset Limits was implemented into CalWIN in May 2022 The HSS will make complete the appropriate CalWIN entries for property run EDBC and review the budget in CalWIN to ensure the correct property value is counted References MEM 50074 50073 50167 50403 50404 ACWDL 9218 9741 9903 2131 County of San Diego Health and Human Services Agency HHSA MediCal Program Guide Types of Property Property Reserve and Reduction of Property Number Page 0901 6 of 6 Sunset Date This policy will be reviewed for continuance by 06302025 Approval for Release Rick Wanne Director SelfSufficiency Services