706.30 Home Property

 

A. Definitions

 

1. Home Property

 

Home means any property in which an individual has an ownership interest and which serves as the individual’s principal place of residence. Home property includes the shelter in which the individual resides, the land on which the shelter is located and related outbuildings. A home may consist of real or personal property, fixed or mobile, located on land or water.

 

The home property includes any land which is adjacent or contiguous to the home and any other buildings located on the land (C.1 below).

  1. To be adjacent or contiguous to the home, the real property must adjoin the plot on which the home is located and not be separated from it by intervening real property owned by others.

  1. In considering if real property is adjacent or contiguous to the home property, do not consider easements or public rights of way (e.g., streets, roads, utility lines, etc.), which run through or by the land and separate land from the home plot.

Watercourses, such as streams and rivers, do not separate land. Land parcels which are adjoined side-by-side, corner-to-corner, or in any other fashion are considered adjacent or contiguous to each other.

  1. If the individual resides on land on which a shelter exists, it is not necessary for the person to own the shelter to consider the land part of the home property.

 

EXAMPLE:

If the customer resides on his land in someone else's trailer, the land meets the definition of home property and is excluded.

 

Note: Even though home property is always excluded as a resource, a person can still be ineligible for long term services if the equity value of the home exceeds the limit in MS 706.30.D, regardless of the amount by which home equity exceeds the limit in MS 706.30.D. This provision applies to individuals who are determined eligible for ALTCS based on an application filed on or after July 1, 2006. (B.4 below)

 

2. Principal Place of Residence

 

The principal place of residence is the dwelling established as the individual’s home. Only one home established as the principal place of residence is excluded as home property. See C.6 below for instructions when the individual owns more than one residence.

 

3. Institutionalized

 

When used in this section, institutionalized means:

  1. Residing in a medical institution;

  2. Medically eligible for ALTCS and residing in a residential HCBS setting; or

  3. Medically eligible for ALTCS and residing with another person (friend, family member, etc.) who assists the customer with activities of daily living, without which, the customer would have to reside in a NF or alternative residential setting.

For verification requirements, see MS C.2 below.

 

4. Dependent Relative of the Customer

  1. Dependency may be of any kind (e.g., financial, medical, etc.). Accept the customer's or dependent relative's allegation without further verification unless there is reason to question it.

  2. Relative means son, daughter, grandson, granddaughter, stepson, stepdaughter, in-laws, mother, father, stepmother, stepfather, grandmother, grandfather, aunt, uncle, sister, brother, stepbrother, stepsister, half-sister, half-brother, niece, nephew, or cousin.

For verification requirements, see MS C.6 below.

 


 

B. Treatment

 

1. Conditional Home Property Exclusion

  1. Only one residence can be excluded as home property. (see C.2 below)

  2. When determining eligibility for medical assistance, the available equity in the home property is excluded as a resource when:

    1. The customer or spouse resides in the home property;

    2. The customer has resided in the home property, is absent due to institutionalization, but expresses the intent to return;

    3. The customer is absent from the home property due to institutionalization but the customer’s spouse or dependent relative resides in the property as his or her principle place of residence. In this situation, the exclusion applies even when the customer does not express an intent to return or when the customer did not previously reside in the property.

  3. If none of the conditional exclusions apply, count the property as a resource.

  4. If all of the conditions for the exclusion end, the property becomes a countable resource the following month.

2. Intent to Return to the Home

 

Accept the customer’s statement of intent to return unless the statement or actions are contradictory; for example, the home has been listed for sale. If the statement is contradictory, obtain clarification. For verification requirements, see C.3 below.  If the actions are contradictory, do not apply the conditional home property exclusion. When not excluded as home property, the property may be conditionally excluded under Good Faith Effort To Sell (MS 703.10.).

 

3. Home Property Located Out of State

 

Home property can be located outside of Arizona. A customer can intend to return to home property in another state or country and still be considered an Arizona resident as long as the customer also intends to remain in Arizona for an indefinite time (see MS 529.00).

 

4. Equity Value Exceeds the limit (see D below)

  1. For customers who apply for ALTCS benefits on or after July 1, 2006, the customer is ineligible for long term care services if the customer’s equity interest in the home property exceeds the limit in MS 706.30.D. For those who apply after July 1, 2006, the home equity provision applies to the first determination of eligibility and to future renewals. The home equity provision does not apply to individuals who applied and were determined eligible before July 1, 2006 and have no break in long term care eligibility after July 1, 2006.

Even though exceeding the equity value results in the ineligibility for long term care services, the customer may receive medical services under ALTCS Acute Care if otherwise eligible.

  1. Ineligibility for long term care services based on equity value of the home does not apply to a customer if one of the following individuals reside in the customer’s home:

    1. The customer’s spouse; or

    2. The child of the customer meeting one of the following conditions:

  1. Undue Hardship Waiver

    1. Ineligibility for long term care services based on equity value of home can be waived if the customer can demonstrate undue hardship. All of the following must be met to establish undue hardship:

    2. If it appears that the conditions specified in c.i. apply to a customer’s situation, send a Policy Clarification Request form (DE-637) to the Policy Unit requesting an undue hardship.

Include the following specific information:

Central Office will determine whether a denial of eligibility for long term care services is considered an undue hardship.

 

5. Home Property that is Producing Income

 

When home property is also income-producing, the entire value of the home property is excludable regardless of its value, rate of return or current use (e.g., do not consider the property as essential to self-support in accordance with MS 706.51.A.3).

 

6. Life Estate Interest in Home Property

  1. When a Life Estate can be Excluded as Home Property

A life estate interest in property which is conditionally excluded in accordance with B.1 above is also excluded.

 

EXAMPLE:

Mr. and Mrs. G own a life estate interest in property. Mr. G is residing in a NF and Mrs. G uses the life estate property as her principle place of residence. The life estate meets the condition in B.1.b.iii. of this section for the home property exclusion.

  1. When a Life Estate Cannot be Excluded as Home Property

The home property exclusion described in B.1 above cannot be applied to a life estate interest in property that does not meet any of the conditions listed in B.1 above. This includes property in which an ownership interest was not held prior to institutionalization unless the spouse currently resides in the property.

 

Examples

Mr. A resided in an apartment for a number of years. After Mr. A was placed in a nursing facility, he used $20,000 of his savings to buy a life estate interest in his son’s home. Since the son’s home was not the customer’s home property prior to institutionalization, the life estate is not entitled to the home property exclusion. This life estate is a countable resource because Mr. A. did not have an ownership interest in the home nor was it his principle place of residence prior to his institutionalization.

 

Mrs. B was living with her daughter, in her daughter’s home. Her health deteriorated and it became necessary for Mrs. B to move to a nursing facility in March. Mrs. B had $20,000 in savings. In May, she used $19,000 of her savings to buy a life estate interest in her daughter’s home. Although Mrs. B previously lived in the home, the life estate does not qualify for the home property exclusion because Mrs. A did not have an ownership interest in her daughter’s home prior to her institutionalization.

  1. Evaluation of the Creation or Purchase of Life Estates as Transfers

    1. When a life estate is created, it must be evaluated to determine if the granting of the remainder interest in the property to a third party constitutes a transfer with uncompensated value (Chapter 900).

    2. The value of a life estate (MS 706.53.F.) must be compared to the purchase price to determine if adequate compensation was received.

7. Sale of Home Property When the Customer is Not Institutionalized

 

A customer who is not institutionalized is allowed to sell his or her principal place of residence and retain the home property exclusion if the conditions in this section are met.

  1. The proceeds from the sale of the home are the net payments received by the seller after payment of all encumbrances and sales expenses.

  2. The proceeds from the sale of home property must be used (i.e., obligated by contract or actually paid) for the purchase of another principal place of residence for the customer and for the costs incidental to occupying the new home.

The purchase costs include:

    1. Down payment;

    2. Settlement costs;

    3. Loan processing fees and points;

    4. Moving expenses;

    5. Necessary repairs to or replacements of the new home's structure or fixtures (e.g., roof, furnace, plumbing, built-in appliances) that are identified and documented prior to occupancy;

    6. Mortgage payments;

    7. Other costs which are identified and documented prior to occupancy and which stem directly from the purchase or occupancy of the new home.

  1. The proceeds from the sale of a home are excluded until the last day of the third full month following the month of receipt.

If the customer received the proceeds from the sale of home property under an installment contract, the contract is an excluded resource for as long as the customer does both of the following:

EXAMPLE:

An installment contract has a principal balance of $5,000 as of July 1st. On July 10th the buyer makes a principal payment of $200. As of October 31st, the customer has used only $150 of the July payment in connection with the purchase of a new home.

 

The unused $50 principal payment and the value (principal balance) of the installment contract ($4,800) are countable resources effective November.

  1. If the proceeds from the sale of the original home are in excess of the costs of the purchase and occupancy of the substitute home, the excess amount of the proceeds or excess value of an installment contract is a countable resource.

  2. If the home is not replaced within the three-month period, proceeds from the sale of home property, are counted whether received as a lump sum or by installment contract, as of the month of receipt.

  3. Any interest earned on the proceeds from the sale is counted as income in the month of receipt.

  4. Verify the proceeds from the sale and the individual’s intentions to replace the home in accordance with C.7 above.

8. Sale of Home Property When the Customer is Institutionalized

 

The proceeds from the sale of home property and home replacement after the customer is institutionalized are not excluded unless the property that was sold was excluded because it was the principle place of residence for the spouse or a dependent relative and the proceeds are used to purchase a new home in accordance with section 6, where the spouse or dependent relative use the principal place of residence.

 


 

C. Specific Verification

 

1. Ownership

 

Verify the type of ownership and the ownership interest in property used as the principal place of residence in accordance with MS 705.00.

 

2. Value

  1. Applications before July 1, 2006

The value of home property does not have to be verified if conditionally excluded and the ALTCS application is before July 1, 2006. However, the type of ownership and the ownership interest must still be verified (C.1 above).

  1. Applications received on or after July 1, 2006

For ALTCS applications on or after July 1, 2006 (including renewals for applications received on or after July 1, 2006), take the following actions:

 

Step

Action

1

Verify the current market value (CMV) of the home using the County Assessor’s value.

IF the CMV is... THEN...
Equal to or less than the home equity limit in MS 706.30.D

The customer is eligible for long term care services based on the equity value of the home.

 

No other verification is required for the home property except for the type of ownership and the ownership interest (C.1 above)

 

Continue processing the case.

 

Stop

Greater than the home equity limit in D below. Continue to Step 2
 

2

Verify encumbrances on the home such as mortgages or other loans that are secured by the home.

3

Subtract the encumbrances from the CMV value of the home to determine the equity value. (CMV – encumbrance = equity value)

 

Note: If the overall equity interest in the home is shared by co-owners, the customer’s equity interest is determined by dividing the total equity interest by the number of shared owners proportional to their interest in the property.

 

IF the equity value is... THEN...
Equal or less than the home equity limit in MS 706.30.D

The customer is eligible for long term care services based on the equity value of the home.

 

No other verification is required for the home except for the type of ownership and the ownership interest if not already verified (C.1 above)

 

Continue processing the case.

 

Stop

Greater than the home equity limit in D below.

The customer is ineligible for long term care services based on the equity value of the home.

 

Continue to Step 4

 

4

Determine if the customer is otherwise eligible for ALTCS

 

IF the customer is... THEN...
Not otherwise eligible for ALTCS Deny or discontinue the customer’s case using the appropriate denial or discontinuance reason.
Otherwise eligible for ALTCS

Approve the customer’s case for ALTCS acute care as follows:

  • Disposition the case as an approval.

  • Inactivate system generated notice and send the manual Acute Care Approval Notice (DE-506) explaining that the customer is eligible for acute care services only, because the equity value of the home exceeds the home equity limit in subsection D below.

  • Contact the Technical Service Center to post eligibility for acute care services.

 

 

Note: If any of the individuals listed in B.4 above reside in the home property, the CMV or equity value of home does not need to be verified. However, the type of ownership and the ownership interest must still be verified (C.1 above).

 

3. Adjacent or Continuous Lots

 

When there is any indication that a portion of the home property is not adjacent or contiguous with the home plot, obtain documentation of the home property. Document the case record with the pertinent information from the tax assessment, title, deed, or other document.

 

  1. If the customer cannot provide this evidence or the evidence is insufficient, contact the local tax jurisdiction regarding the property boundaries and record the information in the case record.

  2. If the property on which the home is located is recorded as a single holding and treated as a single holding for tax assessment purposes, assume it is a single piece of property in which the home plot is adjoined by the rest of the land.

  3. If two or more holdings are reported to be adjacent or contiguous property and are treated as two or more holdings for recording and tax assessment purposes, obtain documentation that they are adjacent.

Additionally, a description showing the location of the boundaries and the shelter used as the home (principal place of residence) in relation to the boundaries is required.

  1. The land owned by the customer that does not adjoin the home plot cannot be included in the home exclusion.

4. Institutionalized Customer

 

When the customer is in a medical institution, contact the institution to verify institutionalization.

 

When the customer resides in the community, verify medical eligibility by the PAS.

 

5. Intent to Return Home

 

Have the customer complete a Statement of Facts (DE-118) or provide a written statement to document his or her intent to return home.

 

The customer’s statement of intent is accepted without challenge unless the statement is self-contradictory. When the statement is self-contradictory and does not make the customer’s intent clear, obtain clarification from secondary sources, such as a physician, close relative, or person in a position to know. Such clarification from secondary sources, even though the customer is capable, is undertaken only if the customer’s statement of intent is self-contradictory.

 

6. Multiple Residences

 

If multiple residences are owned, evidence must be provided to establish the principal place of residence such as:

  1. Voter's registration address;

  2. Mailing address on tax forms;

  3. Address used by others to mail payments or benefits;

  4. Address from driver's license.

The case record must be clearly documented to show which residence is the one principal place of residence.

 

7. Relatives Living in Home Property

 

For customers who are institutionalized and the spouse or dependent relative lives in the home property, document the case record with a signed statement from the customer, spouse or dependent relative indicating the customer's spouse or dependent relative currently resides in the home. If the relative is other than the spouse, the statement must also describe the relative’s relationship to the customer and the cause of dependency.

 

8. Intent to Replace Home Property

  1. When the home property has been sold but will be replaced, obtain a signed Intention to Replace Home Property (DE-168) to document the intent to use the proceeds to purchase a new home.

  2. Verify the amount of the proceeds and the dates and amounts of any allowable costs or deductions. Verification includes, but is not limited to, the following:

    1. Contracts;

    2. Bills;

    3. Receipts;

    4. Settlement sheets.

 


 

D. Home Equity

 

Effective January 1, 2011, the home equity limit is increased each year by the percentage increase in the Consumer Price Index-Urban (CPIU).

 

Effective 1/1/11 to 12/31/11

Effective 1/1/12 to 12/31/12

Effective 1/1/13 to 12/31/13

$506,000

$525,000

$536,000