Section 208.010:8 RSMo. states in part, '...when determining eligibility for assistance under this chapter there shall be disregarded ... the home of the applicant or recipient when the home is providing shelter to the applicant or recipient, or his spouse or dependent child.'
Exempt the home, regardless of its value, as a resource so long as the home is the principal place of residence of the participant, the participant's spouse or dependent child. Only one home may be established as the principal place of residence.
A 'home' is defined as real property that is furnishing shelter to the individual, the individual's spouse or dependent child. A mobile home that is furnishing shelter is included in this definition regardless of whether the mobile home can be moved or who owns the land on which it is located.
All the land on which the home is located is considered part of the home so long as the land is adjoining and there is no other home on the land. Land in a city or town must be in the same city block. Land in rural areas is considered adjoining even though a road may separate two tracts.
Section 6014 of the DRA of 2005 created a new subsection to Section 1917 of the Social Security Act. Section 1917 (f)(1)(A) which provides that in determining eligibility for MO HealthNet long term care services the participant's equity interest in his or her home cannot exceed specified limits. Home equity and ownership are to be verified. Effective January 1, 2019 if a participant's equity in their primary home is over $585,000, they are not eligible for MO HealthNet under MHABD vendor, PACE or HCB benefits. The definition of homestead has not changed. Policies regarding substantial home equity apply only when determining eligibility for payment for MO HealthNet long term care services. The participant may be eligible for other programs that do not include long-term care services.
The home equity policy does not apply in the following conditions:
A participant may use a reverse mortgage or home equity loan to reduce the equity in the home. Verification of the proceeds of the loan is required. Do not consider the payments to participant from either type of loan as income. Inform the participant that proceeds from a reverse mortgage or home equity loan must be spent. Any of the money retained the following month by the participant from that payment is a resource and transfer penalties apply to improper disposition of the assets.
When a claimant or the spouse with whom the claimant lives owns real property that is not furnishing shelter for the claimant, spouse, or their dependent child, consider the property an available resource, which makes the claimant ineligible for assistance on the basis of need. (For exceptions, see the policy governing institutionalized spouses with a spouse in the community.) The following provisions apply:
NOTE: Exclude the value of the property as available resource when determining eligibility only when the patient goes directly from the home to the nursing facility or other institution or from the home to a hospital and to the nursing facility. Apply the 24-month provision if the patient leaves the home for another living arrangement (child's home, RCF-I, senior citizen housing, etc.) and then enters the nursing or medical facility. If the patient enters the nursing facility or other institution during 24-month period, the home remains exempt.
For QMB, SLMB and QDWI if a non-institutionalized claimant expresses the intent to return to the principle place of residence at any time, do not consider the property an available resource at the expiration of the 24-month period. It the claimant does not intend to return to the property, consider the property available at the end of the 24-month period.
EXAMPLE: Mr. Lee is a cattle farmer. He owns 10 acres of land not adjoining the homestead. The cattle feed on the 10 acres. The 10 acres are exempt as they are being used directly by the claimant in the course of his business.
EXAMPLE: Ms. Alice is part owner of a flower shop she started 40 years ago. As part of the business, she owns a 100 acre parcel for growing plants and another, non-adjacent property upon which the flower shop sits. Ms. Alice now resides in a nursing home and does not work directly in the flower shop or on the land. She still owns the real properties for the business and receives income from the business as part owner of the flower shop. The land and the flower shop are excluded resources.
EXAMPLE: Mr. Stevens moved from his home to an apartment. He rents this home to his nephew, Alan for $300 per month. A few months after moving in, Alan starts a lawn care business out of the garage. Alan continues to pay rent of $300 per month and Mr. Stevens is not involved in and does not receive income from Alan’s business. Because Mr. Stevens is not involved in Alan’s business or trade, this property is treated as rental property to Mr. Stevens.
EXAMPLE: Ms. Oliver was married to Mr. Oliver and they owned a farming business with two properties: their home with adjacent farmland and another separate parcel with equipment storage and additional farmland. Although Ms. Oliver was part-owner, she did not take part in the running of the business. The business later became an LLC and ownership included their sons, Phil and Dave who helped run the business and work the land. The land, both properties, was still owned by Mr. and Ms. Oliver, but was now rented by the farming business LLC. Mr. Oliver passed away leaving Ms. Oliver, Phil and Dave as the remaining business owners.
Ms. Oliver receives rent from the LLC for the land that the business uses. She is also receives proceeds from the farming business even though she is in a nursing home. Because her property is being used for her business, the rental income is countable unearned income, but the land she rents out is not countable toward the resource limit because it is used as part of her business or trade.
NOTE: Do not consider owning or managing rental property as a business or employment for this purpose unless the property is held and managed by the business.
EXAMPLE: Ms. Sybil manages two homes, 3 duplexes, and an apartment building. All of these properties are held and managed by Sybil Properties Limited which she co-owns with her two daughters. These properties are not countable resources as they are owned by the business.
The value of a non-business, income producing real property, such as rental property, may be excluded if the property produces a net annual return equal to at least 6% of the equity value (equity value * 6%). Equity value is the current market value minus the debt against the property, such as a mortgage. If a participant owns property outright, the equity value equals the current market value because the participant has 100% equity in the property. For information on equity, refer to section 1030.010.25 DETERMINATION OF EQUITY IN REAL PROPERTY.
EXAMPLE: Ms. Ellis lives in an apartment and rents out her former home to her niece. The home has an estimated equity value of $10,000. If the property yields a 6% return ($600.00 annually), the equity is not included as a countable resource.
If the non-business property produces less than a 6% return, the exclusion can apply only if:
Otherwise, all of the equity value is counted towards the resource limit.
If an individual owns more than one piece of non-business, income producing property, the 6% return requirement applies individually to each:
EXAMPLE: Mr. Grimes owns a fishing cabin (not his residence) that has a current market value and equity value of $3,000. He owns other property that has a current market value and equity value of $2,000. The fishing cabin produces a net annual rental income of $750, and the other property produces less than $50 a year. A 6% annual return on the fishing cabin would be $180 ($3,000 * 6%). Since the fishing cabin produces more than a 6% return, its equity value is excluded. A 6% annual return on the other property would be $120 ($2,000 * 6%). Since the other property produces less than a 6% return, its equity value is not excluded.
EXAMPLE (if the resource limit is $6,000): Mr. and Mrs. Avon, apply for coverage in March 2018 based on OAA criteria. They have $1,000 in a savings account and $500 in a checking account for a total of $1,500 in liquid resources. They also own real property (not their primary residence) with a current equity value of $5,000, which would cause their total resources to exceed the $6,000 limit.
However, they are renting this property to a family friend who is paying $30 per month to store her RV. A 6% annual return would be $300 ($5,000 * 6%). The Avons receive $360 annually, therefore, the equity value of this resource is excluded.
The equity value of non-business property used to produce goods or services essential to self-support is excluded as a countable resource. The property must be in current use or, if it is not in use for reasons beyond the individual's control, there must be a reasonable expectation that the required use will resume.
Nonbusiness property essential to self-support can be real or personal property if, for example, it is used to:
Unless questionable, accept a statement from the participant which gives:
EXAMPLE: Ms. Lane owns a home that she resides in and a separate garden plot with a chicken coop across town. Ms. Lane states that the fruit, vegetables and eggs produced on the garden plot are for her own use. The current market value and equity value of the property is $8,500. Her statement is not questionable. Therefore, the property value is excluded from the countable resources.
Exclude the value of the equity in a life estate in determining eligibility based on available resources.
In every approval where the claimant owns real property, review the deed or check at the Recorder's Office to verify property ownership. Property ownership must be verified during each subsequent re-investigation if the claimant has acquired real property since the previous investigation.
Property belonging to both husband and wife and recorded in both their names is held 'in entirety', that is, neither one can sell or otherwise dispose of the property, in whole or in part, without the consent of the other. When husband and wife are separated, each one's equity in property jointly owned should be computed as one-half of the net real value of the property, at current market prices. Tenancy in entirety is dissolved by death of one of the parties, or by divorce.
When property is owned by two or more persons, other than husband and wife, or by a divorced couple, it is most often called 'tenancy in common'. Each person owns an equal share in the property unless otherwise specified in the deed or in the will, if the property was acquired by inheritance. This means that each of three persons sharing 'tenancy in common' in a piece of property owns one-third of the property. Each of the owners can sell or otherwise dispose of his share in the property without consent of the others, and his share at death will be inherited by his heirs. Such an arrangement is indicated in the deed or will by the words 'tenancy in common' or 'share and share alike' or statement that the property is held jointly or that the owners have 'joint property'.
Occasionally, property owned by two or more persons (other than husband or wife) is held in 'joint tenancy', that is, the property cannot be inherited by the heirs of the one who dies first but remains the property of the survivor. As long as both or all joint owners are living, the equity of each owner is the same as for a 'tenancy in common'. Refer to the policy governing Distribution of Estate of Deceased Person and Availability of Inheritance.
If the county office is unable to verify property ownership from the deed or will, submit a copy of the deed or will to the State Office through the appropriate supervisory channels. The Program and Policy Unit will obtain a legal interpretation of the deed.
When determining eligibility for assistance, consider the value of real estate to be its current market value if sold in the OPEN MARKET. In determining the value of real property, do not use the assessed value as the sole basis of the determination. If eligibility is not in question, personal judgment and the assessed value may be used to confirm the claimant's statement. The claimant's estimate of property value may be accepted without obtaining an appraisal, provided the caseworker's personal judgment, based on experience with similar property, confirms the claimant's estimate. Use one of the following methods to determine property value:
Paid appraisals of real property in Missouri may only be obtained from appraisers licensed or certified by the Missouri Real Estate Commission. A list of licensed or certified appraisers is available through the commission's web site. Licensed or certified appraisers in your area may also be located by calling commission 573-751-0038.
When the claimant or claimant's spouse owns a fractional interest in property, request a special appraisal (form IM-43A) to determine the value of that fractional share interest.
EXAMPLE: Mr. Smith, an applicant, owns property with his mother and sister. His mother lives on the property. According to the deed, Mr. Smith and his sister each own 1/4 interest in the property. His mother owns 1/2 interest. The caseworker verifies Mr. Smith's 1/4 interest in the property and records Mr. Smith's statement regarding the value of his 1/4 interest. If the caseworker questions Mr. Smith's evaluation, obtain a special appraisal.
If no appraiser can be located to do a special appraisal, document the efforts to secure an appraisal and accept the claimant's statement of the value, and attempt to obtain an appraisal every two years.
For re-investigations where real property has previously been determined by one of the methods previously described, do not obtain a re-appraisal or collateral information unless there is reason to believe the value of the property is greater than the value set during a prior investigation. Re-assess the property value in cases where substantial additions or improvements have been made (such as addition of a room); a street or highway has been relocated and improves property value; additional property has been acquired; property values in general have increased; etc.
For mortgaged property or property with liens, unpaid taxes, or other debts recorded against it, use the value of the owner's equity in property (that is, its real value minus the total amount of indebtedness) as the basis for determining eligibility. Such debts can usually be verified by copies of the mortgage or lien in the applicant's possession, or by monthly payment schedules. INDEBTEDNESS THAT IS NOT RECORDED AS A MORTGAGE OR LIEN AGAINST THE PROPERTY (EXCEPT PROPERTY TAXES) CANNOT BE TAKEN INTO ACCOUNT.