Title of Regulation: 12VAC30-40. Eligibility Conditions and Requirements (amending 12VAC30-40-280, 12VAC30-40-345).

Statutory Authority: §§ 32.1-324 and 32.1-325 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comments: Public comments may be submitted until March 4, 2009.

Effective Date: March 19, 2009.

Agency Contact: Lois Brengel, Project Manager, Department of Medical Assistance Services, 600 East Broad Street, Richmond, VA 23219, telephone (804) 786-7958, FAX (804) 786-1680, or email lois.brengel@dmas.virginia.gov.

Basis: Section 32.1-325 of the Code of Virginia grants to the Board of Medical Assistance Services the authority to administer and amend the Plan for Medical Assistance. Section 32.1-324 of the Code of Virginia authorizes the Director of DMAS to administer and amend the Plan for Medical Assistance according to the board's requirements. The Medicaid authority as established by § 1902 (a) of the Social Security Act (42 USC § 1396a) provides governing authority for payments for services.

Purpose: The purpose of this regulatory change is to amend current Medicaid regulations to provide for the disregard of income obtained through temporary employment with the United States Census Bureau for the decennial census. This proposed amendment to the current regulations contributes to preserving the health, safety, and welfare of the citizens of the Commonwealth by maintaining Medicaid coverage for recipients during this temporary period of employment and allowing for the disregard of this temporary source of income.

The loss of Medicaid coverage is potentially more costly to the Commonwealth than allowing the individual to maintain his current health status by continuing his Medicaid coverage during this period of temporary employment. Maintaining coverage should be cost effective. A loss of coverage could result in the utilization of emergent care because the individual would otherwise be uninsured. The use of emergent care by an uninsured individual places a burden on the healthcare system and serves to increase costs for the general population. The denial of Medicaid coverage for individuals, who would otherwise be eligible if not for this income, is also potentially more costly. Additionally, reapplication to the Medicaid Program at a point in time where lack of healthcare may have caused an individual’s health status to deteriorate, would bring the individual back into the program with increased costs. Therefore, DMAS believes that it is in the best interests of the Commonwealth and its citizens to permit this regulatory change and allow for the disregard of this income source from the Medicaid income eligibility determination.

Rationale for Using Fast-Track Process: The fast-track process is being utilized to promulgate this change in regulatory language as it is expected to be a noncontroversial amendment to existing regulations. The result of this additional income disregard would allow vulnerable recipients to maintain their health care coverage and, therefore, a stable health status. The disregard would also allow individuals of limited financial means to temporarily increase their disposable income to provide for nonmedical needs. Additionally, the continuation of healthcare may result in an overall cost savings to the Commonwealth. The United States Census Bureau has advised that it will begin hiring temporary workers in preparation for the upcoming decennial census in 2009, meaning that the time frame to complete this change is very limited.

Substance: Current Medicaid regulations provide for the disregard of certain types of income. Under 12VAC30-40-345, Eligibility under § 1931 of the Act, Low-income Families and Children (LIFC) are covered by the Commonwealth. In determining eligibility for Medicaid, the agency uses the Aids to Families with Dependent Children (AFDC) policy in effect as of July 16, 1996, with some modifications. With regard to income, this regulation allows for the use of less restrictive methodologies than those in effect as of July 16, 1996. Earned income is disregarded for any child under the age of 19 years old who is a student, as well as, the fair market value of all in-kind support and maintenance as income in determining financial eligibility for these groups. Under 12VAC30-40-280, More Liberal Income Disregards, the value of in-kind support and maintenance as income is disregarded when determining financial eligibility for Medicaid. This applies to Aged, Blind and Disabled (ABD) individuals, with the exception of the special income level group of institutionalized individuals, and all categorically needy and medically needy individuals under the family and children covered groups.

The recommended amendment of these regulations permits the addition of income derived from temporary census bureau employment to be disregarded or not counted as a source of income. The bureau concentrates employment efforts in the geographic locations where enumeration activities are being conducted. It places emphasis on hiring individuals from within low-income neighborhoods as they are hard to serve areas. This source of income is not only temporary, but offers no opportunity for permanent employment, is time limited and intermittent, with no benefits. An individual eligible for full coverage under the Medicaid Program must have an income of less than 80% of the federal poverty level or $694 per month in the ABD covered groups. An adult eligible for full coverage in the LIFC covered groups must have countable income equal to or less than 90% Families and Children Income Limit for the locality in which the individual resides. [Example-A low income adult with a dependent child in a Group One locality must have countable income equal to or less than $253.51 per month.] All of these individuals have incomes well below the federal poverty level. The amount of compensation for this type of work is not likely to cause these affected persons’ incomes to exceed the federal poverty level. Therefore, the termination of Medicaid coverage for these individuals because of income earned from a temporary census job, under these circumstances would not be in the best interest of the individual or the Commonwealth.

Temporary positions with the Census Bureau are available only every 10 years. These positions last for short periods (2-3 months), work schedules are intermittent, no benefits are offered and no opportunity for permanent employment is available. Medicaid eligible individuals who may obtain these positions are low income adults with dependent children and Aged, Blind and Disabled (ABD) populations. The census bureau targets individuals for employment within the geographic locations in which it is conducting enumeration activities, especially in hard to serve low-income neighborhoods. This increases the likelihood that a Medicaid eligible individual may be employed by the Census Bureau. DMAS anticipates that this increase in income could cause ineligibility for Medicaid coverage for individuals, as they are within the income demographic targeted by the Census Bureau’s hiring practices. These individuals are some of the most vulnerable of the general population and would otherwise be eligible for Medicaid if not for this temporary, intermittent source of income.

Individuals eligible under the Medicaid Program as noted are low-income individuals who may have had little or no access to health coverage up until the time they were determined eligible for Medicaid coverage. As such, some may come into the program with pre-existing illnesses, which could be chronic conditions. Loss or denial of Medicaid coverage because of this temporary income could cause these medical conditions to go untreated. The individual’s primary source of treatment if Medicaid was unavailable would be emergent care. This is detrimental to both the individual in terms of health and to the overall healthcare system in terms of cost. Additionally, individuals placed in this position would more than likely gain Medicaid coverage for payment of these costs at a point in time when the cost may be greater to the program. This leads to the conclusion that there is potential for an overall increase in the cost to the Medicaid Program for these individuals over what would have been spent had Medicaid coverage been available.

Implementation of the requested addition of this disregard would have little impact on the local administration of the program by social services. Individuals would maintain their Medicaid coverage and yet have some additional funds to provide for nonmedical needs not covered by the Medicaid Program. Therefore, this change would be relatively transparent to both the recipient and the social services system.

Issues: There are no disadvantages to the public or the Commonwealth in this regulation. The advantage is to low-income citizens by allowing for the disregard of a temporary, intermittent source of income that would cause a barrier to services to which they are otherwise eligible and should be able to access.

The Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The proposed regulations will add to Medicaid eligibility rules a disregard for income earned from temporary employment with the United States Census Bureau in completing a decennial census.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. The United States Census Bureau has advised states that it will start hiring temporary workers in 2009 to conduct the upcoming decennial census. Under current regulations, an existing Medicaid recipient may experience interruption in his or her eligibility due to the temporary income earned from the Census Bureau. In order to maintain uninterrupted eligibility of existing recipients, the proposed regulations will add to Medicaid eligibility rules a disregard for income earned from temporary employment with the United States Census Bureau in completing a decennial census.

The Department of Medical Assistance Services has no estimate for the number of Medicaid recipients who may be temporarily hired by the Census Bureau. However, temporary interruption in the Medicaid coverage is potentially more costly than uninterrupted coverage due to the possibility of emergency care and deterioration of chronic conditions if care is not continuous. There may also be some administrative savings from eliminating disenrollment and reenrollment of the same individuals during the temporary employment with the Census Bureau.

Businesses and Entities Affected. The proposed regulations apply to Medicaid enrollees. The number of Medicaid enrollees who may be temporarily hired by the Census Bureau is not known.

Localities Particularly Affected. The proposed regulations apply throughout the Commonwealth.

Projected Impact on Employment. The proposed regulations will remove a disincentive from regulations that may discourage some Medicaid enrollees to obtain temporary employment with the Census Bureau. Thus, the proposed changes are expected to increase labor supply.

Effects on the Use and Value of Private Property. The proposed regulations are not expected to have any significant effect on the use and value of private property.

Small Businesses: Costs and Other Effects. The proposed regulations are not anticipated to create any small business costs and other affects.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed regulations are not expected to have any adverse effect on small businesses.

Real Estate Development Costs. The proposed regulations are not expected to create any real estate development costs.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 36 (06). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB’s best estimate of these economic impacts.

Agency's Response to the Department of Planning and Budget's Economic Impact Analysis: The agency concurs with the economic impact analysis prepared by the Department of Planning and Budget regarding the regulations concerning Medicaid Eligibility Income Disregards (12VAC30-40-280 and 12VAC30-40-345).

Summary:

The Department of Medical Assistance Services (DMAS) is proposing to amend regulations regarding the income disregards utilized in the Medicaid income eligibility determination. Income that is disregarded is not counted in determining an individual’s eligibility for the Medicaid program. Currently, individuals eligible for coverage under the Medicaid program are allowed disregards for certain types of income in the determination of their eligibility. The proposed change will add a disregard for income earned from temporary employment with the United States Census Bureau in completing a decennial census.

12VAC30-40-280. More liberal income disregards.

A. For children covered under §§ 1902(a)(10)(A)(i)(III) and 1905(n) of the Social Security Act, the Commonwealth of Virginia will disregard one dollar plus an amount equal to the difference between 100% of the AFDC payment standard for the same family size and 100% of the Federal Poverty Level federal poverty level for the same family size as updated annually in the Federal Register.

B. For ADC-related cases, both categorically and medically needy, any individual or family applying for or receiving assistance shall be granted an income exemption consistent with the Act (§§ 1902(a)(10)(A)(i)(III), (IV), (VI), (VII); §§ 1902(a)(10)(A)(ii)(VIII), (IX); § 1902(a)(10)(C)(i)(III)). Any interest earned on one interest-bearing savings or investment account per assistance unit not to exceed $5,000, if the applicant, applicants, recipient or recipients designate that the account is reserved for purposes related to self-sufficiency, shall be exempt when determining eligibility for medical assistance for so long as the funds and interest remain on deposit in the account. For purposes of this section, "purposes related to self-sufficiency" shall include, but are not limited to, (i) paying for tuition, books, and incidental expenses at any elementary, secondary, or vocational school, or any college or university; (ii) for making down payment on a primary residence; or (iii) for establishment of a commercial operation that is owned by a member of the Medicaid assistance unit.

C. For the group described in §§ 1902(a)(10)(A)(i)(VII) and 1902(l)(1)(D), income in the amount of the difference between 100% and 133% of the Federal Poverty Level federal poverty level (as revised annually in the Federal Register) is disregarded.

D. For aged, blind, and disabled individuals, both categorically and medically needy, with the exception of the special income level group of institutionalized individuals, the Commonwealth of Virginia shall disregard the value of in-kind support and maintenance when determining eligibility. In-kind support and maintenance means food, clothing, or shelter or any combination of these provided to an individual.

E. For all categorically needy and medically needy children covered under the family and children covered groups, (§§ 1902(a)(10)(A)(i)(I), 1902(a)(10)(A)(i)(III), 1902(a)(10)(A)(i)(VI), 1902(a)(10)(A)(i)(VII), 1902(a)(10)(A)(ii)(VIII), 1902(a)(10)(C)(ii)(I) and 1905(n) of the Act), the Commonwealth will disregard all earned income of a child under the age of 19 who is a student.

F. For all categorically needy and medically needy individuals covered under the family and children covered groups (§§ 1902(a)(10)(A)(i)(I), 1902(a)(10)(A)(i)(III), 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V), 1902(a)(10)(A)(i)(VI), 1902(a)(10)(A)(i)(VII), 1902(a)(10)(A)(ii)(VIII), 1902(a)(10)(C)(ii)(I) and 1905(n) of the Act), the Commonwealth will disregard the fair market value of all in-kind support and maintenance as income in determining financial eligibility. In-kind support and maintenance means food, clothing or shelter or any combination of these provided to an individual.

G. For aged, blind and disabled individuals, both categorically and medically needy, with the exception of the special income level group of institutionalized individuals, the Commonwealth of Virginia shall disregard the value of income derived from temporary employment with the United States Census Bureau for a decennial census.

H. For all categorically needy and medically needy individuals covered under the family and children covered groups (§§ 1902(a)(10)(A)(i)(I), 1902(a)(10)(A)(i)(III), 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V), 1902(a)(10)(A)(i)(VI), 1902(a)(10)(A)(i)(VII), 1902(a)(10)(A)(ii)(VIII), 1902(a)(10)(C)(ii)(I) and 1905(n) of the Act), the Commonwealth will disregard income derived from the temporary employment with the United States Census Bureau for a decennial census.

12VAC30-40-345. Eligibility under § 1931 of the Act.

A. The state covers low-income families and children under § 1931 of the Act as follows:

AFDC children age 18 who are full-time students in a secondary school or in the equivalent level of vocational or technical training.

B. In determining eligibility for Medicaid, the agency uses the AFDC standards and methodologies in effect as of July 16, 1996, with the following modifications.

1. The agency applies higher income standards than those in effect as of July 16, 1996, increased by no more than the percentage increases in the CPI-U since July 16, 1996. The agency increases the July 16, 1996, income standards shown in 12VAC30-40-220 by the annual increase in the CPI beginning July 1, 2001.

2. The agency uses less restrictive income or resource methodologies than those in effect as of July 16, 1996. The agency does not consider resources in determining eligibility. The agency disregards all earned income of a child under the age of 19 who is a student. The agency disregards the fair market value of all in-kind support and maintenance as income in determining financial eligibility for the above referenced group. The agency disregards income earned from temporary employment with the United States Census Bureau for a decennial census.

3. The income or resource methodologies that the less restrictive methodologies replace are as follows:

a. Resources. The family resource limit was $1,000. Additionally, any applicant or recipient may have or establish one savings or investment account not to exceed $5,000 if the applicant or recipient designates that the account is reserved for purposes related to self-sufficiency. Any funds deposited in the account and any interest earned on or appreciation in the value of the funds shall be exempt when determining eligibility for as long as the funds and interest on or appreciation in value of remain in the account. Any amounts withdrawn and used for purposes related to self-sufficiency shall be exempt. For purposes of this section, "purposes related to self-sufficiency" shall include, but is not limited to, paying for tuition, books and incidental expenses at any elementary, secondary or vocational school or any college or university; making down payment on a primary residence; or establishing a commercial operation that is owned by a member of the Medicaid assistance unit.

b. Income. Any interest or appreciation earned on one interest-bearing savings account per medical assistance unit not to exceed $5,000 at a financial institution, if the applicant or recipient designates that the account is reserved for the purpose of paying for tuition, books, and incidental expenses at any elementary, secondary or vocational school or any college or university, or for making down payment on a primary residence or for business incubation, shall be exempt when determining eligibility for medical assistance for as long as the funds and interest remain on deposit in the account. For purposes of this section, "business incubation" means the initial establishment of a commercial operation owned by a member of the Medicaid assistance unit.

c. Income earned by a child under the age of 19 who is a student was counted in determining eligibility in accordance with the AFDC income methodologies that were in effect as of July 16, 1996.

d. The fair market value of in-kind support and maintenance is counted as income when evaluating the financial eligibility of the above-referenced group. In-kind support and maintenance means food, clothing or shelter or any combination of these provided to an individual.

C. The agency continues to apply the following waivers of the provisions of Part A of Title IV in effect as of July 16, 1996, or submitted prior to August 22, 1996, and approved by the secretary on or before July 1, 1997. For individuals who receive TANF benefits and meet the requirements of Virginia's § 1115 waiver for the Virginia Independence Program, the agency continues to apply the following waivers of the provisions of Part A of Title IV in effect as of July 16, 1996, or submitted prior to August 22, 1996, and approved by the secretary on or before July 1, 1997. The waiver contains the following more liberal income disregards:

Earned income will be disregarded so long as the earnings plus the AFDC benefits are equal to or less than 100% of the Federal Income Poverty Guidelines. For any month in which earnings plus the AFDC standard of payment for the family size exceed the Federal Poverty Income Guidelines for a family of the same size, earned income above 100% of the Federal Poverty Income Guidelines shall be counted.

These waivers will apply only to TANF cash assistance recipients. These waivers will be continued only for as long as eligibility for TANF was established under the welfare reform demonstration project for which these waivers were originally approved.