Title of Regulation: 12VAC30-40. Eligibility Conditions and Requirements (amending 12VAC30-40-290; adding 12VAC30-40-370).

Statutory Authority: § 32.1-325 of the Code of Virginia; 42 USC § 1396 et seq.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: December 16, 2016.

Agency Contact: Emily McClellan, Regulatory Supervisor, Policy Division, Department of Medical Assistance Services, 600 East Broad Street, Suite 1300, Richmond, VA 23219, telephone (804) 371-4300, FAX (804) 786-1680, or email emily.mcclellan@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 the Department of Medical Assistance Services (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.

The Item 307 T of Chapter 665 of the 2015 Acts of the Assembly directed DMAS to modify its eligibility regulations to exempt sterilization compensation, awarded to individuals who had been involuntarily sterilized under previous state policy, from consideration during the Medicaid eligibility determination process. Item 313 Q of Chapter 780 of the 2016 Acts of the Assembly continued funding for the sterilization compensation program.

Purpose: The purpose of this action is to allow individuals who are compensated for their involuntary sterilization to accept their monetary compensation without losing their eligibility for Medicaid. This regulation is essential to protect the health, safety, and welfare of the public in that it helps assure that low income individuals are able to maintain their Medicaid benefits if they receive a payment to compensate them for involuntary sterilization.

Substance: The proposed amendments add language to 12VAC30-40-290 and create the new section 12VAC30-40-370 to disregard compensation payments received by individuals who were involuntarily sterilized pursuant to the Virginia Eugenical Sterilization Act and who are living as of February 1, 2015. Receipt of federal authority to disregard these payments in the Medicaid eligibility determination mean that these payments will have no impact on eligibility for new or current enrollees who receive this payment.

Unless otherwise exempted by state or federal requirements, all income an individual receives must be counted in the Medicaid eligibility determination. Similarly, all money an individual has at the beginning of a month either in his hand or in a financial institution account must be considered a resource in the Medicaid eligibility determination. Money an individual has cannot be counted as both income and a resource in the same month, so payments received by individuals are counted as income the month received, and if the money is retained, counted as a resource in following months.

Current policy would require payments (awards, settlements) made to individuals who had been involuntarily sterilized as a result of the Virginia Eugenical Sterilization Act to be counted as income in the month of receipt of the payment and, if the money was retained, counted as a resource in following months. Counting this payment as income in the month of receipt and a resource thereafter could result in an individual losing Medicaid eligibility.

Issues: There are no advantages or disadvantages to the public of this action. The advantage to the individuals who were subjected to involuntary sterilization is that they will be compensated to some degree for their pain and suffering. In receiving this General Assembly-authorized compensation, individuals will not risk losing their Medicaid eligibility. There are no disadvantages to the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Director of the Department of Medical Assistance Services (Director) proposes to amend this regulation to not count payments made to compensate individuals who were involuntarily sterilized as income¹ for the purpose of determining Medicaid eligibility.

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

Estimated Economic Impact. Chapter 665, item 307 T of the 2015 Acts of Assembly² required the Director to exempt involuntary sterilization compensation from Medicaid eligibility determinations through an emergency regulation. Accordingly, the Department of Medical Assistance Services promulgated an emergency regulation on November 23, 2015, which is scheduled to be effective through May 22, 2017. This action replaces that regulation on a permanent basis.

From 1924 to 1979, at least 7,325 individuals were sterilized in Virginia under the Virginia Eugenical Sterilization Act (1924). Of those sterilized about half were deemed "mentally ill" and the other half deemed "mentally deficient." Approximately 62% of those sterilized were female. Some estimate the total number of sterilizations to be as high as 8,300 individuals.³ In 2015, the Virginia Appropriation Act provided compensation to these individuals involuntarily sterilized and who were living as of February 1, 2015. Chapter 780, item 313 Q of the 2016 Acts of Assembly continued the funding for the sterilization compensation program. Each qualified applicant receives $25,000.

Disregarding payments for the purpose of Medicaid eligibility determinations made to compensate individuals who were involuntarily sterilized increases the likelihood that such individuals will qualify for Medicaid. Thus far 24 individuals have been awarded compensation through the program, while two individuals are currently having their claims reviewed.⁴ The Medicaid applications do not ask applicants to report whether or not they have received sterilization compensation. Consequently it is not known whether any of the 24 compensation recipients have applied for Medicaid while the emergency regulation has been in effect.

The Commonwealth pays approximately fifty percent of Medicaid costs, with the federal government paying for the other fifty percent. The average annual cost for individuals in the Aged, Blind and Disabled category⁵ of Medicaid is approximately $17,000.⁶ Thus if disregarding the compensation enables a recipient to qualify for Medicaid who otherwise would not have, the additional cost to Virginia would on average be about $8,500 per such individual.⁷

Businesses and Entities Affected. The proposed amendment applies to individuals involuntarily sterilized and who were living as of February 1, 2015. Thus far 24 individuals have been awarded compensation through the program, while two individuals are currently having their claims reviewed.

Localities Particularly Affected. The proposed amendment does not disproportionately affect particular localities.

Projected Impact on Employment. The proposed amendment does not significantly affect employment.

Effects on the Use and Value of Private Property. The proposed amendment does not significantly affect the use and value of private property.

Real Estate Development Costs. The proposed amendment does not affect real estate development costs.

Small Businesses:

Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Costs and Other Effects. The proposed amendment does not affect small businesses.

Alternative Method that Minimizes Adverse Impact. The proposed amendment does not affect small businesses.

Adverse Impacts:

Businesses. The proposed amendment does not affect businesses.

Localities. The proposed amendment does not affect localities.

Other Entities. The proposed amendment does not adversely affect other entities.

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¹ Specifically, the Board proposes to state that "For all aged, blind, or disabled individuals, both categorically needy and medically needy, the Commonwealth shall disregard as resources amounts received as payment for involuntary sterilization under the Virginia Eugenical Sterilization Act, beyond the allowable nine-month exclusion by the SSI program's resource methodologies."

² See http://budget.lis.virginia.gov/item/2015/1/HB1400/Chapter/1/307/

³ For more information, see https://www.uvm.edu/~lkaelber/eugenics/VA/VA.html

⁴ Source: Department of Behavioral Health and Developmental Services

⁵ All (or almost all) surviving individuals who were sterilized in Virginia under the Virginia Eugenical Sterilization Act are aged, and would therefore fall into the Aged, Blind and Disabled category. Additionally, as stated in note 1 above, the proposed amendment is for "For all aged, blind, or disabled individuals …"

⁶ Source: 2015 Virginia Medicaid and CHIP Data Book, Department of Medical Assistance Services

⁷ The actual cost for each person can vary widely.

Agency's Response to Economic Impact Analysis: The agency has reviewed the economic impact analysis prepared by the Department of Planning and Budget; the agency concurs with this analysis.

Summary:

Pursuant to Item 307 T of Chapter 665 of the 2015 Acts of Assembly (and continued as Item 313 Q of Chapter 780 of the 2016 Acts of Assembly), the proposed amendments require that payments made to compensate individuals who were involuntarily sterilized pursuant to the Virginia Eugenical Sterilization Act and who are living as of February 1, 2015, (i) are disregarded for the purpose of Medicaid eligibility determinations and (ii) increase the basic personal needs allowance.

12VAC30-40-290. More liberal methods of treating resources under § 1902(r)(2) of the Act: § 1902(f) states.

A. Resources to meet burial expenses. Resources set aside to meet the burial expenses of an applicant/recipient or that individual's spouse are excluded from countable assets. In determining eligibility for benefits for individuals, disregarded from countable resources is an amount not in excess of $3,500 for the individual and an amount not in excess of $3,500 for his spouse when such resources have been set aside to meet the burial expenses of the individual or his spouse. The amount disregarded shall be reduced by:

1. The face value of life insurance on the life of an individual owned by the individual or his spouse if the cash surrender value of such policies has been excluded from countable resources; and

2. The amount of any other revocable or irrevocable trust, contract, or other arrangement specifically designated for the purpose of meeting the individual's or his spouse's burial expenses.

B. Cemetery plots. Cemetery plots are not counted as resources regardless of the number owned.

C. Life rights. Life rights to real property are not counted as a resource. The purchase of a life right in another individual's home is subject to transfer of asset rules. See 12VAC30-40-300.

D. Reasonable effort to sell.

1. For purposes of this section, "current market value" is defined as the current tax assessed value. If the property is listed by a realtor, then the realtor may list it at an amount higher than the tax assessed value. In no event, however, shall the realtor's list price exceed 150% of the assessed value.

2. A reasonable effort to sell is considered to have been made:

a. As of the date the property becomes subject to a realtor's listing agreement if:

(1) It is listed at a price at current market value; and

(2) The listing realtor verifies that it is unlikely to sell within 90 days of listing given the particular circumstances involved (e.g., owner's fractional interest; zoning restrictions; poor topography; absence of road frontage or access; absence of improvements; clouds on title, right of way or easement; local market conditions); or

b. When at least two realtors refuse to list the property. The reason for refusal must be that the property is unsaleable at current market value. Other reasons for refusal are not sufficient; or

c. When the applicant has personally advertised his property at or below current market value for 90 days by use of a "Sale By Owner" sign located on the property and by other reasonable efforts, such as newspaper advertisements, or reasonable inquiries with all adjoining landowners or other potential interested purchasers.

3. Notwithstanding the fact that the recipient made a reasonable effort to sell the property and failed to sell it, and although the recipient has become eligible, the recipient must make a continuing reasonable effort to sell by:

a. Repeatedly renewing any initial listing agreement until the property is sold. If the list price was initially higher than the tax-assessed value, the listed sales price must be reduced after 12 months to no more than 100% of the tax-assessed value.

b. In the case where at least two realtors have refused to list the property, the recipient must personally try to sell the property by efforts described in subdivision 2 c of this subsection for 12 months.

c. In the case of a recipient who has personally advertised his property for a year without success (the newspaper advertisements and "for sale" sign do not have to be continuous; these efforts must be done for at least 90 days within a 12-month period), the recipient must then:

(1) Subject his property to a realtor's listing agreement at price or below current market value; or

(2) Meet the requirements of subdivision 2 b of this subsection which are that the recipient must try to list the property and at least two realtors refuse to list it because it is unsaleable at current market value; other reasons for refusal to list are not sufficient.

4. If the recipient has made a continuing effort to sell the property for 12 months, then the recipient may sell the property between 75% and 100% of its tax assessed value and such sale shall not result in disqualification under the transfer of property rules. If the recipient requests to sell his property at less than 75% of assessed value, he must submit documentation from the listing realtor, or knowledgeable source if the property is not listed with a realtor, that the requested sale price is the best price the recipient can expect to receive for the property at this time. Sale at such a documented price shall not result in disqualification under the transfer of property rules. The proceeds of the sale will be counted as a resource in determining continuing eligibility.

5. Once the applicant has demonstrated that his property is unsaleable by following the procedures in subdivision 2 of this subsection, the property is disregarded in determining eligibility starting the first day of the month in which the most recent application was filed, or up to three months prior to this month of application if retroactive coverage is requested and the applicant met all other eligibility requirements in the period. A recipient must continue his reasonable efforts to sell the property as required in subdivision 3 of this subsection.

E. Automobiles. Ownership of one motor vehicle does not affect eligibility. If more than one vehicle is owned, the individual's equity in the least valuable vehicle or vehicles must be counted. The value of the vehicles is the wholesale value listed in the National Automobile Dealers Official Used Car Guide (NADA) Book, Eastern Edition (update monthly). In the event the vehicle is not listed, the value assessed by the locality for tax purposes may be used. The value of the additional motor vehicles is to be counted in relation to the amount of assets that could be liquidated that may be retained.

F. Life, retirement, and other related types of insurance policies. Life, retirement, and other related types of insurance policies with face values totaling $1,500 or less on any one person 21 years old and over are not considered resources. When the face values of such policies of any one person exceeds exceed $1,500, the cash surrender value of the policies is counted as a resource.

G. Long-term care partnership insurance policy (partnership policy). Resources equal to the amount of benefits paid on the insured's behalf by the long-term care insurer through a Virginia issued long-term care partnership insurance policy shall be disregarded. A long-term care partnership insurance policy shall meet the following requirements:

1. The policy is a qualified long-term care partnership insurance policy as defined in § 7702B(b) of the Internal Revenue Code of 1986.

2. The policy meets the requirements of the National Association of Insurance Commissioners (NAIC) Long-Term Care Insurance Model Regulation and Long-Term Care Insurance Model Act as those requirements are set forth in § 1917(b)(5)(A) of the Social Security Act (42 USC § 1396p).

3. The policy was issued no earlier than May 1, 2007.

4. The insured individual was a resident of a partnership state when coverage first became effective under the policy. If the policy is later exchanged for a different long-term care policy, the individual was a resident of a partnership state when coverage under the earliest policy became effective.

5. The policy meets the inflation protection requirements set forth in § 1917(b)(1)(C)(iii)(IV) of the Social Security Act.

6. The Insurance Commissioner requires the issuer of the partnership policy to make regular reports to the federal Secretary of Health and Human Services that include notification of the date benefits provided under the policy were paid and the amount paid, the date the policy terminates, and such other information as the secretary determines may be appropriate to the administration of such partnerships. Such information shall also be made available to the Department of Medical Assistance Services upon request.

7. The state does not impose any requirement affecting the terms or benefits of a partnership policy that the state does not also impose on nonpartnership policies.

8. The policy meets all the requirements of the Bureau of Insurance of the State Corporation Commission described in 14VAC5-200.

H. Reserved.

I. Resource exemption for Aid to Dependent Children categorically and medically needy (the Act §§ 1902(a)(10)(A)(i)(III), (IV), (VI), (VII); §§ 1902(a)(10)(A)(ii)(VIII), (IX); § 1902(a)(10)(C)(i)(III)). For ADC-related cases, both categorically and medically needy, any individual or family applying for or receiving assistance may have or establish 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. Any funds deposited in the account shall be exempt when determining eligibility for medical assistance for so long as the funds and interest remain on deposit 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 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 medical assistance unit.

J. Disregard of resources. The Commonwealth of Virginia will disregard all resources for qualified children covered under §§ 1902(a)(10)(A)(i)(I), 1902(a)(10)(A)(i)(III), 1902(a)(10)(A)(ii)(VIII), and 1905(n) of the Social Security Act.

K. Household goods and personal effects. The Commonwealth of Virginia will disregard the value of household goods and personal effects. Household goods are items of personal property customarily found in the home and used in connection with the maintenance, use and occupancy of the premises as a home. Examples of household goods are furniture, appliances, televisions, carpets, cooking and eating utensils and dishes. Personal effects are items of personal property that are worn or carried by an individual or that have an intimate relation to the individual. Examples of personal property include clothing, jewelry, personal care items, prosthetic devices and educational or recreational items such as books, musical instruments, or hobby materials.

L. Determining eligibility based on resources. When determining Medicaid eligibility, an individual shall be eligible in a month if his countable resources were at or below the resource standard on any day of such month.

M. Working individuals with disabilities eligible for assistance under § 1902(a)(10)(A)(ii)(XV) of the Act who wish to increase their personal resources while maintaining eligibility for Medicaid shall establish Work Incentive (WIN) accounts. The Commonwealth will disregard up to the current annual SSI (Social Security Act, § 1619(b)) threshold amount (as established for Virginia by the Social Security Administration) held in WIN accounts for workers with disabilities eligible for assistance under § 1902(a)(10)(A)(ii)(XV) of the Act. To be eligible for this resource disregard, WIN accounts are subject to the following provisions:

1. Deposits to this account shall derive solely from the individual's income earned after electing to enroll in the Medicaid Buy-In (MBI) program.

2. The balance of this account shall not exceed the current annual SSI (Social Security Act § 1619(b)) threshold amount (as established for Virginia by the Social Security Administration).

3. This account will be held separate from nonexempt resources in accounts for which prior approval has been obtained from the department, and for which the owner authorizes regular monitoring and reporting including deposits, withdrawals, and other information deemed necessary by the department for the proper administration of this provision.

4. A spouse's resources will not be deemed to the applicant when determining whether or not the individual meets the financial eligibility requirements for eligibility under this section.

5. Resources accumulated in the Work Incentive account shall be disregarded in determining eligibility for aged, blind, and disabled Medicaid-covered groups for one year after the individual leaves the Medicaid Buy-In program.

6. In addition, excluded from the resource and asset limit include amounts deposited in the following types of IRS-approved accounts established as WIN accounts: retirement accounts, medical savings accounts, medical reimbursement accounts, education accounts and independence accounts. Assets retained in these WIN accounts shall be disregarded for all future Medicaid eligibility determinations for aged, blind, or disabled Medicaid-covered groups.

N. For all aged, blind, or disabled individuals, both categorically needy and medically needy, the Commonwealth shall disregard as resources amounts received as payment for involuntary sterilization under the Virginia Eugenical Sterilization Act, beyond the allowable nine-month exclusion by the SSI program's resource methodologies.

12VAC30-40-370. Variations from the basic personal needs allowance.

For victims of Virginia's eugenical program, the Commonwealth shall, in addition to the basic personal needs allowance (PNA), increase the basic PNA by amounts received as payments for involuntary sterilization under the Virginia Eugenical Sterilization Act.