PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of section 360-7.11 of Title 18 NYCRR.
Statutory authority:
Public Health Law, sections 201 and 206; and Social Services Law, sections 363-a and 369(6)
Finding of necessity for emergency rule:
Preservation of general welfare.
Specific reasons underlying the finding of necessity:
Chapter 59 of the laws of 2011 enacted a number of proposals recommended by the Medicaid Redesign Team established by the Governor to reduce costs and increase quality and efficiency in the Medicaid program. The changes to SSL section 369(6) that require the Department, by regulation, to implement an expanded definition of estate for Medicaid recovery purposes, took effect April 1, 2011. Paragraph (t) of section 111 of Part H of Chapter 59 authorizes the Commissioner to promulgate, on an emergency basis, any regulations needed to implement such law. The Commissioner has determined it necessary to file these regulations on an emergency basis to achieve the savings intended to be realized by the Chapter 59 provisions regarding Medicaid estate recoveries.
Subject:
Medicaid Estate Definition.
Purpose:
Expand the estate definition for Medicaid recovery purposes to include assets that pass outside of an individuals probate estate.
Text of emergency rule:
Section 360-7.11 is amended to read as follows:
Section 360-7.11. Medical assistance liens and recoveries.
(a) Definitions.
(1) Estate means: (i) all of a decedent's real and personal property and other assets passing under the terms of a valid will or by intestacy; and (ii) any other real and personal property and other assets in which the decedent had any legal title or interest at the time of death, including such assets conveyed to a survivor, heir, or assign of the decedent through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement, to the extent of the decedent's interest in the property immediately prior to death.
(2) Interest in property immediately prior to death includes the value of:
(i) the person's proportionate share of real property held in a joint tenancy, tenancy in common, or similar arrangement;
(ii) a retained life estate, based on the actuarial life expectancy of the life tenant;
(iii) funds in a jointly owned bank account, except to the extent that the surviving joint owner documents his or her interest in the account through verifiable deposits and withdrawals;
(iv) the person's per capita share of jointly owned securities;
(v) the principal and accumulated interest of a revocable trust;
(vi) the principal and accumulated interest of an irrevocable trust funded in whole or in part with the assets of the person or the person's spouse to the extent that the person was entitled to the distribution of such principal and interest pursuant to the terms of the trust, and if the person was entitled to receive trust income, any income that, as of the date of the person's death, was required to be but had not been distributed; and
(vii) remaining payments from an annuity purchased by or with the assets of the person or the person's spouse.
(3) Retained life estate means: (i) a life estate created by a person or the person's spouse in property in which the person or spouse held any interest at the time the life estate was created; or (ii) a life estate created for the benefit of a person or the person's spouse in property in which the person or spouse held any interest within five years prior to the creation of the life estate.
(b) Liens.
(1) The [social services district] MA program may not impose any lien against a person's property prior to his or her death for MA paid or to be paid on his or her behalf except:
[(1)] (i) based upon a court judgment for benefits incorrectly paid; or
[(2)] (ii) against claims and suits for personal injuries, to recover the amount of MA furnished to a person on and after the date the person incurred the injuries; or
[(3)] (iii) with respect to the real property of a person who is an in-patient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution, and who is not reasonably expected to be discharged from the medical institution and return home, provided that:
[(i)] (a) any such lien will dissolve upon the person's discharge and return home; and
[(ii)] (b) no lien may be imposed on the person's home if the person's spouse, child under 21 years of age, certified blind or certified disabled child of any age, or sibling who has an equity interest in the home and who resided in the home for at least one year immediately before the date of the person's admission to the medical institution, is lawfully residing in the home.
(2) Liens shall be imposed on property and assets described in subparagraph (ii) of paragraph (1) of subdivision (a) of this section as soon as practicable after the person's death.
[(b) Adjustments and recoveries] (c) Recoveries - generally.
(1) [A social services district] The MA program may make no adjustment or recovery for MA correctly paid, except that recoveries must be pursued from:
(i) the estate of a person who was [65] 55 years of age or older when he or she received MA; or
(ii) the sale of real property subject to a lien imposed [pursuant to] on account of MA furnished to a person described in [paragraph (a)(3)] subparagraph (b)(1)(iii) of this section, or from the estate of such a person; or
(iii) a legally responsible relative of an MA recipient, and then only the amount of MA granted, provided the relative has sufficient income and resources which he or she fails or refuses to make available. The amount of income and resources required to be contributed by a legally responsible relative is determined under Subpart 360-4 of this Part.
(2) An adjustment or recovery under subparagraph (1)(i) or (ii) of this subdivision may be made from a person's estate only after the death of the person's surviving spouse, and only when the person has no surviving child who is under 21 years of age or who is certified blind or certified disabled.
(3) In addition to the limitations set forth in paragraph (2) of this subdivision, in the case of a lien on a person's home, no adjustment or recovery may be made when:
(i) a sibling of the person has an equity interest in the home, has resided in the home for at least one year immediately before the date of the person's admission to the medical institution, and has lawfully resided in the home on a continuous basis since the date of admission; or
(ii) a child of the person resided in the home for a period of at least two years immediately before the date of the person's admission to a medical institution, provided care to such person which permitted the person to reside at home rather than in an institution, and has lawfully resided in the home on a continuous basis since the date of admission.
(d) Estate recoveries.
(1) Notice of claim. As soon as practicable after the death of a person who received MA or the surviving spouse of such a person, the MA program will provide a written notice of claim to the estate fiduciary, if applicable, and to individuals in possession of property described in subparagraph (ii) of paragraph (1) of subdivision (a) of this section. Such notice will:
(i) set forth the basis for the estate claim, and the specific laws and/or regulations supporting the claim;
(ii) specify the amount determined to be owed to the MA program as of the date of the notice;
(iii) describe the criteria for being granted a deferral or waiver of the estate recovery, and the timeframes for requesting such deferral or waiver;
(iv) indicate that the MA program has imposed or may impose a lien against any real property described in subparagraph (ii) of paragraph (1) of subdivision (a) of this section; and
(v) instruct the estate fiduciary to inform the person's dependents, heirs, or survivors of the MA program's claim and of their right to seek a deferral or waiver of the estate recovery, or to contest the MA program's claim.
(2) Waiver of estate recovery. Recovery of MA correctly paid shall be waived in whole or in part if it would result in undue hardship. Any estate beneficiary, estate fiduciary on behalf of an estate beneficiary, or person in possession of property described in subparagraph (ii) of paragraph (1) of subdivision (a) of this section, may request that recovery be waived on the basis of undue hardship.
(i) Undue hardship may be found to exist when: the estate asset subject to recovery is the sole income-producing asset of the beneficiary or beneficiaries, such as a family farm or business, and income produced by the asset is limited; the estate asset subject to recovery is a home of modest value and the home is the primary residence of the beneficiary; or there are other compelling circumstances.
(ii) Undue hardship will not be found to exist based solely on the inability of any of the beneficiaries to maintain a pre-existing lifestyle, or where the alleged hardship is the result of MA or estate planning methods involving divestiture of assets.
(3) Deferral of estate recovery.
(i) The MA program must defer estate recovery:
(a) during the lifetime of the person's surviving spouse;
(b) during any period in which the person has a surviving child who is under age 21 or who is certified blind or disabled; and
(c) with respect to the home of a deceased Medicaid recipient, when one of the relatives described in paragraph (3) of subdivision (c) of this section is lawfully residing in the home.
(ii) The MA program may defer estate recovery if:
(a) the asset subject to recovery is an interest in real property and undue hardship has not been found to exist;
(b) a dependent, heir, or survivor has lawfully and continuously resided in the real property, beginning prior to the person's death, and is unwilling to sell the real property;
(c) the dependent, heir, or survivor cannot pay the MA estate claim in full unless the property is liquidated;
(d) the dependent, heir, or survivor has applied for but been unable to obtain financing in order to pay the MA claim; and
(e) a written agreement has been entered into between the MA program and the dependent, heir, or survivor whereby the MA program holds a lien on the property, and the dependent, heir, or survivor agrees to pay the amount of the MA claim in accordance with a reasonable payment schedule, subject to reasonable interest.
[(4)] (e) [A social services district] The MA program may maintain an action pursuant to sections 101 and 104 of the Social Services Law to collect from a trustee, grantor, or grantor's spouse any beneficial interest of the grantor or grantor's spouse in any trust established other than by will, to reimburse [such district] the program for the amount of MA granted to, or on behalf of, a grantor or grantor's spouse. The beneficial interest of the grantor or grantor's spouse includes any income and principal amounts to which the grantor or grantor's spouse would be entitled under the terms of the trust, by right or in the discretion of the trustee, assuming the full exercise of discretion by the trustee.
[(5)] (f) If an MA recipient receives an insurance settlement for personal injuries which includes an amount for medical bills, the [social services district] MA program may recover from such amount the cost of MA provided for the treatment of the injuries.
[(6)] (g) [A social services district] The MA program may maintain an action under the Debtor and Creditor Law to set aside any transaction which appears to have been made for the purpose of qualifying a person for MA or for avoiding a lien or recovery of MA paid on behalf of an MA recipient.
(h) Nothing in this section shall authorize the imposition of liens or pursuit of MA recoveries against assets exempted from such liens and recoveries by federal or State law.
This notice is intended
to serve only as a notice of emergency adoption. This agency intends to adopt this emergency rule as a permanent rule and will publish a notice of proposed rule making in the State Register at some future date. The emergency rule will expire December 6, 2011.
Text of rule and any required statements and analyses may be obtained from:
Katherine Ceroalo, DOH, Bureau of House Counsel, Reg. Affairs Unit, Room 2438, ESP Tower Building, Albany, NY 12237, (518) 473-7488, email: regsqna@health.state.ny.us
Regulatory Impact Statement
Statutory Authority:
Social Services Law (SSL) section 363-a and Public Health Law section 201(1)(v) provide that the Department is the single state agency responsible for supervising the administration of the State's medical assistance ("Medicaid") program and for adopting such regulations, not inconsistent with law, as may be necessary to implement the State's Medicaid program.
Legislative Objectives:
Subdivision 6 of section 369 of the Social Services Law (SSL), as amended by Chapter 59 of the Laws of 2011, provides that pursuant to regulations promulgated by the Commissioner of Health, an individual's estate for Medicaid recovery purposes will include any property in which the individual had any legal title or interest at the time of death, including jointly held property, retained life estates, and interests in trusts, to the extent of those interests. The legislative objective, expressed through SSL section 369(6), is to increase the amount of Medicaid estate recoveries by expanding the definition of estate to include assets that pass outside of an individual's probate estate.
Needs and Benefits:
The proposed regulation is required before the State's Medicaid program can implement the provisions of Chapter 59 of the Laws of 2011 expanding the Medicaid definition of estate. In addition, the proposed regulation amends outdated provisions in 18 NYCRR § 360-7.11 to bring them in conformance with changes made to SSL section 369 by Chapter 170 of the Laws of 1994 that: made Medicaid estate recoveries mandatory rather than permissive; expanded estate recoveries to Medicaid provided to individuals 55 years of age or older, rather than 65 years of age or older; and required Medicaid recoveries to be waived in cases of undue hardship.
The proposed regulation would make a number of substantive changes to the current section dealing with Medicaid liens and recoveries, 18 NYCRR 360-7.11.
Subdivision (a) of the regulation defines various terms related to Medicaid estate recoveries. It defines the term estate in accordance with the statutory definition, but clarifies that having a legal title or interest in property at the time of death means the extent of such interest immediately prior to death. This clarification is necessary because some interests in property that the Legislature clearly intends to be subject to Medicaid recoveries technically end at the time (moment) of death. The definition of the term interest in property immediately prior to death lists typical assets that pass outside an individual's probate estate, and defines the extent of the individual's interest in each such asset immediately prior to death for purposes of asserting a Medicaid recovery claim. The definition of retained life estate further limits Medicaid recoveries from life estates to situations in which the Medicaid recipient or spouse had an interest in the property at the time the life estate was created or within five years prior to the creation of the life estate.
Subdivision (b) of the regulation, relating to the placement of Medicaid liens, is amended to provide that post-death liens against assets will be imposed as soon as practicable after the individual's death.
Subdivision (c) of the regulation, relating to Medicaid recoveries in general, is amended to reflect that recoveries are mandatory and that the cost of correctly paid Medicaid will be recovered from the estates of individuals who were 55 years of age or older when they received assistance.
Subdivision (d) of the regulation, relating specifically to estate recoveries, addresses:
• the requirement for and contents of a Medicaid notice of claim to be provided to the estate fiduciary, if applicable, and to individuals in possession of assets that pass outside the probate estate;
• the right of an estate beneficiary or fiduciary, or person in possession of non-probate assets, to request a waiver of a Medicaid estate recovery, and the criteria for granting such a waiver;
• periods of time during which a Medicaid recovery is prohibited by law, i.e., during the lifetime of the individual's surviving spouse, or when there is a surviving child who is a minor or who is blind or disabled, or, with respect to a home, when certain relatives have lawfully and continuously resided in the home since the date of the Medicaid recipient's admission to a medical institution; and
• circumstances under which a Medicaid recovery may be deferred in order to allow a dependent, heir, or survivor who has lawfully and continuously resided in the individual's home, beginning prior to the individual's death, to continue to live there.
Section (h) of the regulation clarifies that nothing in section 360-7.11 authorizes Medicaid liens or recoveries against assets that are exempted from such liens and recoveries by federal or State law.
In addition to the changes described above, the proposed regulation amends section 360-7.11 to replace references to social services districts with references to the Medicaid program, to reflect the fact that the authority to impose liens and pursue Medicaid recoveries does not rest solely with the local districts. Subdivision 7 of SSL section 369 was added by Chapter 58 of the Laws of 2008 to clarify that the Department has concurrent authority to conduct the full range of Medicaid recovery activities.
COSTS:
Costs for the Implementation of, and Continuing Compliance with the Regulation to the Regulated Entity:
This amendment will not increase costs to the regulated parties.
Costs to State and Local Government:
This amendment will not increase costs to the State or local governments. Savings to the Medicaid program will be achieved by expanding the scope of assets subject to Medicaid recovery.
Costs to the Department of Health:
There will be no additional costs to the Department.
Local Government Mandates:
This amendment will not impose any program, service, duty, additional cost, or responsibility on any county, city, town, village, school district, fire district, or other special district.
Paperwork:
This amendment will not impose any additional paperwork requirements.
Duplication:
There are no duplicative or conflicting rules identified.
Alternatives:
The expansion of the definition of estate for Medicaid recovery purposes is mandated by section 369(6) of the SSL. No alternatives were considered.
Federal Standards:
The federal Medicaid statute, at 42 USC 1396p(b)(4), provides that for purposes of Medicaid estate recoveries, the term "estate" shall include all real and personal property in the individual's probate estate, and may include, at the option of the State, any other real and personal property and other assets in which the individual had any legal title or interest at the time of death, including assets conveyed through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.
Compliance Schedule:
Social services districts should be able to comply with the proposed regulations when they become effective.
Regulatory Flexibility Analysis
Effect of Rule:
The proposed regulation implements the provisions of Chapter 59 of the Laws of 2011. Chapter 59 amended Social Services Law section 369(6) to expand the definition of estate, for Medicaid recovery purposes, to include assets that pass outside of an individual's probate estate. Social services districts currently impose liens and pursue recoveries on behalf of the Medicaid program. The proposed regulation expands the type of assets that are the target of these ongoing recovery activities.
Compliance Requirements:
This amendment does not impose new reporting, recordkeeping or other compliance requirements on small businesses or local governments.
Professional Services:
No new professional services are required as a result of this amendment.
Compliance Costs:
There are no costs of compliance with this amendment.
Economic and Technological Feasibility:
There should be no technological difficulties associated with complying with the proposed regulation.
Minimizing Adverse Impact:
The expansion of the definition of estate for Medicaid recovery purposes is mandated by section 369(6) of the SSL. This will have an adverse impact on some survivors of deceased Medicaid recipients, because Medicaid's estate claim will reduce the amount of non-probate assets that pass to such survivors by operation of law or pursuant to the terms of a trust. This impact cannot be avoided given the statutory mandate.
Small Business and Local Government Participation:
Local government officials have consistently been in favor of measures that would reduce the amount of assets sheltered by Medicaid applicants to achieve eligibility and to avoid estate recoveries. The Department hosted a conference call for program, fiscal, and legal staff of the social services districts to brief them on the policy changes that the Department anticipated making, through regulation and administrative directive, to comply with the expanded estate definition provisions of Chapter 59 of the Laws of 2011. In addition to the discussion that took place during the call, the Department solicited and received written comments and questions from the districts on these policy changes, which the Department considered in preparing the final version of the proposed regulation.
Rural Area Flexibility Analysis
Effect on Rural Areas:
The proposed regulation implements the provisions of Chapter 59 of the Laws of 2011, which expand the definition of estate, for Medicaid recovery purposes, to include assets that pass outside of an individual's probate estate. Social services districts currently impose liens and pursue recoveries on behalf of the Medicaid program. Each upstate county in New York State is a separate social services district; some are rural counties.
Compliance Requirements:
No new reporting, recordkeeping or other compliance requirements are being imposed as a result of the proposed regulation.
Professional Services:
No additional professional services are required for social services districts to comply with the proposed regulation.
Compliance Costs:
There are no costs associated with compliance.
Minimizing Adverse Impact:
The expansion of the definition of estate for Medicaid recovery purposes is mandated by section 369(6) of the SSL. This will have an adverse impact on some survivors of deceased Medicaid recipients, because Medicaid estate claims against non-probate assets will reduce the amount of assets that pass to such survivors by operation of law or pursuant to the terms of a trust. This impact cannot be avoided given the statutory mandate.
Opportunity for Rural Area Participation:
The Department hosted a conference call for program, fiscal, and legal staff of the social services districts to brief them on the policy changes that the Department anticipated making, through regulation and administrative directive, to comply with the expanded estate definition provisions of Chapter 59 of the Laws of 2011. In addition to the discussion that took place during the call, the Department solicited and received written comments and questions from the districts on these policy changes, which the Department considered in preparing the final version of the proposed regulation.
Job Impact Statement
Nature of Impact:
The proposed regulation will not adversely impact jobs or employment opportunities in New York. The proposed regulation implements the provisions of Chapter 59 of the Laws of 2011, which expand the definition of estate, for Medicaid recovery purposes, to include assets that pass outside of an individual's probate estate.
