TITLE 1.ADMINISTRATION 
Part 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION 
Chapter 358. MEDICAID ELIGIBILITY 
Subchapter D. RESOURCES 
1 TAC §§358.431 - 358.433 
Pursuant to the federal Deficit Reduction Act of 2005 (DRA), PL 109-362, the Texas Health and Human Services Commission (HHSC) proposes to add §§358.431 - 358.433 to Texas Administrative Code (TAC), Title 1, Subchapter D, Chapter 358, Resources: §358.431 Transfer of Assets on or after February 8, 2006, §358.432, Home Equity Treatment, and §358.433, Treatment of Entrance Fees for Individuals Residing in Continuing Care Retirement Communities. The purpose of the new rules is to incorporate the mandatory provisions under section 1917 of the Social Security Act (SSA) as amended by the Deficit Reduction Act of 2005. 
Background and Justification 
On February 8, 2006, the DRA was signed into law. The Act made changes to certain Medicaid eligibility provisions of the SSA, necessitating the change to the Texas rules. HHSC proposes to amend its Medicaid Eligibility chapter by adding three new rules to Title 1, Subchapter D to, Chapter 358 of the TAC. 
Section-by-Section Summary 
Section 358.431, Transfer of Assets on or after February 8, 2005 - Provides rules for treatment of asset transfers that occur on or after February 8, 2006 for those who are eligible for medical assistance with respect to nursing facility services or other long-term care services as described the Social Security Act (SSA) §1917(c)(1) (codified at 42 U.S.C 1396p(c)(1)). Highlights from this rule are as follows: 
Look-Back Period - The look-back period is 60 months for all transfers (outright transfers as well as transfers to and from certain trusts). The look-back period is the period of time within which Medicaid reviews financial transactions of the applicant to determine whether any of those actions would result in Medicaid transfer of assets penalty. It begins with the date of application and goes backwards in time. The current law found in TAC §358.430(e) is a two element look-back period. For outright transfers, there is a 36-month look-back period. For transfers to a trust, there is a 60-month look-back period. The two element look-back period continues for transfers that occurred before February 8, 2006. 
Change In Beginning Date For Period Of Ineligibility - For transfers of assets made on or after the date February 8, 2006, the beginning date of penalty is based on the latter of the (1) date of transfer or the (2) eligibility date for nursing facility or waiver services. For transfers before February 8, 2006, the beginning date of penalty is the month that the transfer occurred. 
Availability of Hardship Waivers - This provision adds criteria for the application of the hardship waiver provisions. This section also includes notice requirements as to the possibility for a hardship waiver and the availability of a process by which an applicant for a hardship waiver may appeal an adverse determination of an application. It also allows the facility in which the institutionalized individual resides to file an application on behalf of the individual. 
Disclosure and Treatment of Annuities - For purposes of being eligible for long term care services under Medicaid, the applicant or the applicant's spouse must disclose any interest in an annuity (or similar financial instrument). The application or recertification form will include a statement that the State becomes a remainder beneficiary under such annuity or similar financial instrument. The State is to notify the issuer of the annuity of the right of the State to be a preferred remainder beneficiary in the annuity. 
State Named as Remainder Beneficiary - Current law only requires the State be named a remainder beneficiary when the annuitant is the client, not the community spouse. The DRA changes this to include annuities purchased for or by a person who is the community spouse on or after February 8, 2006. 
Promissory note, loan, or mortgage - A transfer of assets penalty will be based on funds used to purchase a promissory note, loan, or mortgage, on or after April 1, 2006, unless such note, loan, or mortgage (1) has a repayment term that is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the Social Security Administration); (2) provides for payments to be made in equal amounts during the term of the loan, with no deferral and no balloon payments made; and (3) prohibits the cancellation of the balance upon the death of the lender. 
Inclusion of Transfers to Purchase Life Estates - A transfer of assets penalty will be based on the purchase of a life estate interest in another individual's home made on or after April 1, 2006, unless the purchaser resides in the home for a period of at least one year after the date of the purchase. 
Section 358.432, Home Equity Treatment - Home Equity Treatment for Applications Filed on or after January 1, 2006--provides rules for treatment of the home equity for those who apply on or after January 1, 2006 for medical assistance with respect to nursing facility services or other long-term care services as described the SSA §1917(c)(1) (codified at 42 U.S.C 1396p(c)(1)). Prior to the enactment of the DRA, there was no limit to the value of the homestead as it related to Medicaid eligibility. Highlights from this rule are as follows: 
Disqualification for Long-Term Care Assistance for Individuals with Substantial Home Equity - The denial of benefits for an individual who has equity in a home that exceeds $500,000 would occur for those who apply for nursing facility services or other long-term care services as described the Social Security Act (SSA) §1917(c)(1) (codified at 42 U.S.C 1396p(c)(1)) on or after January 1, 2006. 
The $500,000 limit may be increased annually, starting in 2011, based on a percentage increase in the consumer price index, urban consumers, rounded to the nearest $1,000. 
Exceptions to the general rule apply if there is a spouse or child under twenty-one, blind or disabled is lawfully residing in the home. 
Permits an individual to use a reverse annuity mortgage or home equity to reduce the total equity. 
Secretary of the United States Department of Health and Human Services will establish a process to waive the treatment of the equity in cases of demonstrated hardship. 
Section 358.433, Treatment of Entrance Fees - Treatment of Entrance Fees of Individuals Residing in Continuing Care Retirement Communities provides rules for treatment entrance fees as a resource if a resident (1) has the ability to use the entrance fee, or the contract provides that the entrance fee may be used, to pay for care should other resources or income of the individual be insufficient to pay for such care; (2) is eligible for a refund of any remaining entrance fee when the individual dies or terminates the continuing care retirement community or life care community contract and leaves the community; and (3) the entrance fee does not confer an ownership interest in the continuing care retirement community or life care community. 
Fiscal Note 
Tom Suehs, Deputy Commissioner for Financial Services, has determined that during the first 5-year period the proposed rules are in effect, there will be a fiscal impact to state government. There will be costs due to automation and savings for Long Term Care services, but the State does not have sufficient data at this time to be able to estimate the overall impact. The proposed rules will not result in any fiscal implications for local health and human services agencies. Local governments will not incur additional costs. 
Small and Micro-business Impact Analysis 
Mr. Suehs has also determined that there will be no effect on small businesses or micro businesses to comply with the proposal, as they will not be required to alter their business practices as a result of the rule. There are no anticipated economic costs to persons who are required to comply with the proposed rules. There is no anticipated negative impact on local employment. 
Public Benefit 
Anne Heiligenstein, Deputy Executive Commissioner for Social Services, has determined that for each of the first five years the proposed new rules are in effect, the public will benefit from the adoption of the rules. The anticipated public benefit of enforcing the proposed rules will be a reduction in Medicaid spending for long-term care. 
Regulatory Analysis 
HHSC has determined that this proposal is not a "major environmental rule" as defined by §2001.0225 of the Texas Government Code. "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. 
Takings Impact Assessment 
HHSC has determined that this proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under §2007.043 of the Government Code. 
Public Comment 
Written comments on the proposal may be submitted to Dee Church at Mail Code 2090, P.O. Box 12668, Austin, TX 78711-2668, by fax to (512) 206-5211, or by e-mail to dee.church@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register . 
Public Hearing 
A Public Hearing is scheduled for July 17, 2006 between 9:00 am and 11:00 am at 701 W. 51st, Austin, Texas, Winters Complex, Public Hearing Room. Persons requiring further information, special assistance, or accommodations should contact Kyna Belcher at (512) 491-1884. 
Statutory Authority 
The new rules are proposed under the Texas Government Code, §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; the Human Resources Code, §32.021 and the Texas Government Code, §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas. 
The proposed new rules affect the Human Resources Code, Chapter 32, and the Texas Government Code, Chapter 531. No other statutes, articles, or codes are affected by this proposal. 
§358.431.Transfer of Assets on or after February 8, 2006. 
(a) Definitions--The Commission uses the definitions under the provisions of the Social Security Act (SSA) §1917(e) (codified at 42 U.S.C 1396p(h)). 
(1) The term "assets", with respect to an individual, includes all income and resources of the individual and of the individual's spouse, including any income or resources which the individual or such individual's spouse is entitled to but does not receive because of action-- 
(A) by the individual or such individual's spouse, 
(B) by a person, including a court or administrative body, with legal authority to act in place of or on behalf of the individual or such individual's spouse, or 
(C) by any person, including any court or administrative body, acting at the direction or upon the request of the individual or such individual's spouse. 
(2) The term "income" has the meaning given such term in section SSA §1612 (codified at 42 U.S.C. 1382a). 
(3) The term "institutionalized individual" means an individual who is an inpatient in a nursing facility, who is an inpatient in a medical institution and with respect to whom payment is made based on a level of care provided in a nursing facility, or who is described in SSA §1902(a)(10)(A)(ii)(VI) (codified at 42 U.S.C. 1396a). 
(4) The term "noninstitutionalized individual" means an individual receiving home health care services, home and community care for functionally disabled elderly individuals, or personal care services furnished to an individual who is not an inpatient or resident of a hospital, nursing facility, intermediate care facility for the mentally retarded, or institution for mental disease that are authorized for the individual by a physician in accordance with a plan of treatment or otherwise authorized for the individual in accordance with a service plan approved by the State, other long-term care services for which medical assistance is otherwise available under the State plan to individuals requiring long-term care. 
(5) The term "resources" has the meaning given such term in SSA §1613 (codified at 42 U.S.C. 1382b), without regard (in the case of an institutionalized individual) to the exclusion of the home. 
(b) Other definitions used in this section are client--"client" includes the individual himself, and as well as 
(1) "client" is synonymous with "individual" 
(2) the client's spouse; 
(3) a person, including a court or administrative body, with legal authority to act in place of or on behalf of the client or client's spouse; and 
(4) any person, including a court or administrative body, acting at the direction or upon the request of the client or the client's spouse. 
(c) The Commission is required to apply the penalty for transfers of assets under the provisions of the Social Security Act (SSA) §1917(c)(1) (codified at 42 U.S.C 1396p(c)(1)). 
(1) For transfers made on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005 
(A) If an institutionalized individual or the spouse of such an individual (or a noninstitutionalized individual or the spouse of such an individual) disposes of assets for less than fair market value on or after the look-back date specified in subparagraph (B) of this paragraph, the individual is ineligible for medical assistance for services described in subparagraph (C)(i) of this paragraph (or, in the case of a noninstitutionalized individual, for the services described in subparagraph (C)(ii) of this paragraph) during the period beginning on the date specified in subparagraph (D) of this paragraph and equal to the number of months specified in subparagraph (E) of this paragraph. 
(B) Look-Back Period 
(i) The look-back date specified in this subparagraph is a date that is 36 months (or, in the case of payments involving a trust or portions of a trust that are treated as assets disposed of by the individual pursuant to §358.430(e)(2) of this title or in the case of any other disposal of assets made on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, 60 months) before the date specified in clause (ii). 
(ii) The date specified in this clause, with respect to-- 
(I) an institutionalized individual is the first date as of which the individual both is an institutionalized individual and has applied for medical assistance under the State plan, or 
(II) a noninstitutionalized individual is the date on which the individual applies for medical assistance under the State plan or, if later, the date on which the individual disposes of assets for less than fair market value. 
(C) Ineligible for Medical Assistance for Services 
(i) The services described in this subparagraph with respect to an institutionalized individual are the following: 
(I) Nursing facility services. 
(II) A level of care in any institution equivalent to that of nursing facility services. 
(III) Home or community-based services furnished under a waiver granted under the Social Security Act §1917, subsection (c) or (d) as codified at 42 U.S.C 1396n (c) or (d). 
(ii) The services described in this subparagraph with respect to a noninstitutionalized individual are services (not including any services described in clause (i)) that are described in paragraph (7), (22), or (24) of the Social Security Act §1905(a) as codified at 42 U.S.C. 1396d and, at the option of a State, other long-term care services for which medical assistance is otherwise available under the State plan to individuals requiring long-term care. 
(D) Beginning Date of Penalty 
(i) In the case of a transfer of asset made before February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, the beginning date of penalty; and specified in this subparagraph, is the first day of the first month during or after which assets have been transferred for less than fair market value and which does not occur in any other periods of ineligibility under this subsection. 
(ii) In the case of a transfer of asset made on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, the beginning date of penalty, specified in this subparagraph, is the first day of a month during or after which assets have been transferred for less than fair market value, or the date on which the individual is eligible for medical assistance under the State plan and would otherwise be receiving institutional level of care described in subparagraph (C) of this paragraph based on an approved application for such care but for the application of the penalty period, whichever is later, and which does not occur during any other period of ineligibility under this subsection. 
(E) Length of Ineligibility Period 
(i) With respect to an institutionalized individual, the number of months of ineligibility under this subparagraph for an individual shall be equal to-- 
(I) the total, cumulative uncompensated value of all assets transferred by the individual (or individual's spouse) on or after the look-back date specified in subparagraph (B)(i) of this paragraph, divided by 
(II) the average monthly cost to a private patient of nursing facility services in the State at the time of application. 
(ii) With respect to a noninstitutionalized individual, the number of months of ineligibility under this subparagraph for an individual shall not be greater than a number equal to-- 
(I) the total, cumulative uncompensated value of all assets transferred by the individual (or individual's spouse) on or after the look-back date specified in subparagraph (B)(i) of this paragraph, divided by 
(II) the average monthly cost to a private patient of nursing facility services in the State at the time of application. 
(iii) The number of months of ineligibility otherwise determined under clauses (i) or (ii) of this subparagraph with respect to the disposal of an asset shall be reduced-- 
(I) in the case of periods of ineligibility determined under clause (i) of this subparagraph, by the number of months of ineligibility applicable to the individual under clause (ii) of this subparagraph as a result of such disposal, and 
(II) in the case of periods of ineligibility determined under clause (ii) of this subparagraph, by the number of months of ineligibility applicable to the individual under clause (i) of this subparagraph as a result of such disposal. 
(iv) The Commission shall not round down, or otherwise disregard any fractional period of ineligibility determined under clause (i) or (ii) of this subparagraph with respect to the disposal of assets. 
(F) Annuity--The purchase of an annuity made on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, shall be treated as the disposal of an asset for less than fair market value unless-- 
(i) the State is named as the remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the annuitant under this title; or 
(ii) the State is named as such a beneficiary in the second position after the community spouse or minor or disabled child and is named in the first position if such spouse or a representative of such child disposes of any such remainder for less than fair market value. 
(G) With respect to a transfer of assets, the term 'assets' includes an annuity purchased on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, by or on behalf of an annuitant who has applied for medical assistance with respect to nursing facility services or other long-term care services under this title unless-- 
(i) the annuity is-- 
(I) an annuity described in subsection (b) or (q) of section 408 of the Internal Revenue Code of 1986; or 
(II) purchased with proceeds from-- 
(-a-) an account or trust described in subsection (a), (c), or (p) of section 408 of such Code; 
(-b-) a simplified employee pension (within the meaning of section 408(k) of such Code); or 
(-c-) a Roth IRA described in section 408A of such Code; or 
(ii) the annuity-- 
(I) is irrevocable and nonassignable; 
(II) is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the United States Department of Health and Human Services); and 
(III) provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made. 
(H) In the case of a promissory note, loan, or mortgage that does not satisfy the requirements of clauses (i) through (iii) of this subparagraph, the value of such note, loan, or mortgage shall be the outstanding balance due as of the date of the individual's application for medical assistance for services described in subparagraph (C) of this paragraph and this amount would be used to determine the length of ineligibility. For purposes of this paragraph with respect to a transfer of assets, the term 'assets' includes funds used to purchase, on or after April 1, 2006, a promissory note, loan, or mortgage unless such note, loan, or mortgage-- 
(i) has a repayment term that is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the Social Security Administration); 
(ii) provides for payments to be made in equal amounts during the term of the loan, with no deferral and no balloon payments made; and 
(iii) prohibits the cancellation of the balance upon the death of the lender. 
(I) For purposes of this paragraph with respect to a transfer of assets, the term 'assets' includes the purchase of a life estate interest in another individual's home made on or after April 1, 2006, unless the purchaser resides in the home for a period of at least one year after the date of the purchase. 
(2) The Commission allows exceptions to transfers of assets under the provisions of the Social Security Act (SSA) §1917(c)(2) (codified at 42 U.S.C 1396p(c)(2))-- 
(A) the assets transferred were a home and title to the home was transferred to-- 
(i) the spouse of such individual; 
(ii) a child of such individual who 
(I) is under age 21, or 
(II) is blind or disabled as defined in SSA §1614 (codified at 42 U.S.C 1382c); 
(iii) a sibling of such individual who has an equity interest in such home and who was residing in such individual's home for a period of at least one year immediately before the date the individual becomes an institutionalized individual; or 
(iv) a son or daughter of such individual (other than a child described in clause (ii) of this subparagraph) who was residing in such individual's home for a period of at least two years immediately before the date the individual becomes an institutionalized individual, and who as determined by the State provided care to such individual which permitted such individual to reside at home rather than in such an institution or facility; 
(B) the assets-- 
(i) were transferred to the individual's spouse or to another for the sole benefit of the individual's spouse, 
(ii) were transferred from the individual's spouse to another for the sole benefit of the individual's spouse, 
(iii) were transferred to, or to a trust (including a trust described in §358.430(e)(2) of this title established solely for the benefit of, the individual's child described in subparagraph (A)(ii)(II) of this paragraph, or 
(iv) were transferred to a trust (including a trust described in §358.430(e)(2) of this title established solely for the benefit of an individual under 65 years of age who is disabled as defined in SSA §1614(a)(3) (codified at 42 U.S.C 1382c(a)(3)) 
(C) a satisfactory showing is made to the State based on guidance from the United States Department of Health and Human Services that-- 
(i) the individual intended to dispose of the assets either at fair market value, or for other valuable consideration, 
(ii) the assets were transferred exclusively for a purpose other than to qualify for medical assistance, or 
(iii) all assets transferred for less than fair market value have been returned to the individual; or 
(D) the Commission determines, that the denial of eligibility would work an undue hardship based on guidance of procedural standards and criteria from the United States Department of Health and Human Services 
(i) under which an undue hardship exists when application of the transfer of assets provision would deprive the individual-- 
(I) of medical care such that the individual's health or life would be endangered; or 
(II) of food, clothing, shelter, or other necessities of life; and 
(ii) which provides for-- 
(I) notice to recipients that an undue hardship exception exists; 
(II) a timely process for determining whether an undue hardship waiver will be granted; and 
(III) a process under which an adverse determination can be appealed. 
(E) The procedures established under subparagraph (D) of this paragraph shall permit the facility in which the institutionalized individual is residing to file an undue hardship waiver application on behalf of the individual with the consent of the individual or the personal representative of the individual. 
(3) For purposes of this subsection effective on or after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005, in the case of an asset held by an individual in common with another person or persons in a joint tenancy, tenancy in common, or similar arrangement, the asset (or the affected portion of such asset) shall be considered to be transferred by such individual when any action is taken, either by such individual or by any other person, that reduces or eliminates such individual's ownership or control of such asset. 
(4) The Commission will not provide for any period of ineligibility for an individual due to transfer of resources for less than fair market value except in accordance with this subsection. In the case of a transfer by the spouse of an individual which results in a period of ineligibility for medical assistance for such individual, the Commission will apportion such period of ineligibility (or any portion of such period) among the individual and the individual's spouse if the spouse otherwise becomes eligible for medical assistance. 
(5) In this subsection, the term "resources" has the meaning given such term in SSA §1613 (codified in 42 U.S.C. 1382b), without regard to the exclusion described in subsection (a)(1) of this section thereof. 
(d) In spousal situations, if assets are transferred to a third party before institutionalization or by the community spouse, the Commission does not include the uncompensated amount of the transfer in calculating the protected resource amount or countable resources upon application for Medicaid. 
(e) Transfer of income-- 
(1) The individual may incur a transfer penalty by transferring income. Transfers of income include: 
(A) waiving the right to receive an inheritance even in the month of receipt; 
(B) giving away a lump sum payment even in the month of receipt; or 
(C) irrevocably waiving all or part of federal, state, or private pensions or annuities. 
(2) The date of transfer is the date of the actual change in income. Interspousal transfers of income are permitted (for example, obtaining a court order to have community property pension income paid to a community spouse). 
(3) Because revocable waivers of pension benefits can be revoked and the benefits reinstated, no uncompensated value is developed, and no transfer of assets penalty is incurred. Such waivers are subject to the utilization of benefits policy, and the individual must apply for reinstatement of the full pension amount or he is ineligible for all Medicaid benefits. 
(f) Disclosure and Treatment of Annuities--The Commission under the provisions of the Social Security Act (SSA) §1902(a)(18) (codified at 42 U.S.C 1396a(18)) requires as a condition for the provision of medical assistance for services described in subsection (c)(1)(C)(i) of this section (relating to long-term care services) for an individual-- 
(1) the application of the individual for such assistance (including any recertification of eligibility for such assistance) shall disclose a description of any interest the individual or community spouse has in an annuity (or similar financial instrument as directed by the United States Department of Health and Human Services), regardless of whether the annuity is irrevocable or is treated as an asset. Such application or recertification form shall include a statement that under paragraph (2) of this subsection the State becomes a remainder beneficiary under such an annuity or similar financial instrument by virtue of the provision of such medical assistance. 
(2) In the case of disclosure concerning an annuity under subsection (c)(1)(F) of this section, the Commission shall notify the issuer of the annuity of the right of the State under such subsection as a preferred remainder beneficiary in the annuity for medical assistance furnished to the individual. Nothing in this paragraph shall be construed as preventing such an issuer from notifying persons with any other remainder interest of the State's remainder interest under such subsection. 
(3) The Commission will establish categories of transactions that may be treated as a transfer of asset for less than fair market value as the United States Department of Health and Human Services provides guidance. 
(4) Nothing in this subsection shall be construed as preventing the Commission from denying eligibility for medical assistance for an individual based on the income or resources derived from an annuity described in paragraph (1) of this subsection. 
§358.432.Home Equity Treatment. 
Home Equity and Eligibility for Medical Assistance with Respect to Services--The Commission is required under the provisions of the Social Security Act (SSA) §1917(f) (codified at 42 U.S.C 1396p(f)) 
(1) For individuals who are determined eligible for medical assistance with respect to nursing facility services or other long-term care services as described the Social Security Act (SSA) §1917(c)(1) (codified at 42 U.S.C 1396p(c)(1)) based on an application filed on or after January 1, 2006-- 
(A) Despite any other provision of the Social Security Act (SSA) §1917 (codified at 42 U.S.C 1396p), subject to subparagraph (B) of this paragraph and paragraph (2) of this subsection, the individual shall not be eligible for such assistance if the individual's equity interest in the individual's home exceeds $500,000. 
(B) The dollar amounts specified in this paragraph shall be increased, beginning with 2011, from year to year based on the percentage increase in the consumer price index for all urban consumers (all items; United States city average), rounded to the nearest $1,000. 
(2) Paragraph (1) of this subsection shall not apply with respect to an individual if-- 
(A) The spouse of such individual, or 
(B) Such individual's child who is under age 21, or (with respect to States eligible to participate in the State program established under title XVI) is blind or permanently and totally disabled, or (with respect to States which are not eligible to participate in such program) is blind or disabled as defined in SSA §1614 (codified at 42 U.S.C 1382c), is lawfully residing in the individual's home. 
(3) Nothing in this subsection shall be construed as preventing an individual from using a reverse mortgage or home equity loan to reduce the individual's total equity interest in the home. 
(4) The Secretary of the United States Department of Health and Human Services shall establish a process whereby paragraph (1) of this subsection is waived in the case of a demonstrated hardship. 
§358.433.Treatment of Entrance Fees of Individuals Residing in Continuing Care Retirement Communities. 
Treatment of Entrance Fees of Individuals Residing in Continuing Care Retirement Communities--The Commission under the provisions of the Social Security Act (SSA) §1917(g) (codified at 42 U.S.C 1396p(g)) 
(1) IN GENERAL--For purposes of determining an individual's eligibility for, or amount of, benefits under the State plan, the rules specified in paragraph (2) of this section shall apply to individuals residing in continuing care retirement communities or life care communities that collect an entrance fee on admission from such individuals. 
(2) TREATMENT OF ENTRANCE FEE--For purposes of this subsection, an individual's entrance fee in a continuing care retirement community or life care community shall be considered a resource available to the individual to the extent that-- 
(A) The individual has the ability to use the entrance fee, or the contract provides that the entrance fee may be used, to pay for care should other resources or income of the individual be insufficient to pay for such care; 
(B) The individual is eligible for a refund of any remaining entrance fee when the individual dies or terminates the continuing care retirement community or life care community contract and leaves the community; and 
(C) The entrance fee does not confer an ownership interest in the continuing care retirement community or life care community. 
This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt. 
Filed with the Office of the Secretary of State on June 19, 2006. 
TRD-200603357 
Steve Aragón 
Chief Counsel 
Texas Health and Human Services Commission 
Earliest possible date of adoption: July 30, 2006 
For further information, please call: (512) 424-6900