Opinion ID: 2570824
Heading Depth: 1
Heading Rank: 1

Heading: Determining Eligibility Requirements

Text: K.A.R. 30-6-108 provides for the treatment of real property: (b) Treatment of real property. The equity value of nonexempt real property shall be considered as a resource. (c) Exempted real property. The equity value of the following classifications of real property shall be exempt: (1) The home; (2) other real property that is essential for employment or self-employment; and (3) other real property that is producing income consistent with its fair market value. It is important in this case to note that if the other real property is not producing income consistent with its fair market value, that property is not exempt. Personal property, unless exempted, is considered a resource. K.A.R. 30-6-109(b). The criteria for classifying personal property is set out in K.A.R. 30-6-109(d), which provides, in part: Exempted personal property. The resource value of the following classifications of personal property shall be exempt: . ... (4) the stock and inventory of any self-employed person that are reasonable and necessary in the production of goods and services; . ... (9) income-producing personal property, other than cash assets, that is essential for employment or self-employment or producing income consistent with its fair market value. Income-producing property may include the following items: (A) tools; (B) equipment; (C) machinery; or (D) livestock. K.A.R. 30-6-111 defines applicable income. That regulation provides: `Applicable income' means the amount of earned and unearned income that is compared with the appropriate protected income level to establish financial eligibility. (a) Non-SSI. All earned income shall be considered applicable income unless exempted in accordance with K.A.R. 30-6-112 and K.A.R. 30-6-113. Applicable earned income shall be determined as follows. . ... (2) For self-employed persons, adjusted gross earned income shall equal gross earned income less cost of the production of the income. Income-producing costs shall include only those expenses directly related to the actual production of income. A standard deduction of 25% of gross earned income shall be allowed for these costs. If the person wishes to claim actual costs incurred, the following guidelines shall be used by the agency in calculating the cost of the production of the income. . ... (d) Applicable unearned income. (1) All net unearned income shall be considered to be applicable income except that the provisions of K.A.R. 30-6-112 and K.A.R. 30-6-113 shall apply to persons in an independent living arrangement or in the home-and community-based service program. The treatment of income is set out in K.A.R. 30-6-110. Income is classified as either earned income or unearned income. Earned income is income that an applicant earns through the receipt of wages, salary, or profit from activities in which the individual engages as an employer or as an employee with responsibilities that necessitate continuing activity on the individual's part. K.A.R. 30-6-110(a). All income received or reasonably expected to be received shall be considered in determining the applicable income for the eligibility base period. K.A.R. 30-6-110(b)(2). This includes income produced by real property exempt under K.A.R. 30-6-108(c)(3). Prior to the deterioration of Donald Fischer's health, Donald owned and managed the family farm. Donald's wife, Betty Fischer, did not participate in the active management of the farm. Donald entered long-term nursing home care in June 1996. At the time he entered the nursing home, Donald and Betty owned the following assets: 240 acres of farm land $123,300.00 (The Fischers rented out their farm land and received rental income. There is no information included in the 1998 application to determine how Donald was involved in the management of the farm or if he retained authority to direct the tenant in the planting, tilling, and harvesting of the crops in 1996.) Building site, 8.8 acres 36,000.00 32 acre farm, Betty (not Donald) owned 40 percent 8,201.00 Grain and hay 2,800.00 Loader 2,400.00 Feed wagon 400.00 Cattle 7,846.00 Stock trailer 3,700.00 Checking at Tri-County National Bank 6,082.91 Checking at Community State Bank 576.98 Second checking at Tri-County National Bank 3,810.55 Donald began selling off his real estate after his admission to the nursing home in 1996. On October 6, 1998, after the Fischers had sold their farm resources, Betty filed an application on behalf of Donald for SRS Medicaid assistance. The application asked for a description of two sets of assets: assets owned at the date the applicant entered long-term care (1996) and assets owned at the date of application (1998). There are two application forms in the record because, after the applicant fills out an application and turns it into SRS, SRS fills out an identical application for the applicant where it determines and classifies the assets (countable or exempt).