KFMAM Manual - 11/22/2009

05000

                                                                                                  07000

06000: Budgeting of Income - Income There are two types of income, earned and unearned. Income shall include money received from such sources as wages, self-employment, property rentals, pensions, benefits, and contributions.

06100 Budgeting of Income - A prospective (income estimate or conversion) or income average method of budgeting shall be used to determine eligibility and the amount of assistance. All income shall be counted in the calendar month received except when received on a twice a month or monthly basis. In such instances, income shall be viewed as being received by the client on the day that the payment is ordinarily scheduled.

NOTE: For teachers or other school employees, income shall normally be budgeted on a prospective basis as received unless the teacher has opted to receive their yearly contract salary over fewer than 12 months (such as only over 9 months during the school year). In such instances, the total year's income is to be averaged over 12 months so that a monthly amount of income is considered in determining eligibility and amount of assistance.

6110 Prospective Budgeting - Is based on an estimate reflecting the income received and/or expected to be received in the calendar month and the deductions which will be billed to the household in that month (see 6220 and subsections). The basis for any estimate (including tips) must be documented. For self-employment and other intermittent income and deductions, the estimate shall be determined as outlined in 6200. A prospectively estimated budget may be recomputed if information is received that the estimate is no longer correct (e.g., income that was estimated to be received in a month is reduced or terminated). The client must request a new budget computation and the change shall be applied to the case in a month subsequent to the month in which it is requested in accordance with provisions in 6200 and 7212.

Earned income information must be analyzed to accurately prospect income. Past information must be evaluated to determine if it represents the future. Paystubs provided must be evaluated to determine if any are not reflective of future earnings, such as a high check due to one-time overtime or a bonus, a low check due to illness or missed work, or a first partial check. If overtime, bonuses, or commissions are on the pay stub, these must be evaluated to determine whether this income is recurring. If the person is employed where tips are paid, it must be determined if tips are actual or allocated. (Certain employers must allocate tips if the percentage of tips reported by employees falls below a required minimum percentage of gross sales. To “allocate tips” means to assign an additional amount as tips to each employee whose reported tips are below the required percentage.) Pay information provided must be evaluated to determine if there was a recent pay raise that will impact future earnings. Paystubs should also be evaluated to determine if there are any discrepancies in the year-to-date amounts. If so, the missing information must be obtained. When using paystubs, the most recent should be used and they should be consecutively. If one or more checks are not reflective (high due to a one-time bonus, or low due to illness, for example) they should not be used in the calculation.

Documentation must be in the case file regarding the method of computation and why any paystubs are not used in the computation. When income is from a new source, the pay rate has increased (or decreased) or when the numbers or hours to be worked has increased or decreased, the income should be projected from the best information available. Weekly and biweekly income must be converted to a monthly amount.

Budgeting - Rules are dependent upon frequency and regularity of income. The case record is to be documented as the method of computation.

6111 Regular Earned or Unearned Income and Deductions - Once the full monthly amount is determined, that same amount of income shall be budgeted providing the individual anticipates continued regular income and deductions. A new budget is required prior to redetermination only if regular income becomes irregular, there is no longer any income (not applicable to a job change if earnings remain regular), or there is a change in the monthly amount of regular income.

6112 Irregular Earned or Unearned Income and Deductions - For income and expenses received or billed more frequently than on a monthly basis (i.e., weekly, biweekly, etc.), the amount to be budgeted shall be based on converting a "representative" amount to a standard amount of anticipated monthly income or deductions. "Representative" is defined as a month in which the amount reflects a full month's benefits or wages, or deductions.

6112.01 - Income and deductions in the same weekly amount are to be multiplied by 4.3. If the income or deduction amount received is in differing weekly amounts, a representative amount shall be determined and then multiplied by 4.3.

6112.02 - Income and deductions in the same amount every 2 weeks are to be multiplied by 2.15. If the income or deduction amount received is in differing amounts every 2 weeks, a representative amount shall be determined and then multiplied by 2.15.

6112.03 - Income and deductions in the same amount twice per month are to be added together to obtain a monthly amount. If the income or deduction is in differing amounts twice per month, a representative amount shall be determined and then multiplied by 2.

NOTE: To prospectively estimate semi-monthly income from a new job, (when paychecks are not available to average) pay periods with varying hours must be taken into account. The easiest and most accurate way to make this determination is to calculate a weekly estimate, times 2.15 times 2. Multiplying the weekly amount time 2.15 will take into account pay periods that have fluctuating hours. For example, a person working 40 hours a week will have more than 80 hours in a pay period when paid semi-monthly. Taking 40 X the hourly rate X 2.15 X 2 will get a closer anticipation of projected income than taking 40 X the hourly rate X 2 X 2.

6113 Irregular and Intermittent Income - Received on a monthly basis in differing amounts or deductions bill monthly in differing amounts shall be averaged. (see 6200)

Actual income shall be used in computing prior medical eligibility (see 6311.02) and in computing any month in which the amount of income is not representative.

6113.01 - Once a standard monthly amount is established, it may continue to be budgeted through the redetermination period. However, a new budget is required:

(1) - for medical assistance when income terminates and there continues to be a spenddown in place;

(2) - for HealthWave when income decreases and results in elimination of a premium requirement.

For recomputing eligibility in medical assistance spenddown cases based on a change or termination in income, use the converted or actual income amounts established for the case prior to the month of change. In addition, if income continues, establish a new converted monthly amount based on anticipated income from the month of change through the end of the base period. In some instances, it may be appropriate to use an actual income amount or a separate anticipated income amount for the month of change particularly when there is a mixture of old and new income amounts in that month (e.g., client receives an increase in hourly wage which takes effect in the middle of the month).

06200 Income Averaging -

6210 Income Averaging - The income averaging budgeting method is used to budget self-employment and intermittent (earned and unearned income) in the Medical Assistance program. In addition, for Medical Assistance, earned and unearned income received in differing amounts on a monthly basis may be averaged.

6211 Intermittent Income - For intermittent income, the monthly amount shall be established by dividing the income by the proper number of months for the period that the income is intended (e.g., 3 months for quarterly, etc.). A fair estimate for the time period used for averaging shall be established with the client. The case record shall clearly indicate that the income is being treated as intermittent income.

Since intermittent income is counted from the date of receipt and budgeted for the period of time that it is intended, it is possible that two monthly amounts could be considered for the same month. (See 5213)

6212 Self-Employment Income - See 5413 for guidelines to determine if an individual is self-employed. For self-employment income, an average shall be established based on the guidelines below.

6212.01 Tax Return Filed - When a tax return has been filed, the average shall be based on the most recent year's income tax return filed. Provided the return reflects a full year of self-employment earnings, a twelve month average shall be established.

6212.02 Tax Return Not Filed or Does Not Contain Full Year's Earnings - If a tax return has not been filed (e.g., employment just started or client has not filed a return) or does not reflect a full year of earnings, an initial average shall be established based on at least 3 calendar months of income which are reflective of the individual's income pattern. If the earnings reported on the tax return are representative, an average can be established based on that information dependent on the number of months reflected for the earnings reported. Otherwise, the calendar months used to establish an average must be consecutively prior to the month of application or the month in which the average is being calculated.

Income must be counted by the calendar month received. An average shall exclude only the first month of earnings when that amount is not representative. (See 6111.) A prospective estimate shall be used until an average can be instituted based on methodologies for using actual or anticipated income in 6111. When at least 3 calendar months of income are known following use of the prospective estimate and these months reflect the individual's income pattern, an average is to be established. However, if additional calendar months are necessary to more accurately reflect this pattern, the average should incorporate these months.

Once an average is established, it may continue through the review period. When income is reaveraged (e.g., review or redetermination), at least 3 of the most recent calendar months shall be used. Once again, additional months should be used if necessary to accurately reflect the person's income pattern. However, once a full year of earnings is obtained based on tax return information, a new average is to be established with this information at the time of the next scheduled review and remain in effect until the following year's tax return information is available except as indicated below.

For self-employment, the average is determined by totaling all adjusted gross earnings in the months being counted and dividing by the respective number of months. The calendar months being used and the corresponding earnings must be clearly documented in the case record.

6212.03 Need for New Estimate/Average Based on Changes in Income - Income shall not be calculated on the basis of prior income (i.e., income tax returns) when the individual has experienced a substantial increase or decrease in earnings. If the averaged amount does not accurately reflect the individual's actual circumstances because he or she has experienced a substantial increase or decrease in business, the self-employment income shall be calculated on anticipated earnings until a new average can be established. Self-employment earnings may also be reaveraged prior to the review period or the availability of tax return information if the current average is no longer reflective of the person's income. This can be done by either establishing a new average which incorporates the change in income pattern or an estimate until at least three calendar months of income which are reflective are known.

6212.04 Unearned Income - If unearned income is treated as self-employment and received on a basis other than monthly it is budgeted as intermittent income per 5213 so that income received prior to the first eligibility base shall not be considered. (See 5413).

6213 Income Producing Cost Deduction - Prior to the application of the income disregards and deductions listed in 6220, a standard income producing cost deduction of 25% of the gross earnings must be subtracted from the gross earnings of persons who are self-employed. Gross earnings includes the amount of any capital gains from business-related property but excludes the amount of cost of goods sold.

NOTE: The cost of goods sold are the amount of expenses incurred for products purchased if the business makes or buys goods to sell. Most commonly it is the cost of merchandise purchased to sell by the business or the cost of raw materials that are made into a finished product to sell. The amount of the deduction for the cost of goods sold can be determined from the current federal tax return (see 6212.01). Otherwise, the cost of goods sold is determined separately from other income producing costs. If the business maintains inventory logs, the cost of goods sold is determined by adding the total value of the business� beginning inventory and the amount of merchandise purchased to sell/manufacture. Reduce this amount by any merchandise used for personal use and the cost of the ending inventory. The result is the cost of goods sold. See item W-1 in the KEESM Appendix - The Cost of Goods Sold Worksheet. If the business does not keep inventories, the cost of goods sold shall be determined by the actual costs associated with merchandise sold in the period.

To determine countable income for self-employment either a 25% standard deduction or actual income producing costs shall be deducted from the gross self-employment income. The income shall be budgeted with the method that provides the highest deduction from the gross income.
Note: The 25% standard deduction shall be used when no actual income producing costs are reported or verified.

Income producing costs shall include only those expenses directly related to the actual production of income. It is the responsibility of the client to provide verification of income producing costs. In using the guidelines for income producing costs, it is not the intent of KHPA to pay debts, set up an individual in business, subsidize a nonprofit activity, or to treat income on the basis of IRS policies.

In determining the amount of income producing costs to arrive at the adjusted gross income use KEESM Appendix items P12 and P13 to identify allowable expenses when an income tax return has been filed.

If using verification other than a tax return, the following guidelines are provided.

6213.01 - The cost of inventories and supplies that are reasonable and required for the business (such as items for sale or consumption and raw materials) are to be considered as income producing costs. Also included would be costs for seed, fertilizer, and plants.

NOTE: The amount of allowable inventories is determined as part of the cost of goods sold (see above). The cost of unsold inventory is not an allowable expense.

6213.02 - Wages and mandated costs related to wages for employees of the self-employed are to be considered as income producing costs. However, an exclusion cannot be allowed for wages paid to the self-employed person or other assistance plan members.

6213.03 - For non-home based operations, such items as business space and utilities can be considered as income producing costs. For home based operations, such items as shelter and utilities are not considered as income producing costs (as they are included in the basic and shelter standards) unless the items are clearly distinguishable from the home operation based on separate utility meters, separate rental costs, on the individual's income tax forms.

6213.04 - Property taxes and insurance payments on equipment, vehicles, or property shall be allowed if evidence is provided that such payments are directly related to the business. This includes crop insurance. Privilege taxes such as licensing fees and general excise taxes that must be paid in order to earn self-employment income including severance taxes from income derived from mineral rights (e.g., oil royalties) are allowable.

6213.05 - For equipment, vehicles, or property purchased on an installment plan, the actual interest paid can be considered, but that portion of the payments with which the person obtains equity (the principal) cannot be deducted.

6213.06 - Business transportation costs, rental payments on income producing equipment, cost of repairs and maintenance of equipment, and storage and warehousing charges are allowable.

6213.07 - Depreciation on equipment, vehicles, or property is not to be considered as an income producing cost.

6213.08 - A loss from self-employment cannot be deducted from other income nor can a net loss of a business be considered as an income producing cost.

6213.09 - Federal, state, and local income taxes, monies set aside for retirement purposes, and other work-related personal expenses (such as transportation to and from work) are not allowable as these are contained in the work expense deduction.

When at least one person has wages and at least one person is self-employed, separate calculations are required and the countable incomes are then totaled.

06220 Deduction from Income -

6221 Deductions for MA CM - The following deductions are used to determine countable earned income for MA CM.

If more than one person has earnings, separate calculations are required.

Legally responsible persons or mandatory filing unit members (KEESM 4113) in the household who are excluded from the assistance plan, shall still have their income counted and deductions applied as if they were included in the assistance plan.

The following deductions are used in MA CM programs to determine countable income. The deductions shall be applied to the monthly gross nonexempt income, in the order outlined below.

6221.01 - For persons with wages, a $90 deduction is allowed for work related expenses. The following items are included in the work related expense: all income taxes; lunches; tools; special uniforms; transportation to and from work or child care providers; parking; and other work related expenses.

6221.02 - After application of the $90 work expense, 40% of the remainder of the person's monthly gross earnings shall be deducted for persons with wages who have received MA CM in Kansas in one of the four preceding months.

6221.03 - Expenses paid for the care of a child or other dependent which are necessary for the person to accept or continue employment, seek employment, or attend training or pursue education which is preparatory to employment to the extent that the person is not otherwise reimbursed for the care. (Note that the deduction will benefit persons with earnings only.) Such amounts must not exceed $200/month for each child under age two or $175/month per individual for all other children or dependents and are allowable only for children or dependents in the home and in the family group. In order to be deducted such amounts must be verified and documented in the case file.

Child care deductions shall be budgeted prospectively in accordance with the type of case and applicable income methodologies described in 6111.

6222 Deductions for TransMed (at the 6 month income review) - Expenses paid for the care of a child as is necessary for the employment of the caretaker relative are allowed as a deduction from income when completing the TransMed review. The total child care expenses incurred during the first three months of the first 6-month period of TransMed coverage must be allowed as a deduction from income incurred during the same period. See 2230.04 for additional information about the requirements at review.

In order to be deducted such amounts must be verified and documented in the case file.

6223 Deductions for MA Spenddown, Medicaid Poverty Level and HealthWave programs - For each person with wages, a standard deduction of $200 for each employed person shall be subtracted from the total monthly non-exempt gross earned income (or adjusted gross for self-employed persons.) The following items are included in the work related expense: all income taxes; lunches; tools; special uniforms; child care expenses and transportation to and from work or child care providers; parking; and other work related expenses.

If more than one person has earnings, separate calculations are required to determine total countable income.

The standard deduction reflected above is applicable to the earnings of a legally responsible person even if the person is not included in the assistance plan.

There is no disregard applicable to unearned income. Such income shall be counted in full.

06300 Eligibility Period -

6310 Eligibility Period - The eligibility period is the time period on which need is computed. See Section 7330 for policy and procedures for eligibility reviews.

6311 Eligibility Periods for Medical Programs - An eligibility or base period is the length of time used in determining financial eligibility for an individual or family. The length of the base period varies from one to six months depending on the medical program and any changes of circumstance as referenced in 6311.01. The date of receipt of a signed application in the local SRS office or the HealthWave Clearinghouse is the application date for determining eligibility.

For all medical programs other than HealthWave, the month of application establishes the first month of the current eligibility base period provided all eligibility factors, with the exception of a spenddown, have been met. On request of the client, a 3 month prior eligibility base period shall be established. (See 6311.02.) For cases determined eligible without a spenddown, the effective date of eligibility will correspond with the beginning of the eligibility base and will begin with the first day of the first month of the medical base period. For spenddown cases, eligibility cannot be certified until the spenddown has been met. However, the effective date of eligibility may precede the date on which the spenddown is actually met.

Since suspension, closure, and denial are alternative administrative procedures that result in the withholding of benefits to the client when there is unmet spenddown, a base period can be established and maintained regardless of which procedure is chosen. Denied applications establish an eligibility base period and an application month when the reason for denial is excess income resulting in spenddown. (See 1406.02(3). Closures within an eligibility base period because of increased spenddown do not change the base period. A reapplication received outside of a previously established base shall be treated as a new application without regard to any previous base except for a determination of prior medical eligibility. (See 6311.02.) Once an eligibility base is established, it can be shortened or changed in accordance with 6311.01. Ineligible months are counted as part of the eligibility base period only when ineligibility occurs within an established base period.

For HealthWave, the month of application does not establish the first month of the current eligibility base period. The base period begins with the first month the eligible individual is enrolled in a managed care health plan per 2470. There is no eligibility for HealthWave for any months prior to that first enrollment month. Thus the effective date of eligibility and the eligibility base period will always correspond to the first day of the first enrollment month.

6311.01 Current Eligibility Periods -
The eligibility base will be 1 month base for MACM, TransMed, Extended Medical, and MP. The eligibility base will be 6 months for Medically Needy cases. The 6 month base will be shortened, however, in the following circumstances:

(1) - When a recipient becomes eligible for MACM or cash assistance (RE or SSI.)

(2) - When a recipient begins receiving long term care in a Medicaid-approved institution.

(3) - When a recipient begins HCBS.

(4) - When a recipient is interprogram transferred from MA to MS or vice versa.

(5) - When the only person in an assistance plan dies and eligibility has not been determined due to a spenddown.

If the applicant dies or if an application is made on behalf of a deceased person, eligibility will begin no earlier than the third month prior to the month of application.

(6) - When the only recipient on an MA case becomes eligible for Medicaid poverty level coverage, or coverage through foster care.

(7) - When two or more MA or MS recipient family groups combine into one assistance plan. In such instances, the previous bases shall be shortened and a new base period started with the combined family group.

6311.02 Prior Medical Eligibility (Not Applicable to HealthWave 21) - An applicant for medical assistance may request a determination of medical eligibility for a 3 month period prior to the month of application. The month of application establishes this prior medical period. A request for prior medical must be made in the month of application or the two following months. Requests made after this time shall be denied as they would be more than 3 months from the applicable prior period. See 2340.02 and 2460.02 regarding prior coverage determinations for children being added to an existing MP program.

Prior eligibility can be established even though there is no eligibility for the current base period. However, there is no eligibility in any prior month for an individual who does not qualify for Medicaid.

NOTE: Prior HealthWave 21 coverage is only available for certain HealthWave eligible newborns. (See 2501) Other HealthWave eligible children may be eligible for prior medical coverage under the Medicaid program.

Except for persons requesting MA CM or in the Medicaid poverty level program, a 3 month eligibility base shall be used unless one of the following conditions exist:

(1) - Part or all of the prior base period falls into a previously established medical base period.

(2) - Part or all of the base period falls within any month in which the client was a cash recipient (TAF, GA, RE, or SSI) or a MA CM or Medicaid poverty level recipient.

(3) - The individual is not categorically eligible for any medical program in one or more months of the base period (i.e., is not a child, a pregnant woman, or a caretaker).

(4) - The individual was not part of the current family group in one or more months of the base period.

If, in the above instances, the assistance request includes other individuals in the family group, only the individual would be excluded for the applicable months. If the assistance request is only for the individual, the prior base period shall be shortened to exclude those months. However, if the client received cash assistance (other than SSI) in another state, those months shall be included in the prior period but the amount of assistance received would not be considered as income.

For the Medicaid poverty level or for MA CM, a one month base period shall be used in accordance with 6311.01 for each month of the prior period. Eligibility can be determined for any one or all of the 3 prior months. MA CM shall be used to provide prior medical benefits to caretaker relatives seeking benefits only and persons who do not meet caretaker status in the current month but did so in any of the prior months for which eligibility is requested.

Financial factors of eligibility apply to the entire base period. Eligibility factors other than the income shall affect eligibility for each of the months separately. Eligibility shall be effective only for the months in which the client meets both the financial and nonfinancial factors of eligibility.

06400 Medical Program Standards -

6410 Medical Program Standards - For the Medicaid poverty level, HealthWave and TransMed (at the six month income review) programs, standards have been established based on a percentage of the federal poverty level. If countable income does not exceed these standards, there is eligibility. For the MA (spenddown) program, standards have been established which are the amounts of monthly income protected from medical expenses to allow applicants/recipients to meet their maintenance needs. If countable income does not exceed these standards, there is eligibility. If countable income exceeds the standards, a person can "spenddown" the excess and become eligible.

6410.01 Standards in the Medicaid Poverty Level and HealthWave Programs - To be eligible, the total countable income must not exceed the monthly poverty level standards based on the appropriate number of individuals. See KEESM Appendix F-8 for the Medicaid and HealthWave standards.

6410.02 Standards in the MA Program - The protected income budgeted is the independent living standard for the number of persons in the plan and any legally responsible persons in the family group. In addition, in determining the eligibility of a pregnant woman for the MA program based on the provisions of 2352, the needs of the unborn child and the needs of the father of the unborn, if in the home, shall also be included in determining the protected income level. An SSI recipient shall not, however, be included in determining the protected income level. For 9 or more persons, see KEESM Appendix F-8, Protected Income Level Table.

06500 - Determination of Financial Eligibility

6510 Need - (1) - Need is a factor of eligibility in all categories of assistance and shall be determined through the application of standards by use of the budgetary method.

(2) - Need requirements and countable income shall be documented in the KAECSES System or on the appropriate budget form.

6511 Financial Eligibility in the Medicaid Poverty Level and HealthWave Program (see 6514 and subsections for Caretaker Medical [MA-CM], TransMed [MA-WT] and Extended Medical [MA-EM]) - Financial eligibility exists if countable income does not exceed the allowable poverty level standards and resources do not exceed program limits, where applicable. A person cannot spenddown to obtain eligibility under any of these programs.

6512 Financial Eligibility in the MA Program - Spenddown (Not Applicable to MA CM) - Financial eligibility exists if allowable incurred medical expenses, as specified in this section, equal or exceed the spenddown for the base period and resources do not exceed program limits. See 6410.02 for establishing the spenddown amount.

6512.01 Allowable Expenses - Allowable expenses incurred outside of the current eligibility base are only allowable if the individual is still legally obligated to pay the expense and such expenses have not been previously applied to spenddown in any other base period in which the person became eligible. The amount of these expenses applied to spenddown within a particular base period shall be the amount due and owing as of the first day of that base period. This provision includes instances in which the individual has taken out a loan to pay the expense or charged the expense on a credit card. The unpaid portion of the loan or credit card balance attributable to the original medical expense shall be regarded as a due and owing expense which can be applied to spenddown.

The amount still due and owing shall be determined by subtracting all payments made on the loan or credit card balance prior to application of the expense in a base period from the original expense amount. The remainder shall be regarded as due and owing. Verification of the initial medical expense as well as payment made will be necessary.

All expenses which are incurred by persons in the assistance plan as well as those incurred by legally responsible family group members are allowable within the limitations described above. In addition, if a pregnant woman is included in the assistance plan in accordance with 2352, the expenses incurred by the father of the unborn child, if in the home, shall also be applicable. Such expenses do not actually have to be paid to be allowed against the spenddown. The client will choose which of his allowable expenses he wishes to apply on the spenddown. Failure by designated providers to collect from the client does not shift responsibility to the medical program. A medical payment can be made only for the excess expenses.

Payment for or assumption of medical expenses by a third party, whether legally liable or not, negates the client's responsibility to pay; therefore, such medical expenses cannot be considered against the spenddown. This includes the portion of any medical expense paid by Medicare or another health insurance. The portion not covered by insurance, such as the co-payment or deductible, is allowable. See 6512.02 for exceptions of when expenses are allowable when paid by a third party.

The following expenses are allowable against a spenddown when the client provides eligibility staff with evidence that he has incurred such expenses within the limitations established above.

(1) - The pro rata portion of medical insurance premiums for the number of months covered in the eligibility base period regardless of the actual date of payment, past or future, are allowable.

Medicare premiums not covered by Buy-in are also allowable. See EES Policy Memo 99-10-04 for guidelines on applying such premiums when Buy-in is first initiated. Premiums which are subject to Buy-in are not allowable even if the client pays them (or they are withheld) prior to completion of the Buy-in process as such amounts are subject to repayment.

NOTE: Additional costs consumers pay for Medicare Replacement polices will not be reimbursed through the Buy-in process but are an allowable medical insurance premium.

Premiums for hospital indemnity policies which pay a flat per day amount are not deductible as they are viewed as income replacement policies rather than medical insurance. However, certain indemnity-type policies pay based on specific services received and charges incurred. In these instances, the premiums would be allowable. Each policy will need to be reviewed to determine whether the premium is allowable or not.

(2) - If medically necessary, all expenses for medical services incurred by the individual or a legally responsible family group member in the home are allowable. In addition, if a pregnant woman is included in the assistance plan in accordance with 2352, the expenses of the father of the unborn child, if in the home, shall also be allowable. See KEESM Appendix P-1 for Allowable Medical Expenses.

Medicaid co-payments are deductible. In addition, charges in a Medicaid approved institution can be allowed up to the private rate for individuals subject to the gross income limit and whose income exceeds that limit. Otherwise the facility can only charge at the SRS rate if the individual's income is below the limit. Charges in a non-Medicaid approved institution are not allowable including charges incurred during a transfer penalty. (See KEESM 8111.)

6512.02 Expenses Paid by a Third Party - Medically necessary expenses paid for by a public program funded by the State (or political subdivision of the State, such as a county), other than Medicaid, can be applied to spenddown. Only the portion of the expenses funded by the public program is allowable unless the client will continue to be obligated for the remaining portion of the bill. Such an expense is allowable in the base period in which it was incurred. Examples include expenses paid by Vocational Rehabilitation, the Family Support Program, Kansas Health Insurance Program for the uninsurable, certain programs administered by the Department of Health and Environment, such as those through Children with Special Health Care Needs, the
Infant/Toddler Program and Other Title V programs and non-Title II AIDS Drug Assistance Program/Ryan White (KEESM 2694) payments. Also included are services paid by Donated Dental Services, Adult Emergency Support Services/APS Emergency Funds (KEESM 12650), the Community Support Medication Program and expenses subsidized on services received through a Community Mental Health Center or Community Developmental Disability Organization. For prescription drugs purchased with a Medicare Approved Drug Discount Card (KEESM 2911) the pre-discount cost of the item is allowed toward spenddown. The entire cost of the item is allowable even if the $600 credit was used to purchase the drug. Services provided for or paid through Hill-Burton funds, Ryan White funds or the Kansas Farmworker Health program is NOT allowable.

6513 Meeting a Spenddown - When allowable incurred medical expenses equal or exceed the spenddown eligibility exists. The spenddown for the entire eligibility base must be met before there is eligibility. Once met, eligibility exists for all months of the base period in which categorical, nonfinancial, general and other financial eligibility criteria are met.

The Case Manager must notify the fiscal agent of the expenses the client has chosen to apply to the spenddown so that such bills will not be paid through the medical program. Initial notification must be no later than at the time eligibility is certified and any subsequent changes in this information must be communicated immediately.

Eligibility under a spenddown shall be authorized on KAECSES beginning with the month of the latest date of service used to meet the spenddown. Regular medical eligibility would be reflected for that month and subsequent months in the base period in which eligibility exists. Because months prior to the month of the last services date are not reauthorized, spenddown eligibility will continue to be reflected for those months. If the spenddown was met entirely with due and owing or non-Medicaid covered expenses, regular eligibility shall be authorized for each eligible month of the base period.

6514 Establishing Financial Eligibility in the Family Medical Programs (MA CM, TransMed, Four-Month Extended Medical -

6514.01 Caretaker Medical (MA-CM) - Financial eligibility exists if countable income does not exceed established limits for TAF cash assistance (see KEESM 7510).

6514.02 TransMed (MA-WT) - There are no financial eligibility criteria for establishing the first six months of TransMed coverage. The family must meet the criteria in 2230.02 in order to establish the initial six months of coverage.

6514.03 Extended Medical (MA-EM) - There are no financial eligibility criteria for establishing the four-month Extended Medical period. The family must meet the criteria in 2240 and subsections.

06520 Continuing Financial Eligibility -

6521 Continuing Financial Medical Eligibility - When circumstances change, adjustments will be made as necessary depending on the category of medical coverage. For persons eligible based on receipt of cash assistance or SSI, changes of circumstances may affect the basis of eligibility. For the Medicaid Poverty Level and HealthWave programs for children and pregnant women, changes in income will not impact eligibility based on continuous eligibility provisions. Changes in the amount of earned income do not impact eligibility for TransMed during the first six-month period. Income is reported by the end of the 5th month and examined to determine eligibility for the second six-month period in accordance with 2230.04. If the family meets the income guidelines for the second six months, an increase in income during the second six months of coverage will not impact eligibility. All other changes must be evaluated to determine if eligibility criteria continue to be met.

6522 Continuing Financial Medical Eligibility - When circumstances change, adjustments will be made as necessary depending on the category of medical coverage. For persons eligible based on receipt of cash assistance or SSI, changes of circumstances may affect the basis of eligibility. For the Medicaid Poverty Level and HealthWave programs for children and pregnant women, changes in income will not impact eligibility based on continuous eligibility provisions. Changes in the amount of earned income do not impact eligibility for TransMed. All other changes must be evaluated to determine if eligibility criteria continue to be met.