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Minnesota Department of Human Services MA Estate Recovery Manual
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Undue hardship waivers

Federal law requires states to waive part or all of a Medical Assistance (MA) claim if an heir or devisee of the estate, or a person with an ownership interest in the decedent’s real property, can show that he or she will undergo undue hardship should the local agency recover the entire MA claim amount. Because you must send an Application for a Waiver of Claim (DHS-4933) (PDF) to each identified heir and devisee of an estate subject to an MA claim, and to any person with an ownership interest in the decedent’s real property, you must have a process in place to review a returned application and determine whether it shows that undue hardship will result from the MA claim moving forward. The applicant can appeal your decision to a human services judge at DHS.

I. What is undue hardship?

Undue hardship occurs when:

  • • an MA claim cannot be paid except by selling particular estate property and
  • • that particular estate property is used as described in one of the two situations noted below.
  • A. An applicant owns and lives on real property subject to the MA claim

    You must grant an undue hardship waiver if an applicant other than a deceased MA member’s surviving spouse demonstrates all the following:

  • • The applicant actually and continuously occupied the real property subject to the MA claim as his or her only dwelling place from at least 180 days before the date of the MA member’s death (or before the surviving spouse’s date of death) through the present and will continue to do so through the date the waiver is granted.
  • • The applicant had an ownership interest (i.e., joint tenancy, life estate, contract for deed or otherwise personally has a mortgage on the property) in the real property before the death of the decedent and continues to have an interest.
  • If the real property is classified as the applicant’s homestead for property tax purposes under Minnesota Statutes, section 273.124, throughout the entire period referenced in the first bullet above, then upon granting a waiver, you cannot recover on the MA claim against the real property until the applicant no longer resides on the property or until the applicant sells or transfers the property. See Minnesota Statutes, section 256B.15, subdivision 5(b).

    Because this provision anticipates future MA estate recovery as part of the waiver, email DHS a Referral for an MA Lien or Notice of Potential Claim (DHS-3203) (PDF) describing the real property you have granted a waiver for. If no other exceptions apply, DHS will file a notice of potential claim (NPC) to secure future recovery of MA funds.

    Note that a hardship waiver can be granted for a single parcel of real property and denied for other parcels. A hardship waiver can also be granted for all parcels.

    B. An applicant uses the estate property in a trade, profession, or occupation

    You must grant an undue hardship waiver if an applicant demonstrates all the following:

  • • The applicant uses specific estate property in his or her trade, profession, or occupation. “Trade, profession, or occupation” includes a working farm that the applicant actually operates, but does not include a farm that is not worked by the applicant, or a farm that is rented.
  • • The property is a necessary part of the applicant’s trade, profession, or occupation.
  • • The applicant has continuously and exclusively worked in the trade, profession, or occupation for at least 180 days before the date of the MA member’s death (or the date of death of the MA member’s spouse).
  • • The applicant has continuously and predominantly worked in the trade, profession, or occupation since the date of the MA member’s (or spouse’s) death and will continue to do so using the estate property at issue.
  • Give special consideration to family farms that generate agricultural income and are farmed by the family. In these circumstances, because family farms can be a variable source of income, the look-back period to determine whether the farm is generating the majority of the applicant’s income can be extended to 10 years. The farm does not need to have generated more than half of the waiver applicant’s income in every year, but it should have produced at least half of the applicant’s income most of the time, accounting for fluctuations in commodity prices and necessary farm equipment investments. The waiver applicant must provide proof of farm income.

    You can grant a partial hardship waiver when the income-generating assets of the estate (for example, mechanic’s tools or particular land parcels in a multiparcel estate) can be separated from the rest of the estate.

    You can grant a total hardship waiver when non-real-property assets cannot be practicably removed from the real property without causing significant damage to the business.

    Exception: There is an exception to granting undue hardship waivers. Even if all the criteria in either of the above circumstances are met, you must not grant a waiver if the decedent improperly divested or diverted the estate property under MA eligibility rules, for example, if the MA member transferred property before his or her death without notifying a county financial worker.

    II. Deadlines for application and determination

    Both you and the applicant must meet certain deadlines in the waiver process.

    A. Deadline for applicant to submit undue hardship waiver application

    An heir or devisee’s application for a waiver must be received or postmarked within 30 days of the date the local agency listed in its Notice of Claim for Medical Assistance (DHS-4934) (PDF). If the applicant misses the 30-day deadline, the applicant loses the right to a waiver. You should still respond to a late request, however, explaining to the applicant that he or she missed the deadline.

    B. Deadline for you to grant or deny a hardship waiver request

    Generally, you must mail the heir or devisee a completed Determination of Waiver Request – Requestor (DHS-4935A) within 30 days of receiving an application. If the heir or devisee has an attorney, also mail the attorney a completed Determination of Waiver Request – Attorney (DHS-4935B) within 30 days.

    You may extend this timeline, however, when you have good cause to do so. An example of good cause would be needing more time so you can get further documentation from an heir or devisee to decide whether he or she qualifies for a waiver. Notify the heir or devisee (and attorney, if applicable) that the timeline has been extended.

    III. Deciding whether to grant an undue hardship waiver

    You are responsible for reviewing an application and determining whether the heir or devisee has shown that undue hardship will occur if you pursue an MA claim.

    A. Required decision processes

    Develop and follow written guidelines for how to do the following:

  • • receive and record receipt of waiver applications
  • • review waiver applications
  • • respond to waiver applications by the 30-day deadline
  • • record waiver determinations
  • The guidelines must also describe under what circumstances you have good cause to extend the 30-day deadline for responding to a waiver application.

    B. Deciding whether to grant a waiver request

    You must choose to grant or deny a request for an undue hardship waiver and, if you are granting the request, choose whether to grant it for all or part of the estate property being considered in the request. Once you have made your decision, write a letter to the applicant (and attorney, if applicable) that does the following:

  • • summarizes your understanding of why the applicant requested a waiver
  • • clearly describes your determination
  • • briefly explains the reason for the determination
  • • includes information about the applicant’s right to appeal
  • Send the determination by mail. This begins the 30-day period that the applicant has to appeal the determination (or 90-day period if the applicant has good cause). A human services judge at DHS decides the appeal.

    After deciding whether to grant or deny the request, and after the time allowed for an appeal has ended, you may assert the whole MA claim amount or part of the MA claim amount according to the terms of your determination. Also, if you grant a request for an undue hardship waiver, notify DHS so DHS can remove any liens on the real property.

    IV. Appeals

    Applicants whose waiver request was denied may appeal your decision. When an applicant appeals, follow the appeals procedures provided under Minnesota Statutes, section 256.0451. You are responsible for representing your decision in the appeal hearing, which includes submitting all required documentation to the DHS human services judge and providing copies of the documentation to the applicant. Consult the Special Recovery Unit (SRU) at DHS for advisement as needed.

    Upon appeal, the burdens of persuasion for you and the applicant are as follows:

  • • You must first establish that the MA claim is valid.
  • • The applicant then has the burden to persuade the human services judge that the undue hardship waiver should be granted in his or her case.
  • The human services judge typically has 90 days from the date the applicant requested the appeal to make a decision. See Minnesota Statutes, section 256.0451, subdivisions 17 and 22.

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