17-1725.1

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1725.1-1
HAWAII ADMINISTRATIVE RULES
TITLE 17
DEPARTMENT OF HUMAN SERVICES
SUBTITLE 12
MED-QUEST DIVISION
CHAPTER 1725.1
ASSETS FOR MAGI-EXCEPTED INDIVIDUALS
Subchapter 1 	General Provisions
§17-1725.1-1 	Purpose
§17-1725.1-2 	General requirements
§17-1725.1-3 	Rounding of assets
§§17-1725.1-4 to 17-1725.1-8 	(Reserved)
Subchapter 2 	Availability and Verification Of
Assets
§17-1725.1-9 	Purpose
§17-1725.1-10 	Availability and verification of
assets
§§17-1725.1-11 to 17-1725.1-15 	(Reserved)
Subchapter 3 	Assets To Be Considered
§17-1725.1-16 	Purpose
§17-1725.1-17 	Assets to be considered
§17-1725.1-18 	Treatment of trusts established after
August 10, 1993
§17-1725.1-19 	Assets of the sponsor of a non-
citizen
§§17-1725.1-20 to 17-1725.1-24 	(Reserved)

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Subchapter 4 	Exempt Assets
§17-1725.1-25 	Purpose
§17-1725.1-26 	Exempt assets
§§17-1725.1-27 to 17-1725.1-31 	(Reserved)
Subchapter 5 	Evaluation Of Real Property
§17-1725.1-32 	Purpose
§17-1725.1-33 	Equity value of real property
§17-1725.1-34 	Treatment of special forms of
ownership of real or personal
property
§17-1725.1-35 	Special provision for removal of
legal impediments to availability
§17-1725.1-36 	Real property used as a home
§§17-1725.1-37 to 17-1725.1-41 	(Reserved)
Subchapter 6 	Personal Reserve Standards
§17-1725.1-42 	Purpose
§17-1725.1-43 	Personal reserve standard for MAGI-
excepted individuals and households
§§17-1725.1-44 to 17-1725.1-48 	(Reserved)
Subchapter 7 	Treatment of Assets for Individuals
Requesting Coverage of Long-Term
Care Services
§17-1725.1-49 	Purpose
§17-1725.1-50 	Determination of the community spouse
resource allowance
§17-1725.1-51 	Penalty period for the transfer of an
asset for less than fair market
value
§17-1725.1-52 	Treatment of annuities
§17-1725.1-53 	Treatment of promissory notes, loans
and mortgages

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§17-1725.1-54 	Treatment of the purchase of a life
interest in the home property of
another
§17-1725.1-55 	Treatment of the transfer of income
§17-1725.1-56 	Transfer of assets that are not
subject to the assessment of a
penalty
§17-1725.1-57 	Determining a penalty period
§17-1725.1-58 	Waiver of a transfer of asset penalty
period due to undue hardship
§17-1725.1-59 	Individual with substantive equity in
a home property
§17-1725.1-60 	Waiver of excess home equity due to
undue hardship
§§17-1725.1-61 to 17-1725.1-65 	(Reserved).
Historical Note: 	This chapter is based substantially
upon subchapters 3, 7 and 8 of chapter 17-1721 and
repealed chapter of 17-1725.
The source notes for subchapters 3, 7 and 8 of chapter
17-1721 are: 	[Eff 08/01/94; am 11/13/95; am 11/25/96;
am 10/26/01; am 01/31/09; am 10/19/09; am 06/25/12;
R 09/30/13].
The source notes for chapter 17-1725 are: 	[Eff
08/01/94; am 11/13/95; am 01/29/96; am 03/30/96;
am 11/13/96; am 11/25/96; am 05/02/98; am 06/19/00;
am 10/26/01; am 12/03/01; am 04/11/03; am 05/10/03;
am 09/10/09; am 10/19/09; am 04/12/13;
R 09/30/13].
SUBCHAPTER 1
GENERAL PROVISIONS
§17-1725.1-1 	Purpose. 	This chapter describes
the types and amount of assets that apply to a MAGI-
excepted individual and the treatment of resources for
a MAGI-excepted individual or household and for

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1725.1-4
individuals applying for or receiving long-term care
services. 	[Eff 	09/30/13] 	(Auth: 	HRS §§346-14, 346-
53; 42 C.F.R. §§431.10, 435.3, 435.120, 435.230,
435.301, 435.735, 435.840, 435.843, 435.845; 42 U.S.C.
§§1315, 1396r-5) 	(Imp: 	HRS §346-14; 42 C.F.R.
§§431.10, 435.3, 435.120, 435.230, 435.301, 435.735,
435.840, 435.843, 435.845; 42 U.S.C. §§1315, 1396r-5)
§17-1725.1-2 	General requirements. 	This chapter
identifies and describes the types of assets and how
they are considered in determining the eligibility of
a MAGI-excepted individual or household.
[Eff 	09/30/13] 	(Auth: 	HRS §346-53; 42 C.F.R.
§§435.230; 435.601, 435.840, 435.845) 	(Imp: 	HRS
§§346-14, 346-53, 346-71; 42 C.F.R. §§435.230;
435.601, 435.840, 435.845)
§17-1725.1-3 	Rounding of assets. 	There are no
provisions for the rounding of assets to a whole
dollar amount when determining eligibility for a MAGI-
excepted individual or household. 	[Eff 	09/30/13]
(Auth: 	HRS §346-14; 42 U.S.C. §§1382b,
1396a(a)(10)(A)(ii)(I)) 	(Imp: 	HRS §346.14, 42 U.S.C.
§§1382b, 1396a(a)(10)(A)(ii)(I))
§§17-1725.1-4 to 17-1725.1-8 	(Reserved).
SUBCHAPTER 2
AVAILABILITY AND VERIFICATION OF ASSETS
§17-1725.1-9 	Purpose. 	This subchapter describes
the requirements to provide verification of assets
which are considered and evaluated to determine
eligibility for a MAGI-excepted individual.
[Eff 	09/30/13] 	(Auth: HRS §346-53; 42 C.F.R.
§§435.840, 435.845; 20 C.F.R. §416.1202) 	(Imp: 	HRS

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§§346-29, 346-53; 42 C.F.R. §§435.840, 435.845; 20
C.F.R. §416.1202)
§17-1725.1-10 	Availability and verification of
assets. 	(a) 	An individual shall apply for and
develop potential sources of assets, when applicable.
(b) 	The asset shall be considered as of the
first moment of the calendar month for which medical
assistance is being requested or received.
(c) 	The asset of an individual and their legally
responsible household members residing in the same
residence shall be considered when determining
eligibility for medical assistance.
(d) 	Joint ownership of a liquid asset that is
legally defined and available to the individual shall
be considered.
(e) 	Joint ownership of a liquid asset when
legally defined to which only a portion is legally
accessible, shall be considered an available resource
only as to that portion.
(f) 	Joint ownership of a non-liquid asset,
including real and personal property that is legally
defined to which only a portion is legally accessible,
shall be considered an available resource only as to
that portion.
(g) 	The department shall deny or terminate
medical assistance when an individual fails to:
(1) 	Apply for, access, or develop potential
sources of assets;
(2) 	Cooperate in providing accurate and complete
information or verification; or
(3) 	Complete any other action on the part of the
individual or household that prevents a
correct determination of eligibility to be
made. 	[Eff 	09/30/13] 	(Auth: 	HRS §346-53;
42 C.F.R. §§435.121, 435.230, 435.602,
435.608, 435.840, 435.845) 	(Imp: 42 C.F.R.
§§435.121, 435.230, 435.602, 435.608,
435.840, 435.845)

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§§17-1725.1-11 to 17-1725.1-15 	(Reserved).
SUBCHAPTER 3
ASSETS TO BE CONSIDERED
§17-1725.1-16 	Purpose. 	This subchapter
describes assets which are considered in the
determination of eligibility for a MAGI-excepted
individual or household. 	[Eff 	09/30/13]
(Auth: 	HRS §346-53) 	(Imp: 	HRS §346-53)
§17-1725.1-17 	Assets to be considered. 	The
following assets shall be considered in the personal
reserve of a MAGI-excepted individual or household and
include, but are not limited to:
(1) 	Cash on hand;
(2) 	Cash in savings and checking accounts;
(3) 	Value of stocks and bonds verified by a
stock brokerage firm;
(4) 	Value of time deposits and savings
certificates verified by the financial
institution where the funds are deposited;
(5) 	State tax refunds, including state excise
tax credits and state income tax credits;
(6) 	Cash surrender value of a life insurance
policy after the subtraction of outstanding
loans or encumbrances from the cash value of
the policy verified by the insurance
company;
(7) 	Value of governmental debenture bonds, such
as U.S. savings bonds, treasury notes, or
municipal bonds verified by the financial
institutions or stock brokerage firms or
issuers;
(8) 	Value of mutual fund shares be verified by
the stock brokerage firm;
(9) 	Value of burial plots or burial vaults not
exempt in section 17-1725.1-26(8) shall be

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determined by subtracting all encumbrances
from the market value verified by the
purchasing cemetery;
(10) 	Value of funeral plans not exempt in
subsection 17-1725.1-26(9) shall be
determined by subtracting all encumbrances
from the original purchase price;
(11) 	Equity in personal property, such as
jewelry, watercrafts or air transportation
vehicles not exempt in subsection 17-1725.1-
26(3);
(12) 	Equity in real property, not used as the
family home, that is not exempt in section
17-1725.1-35 or section 17-1725.1-36;
(13) 	Moneys or assets in an irrevocable trust
fund established on or before August 10,
1993 if there is the opportunity to remove
legal impediments to gain access to the
available assets of the trust. 	Proof of
irrevocability of the trust or evidence of
legal impediments to acquiring access to the
assets of the trust fund must be provided.
Medical assistance shall be provided to an
otherwise eligible individual while legal or
other impediments to the potential
availability of the assets are being
removed, or title is being cleared on the
condition the individual submits a plan of
action within thirty days of the date of
application to remove such legal or other
impediments to current availability.
(A) 	Failure to meet the deadline shall
disqualify the individual from
receiving further medical assistance.
Benefits received thereafter shall
constitute an ineligible payment
recoverable by the department;
(B) 	The department shall periodically
review the submitted plan of action or
failure to take appropriate action
shall disqualify the individual from
further medical assistance;

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For any Medicaid qualifying trust the
maximum amount permitted to be distributed
to the individual shall be counted
regardless of whether the trust is
irrevocable or established for purposes
other than to qualify for medical assistance
with the exception of a Medicaid qualifying
trust or initial trust decree established
prior to April 7, 1986, solely for the
benefit of a developmentally disabled or
intellectually disabled individual who
resides in an intermediate care facility for
the developmentally disabled or
intellectually disabled individuals;
(14) 	Payments made from protected retirement
plans or annuities to include, but not be
limited to, profit sharing plans, IRAs, or
other retirement accounts, shall be
considered an available asset if an
individual has access to the distribution of
funds;
(15) 	Money received by the individual from the
sale of assets;
(16) 	Investments in diamonds, gold, silver, or
other precious metals;
(17) 	Equity in a business shall be determined as
follows:
(A) 	Subtract the current liabilities from
the fair market value of the remaining
assets.
(B) 	Exempt the following assets that are
essential to the production of goods or
services in determining equity in a
business, which includes, but are not
limited to:
(i) 	Stock and inventory;
(ii) 	Tools and equipment; and
(iii) 	Motor vehicles required for
business use.
(C) 	The remaining equity of all non-exempt
assets, in part or in whole, shall be
considered.

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1725.1-9
(18) 	Equity value of any assets not exempt under
section 17-1725.1-26 verified by an
appropriate entity;
(19) 	Federal tax refunds unless otherwise
exempted by the Federal government;
(20) 	Cash dividends from stocks, life insurance,
or other sources;
(21) 	Refunds of utility and rental deposits not
paid by the department;
(22) 	Funds used to purchase an annuity that:
(A) 	Is revocable and allows the annuitant
access to the cash value of the annuity
less early withdrawals and surrender
fees;
(B) 	Is assignable to allow the sale of the
annuity on the open market; or
(C) 	Does not address issues of revocability
or assignability;
(23) 	Value of the outstanding balance owed on a
promissory note or a property agreement to
the individual (creditor) who holds the
promissory note or agreement of sale;
(24) 	Entrance fees of an individual residing in a
continuing care retirement community or life
care community under the following
conditions:
(A) 	The entrance fee may be used to pay for
care if the individual’s other
resources or income is insufficient to
pay for the care;
(B) 	The entrance fee or any remaining
portion is refundable when the
individual dies or terminates the
contract and leaves the continuing care
retirement community or life care
community; and
(C) 	The entrance fee does not assign an
ownership interest in the continuing
care retirement community or life care
community. 	[Eff 	09/30/13] 	(Auth:
HRS §§346-53, 346-71; 20 C.F.R.
§416.1201, 42 C.F.R §§431.10, 435.601;

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1725.1-10
435.811, 435.840, 435.845; 45 C.F.R.
§233.20; 42 U.S.C. §1396p) 	(Imp: 	HRS
§§346-29, 346-53, 346-71; 20 C.F.R.
§416.1201; 42 C.F.R. §§431.10, 435.601;
435.811, 435.840, 435.845; 45 C.F.R.
§233.20; 42 U.S.C. §1396p)
§17-1725.1-18 	Treatment of trusts established
after August 10, 1993. 	(a) 	An individual shall be
considered to have established a trust if assets of the
individual form all or part of the corpus of the trust
and if the trust was formed other than by a will by any
of the following:
(1) 	The individual;
(2) 	The individual's spouse;
(3) 	A person, including a court or administrative
body, with legal authority to act on behalf
of the individual or the individual's spouse;
or
(4) 	A person, including a court or administrative
body, acting at the direction of the
individual or the individual's spouse.
(b) 	If a trust contains assets of persons other
than the individual, only the portion of the trust that
contains the assets of the individual will be
considered in this section.
(c) 	The treatment of trusts in this section will
be made without regard to:
(1) 	The purpose for which the trust was
established;
(2) 	Whether the trustees have or exercise any
discretion under the trust;
(3) 	Any restrictions on when or whether
distributions can be made from the trust; or
(4) 	Any restrictions on the use of distributions
from the trust.
(d) 	In the case of a revocable trust the
following shall apply:
(1) 	The corpus of the trust is considered an
available asset;

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(2) 	Payments from the trust to or for the
benefit of the individual shall be
considered income of the individual; and
(3) 	Any other payments from the trust shall be
considered assets disposed and subject to
the provisions of subchapter 7.
(e) 	In the case of irrevocable trusts the
following apply:
(1) 	If payments could be made to or for the
benefit of the individual, the portion of
the corpus from which the payment could be
made is considered an available asset;
(2) 	If payments could be made to or for the
benefit of the individual, the income on the
corpus from which the payment could be made
is considered an available asset;
(3) 	The payments in paragraphs (1) and (2) from
the corpus or from the income on the corpus
is considered income to the individual; and
(4) 	The portion of the corpus from which no
payments could be made to or on behalf of
the individual is considered assets disposed
and subject to the provisions of subchapter
7. 	[Eff 	09/30/13] 	(Auth: 	HRS §346-53; 20
C.F.R. §416.1201; 42 C.F.R. §431.10; 45
C.F.R. §233.20; 42 U.S.C. §1396p) 	(Imp:
HRS §346-29; 20 C.F.R. §416.1201; 42 C.F.R.
§431.10; 45 C.F.R. §233.20; 42 U.S.C.
§1396p)
§17-1725.1-19 	Assets of the sponsor of a non-
citizen. 	(a) 	The sponsor of a non-citizen who
executed an affidavit of support pursuant to section
213A of the INA on or after December 19, 1997, shall
have their assets and their spouse's assets deemed as
available to a non-citizen requesting medical
assistance.
(b) 	The assets of a non-citizen's sponsor and
the sponsor’s spouse shall be deemed available to the
non-citizen until such time as the non-citizen:

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1725.1-12
(1) 	Achieves U.S. citizenship through
naturalization pursuant to chapter 2 of
Title III of the INA; or
(2) 	Has worked forty qualifying quarters of
coverage as defined under Title II of the
Social Security Act or can be credited with
such qualifying quarters as provided under 8
U.S.C. §1645. 	In the case of any such
qualifying quarter beginning after December
31, 1996, the non-citizen must not have
received any Federal means-tested public
benefit during any such period.
(c) 	The non-citizen's failure to provide
information and verification regarding the assets of
their sponsor and the sponsor’s spouse as applicable
shall disqualify the non-citizen from receiving
medical assistance.
(d) 	The assets of a non-citizen's sponsor and
the sponsor’s spouse shall not be deemed available to
a non-citizen for coverage of emergency medical
assistance as described in chapter 17-1723.1.
(e) 	Special provisions shall apply in the case
of an indigent non-citizen. 	The deeming of assets in
subsection (a) shall not be applicable for a twelve-
month period from the date a non-citizen is determined
to be indigent.
(1) 	The department may determine a non-citizen
to be indigent when the non-citizen is
unable to obtain food and shelter because
the non-citizen's own assets plus assets
provided by other individuals, including the
sponsor and the sponsor's spouse, does not
exceed one hundred per cent of the asset
retention limit for the non-citizen’s
household size;
(2) 	The department will only consider the actual
amount contributed by the sponsor and
sponsor’s spouse for a twelve month period,
which begins on the date of such
determination and ends twelve months after
such date;

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1725.1-13
(3) 	Each period of indigence is renewable for
additional twelve month periods; and
(4) 	The department must notify the federal
Attorney General of each such determination,
including the names of the sponsor and the
sponsored non-citizen involved.
(f) 	Special provisions for a battered spouse and
child who are non-citizens. 	The assets of the sponsor
and the sponsor's spouse described in subsection (a)
shall not be deemed when the sponsor and the sponsor's
spouse are the batterer and the spouse of the
batterer, and only for the period the non-citizen is
not residing in the residence of the batterer:
(1) 	This provision applies to:
(A) 	A non-citizen who was battered or
subjected to extreme cruelty in the
U.S. by the non-citizen’s spouse or
parent, or by a member of the spouse's
or parent's family residing in the same
residence as the non-citizen and the
spouse or parent consented to or
acquiesced to such battery or cruelty;
(B) 	A non-citizen whose child was battered
or subjected to extreme cruelty in the
U.S. by the spouse or parent of the
non-citizen who did not actively
participate in such battery or cruelty
or by a member of the spouse's or
parent's family residing in the same
residence and the spouse or the parent
consented to or acquiesced to such
battery or cruelty; or
(C) 	A non-citizen child who was residing
with the parent who was battered or
subjected to extreme cruelty in the
U.S. by that parent's spouse or by a
member of the spouse's family residing
in the same residence as the parent and
the spouse consented to or acquiesced
to such battery or cruelty described in
any of the paragraphs under this
subsection;

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(2) 	The department shall determine whether the
battery or cruelty is substantially
connected to the need for public benefits
which means that without the support of the
batterer, the non-citizen is unable to
obtain food and shelter because the non-
citizen's own assets, or other assets
provided by other individuals, including the
sponsor and the sponsor's spouse, does not
exceed one hundred per cent of the asset
retention limit for the non-citizen's
household size; and
(3) 	After the twelve month period ends, the
department shall continue to exempt the
batterer's assets when the battery or
cruelty is recognized in an order of a judge
or administrative law judge or a prior
determination of the USCIS and the
department determines that such battery or
cruelty still has a substantial connection
to the non-citizen’s need for benefits.
[Eff 	09/30/13] 	(Auth: 	HRS §346-14; 20
C.F.R. §416.1204; 8 U.S.C. §§1631, 1632)
(Imp: 	20 C.F.R. §416.1204; 8 U.S.C. §§1631,
1632)
§§17-1725.1-20 to 17-1725.1-24 	(Reserved).
SUBCHAPTER 4
EXEMPT ASSETS
§17-1725.1-25 	Purpose. 	This subchapter
describes assets which are exempt in the determination
of eligibility for an individual or household.
[Eff 	09/30/13] 	(Auth: 	HRS §§346-14, 346-53) 	(Imp:
HRS §346-53)

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1725.1-15
§17-1725.1-26 	Exempt assets. 	The following
assets shall be exempted from consideration in the
personal reserve of an individual or household which
shall include, but are not limited to:
( 1) 	Household goods of limited value essential
to day-to-day living including but not
limited to clothing, furniture, appliances
or electronic equipment;
(2) 	Personal effects including but not limited
to one wedding ring and one engagement ring,
personal care items and clothing, pets,
educational or recreational items, or items
of cultural or religious significance to an
individual;
(3) 	All motor vehicles, with the exception of
watercrafts or air transportation vehicles,
including but not limited to cars, trucks,
vans, or motorcycles;
(4) 	Any equity in the principal place of
residence of an individual or household, as
described in subchapter 5 except for the
home of an individual requesting or
receiving long-term care services placed in
a trust;
(5) 	Refunds of utility and rental deposits paid
by the department;
(6) 	Bona fide loans or agreements from any
source, including but not limited to
educational loans, is a debt that the
individual (borrower) has an obligation to
repay;
(7) 	Cash payments to the assistance unit
responsible for payment of the household
bills by a non-unit household member for his
or her share of common household expenses;
(8) 	One burial space (including plots, vaults,
and niches) per household member if
specifically designated for the individual
or immediate household member;
(9) 	The value of bona fide funeral or burial
plans or agreements per household member if

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1725.1-16
specifically designated for the individual
or immediate household member;
(10) All funds contained in a trust established
after August 10, 1993 for a disabled (as
defined in section 17-1719-8) individual
under sixty-five years of age established
under 42 U.S.C. §1396p(d)(4)(A) that meets
the following conditions:
(A) 	The trust was established with the
assets of the disabled individual
solely for the benefit of the
individual by a parent, grandparent,
legal guardian or by a court; and
(B) 	The State will receive all amounts
remaining in the trust upon the death
of the disabled individual up to an
amount equal to the total medical
assistance received by the individual;
(11) All funds contained in a trust established
after August 10, 1993 for a disabled (as
defined in section 17-1719-8) individual
under sixty-five years of age, established
and managed by a non-profit association
established under 42 U.S.C. §1396p(d)(4)(C)
that meets the following conditions:
(A) 	A separate account is maintained for
each beneficiary of the trust, but, for
purposes of investment and management
of funds, the trust may pool these
accounts;
(B) 	The accounts in the trust were
established with the assets of the
disabled individual solely for the
benefit of the individual by a parent,
grandparent, legal guardian or by a
court; and
(C) 	The State will receive all amounts
remaining in the disabled individual's
account in the trust upon the death of
the disabled individual up to an amount
equal to the total medical assistance
received by the individual;

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(12) Funds used to purchase an annuity that is
irrevocable and not assignable.
(A) 	An annuity is irrevocable when the
annuitant cannot void the contract and
obtain the cash value of the annuity
less early withdrawals and surrender
fees; and
(B) 	An annuity is not assignable when the
annuitant cannot sell the annuity on
the open market;
(13) 	Federal tax refund or payment made by an
employer related to an earned income tax
credit (EITC) received is excluded for nine
months following the month the refund or
payment is received;
(14) 	Federal tax refund from a child tax credit
(CTC) received is excluded from resources
for nine months following the month the
refund or payment is received;
(15) 	One-time payment issued to eligible Filipino
veterans who aided American troops during
World War II that were established by the
Filipino Veterans Equity Compensation Fund
(FVECF) under the American Recovery and
Reinvestment Act of 2009;
(16) 	Any gift to, or for the benefit of, an
individual under nineteen years of age who
has a life-threatening condition, received
from an organization described under
§501(c)(3) of the Code. 	An in-kind gift
that is converted to cash or a cash gift,
only up to $2,000 is exempt in the calendar
year in which the gift is made;
(17) 	Restitution payments made under Pub. L. 100-
383 for the evacuation, relocation, and
internment to an eligible Japanese-American
citizen or permanent resident non-citizen of
Japanese ancestry under §105 of the Civil
Liberties Act of 1988 and to an eligible
Aleut under §206 of the Aleutian and
Pribilof Islands Restitution Act;

UNOFFICIAL
1725.1-18
(18) 	State annuities paid to an individual or the
individual’s spouse on the basis that the
individual is an aged, blind, or disabled
veteran under §202 of P.L. 110-245;
(19) 	Crime Victim Compensation payments issued
pursuant to the Victims of Crime Act of 1984
to victims of certain crimes or dependents
of deceased victims to include, but not
limited to compensation paid by Hawaii’s
Crime Victim Compensation Commission which
are exempt up to nine months from the month
of receipt;
(20) Value of stocks or equity in protected
retirement accounts which include, but are
not limited to profit sharing plans, IRAs,
annuities, or other retirement accounts, if
an individual continues to be employed by
the firm which controls the profit sharing
distributions;
(21) Unspent funds from payments made to or for
an individual who is or was:
(A) 	Captured and interned by North Vietnam
pursuant to §606 of Pub. L. 105-78;
(B) 	Captured and incarcerated by the
Democratic Republic of Vietnam after
entering Vietnam under OPLAN 34A, or
Laos under OPLAN 35, pursuant to
certain Vietnamese commando operations
pursuant to §657(d)(2) of Pub. L. 104-
201;
(C) 	Displaced by any federal or federally-
assisted project pursuant to Title II
of the Uniform Relocation Assistance
and Real Property Acquisition Policies
Act of 1970 (42 U.S.C. §§460l-4655);
(D) 	A volunteer under the Domestic
Volunteer Service Act of 1973 as
amended by the National and Community
Service Trust Act of 1993 - Volunteers
In Service to America (VISTA), Foster
Grandparent Program, Retired and Senior
Volunteer Program (RSVP), Senior

UNOFFICIAL
1725.1-19
Companion Program (42 U.S.C. §§4951-
5085) and under the Small Business Act
- Service Corps of Retired Executives
(SCORE), and the Active Corps of
Executives (ACE) (15 U.S.C. §637);
(E) 	Provided relocation assistance payments
by a state or county government or
through a state or county-assisted
project up to nine months after
receipt;
(F) 	Paid pursuant to the Civil Liberties
Act of 1988, Title I of Pub. L. 100-
383, and the Aleutian and Pribilof
Islands Restitution Act, Title II of
Pub. L. 100-383;
(G) 	Paid from the Agent Orange Settlement
Fund or any other fund established
pursuant to the settlement in the In Re
Agent Orange product liability
litigation, M.D.L. No. 381 (E.D.N.Y.)
effective to January 1, 1989;
(H) 	A victim pursuant to the Netherlands'
Act on Benefits for Victims of
Persecution 1940-1945, to a persecuted
victim during the Nazi occupation of
the Netherlands and the Dutch East
Indies during World War II pursuant to
Pub. L. No. 103-286;
(I) 	Compensated for losses during the
period March 1933 and May 1945 due to
political, religious, or ethnic reasons
under paragraphs 500 to 506 of the
Austrian General Social Insurance Act;
(J) 	Paid from the Radiation Exposure
Compensation Trust Fund established
under the Radiation Exposure
Compensation Act (RECA) (Pub. L. 101-
426) to compensate an individual for
injuries or death resulting from the
exposure to radiation from nuclear
testing or uranium mining under the
National Defense Authorization Act for

UNOFFICIAL
1725.1-20
Fiscal Year 1991 and RECA Amendments of
2000 and succeeding amendments;
(K) 	Paid pursuant to the Disaster Relief
and Emergency Assistance Act or any
other assistance provided under a
federal statute as a result of a
catastrophe which is declared a major
disaster by the President of the U.S.
or comparable disaster assistance
provided by any state, county agency or
from a disaster assistance
organization;
(L) 	Paid for assistance to children under
the School Lunch Programs (42 U.S.C.
chapter 13), Child Nutrition Programs -
School Breakfast Program, WIC Program,
Milk Programs (42 U.S.C. chapter
13(A)); and
(M) 	Paid for assistance to senior citizens
under the Programs for Older Americans
(42 U.S.C. §§3030d-3030g);
(22) Settlement received in the case of Susan
Walker v. Bayer Corporation, et al., to
compensate an individual who contracted the
human immunodeficiency virus (H.I.V.) from
contaminated blood products pursuant to
Title IV, section 4735 of the Balanced
Budget Act of 1997 (Pub. L. 105-33);
(23) Retroactive RSDI or SSI benefits retained in
the form of cash or deposited into a bank
account is exempt for a period of nine
calendar months following the month of
receipt;
(24) VA benefits received by or on behalf of
certain natural children of:
(A) 	Vietnam and Korean Service veterans,
born with spina bifida under §421 of
Pub. L. 104-204 and §102 of Pub. L.
108-183, respectively; and
(B) 	Vietnam veteran women, born with
certain birth defects that results in

UNOFFICIAL
1725.1-21
permanent physical or mental disability
under §401 of Pub. L. 106-419;
(25) Ricky Ray Hemophilia Relief Fund Act of 1998
under Pub. L. 105-369 to compensate an
individual with hemophilia-clotting disorder
who was treated with blood-clotting agents
and contracted the H.I.V.;
(26) The following payments made to Native
Americans:
(A) 	San Carlos Apache Indian Tribe of
Arizona under §7 of PL 93-134 and Pub.
L. 97-95;
(B) 	Wyandot Tribe of Indians of Oklahoma
under §6 of Pub. L. 97-371;
(C) 	Shawnee Tribe of Indians (Absentee
Shawnee Tribe of Oklahoma, Eastern
Shawnee Tribe of Oklahoma and the
Cherokee Band of Shawnee descendants)
under §7 of Pub. L. 97-372;
(D) 	Clallam Tribe of Indians of the State
of Washington (Port Gamble Indian
Community, Lower Elwha Tribe Community
and the Jamestown Band of Clallam
Indians) under §6 of Pub. L. 97-402;
(E) 	Red Lake Band of Chippewa Indians under
§3 of Pub. L. 98-123;
(F) 	Saginaw Chippewa Indian Tribe of
Michigan under §6 of Pub. L. 99-346;
(G) 	Cow Creek Band of Umpqua Tribe of
Indians under §4 of Pub. L. 99-377;
(H) 	Santee Sioux Tribe of Nebraska, the
Flandreau Santee Sioux Tribe, the
Prairie Island Sioux, Lower Sioux, and
Shakopee Mdewakanton Sioux Communities
of Minnesota under §8 of Pub. L. 99-130
and §7 of Pub. L. 93-134 as amended by
Pub. L. 97-458;
(I) 	Tax exempt portions of payments made
pursuant to the Alaska Native Claims
Settlement Act (43 U.S.C. §1620);
(J) 	Distributions made to a household, an
individual Native, or a descendent of a

UNOFFICIAL
1725.1-22
Native by a Native Corporation
established in accordance with the
Alaska Native Claims Settlement Act
(Pub. L. 92-203 as amended) as provided
by Pub. L. 100-241, §15 (43 U.S.C.
§1626);
(K) 	Assiniboine Tribe of Fort Belknap
Indian Community of Montana and the
Assiniboine Tribe of the Fort Peck
Indian Reservation of Montana under §5
of Pub. L. 98-124;
(L) 	White Earth Band of Chippewa Indians as
allottees, or their heirs under §16 of
Pub. L. 99-264;
(M) 	Sac and Fox Indian Nation under §6 of
Pub. L. 94-189;
(N) 	Grand River Band of Ottawa Indians
under §6 of Pub. L. 94-540;
(O) 	Confederated Tribes and Bands of the
Yakima Indian Nation or the Apache
Tribe of the Mescalero Reservation
under §2 of Pub. L. 95-433;
(P) 	Assiniboine Tribe of Fort Belknap
Indian Community and the Papago Tribe
of Arizona under §6 and §8 of Pub. L.
94-408;
(Q) 	Chippewas of Lake Superior and the
Chippewas of the Mississippi under §6
of Pub. L. 99-146;
(R) 	Chippewas of Lake Superior and the
Chippewas of the Mississippi under §4
of Pub. L. 99-377;
(S) 	Delaware Tribe of Indians and the
absentee Delaware Tribe of Western
Oklahoma under §8 of Pub. L. 96-318;
(T) 	Miami Tribe of Oklahoma and the Miami
Indians of Indiana under §7 of Pub. L.
97-376;
(U) 	Pembina Chippewa Indians (Turtle
Mountain Band of Chippewa Indians,
Chippewa Cree Tribe of Rocky Boy's
Reservation, Minnesota Chippewa Tribe,

UNOFFICIAL
1725.1-23
Little Shell Band of the Chippewa
Indians of Montana, and the non-member
Pembina descendants) under §9 of Pub.
L. 97-403;
(V) 	Confederated Tribes of the Warm Springs
Reservation up to $2,000 under §4 of
Pub. L. 97-436;
(W) 	Wyandotte Tribe of Oklahoma and the
Absentee Wyandottes under §106 of Pub.
L. 98-602;
(X) 	Seminole Nation of Oklahoma, the
Seminole Tribe of Florida, the
Miccosukee Tribe of Indians of Florida
and the independent Seminole Indians of
Florida under §8 of Pub. L. 101-277;
(Y) 	Indian judgment funds under Pub. L. 93-
134, as amended by Pub. L. 97-458 (25
U.S.C. §1407);
(Z) 	Wisconsin Band of Potawatomi
(Hannahville Indian Community and
Forest County Potawatomi) under §503 of
Pub. L. 100-581;
(AA) Passamaquoddy Tribe, Penobscott Nation,
and the Houlton Band of Maliseet
Indians under the Maine Indian Claims
Settlement Act under §9 of Pub. L. 96-
420 (25 U.S.C. §1728(c));
(BB) Michigan Indian Land Claims Settlement
Act under Pub. L. 105-143 and §4 of the
Cowlitz Indian Tribe Distribution of
Judgment Funds Act under Pub. L. 108-
222;
(CC) Shoalwater Bay Indian Tribe under §5 of
Pub. L. 98-432;
(DD) Coushatta Tribe of Louisiana under §2
of Pub. L. 100-411 and §7 of Pub. L.
93-134 as amended by Pub. L. 97-458 (25
U.S.C. §1407);
(EE) Hoopa Valley Indian Tribe and the Yurok
Indian Tribe under §§4, 6, and 7 of
Pub. L. 100-580 and §3 of Pub. L. 98-
64;

UNOFFICIAL
1725.1-24
(FF) Red Lake Band of Chippewa Indians from
the sale of timber and lumber on the
Red Lake Reservation under §3 of Pub.
L. 85-794;
(GG) Blackfeet and GrosVentre by the
Blackfeet and GrosVentre tribal
government resulting from judgment
funds under §4 of Pub. L. 92-254 and
under §6 of Pub. L. 97-408;
(HH) Under §102 of the Fallon Paiute
Shoshone Indian Tribes Water Rights
Settlement Act of 1990 under Pub. L.
101-618 and §7 of Pub. L. 93-134 as
amended by Pub. L. 97-458 (25 U.S.C.
§4107);
(II) Seneca Nation of New York under §8(b)
of the Seneca Nation Settlement Act of
1990, Pub. L. 101-503 (25 U.S.C.
§1774f);
(JJ) Pueblo of Santa Ana and distributed to
members of that tribe under §6 of Pub.
L. 95-498; and the Pueblo of Zia of New
Mexico and distributed to members of
that tribe under §6 of Pub. L. 95-499;
(KK) Certain Indian tribes under §6 of Pub.
L. 94-114 (25 U.S.C. §459e);
(LL) Hopi and Navajo Tribes under §22 of
Pub. L. 93-531 as amended by Pub. L.
96-305;
(MM) Puyallup Tribe under §10 of the
Puyallup Tribe Indians Settlement Act
of 1989, Pub. L. 101-41 (25 U.S.C.
§17734(c));
(NN) Catawba Indian Tribe of South Carolina
under §11(m) of Pub. L. 103-116;
(OO) Confederated Tribes of the Colville
Reservation under §7(b) of Pub. L. 103-
436; and
(PP) Heirs of certain deceased Indians under
of the Old Age Assistance Claims
Settlement Act §8 of Pub. L. 98-500;

UNOFFICIAL
1725.1-25
(27) 	Unspent financial assistance received,
under:
(A) 	Title IV of the Higher Education Act
which include but may not be limited to the
following:
(i) 	Academic Achievement Incentive
Scholarships;
(ii) 	Byrd Scholars;
(iii) 	Federal Educational Loans (Federal
PLUS Loans, Perkins Loans,
Stafford Loans, Ford Loans, etc.);
(iv) 	Federal Supplemental Educational
Opportunities Grants (FSEOG);
(v) 	Gear Up (Gaining Early Awareness
and Readiness for Undergraduate
Programs);
(vi) 	LEAP (Leveraging Educational
Assistance Partnership);
(vii) 	Pell grants;
(viii) 	SLEAP (Special Leveraging
Educational Assistance
Partnership);
(ix) 	State Student Incentives;
(x) 	Upward Bound; and
(xi) 	Work-Study Programs; or
(B) 	The Bureau of Indian Affairs student
assistance programs which exempt all
other grants, scholarships,
fellowships, and gifts used to pay
tuition, fees, and other necessary
educational expenses at any educational
institution, including vocational and
technical education under Pub. L. 108-
203 for nine calendar months following
the month of receipt.
[Eff 	09/30/13] 	(Auth: 	HRS §346-29;
20 C.F.R. §§416.1201, 416.1237; 42
C.F.R. §§431.10; 435.631; 45 C.F.R.
§233.20) 	(Imp: 	HRS §346-29; 20 C.F.R.
§§416.1201, 416.1237; 42 C.F.R.
§§431.10; 435.631; 45 C.F.R. §233.20)

UNOFFICIAL
1725.1-26
§§17-1725.1-27 to 17-1725.1-31 	(Reserved).
SUBCHAPTER 5
EVALUATION OF REAL PROPERTY
§17-1725.1-32 	Purpose. 	This subchapter
identifies and describes the different types of
property ownership and how they are considered in the
determination of eligibility for a MAGI-excepted
individual or household. 	[Eff 	09/30/13] 	(Auth: 	HRS
§346-53) 	(Imp: 	HRS §346-53)
§17-1725.1-33 	Equity value of real property.
(a) 	The equity value of real property shall be
determined by subtracting all encumbrances from the
fair market value.
(b) 	The equity value of any real property not
designated within this chapter as exempt shall be
considered an available asset counted towards the
individual's personal reserve.
(c) 	The fair market value of real property shall
be determined by considering the following variables:
(1) 	Geographic location;
(2) 	Land use;
(3) 	Amenities; and
(4) 	Land configuration.
(d) 	Acceptable verification of the current fair
market value other than the county property tax
assessment shall specify how the value was established
based on the variables in subsection (c) and may
include, but are not limited to the following sources:
(1) 	A licensed appraiser’s written appraisal of
the current fair market value of the
property;
(2) 	A current sales agreement that reflects the
current property appraisal or an accurate
valuation of the fair market value of the
property; or

UNOFFICIAL
1725.1-27
(3) 	A licensed realtor’s written appraisal of
the current fair market value of the
property. 	[Eff 	09/30/13] 	(Auth: 	HRS
§346-53; 42 C.F.R. §§431.10, 435.601,
435.845; 45 C.F.R. §233.20) 	(Imp: 	HRS
§346-29; 42 C.F.R. §§431.10, 435.601,
435.845; 45 C.F.R. §233.20)
§l7-1725.1-34 	Treatment of special forms of
ownership of real or personal property. 	(a) 	The
individual's interest in property shall be determined
by the type and form of ownership which may affect the
value of the property in determining eligibility.
(b) 	Property held in joint tenancy shall be
determined by:
(1) 	An appraisal of the current fair market
value of the individual’s interest in the
property; or
(2) 	Dividing the current fair market value of
the property by the number of joint tenants;
and
(3) 	Upon the death of one of the joint tenants,
the survivor or survivors become the sole
owner or owners of the entire interest.
(c) 	Property held in tenancy by the entirety
shall be determined by:
(1) 	An appraisal of the current fair market
value of the individual's interest in the
property; and
(2) 	Dividing the current fair market value of
the property equally between the husband and
wife.
(d) 	Property held by tenancy in common:
(1) 	Shall be determined by an appraisal of the
current fair market value based on the
percentage of ownership of two or more
individual owners;
(2) 	Each owner may sell, transfer or dispose of
his or her share of the property without the
permission of the other owner or owners but

UNOFFICIAL
1725.1-28
cannot do so with respect to the entire
property; and
(3) 	There is no automatic survivorship rights to
a deceased's ownership interest as it passes
to his or her estate or heirs.
(e) 	Property under an agreement of sale shall be
allocated between the buyer and seller in accordance
with their respective interests as follows:
(l) 	The buyer's interest shall be the fair
market value of the real property minus the
balance due on the agreement of sale; and
(2) 	The seller's interest shall be the balance
on the agreement of sale.
(f) 	Property subject to a life estate interest:
(1) 	Is established by a will or deed which
conveys property to a life estate owner or
life tenant for life and to one or more
remaindermen upon termination of life
estate;
(2) 	The current value of the property shall be
allocated between the life tenant and the
remainderman by determining the present
worth of their respective interests using
the Life Estate and Remainder Interest Table
(26 C.F.R §20.2031-7 and 49 FR Vol. 49 No.
93/5-11-84), that corresponds to the age of
the life tenant;
(3) 	The life tenant:
(A) 	Owns the physical property for the
duration of the life estate;
(B) 	Has the right to possess, use, and
obtain profits from the property;
(C) 	Can sell his or her life estate
interest; but
(D) 	Cannot take any action concerning the
interest of the remainderman.
(4) 	The remainderman:
(A) 	Has ownership interest in the physical
property;
(B) 	Does not have the right to possess and
use the property until termination of
life estate; and

UNOFFICIAL
1725.1-29
(C) 	Unless restricted by will or deed, is
able to sell his or her interest in the
physical property before the life
estate interest expires but the market
value of the remainder interest may be
reduced as the sale is subject to life
estate interest.
(g) 	The individual's interest in real property
shall not be considered available as an asset if a co-
owner would be affected by the sale of the
individual’s interest under the following:
(1) 	The co-owner resides on the property;
(2) 	The co-owner would have to move if the
property was sold; and
(3) 	The co-owner owns no other real property
that could be used as the co-owner’s home
property. 	[Eff 	09/30/13] 	(Auth: 	HRS
§346-53; 20 C.F.R. §§416.1201, 416.1245,
416.1246; 42 C.F.R §§435.230, 435.601,
435.840, 435.845) 	(Imp: 	HRS §346-53; 20
C.F.R. §§416.1201, 416.1245, 416.1246; 42
C.F.R §§435.230, 435.601, 435.840, 435.845)
§17-1725.1-35 	Special provision for removal of
legal impediments to availability. 	Medical assistance
shall be provided to an otherwise eligible individual
while legal impediments to the current availability of
real property are being removed or title is being
cleared based on the condition that the individual’s
plan of action is submitted within thirty days of the
date of request by the department to remove those
legal impediments or to clear title.
(1) 	Failure to meet the deadline shall
disqualify the individual from receiving
further medical assistance.
(2) 	The department shall periodically review the
status of the plan of action and determine
whether a recipient's failure to take
appropriate action shall disqualify the
recipient from further assistance.

UNOFFICIAL
1725.1-30
[Eff 	09/30/13] 	(Auth: 	HRS 346-14; 20
C.F.R. §§416.1201, 416.1245; 42 C.F.R.
§§431.10, 435.601) 	(Imp: 	20 C.F.R.
§§416.1201, 416.1245; 42 C.F.R. §435.601)
§17-1725.1-36 	Real property used as a home. 	(a)
Real property which is considered the home or usual
place of residence of the individual is generally
exempt from consideration as a countable asset except
for the home property of an institutionalized
individual placed in a trust.
(b) 	The home property exemption is extended to
the land and all structures on the parcel of land.
The home property exemption may include contiguous
parcels of property, regardless of whether legally
considered separate parcels of property, and adjoining
structures on that property that are not separated by
easements or public right of ways, and provided the
individual owner or owners consider the parcels to be
part of their home property.
(c) 	For the purpose of this subsection, whether
an individual is living on or away from the real
property shall determine whether the property is
considered home property or not, regardless of the
form of the individual's interest such as a life
tenant, remainderman, a buyer or seller under an
agreement of sale, settlor or beneficiary under a
trust, or any other form of leased or divided
interest.
(1) 	For an institutionalized individual home
property shall not be considered other
property if:
(A) 	The individual states an intent to
return to the home; or
(B) 	A spouse or dependent relative is
living in the home.
(2) 	For a non-institutionalized individual in
the community who is not residing on their
home property, the home property may
continue to be exempt if the individual
states the intent to return home.

UNOFFICIAL
1725.1-31
(3) 	The intent to return home for individuals
under paragraphs (1) and (2) shall be re-
evaluated annually. 	[Eff 	09/30/13]
(Auth: 	HRS §346-53; 42 C.F.R. §431.10; 45
C.F.R. §233.20; 42 U.S.C. §1396p) 	(Imp:
HRS §346-53; 45 C.F.R. §233.20; 42 U.S.C.
§1396p)
§§17-1725.1-37 to 17-1725.1-41 	(Reserved).
SUBCHAPTER 6
PERSONAL RESERVE STANDARDS
§17-1725.1-42 	Purpose. 	This subchapter
identifies the personal reserve standards for a MAGI-
excepted individual or household. 	[Eff 	09/30/13]
(Auth: HRS §346-14; 42 C.F.R. §§435.3, 435.840,
435.843, 435.845) 	(Imp: 	42 C.F.R. §§435.3, 435.840,
435.843, 435.845)
§17-1725.1-43 	Personal reserve standard for a
MAGI-excepted individual or household. 	(a) 	The
personal reserve standards for an individual or
household are the maximum amount of countable assets
that may be held by the individual or household while
establishing or maintaining eligibility.
(b) 	An individual or a household whose equity in
non-exempt assets as determined in this chapter
exceeds the personal reserve standard for medical
assistance shall be ineligible.
(c) 	The personal reserve standards for a MAGI-
excepted individual or household applying for or
receiving assistance, is equal to standards employed
by the SSI program.
(d) 	For each additional family member, $250
shall be added to the SSI personal reserve standard
for a household of two and the resultant amount is the

UNOFFICIAL
1725.1-32
personal reserve standard for a household of
applicable size. 	[Eff 	09/30/13] 	(Auth: HRS
§346-14; 42 C.F.R. §§435.840, 435.843, 435.845) 	(Imp:
42 C.F.R. §§435.840, 435.843, 435.845)
§§17-1725.1-44 to 17-1725.1-48 	(Reserved).
SUBCHAPTER 7
TREATMENT OF ASSETS FOR INDIVIDUALS REQUESTING
COVERAGE OF LONG-TERM CARE SERVICES
§17-1725.1-49 	Purpose. 	The purpose of this
subchapter is to establish the requirements for the
treatment of assets for an individual who requests
coverage of long-term care services.
[Eff 	09/30/13] 	(Auth: 	HRS §346-14; 42 C.F.R.
§431.10; 42 U.S.C. §1396p(c)) 	(Imp: 42 U.S.C.
§1396p(c))
§17-1725.1-50 	Determination of the community
spouse resource allowance. 	(a) 	At the time of
initial eligibility determination, the community
spouse of an institutionalized individual who received
long-term care services on or after September 30,
1989, shall be allowed to maintain countable assets up
to the maximum allowed by federal statutes or
regulations with provisions for increase, as allowed
by the Secretary of Health and Human Services by means
of indexing, court order, or fair hearing.
(b) 	At the time of initial eligibility
determination of an institutionalized individual, the
total value of assets of both spouses, regardless of
how they are held, shall be considered available to
the institutionalized individual, except for the
community spouse resource allowance, as defined by
subsection (a).

UNOFFICIAL
1725.1-33
(c) 	The assets retained by the community spouse,
as allowed by subsection (a), shall not jeopardize the
eligibility of the institutionalized individual.
After the initial eligibility of the institutionalized
individual is established, any assets of the community
spouse, which do not include the institutionalized
individual as a co-owner, shall not be considered
during the continuous period of both eligibility and
institutionalization of the institutionalized
individual.
(d) 	The post-eligibility interspousal transfer
of assets shall be allowed for the legal transfer of
assets from the institutionalized individual to the
community spouse. 	After a protected period of ninety
days from the date eligibility is determined, which
may be extended if there are legal reasons or
extenuating circumstances that delay such a
transfer,any assets still legally available to the
institutionalized individual shall be considered in
the determination of continued eligibility of the
institutionalized individual.
(e) 	The provisions of subsections (a) through
(d) apply to an institutionalized individual who
qualifies for long-term care services.
[Eff 	09/30/13] 	(Auth: HRS §346-14; 42 C.F.R §431.10,
435.217; 42 U.S.C. §§1315, 1396r-5) 	(Imp: 	HRS §346-
29; 42 C.F.R. §435.217; 42 U.S.C. §§1315, 1396r-5)
§17-1725.1-51 	Penalty period for the transfer of
an asset for less than fair market value. 	(a) 	An
individual who requests medical assistance for
coverage of long-term care services shall be assessed
a penalty period for coverage of these services if the
individual or the individual’s spouse, transferred an
asset for less than fair market value within the
applicable look-back period. 	The length of the look-
back period shall be sixty months for an asset
transferred on or after February 8, 2006.

UNOFFICIAL
1725.1-34
(b) 	An asset that was transferred on or after
the date of application shall be considered as
follows:
(1) 	A penalty period shall be assessed if an
individual transfers an asset after being
determined eligible for coverage of long-
term care services.
(2) 	A penalty period shall not be assessed for
the transfer of an asset owned by the
community spouse made after the individual
has been determined eligible for coverage of
long-term care services with the exception
of subsection (d).
(c) 	The transfer provision shall apply to an
asset held by the individual and the individual’s
spouse when any action is taken that reduces or
eliminates such individual’s ownership or control of
such asset.
(d) 	The transfer provision shall apply to
countable assets under this chapter owned by the
individual or the individual’s community spouse or
both and to the following exempt assets in subchapters
4 and 5:
(1) 	The home property;
(2) 	The value of basic maintenance items
essential for day-to-day living including
but not limited to clothing, furniture, and
appliances;
(3) 	All motor vehicles with the exception of
watercrafts or air transportation vehicles,
including but not limited to cars, trucks,
vans, or motorcycles;
(4) 	The equity value of a bona fide funeral or
burial plan or agreement; and
(5) 	The burial space (including plots, vaults,
and niches) including those designated for
immediate family members.
(e) 	The transfer provision shall apply to the
transfer of income of the individual and the
individual’s spouse, or their right to receive income,
either as a single payment or a stream of income that

UNOFFICIAL
1725.1-35
is countable in determining Medicaid eligibility under
chapter 17-1724.1.
(f) 	The unpaid portion of long-term care
expenses incurred during a penalty period shall not be
deducted in post-eligibility as an incurred medical
expense when a penalized individual becomes eligible for
coverage of long-term care services. 	[Eff 	09/30/13]
(Auth: 	HRS §346-14; 42 C.F.R. §431.10; 42 U.S.C.
§§1382b(a), (c) and (d), and 1396p(c)) 	(Imp: 42 U.S.C.
§§1382b(a), (c) and (d), and 1396p(c))
§17-1725.1-52 	Treatment of annuities. 	(a) 	An
individual who requires coverage of long-term care
services or their community spouse shall disclose
whether or not the individual or their community
spouse has any ownership interest in annuities at the
time of application and at each subsequent
redetermination of Medicaid eligibility.
(1) 	An individual shall not be eligible for
coverage of long-term care services if the
institutionalized individual or their
community spouse fails to disclose any
interest in an annuity.
(2) 	The disclosure shall be required regardless
of whether the annuity is irrevocable or
treated as an asset under this chapter.
(b) 	The portion of the funds of an annuity
purchased by the institutionalized individual or their
community spouse prior to February 8, 2006, that is
not actuarially sound and is payable beyond the life
expectancy of the annuitant shall be considered
transferred.
(c) 	All funds used to purchase an annuity on or
after February 8, 2006, by the institutionalized
individual or their community spouse shall be
considered transferred if the department is not named
as a remainder beneficiary in the first position, or
in a position behind the community spouse and the
institutionalized individual’s minor child under the
age of twenty-one years or who is blind or disabled,

UNOFFICIAL
1725.1-36
for the amount of medical assistance paid on behalf of
the institutionalized individual.
(1) 	The department shall notify the issuer of an
annuity issued on or after February 8, 2006,
of the right of the department to be a
preferred remainder beneficiary.
(2) 	The issuer may inform other remainder
beneficiaries of the department’s remainder
interest.
(d) 	Funds used to purchase an annuity on or
after February 8, 2006, by the institutionalized
individual or the community spouse, or on behalf of
the institutionalized individual or their community
spouse, shall not be considered transferred if:
(1) 	The annuity is considered:
(A) 	An individual retirement annuity that
meets the requirements of section
408(b) of the IRC; or
(B) 	A deemed IRA under a qualified employer
plan under section 408(q) of the IRC;
or
(2) 	The annuity is purchased with proceeds from
one of the following:
(A) 	A traditional IRA under section 408(a)
of the IRC;
(B) 	An account or trust which is treated as
a traditional IRA under section 408(c)
of the IRC;
(C) 	A simplified retirement account under
section 408(p) of the IRC;
(D) 	A simplified employee pension under
section 408(k) of the IRC; or
(E) 	A Roth IRA under section 408A of the
IRC; or
(3) 	The annuity meets all of the following
requirements:
(A) 	Is actuarially sound as determined by
the department in accordance with
actuarial publications of the Office of
the Chief Actuary of the Social
Security Administration;

UNOFFICIAL
1725.1-37
(B) 	Is irrevocable, non-assignable and
cannot be sold;
(C) 	Makes equal payments throughout the
term of the contract and does not defer
payments or allow balloon payments; and
(D) 	Cannot be cancelled upon the death of
the institutionalized individual or the
community spouse.
(e) 	Certain transactions or changes which occur
on or after February 8, 2006, that affect the terms of
a qualified annuity that was purchased by the
institutionalized individual or their community spouse
prior to February 8, 2006, shall be considered a
transfer of asset to include, but are not limited to
the:
(1) 	Course of payment made by the annuity;
(2) 	Treatment of income or principal of the
annuity to include additions of principal,
elective withdrawals or requests to change
the distribution of the annuity; or
(3) 	Election to annuitize the contract.
(f) 	Routine changes or automatic events or both,
made by the institutionalized individual or the
community spouse for an annuity that was purchased
prior to February 8, 2006, that are not considered a
transfer of asset include:
(1) 	Routine changes to include, but are not
limited to notifications of address change,
death, or divorce of a remainder
beneficiary.
(2) 	Changes based on the terms of an annuity
which existed prior to February 8, 2006,
which do not require a decision, election or
action to be effective.
(3) 	Changes that are beyond the control of the
institutionalized individual or the
community spouse to include, but are not
limited to, changes in the law or the
issuer’s policies.
(g) 	Transactions or changes made for annuities
purchased prior to February 8, 2006, that do not meet
the criteria of subsection (f) of this section as well

UNOFFICIAL
1725.1-38
as a qualified annuity that is transferred to anyone
except the community spouse or to another individual
for the sole benefit of the community spouse, the
individual’s child, or to a trust as described in
section 1917(c)(2)(B) of the Social Security Act,
shall be treated as a transfer of asset.
[Eff 	09/30/13](Auth: 	HRS §346-14; 42 C.F.R. §431.10;
42 U.S.C. §§1396(a), 1396p(c) and (e), 1396r-5(c))
(Imp: 42 U.S.C. §§1396(a), 1396p(c) and (e), 1396r-
5(c))
§17-1725.1-53 	Treatment of promissory notes,
loans and mortgages. 	(a) 	The assets used by an
individual who requires coverage of long-term care
services or their community spouse, to secure a
promissory note, loan or mortgage on or after February
8, 2006, shall not be considered transferred if all of
the following conditions apply to the promissory note,
loan or mortgage:
(1) 	The repayment term is actuarially sound;
(2) 	It is irrevocable and cannot be sold;
(3) 	Equal payments are made throughout the term
of the contract with no deferral or balloon
payments; and
(4) 	The balance cannot be cancelled upon the
death of the institutionalized individual or
the community spouse.
(b) 	If the provisions of subsection (a) are not
met, the transferred amount is equal to the
outstanding balance owed as of the date of the
individual’s request for coverage of long-term care
services.
(c) 	The portion of the funds used to secure a
promissory note, loan or mortgage prior to February 8,
2006, that is not actuarially sound and is payable
beyond the life expectancy of the owner of the funds
shall be considered transferred. 	[Eff 	09/30/13]
(Auth: 	HRS §346-14; 42 C.F.R. §431.10; 42 U.S.C.
§1396p(c)) 	(Imp: 42 U.S.C. §1396p(c))

UNOFFICIAL
1725.1-39
§17-1725.1-54 	Treatment of the purchase of a
life interest in the home property of another. 	(a)
The funds used by the individual who requires coverage
of long-term care services or their community spouse
to purchase a life interest in the home property of
another, on or after February 8, 2006, shall be
considered transferred if the purchaser did not reside
on the property for a period of at least one year
after the date of the purchase.
(b) For the purchase of a life interest in the
property of another made on or after February 8, 2006
that meet the requirements of subsection (a), the
portion of the funds that exceed the value of the life
interest property based on the life estate tables
published by the SSA, shall be treated as transferred
assets.
(c) The portion of the funds used to purchase a
life interest in the property of another by the
individual or the individual’s spouse prior to
February 8, 2006, that exceed the value of the life
interest in the property based on the life estate
tables published by the Social Security
Administration, shall be treated as a transferred
asset. 	[Eff 	09/30/13] 	(Auth: 	HRS §346-14; 42
C.F.R. §431.10; 42 U.S.C. §1396p(c)) 	(Imp: 42 U.S.C.
§1396p(c))
§17-1725.1-55 	Treatment of the transfer of
income. 	(a) 	A transfer of asset penalty period shall
be assessed if the institutionalized individual or
their community spouse transferred:
(1) 	Lump sum payments received in the month; or
(2) 	An entitled stream of income (disclaimed or
voluntarily agreed).
(b) 	The penalty period for the transfer of
income shall be calculated by dividing the amount of
income by the statewide average monthly cost of
nursing facility services assessed to a private
patient at the time the individual requests coverage
of long-term care services. 	Disposal of such lump sum

UNOFFICIAL
1725.1-40
payments or the entitled stream of income constitutes
a transfer of asset.
(c) 	The amount of income used to calculate a
penalty period shall be:
(1) 	The gross amount of the lump sum income
transferred in the month it was received; or
(2) 	The total gross amount of income expected to
be received during the individual’s lifetime
when the entitled stream of income was
transferred, which is calculated by
multiplying the annual amount of income
expected to be received during the
individual’s lifetime based on the life
expectancy tables established by the Social
Security Administration's Office of the
Actuary. 	[Eff 	09/30/13] 	(Auth: 	HRS §346-
14; 42 C.F.R. §431.10; 42 U.S.C. §1396p(c))
(Imp: 	42 C.F.R. §431.10; 42 U.S.C.
§1396p(c))
§17-1725.1-56 	Transfer of assets that are not
subject to the assessment of a penalty. 	A penalty
period shall not be applied when:
(1) 	The asset transferred was the individual’s
home property and title was transferred to
the:
(A) 	Spouse of such individual;
(B) 	Child of such individual who is under
age twenty-one years, or a blind or
disabled child;
(C) 	A sibling of such individual who has an
equity interest in the home, and has
resided in the home for at least one
year immediately prior to the date the
individual becomes an institutionalized
individual; or
(D) 	An adult child of such individual,
other than a child described in
paragraph (B), who has resided in the
home with the individual for at least
two years immediately prior to the date

UNOFFICIAL
1725.1-41
the individual becomes an
institutionalized individual and who
provided care which allowed the
individual to reside at home.
(2) 	The asset, other than a home, was
transferred:
(A) 	To the individual’s community spouse or
to another individual or entity for the
sole benefit of the community spouse;
(B) 	From the community spouse to another
individual or entity for the sole
benefit of the community spouse;
(C) 	To the individual’s child who is under
age twenty-one years, a blind or
disabled child, or to a trust
established after August 10, 1993, for
the child; or
(D) 	To a trust established after August 10,
1993, solely for the benefit of an
individual under age sixty-five years
who is disabled as defined in section
17-1719-10.
(3) 	The individual can substantiate that the
individual intended to transfer the asset:
(A) 	At either fair market value, or for
other valuable consideration by
providing substantiated evidence of
attempts to dispose of the asset for
fair market value, as well as evidence
to support the value at which the asset
was disposed; or
(B) 	The asset was transferred exclusively
for a purpose other than to qualify for
medical assistance by providing
convincing evidence as to the specific
purpose for which the asset was
transferred.
(4) 	Circumstances that meet the requirements of
this subsection include, but are not limited
to:

UNOFFICIAL
1725.1-42
(A) 	The individual did not require long-
term care services at the time of the
transfer;
(B) 	The individual was living independently
at the time of the transfer;
(C) 	The individual did not have a pre-
existing condition that could have led
to the need for long-term care or
assisted living services at the time of
the transfer;
(D) 	The transfer was not within the
individual's control (e.g. court
ordered); or
(E) 	A diagnosis of a previously undetected
disabling condition that led to the
need for long-term care services
occurred after the date of transfer.
(5) 	The asset transferred for less than fair
market value has been returned.
(A) 	The returned asset must be evaluated
for the impact on the individual’s
eligibility for Medicaid.
(B) 	If the entire transferred asset has
been returned, the penalty period is
negated. 	Coverage of long-term care
services shall be provided for any
portion of a penalty period that was
applied prior to the return of the
asset.
(C) 	If only a portion of the transferred
asset has been returned, and the
individual is eligible for coverage of
long-term care services, the penalty
period shall be recalculated based upon
the balance of the unreturned asset.
(i) 	The end date of the recalculated
penalty period shall be applicable
if it exceeds the amount of the
penalty period already applied;
and
(ii) 	Coverage of long-term services
shall be provided for the portion

UNOFFICIAL
1725.1-43
of the penalty period that exceeds
the end date of the recalculated
penalty period.
[Eff 	09/30/13] 	(Auth: 	HRS §346-
14; 42 C.F.R. §431.10; 42 U.S.C.
§1396p(c)) 	(Imp: 	42 C.F.R.
§431.10; 42 U.S.C. §1396p(c))
§17-1725.1-57 	Determining a penalty period.
(a) 	A penalty period shall be calculated by
dividing the total uncompensated value of the asset
transferred, by the statewide average monthly cost of
nursing facility services assessed to a private
patient at the time the individual requests and is
determined eligible for the coverage of long-term care
services.
(b) 	A penalty period that results in a partial
month penalty shall not be rounded down or
disregarded.
(c) 	A penalty period established for an asset
that was transferred, shall be applied as follows:
(1) 	The value of all non-exempt transfers during
the applicable look-back period specified in
subsection 17-1725.1-51(a) shall be combined
and a single penalty period shall be
determined.
(2) 	A separate penalty period shall be
determined for non-exempt transfers which
occurred while a penalty is being applied
for a previous transfer by an individual
determined eligible for coverage of long-
term care services.
(3) 	The penalty period shall commence the later
of:
(A) 	The date of request for long-term care
services;
(B) 	The date the individual would be
eligible for coverage of long-term care
services but a penalty is being imposed
under this subchapter; or

UNOFFICIAL
1725.1-44
(C) 	The date a negative action can be taken
in situations when timely notice of
adverse action is required for the
individual currently receiving coverage
of long-term care services.
(4) 	A penalty period that would commence within
the term of another penalty period shall
commence at the end of the prior penalty
period.
(d) 	An established penalty period shall continue
to run, regardless of whether the penalized individual
no longer is eligible for medical assistance, or is
not receiving long-term care services.
(e) 	The department shall send a denial notice to
an individual requesting coverage of long-term care
services, or an adverse action notice to an individual
who is receiving coverage for long-term care services
when imposing a penalty period. 	The notices shall
meet the requirements of chapter 17-1713.1, and must
inform the individual of:
(1) 	The type and amount of the transferred asset
used to determine the penalty period;
(2) 	The length of the penalty period;
(3) 	The start and end date of the penalty
period;
(4) 	The authority under the Hawaii
administrative rules to impose the negative
action; and
(5) 	The individual’s right to request a hardship
waiver of the penalty period.
(f) 	If the spouse of a penalized individual
becomes eligible for coverage of long-term care
services, the remaining penalty period may be
allocated between both spouses.
(g) 	If one of the spouses should die before
completing the allocated penalty period, the remaining
spouse shall be allocated the balance remaining for
the deceased spouse. 	[Eff 	09/30/13] 	(Auth: 	HRS
§346-14; 42 C.F.R. §431.10; 42 U.S.C. §1396p(c))
(Imp: 	42 C.F.R. §431.10; 42 U.S.C. §1396p(c))

UNOFFICIAL
1725.1-45
§17-1725.1-58 	Waiver of a transfer of asset
penalty period due to undue hardship. 	(a) 	A penalty
period may be waived if the department determines that
the imposition of the penalty will cause undue
hardship for the individual.
(b) 	Undue hardship exists if the application of
a penalty period would deprive the individual of:
(1) 	Medical care such that the individual’s life
or health would be endangered; or
(2) 	Food, clothing, shelter, or other
necessities of life.
(c) 	A waiver of a penalty period due to undue
hardship may be granted if the individual provides
satisfactory evidence to the department that the asset
transferred:
(1) 	Has been depleted below the resource
standard specified in section 17-1725.1-43;
(2) 	Has been converted to another asset that is
not liquid or redeemable;
(3) 	The return of the transferred assets would
put the receiving party in serious
deprivation such that the loss of income or
the asset would qualify the receiving party
for medical assistance;
(4) 	The receiving party cannot be located by the
individual or another including but not
limited to the individual’s spouse, other
family member, representative, or an agent
of the nursing facility, after all attempts
to locate the receiving party have been
exhausted; or
(5) 	The asset was transferred due to theft,
fraud, or financial exploitation upon the
individual or their community spouse.
(d) 	The process for requesting and reviewing a
waiver of a penalty period imposed for a transfer of
asset due to undue hardship is as follows:
(1) 	The department shall send the individual a
notice of denial or a notice of adverse
action according to the requirements of
chapter 17-1713.1 to inform the individual
of the establishment of the penalty period

UNOFFICIAL
1725.1-46
and the individual’s right to request a
hardship waiver.
(2) 	The individual shall have twenty calendar
days from the mailing of the notice of
denial or adverse action as specified in
paragraph (1) to request a hardship waiver
and provide all documentation to support the
basis of a hardship waiver request.
(3) 	The department shall make a determination to
grant a hardship waiver within ten business
days after receiving the waiver request and
supporting documentation.
(4) 	An individual who is denied a hardship
waiver shall be informed of the enforcement
date of the penalty period and the right to
request a fair hearing under chapter 17-
1703.1.
(e) 	Nursing facilities may request a hardship
waiver on behalf of their resident with the written
consent of the resident or the resident’s personal
representative and may represent the resident or the
resident’s personal representative throughout the
appeals process. 	[Eff 	09/30/13] 	(Auth: 	HRS §346-
14; 42 C.F.R. §431.10; 42 U.S.C. §1396p(c)) 	(Imp: 	42
C.F.R. §431.10; 42 U.S.C. §1396p(c))
§17-1725.1-59 	Individual with substantive equity
in a home property. 	(a) 	An individual shall not be
eligible for coverage of long-term care services if
the individual’s home equity interest exceeds
$750,000.
(b) 	The individual’s home equity interest shall
be determined by the fair market value less
encumbrances.
(c) 	The provisions of this subsection do not
apply if the individual’s spouse, a child under age
twenty-one years, a blind child, or a disabled child
is residing in the individual’s home.
(d) 	An individual affected by the provisions of
this subsection is allowed to reduce their equity in

UNOFFICIAL
1725.1-47
the home property through the use of a reverse
mortgage or a home equity loan without penalty.
(e) 	An individual affected by this subsection
has the right to file for a waiver due to demonstrated
hardship by which the individual is legally barred
from taking action to access the equity in the
property.
(f) 	Effective 2011, the amount of the equity
interest shall be subject to increase each calendar
year based on the percentage increase in the consumer
price index for all urban consumers, rounded to the
nearest $1,000. 	[Eff 	09/30/13] 	(Auth: 	HRS §346-14;
42 C.F.R. §431.10; 42 U.S.C. §1396p(c)) 	(Imp: 42
U.S.C. §1396p(c))
§17-1725.1-60 	Waiver of excess home equity due
to undue hardship. 	(a) 	The denial for the coverage
of long-term care services may be waived if the
department determined that the imposition of
ineligibility will cause the individual undue
hardship.
(b) 	Undue hardship exists if the denial of
coverage of long-term care services would deprive the
individual of:
(1) 	Medical care such that the individual’s life
or health would be endangered; or
(2) 	Food, clothing, shelter, or other
necessities of life.
(c) 	Undue hardship may be granted if the
individual provides a written statement with
satisfactory evidence to the department of the legal
inaccessibility of the excess home equity through any
means provided by the individual, spouse, legal
representative or authorized representative from the
nursing facility.
(d) 	The process for requesting and reviewing a
waiver of ineligibility due to excess home equity is
as follows:
(1) 	The department shall send the individual a
notice of denial or a notice of adverse
action according to the requirements of

UNOFFICIAL
1725.1-48
chapter 17-1713.1 to inform the individual
of ineligibility due to excess home equity
and of the individual’s right to request a
hardship waiver.
(2) 	The individual shall have twenty calendar
days from the mailing of the denial or
adverse notice as specified under paragraph
(1) to request a hardship waiver and provide
all documentation to support the basis of
the hardship waiver request.
(3) 	The department shall make a determination of
whether to grant a hardship waiver within
ten business days after receiving the waiver
request and supporting documentation.
(4) 	An individual who is denied a hardship
waiver shall be informed of the right to
request a fair hearing under chapter 17-
1703.1.
(e) 	Nursing facilities may request a hardship
waiver on behalf of their resident with specific
written consent of the resident or the resident’s
personal representative and may represent the resident
or the resident’s personal representative throughout
the appeals process. 	[Eff 	09/30/13] 	(Auth: 	HRS
§346-14; 42 C.F.R. §431.10; 42 U.S.C. §1396p(c))
(Imp: 	42 C.F.R. §431.10; 42 U.S.C. §1396p(c))
§§17-1725.1-61 to 17-1725.1-65 	(Reserved).