Mr. Jay Klein

Institute on Disability

Heidelberg Harris Building

125 Technology Drive

Durham, New Hampshire 03824-4724

Dear Mr. Klein:

This is in further reply to my December 12, 1994 letter to you concerning Medicaid payment for rent and food attributable to an unrelated live-in personal care giver who lives in the Medicaid home and community-based waiver recipients home and whether these payments would be considered income for the recipient for purposes of the Supplemental Security Income (SSI) program I regret the delay in my response.

Upon receipt of your letter. we analyzed three specific methods for paying for the rent and food of an unrelated live-in personal care giver and the income consequences for each method for purposes of SSI. For purposes of our analysis we assumed that the SSI recipient and the care giver are living in the home of the SSI Medicaid recipient and that SSI eligibility of the care giver is not an issue. We have also consulted with the Social Security Administration to determine the circumstances under which payment would be considered income to the recipient.

We believe that using a method of reimbursement that would be considered income under SSI would frustrate the objectives of the waiver program; that is, to enable certain recipients to avoid institutionalization by remaining at home with a caregiver. Under SSI, pursuant to 20 C.F.R. Section 456.1 ] 03(a)(3), payment of rent and food attributable to an unrelated live-in personal caregiver is not income under the following circumstances.

Medicaid payment is made directly to the Medicaid home and community-based waiver recipient for the rent and food expenses attributable to an unrelated live-in personal caregiver in order to assist the recipient in paying for groceries and in making mortgage, rent or lease payments.

.Medicaid payment for the rent expenses attributable to an unrelated live-in personal caregiver is made to the Medicaid home and community-based waiver recipient's mortgage or lease holder

For purposes of Medicaid program, however, we believe that Medicaid payment can only be made directly to the SSI/Medicaid recipient since the second payment methodology in which payment is made to the recipient's mortgage or lease holder would violate section 1902 (a)(32) of the statute which states, '`no payment under the plan for any care or service provided to an individual shall be made to anyone other than such individual or the person or institution providing such care or service...." The waiver recipient's mortgage or lease holder would not qualify as a provider of services

Thus, under Medicaid and SSI rules, for payment not to be considered income to the recipient, payment for the portion of the costs of rent and food attributable to an unrelated personal caregiver must be made directly to the Medicaid recipient. The method for determining what is the portion of costs of rent and food is left to the State, with HCFA's approval. Regardless, the personal caregiver must be paid directly for the service component and the recipient must be paid :for the rent and food attributable to the live-in personal caregiver

We have only addressed the effect of payment to a waiver beneficiary for the rent and food of a unrelated live-in personal caregiver on the Medicaid and SSI programs. You should be aware, however, that these payments may have an effect on an individual's eligibility for other Federal State programs which consider income in making eligibility determinations (e.g., housing and food stamps)..

We will be preparing a letter to send to State Medicaid Directors to advise them of this policy. I hope that this response addresses the remaining issues raised in your original correspondence. If you have additional questions please contact Mary Jean l)Duckett of my staff on (410) 786-3294.

Sincerely yours,

Sally K. Richardson Director

Medicaid Bureau