PM 07-02-03

  1. Temporarily exempt a client's nonliquid assets if:
    • total nonexempt assets do not exceed the $3,000 limit for one person or $4,500 for the client and spouse; and
    • total liquid assets do not exceed 3 times the SSI payment level; and
    • the client agrees to the conditions listed on Deferred Asset Agreement - AABD (Form 2880) and signs the form.
  2. File the completed Form 2880 in the case record.
  3. Set a control to review ongoing eligibility at the end of the 3 or 6-month exemption period.

If the client does not sign Form 2880, count the value of the asset and open or SWAP the case to spenddown.

Example 1: Mr. R has the following assets:

  • Life Insurance
    • face value $2,000
    • cash value 1,650
  • Bank Account - 700

Counting the cash value of the insurance policy plus the bank account, total nonexempt assets equal $2,350. The bank account is the only liquid asset. As $700 is less than 3 times the SSI payment level, Mr. R is eligible for a 3-month exemption to reduce the life insurance.

Example 2: Ms. D has the following assets:

  • Prepaid Burial Plan - $2,500
  • Savings Account - $1,950

First apply the burial fund exemption to the prepaid burial plan. The nonexempt portion of the plan is $1,000, which added to the savings account, equals total nonexempt assets of $2,950. Total liquid assets are $1,950 which is greater than 3 times the SSI payment level. Ms. D is not eligible for a temporary exemption.

If the client has not sold the asset by the end of the 3 or 6-month period, review the client's efforts to sell the asset.

  • If the client did not make a reasonable and diligent effort to sell the asset, SWAP the case to spenddown.
  • If the client made a reasonable and diligent effort to sell the asset, extend the period for an additional 3 months. Set a new control for the additional 3 months.

If the asset is not sold at the end of the new 3-month period, SWAP the case to Spenddown.

Example: Mr. R was granted a 3-month exemption to reduce his life insurance policy. Mr. R filed the necessary papers with the insurance company, but they had not taken the action by the end of the 3-month period. Mr. R is eligible for an additional 3-month exemption.