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Disability Asset Protection and Resource Disregard Act

Summary

This legislation would amend § 32.1-325 of the Code of Virginia to require the exclusion of certain non-liquid assets from eligibility determinations for medical assistance (Medicaid) and related disability-based benefit programs. The bill would direct the Board of Medical Assistance Services to disregard specified categories of non-cash assets up to a defined value threshold when calculating countable resources.

The purpose of the bill is to prevent individuals with disabilities from losing eligibility for essential benefits due to ownership of modest, non-liquid personal property, including tools, equipment, or other items necessary for independent living or self-employment.

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Background

Current Law

Virginia law governing Medicaid eligibility is codified in § 32.1-325 of the Code of Virginia. This section authorizes the Board of Medical Assistance Services to:

  • Establish eligibility criteria for medical assistance; and
  • Define which assets are considered "countable resources" for purposes of eligibility.

The statute explicitly permits certain exclusions ("disregards") from countable resources, including:

  • Burial funds up to a specified amount; and
  • A primary residence, subject to conditions.

These provisions demonstrate that Virginia already employs a resource-based eligibility system in which some assets are excluded while others are counted.

Identified Issue

Under current policy implementation, individuals receiving disability-related benefits may be disqualified if their total assets exceed program limits. In some cases, non-liquid personal property—such as artistic equipment, tools, or other work-related assets—may be counted toward these limits.

This can result in:

  • Loss of benefits due to ownership of essential or productive assets;
  • Disincentives to work, create, or build financial stability;
  • Inability to maintain an emergency cushion without risking eligibility.

Structural Gap in Law

While § 32.1-325 allows the Board to disregard certain resources, it does not require exclusion of:

  • Non-liquid personal property;
  • Work-related equipment;
  • Assets used for self-sufficiency or income generation (beyond narrow categories already recognized).

As a result, current exclusions are limited and may not reflect modern economic realities.

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Legislative Findings (Suggested)

The General Assembly may find that:

  • Asset-based eligibility limits for disability-related benefits can unintentionally penalize financial responsibility and self-sufficiency;
  • Non-liquid assets, including tools, equipment, and personal property, do not provide immediate financial liquidity and should be treated differently from cash or cash equivalents;
  • Individuals with disabilities should not be required to liquidate essential personal property in order to qualify for or maintain access to medical assistance;
  • Expanding resource disregards would promote economic participation, stability, and independence.

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Proposed Statutory Approach

Primary Amendment Target

§ 32.1-325, Code of Virginia

Core Mechanism

The bill would add a new required category of excluded resources ("disregard") for non-liquid assets.

Conceptual Draft Language

Note: Placeholder language for future refinement.

A new subsection could provide:

  • That in determining eligibility, the Board shall disregard:

* Non-liquid personal property assets;

* Including tools, equipment, and other property used for employment, self-employment, education, or daily living;

  • Up to a specified aggregate value (e.g., $X per individual or household).

Alternative Approach

Instead of setting a fixed threshold in statute, the bill could:

  • Direct the Board to establish thresholds by regulation; and
  • Require periodic review and adjustment.

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Policy Design Considerations

Asset Categories

Future research should define which assets qualify, such as:

  • Work-related tools and equipment;
  • Artistic or creative materials;
  • Assistive technology;
  • Durable household goods beyond basic exemptions.

Threshold Structure

Options include:

  • Flat dollar cap (e.g., $10,000);
  • Tiered structure based on household size;
  • Higher caps for employment-related assets.

Liquidity Distinction

A key design principle is distinguishing:

  • Liquid assets (cash, bank accounts) — countable; versus
  • Non-liquid assets (equipment, personal property) — partially or fully excluded.

Interaction with Federal Law

Medicaid eligibility is partially governed by federal law. Further research is needed to:

  • Confirm federal compliance constraints;
  • Identify waiver opportunities (e.g., § 1115 waivers);
  • Determine how far Virginia may expand disregards without federal approval.

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Implementation Considerations

  • The Department of Medical Assistance Services would be responsible for:

* Defining eligible asset categories;

* Establishing valuation methods;

* Updating eligibility determination procedures.

  • Administrative guidance may be required to:

* Prevent abuse or overvaluation;

* Ensure consistent application across cases.

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Comparison to Existing Law

This proposal extends an existing legal framework rather than creating a new one.

Current exclusions include:

  • Burial funds (limited amount);
  • Primary residence (subject to conditions).

This bill would add:

  • Non-liquid personal property exclusions up to a defined value.

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Potential Impacts

Positive Effects

  • Increased financial stability for individuals with disabilities;
  • Reduced disincentives for work and asset accumulation;
  • Greater alignment with modern economic realities.

Risks / Considerations

  • Potential increase in program eligibility and associated costs;
  • Administrative complexity in asset valuation;
  • Need for safeguards against asset shielding.

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Areas for Further Research

  • Current DMAS regulations defining "countable resources";
  • Federal Medicaid asset rules and waiver flexibility;
  • Comparative policies in other states;
  • Fiscal impact estimates;
  • Stakeholder input (disability advocates, administrators, policy experts).

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Notes

  • This proposal builds directly on § 32.1-325 of the Code of Virginia.
  • The statutory concept of "resource disregards" provides the legal foundation for the policy change.
  • Detailed implementation will likely occur through administrative regulation.