(305 ILCS 5/3-1.2) (from Ch. 23, par. 3-1.2)

Sec. 3-1.2. Need.

(a) Income available to the person, when added to contributions in money, substance, or services from other sources, including contributions from legally responsible relatives, must be insufficient to equal the grant amount established by Department regulation for such person. In determining earned income to be taken into account, consideration shall be given to any expenses reasonably attributable to the earning of such income. If federal law or regulations permit or require exemption of earned or other income and resources, the Illinois Department shall provide by rule and regulation that the amount of income to be disregarded be increased (1) to the maximum extent so required and (2) to the maximum extent permitted by federal law or regulation in effect as of the date this amendatory Act becomes law. The Illinois Department may also provide by rule and regulation that the amount of resources to be disregarded be increased to the maximum extent so permitted or required.

(b) Subject to federal approval, resources (for example, land, buildings, equipment, supplies, or tools), including farmland property and personal property used in the income-producing operations related to the farmland (for example, equipment and supplies, motor vehicles, or tools), necessary for self-support, up to $6,000 of the person's equity in the income-producing property, provided that the property produces a net annual income of at least 6% of the excluded equity value of the property, are exempt. Equity value in excess of $6,000 shall not be excluded. If the activity produces income that is less than 6% of the exempt equity due to reasons beyond the person's control (for example, the person's illness or crop failure) and there is a reasonable expectation that the property will again produce income equal to or greater than 6% of the equity value (for example, a medical prognosis that the person is expected to respond to treatment or that drought-resistant corn will be planted), the equity value in the property up to $6,000 is exempt. If the person owns more than one piece of property and each produces income, each piece of property shall be looked at to determine whether the 6% rule is met, and then the amounts of the person's equity in all of those properties shall be totaled to determine whether the total equity is $6,000 or less. The total equity value of all properties that is exempt shall be limited to $6,000.

(c) In determining the resources of an individual or any dependents, the Department shall exclude from consideration the value of funeral and burial spaces, funeral and burial insurance the proceeds of which can only be used to pay the funeral and burial expenses of the insured and funds specifically set aside for the funeral and burial arrangements of the individual or his or her dependents, including prepaid funeral and burial plans, to the same extent that such items are excluded from consideration under the federal Supplemental Security Income program (SSI). At any time prior to or after submitting an application for medical assistance and before a final determination of eligibility has been made by the Department, an applicant may use available resources to purchase one of the prepaid funeral or burial contracts exempted under this Section.

Prepaid funeral or burial contracts are exempt to the following extent:

(1) Funds in a revocable prepaid funeral or burial contract are exempt up to $1,500, except that any portion of a contract that clearly represents the purchase of burial space, as that term is defined for purposes of the Supplemental Security Income program, is exempt regardless of value.

(2) Funds in an irrevocable prepaid funeral or burial contract are exempt up to $7,248, except that any portion of a contract that clearly represents the purchase of burial space, as that term is defined for purposes of the Supplemental Security Income program, is exempt regardless of value. This amount shall be adjusted annually for any increase in the Consumer Price Index. The amount exempted shall be limited to the price of the funeral goods and services to be provided upon death. The contract must provide a complete description of the funeral goods and services to be provided and the price thereof. Any amount in the contract not so specified shall be treated as a transfer of assets for less than fair market value.

(3) A prepaid, guaranteed-price funeral or burial contract, funded by an irrevocable assignment of a person's life insurance policy to a trust or a funeral home, is exempt. The amount exempted shall be limited to the amount of the insurance benefit designated for the cost of the funeral goods and services to be provided upon the person's death. The contract must provide a complete description of the funeral goods and services to be provided and the price thereof. Any amount in the contract not so specified shall be treated as a transfer of assets for less than fair market value. The trust must include a statement that, upon the death of the person, the State will receive all amounts remaining in the trust, including any remaining payable proceeds under the insurance policy up to an amount equal to the total medical assistance paid on behalf of the person. The trust is responsible for ensuring that the provider of funeral services under the contract receives the proceeds of the policy when it provides the funeral goods and services specified under the contract. The irrevocable assignment of ownership of the insurance policy must be acknowledged by the insurance company.

(4) Existing life insurance policies are exempt if there has been an irrevocable assignment in compliance with Section 2b of the Illinois Funeral or Burial Funds Act. A person shall sign a contract with a funeral home, which is licensed under the Illinois Funeral or Burial Funds Act, that describes the cost of the funeral goods and services to be provided upon the person's death, up to $7,248, except that any portion of a contract that clearly represents the purchase of burial space, as that term is defined for purposes of the Supplemental Security Income program, is exempt regardless of value. This amount shall be adjusted annually for any increase in the Consumer Price Index. The contract must provide a complete description of the goods and services and any cash advances to be provided and the price thereof. The person shall sign an irrevocable designation of beneficiary form declaring that any amounts payable from the policies not used for goods and services and any cash advances as set forth in the contract shall be received by the State, up to an amount equal to the total medical assistance paid on behalf of the person; any funds remaining after payment to the State shall be paid to a secondary beneficiary (if any) listed on the policy, or to the estate of the purchaser if no secondary beneficiary is named on the policy in the event the proceeds exceed the prearranged costs of merchandise and services and any cash advances and the total medical assistance paid on behalf of the insured. More than one policy may be subject to this subsection if the total face value of the policies is necessary to pay the amount described in the contract with the funeral home; policies that are not necessary to pay the amount described in the contract are not exempt. The licensed funeral home to which the life insurance policy benefits have been irrevocably assigned shall retain copies for inspection by the Comptroller and shall report annually to the Comptroller the following: the name of the insured, the name of the insurance company and policy number, an itemized account of the amount of the contract for goods and services and any cash advances provided, and the current value of the policy of benefits designated with a record of all amounts paid back to the State or other beneficiary. The Department of Healthcare and Family Services shall adopt rules and forms to implement this Section.

(d) Notwithstanding any other provision of this Code to the contrary, an irrevocable trust containing the resources of a person who is determined to have a disability shall be considered exempt from consideration. A pooled trust must be established and managed by a non-profit association that pools funds but maintains a separate account for each beneficiary. The trust may be established by the person, a parent, grandparent, legal guardian, or court. It must be established for the sole benefit of the person and language contained in the trust shall stipulate that any amount remaining in the trust (up to the amount expended by the Department on medical assistance) that is not retained by the trust for reasonable administrative costs related to wrapping up the affairs of the subaccount shall be paid to the Department upon the death of the person. After a person reaches age 65, any funding by or on behalf of the person to the trust shall be treated as a transfer of assets for less than fair market value unless the person is a ward of a county public guardian or the State Guardian pursuant to Section 13-5 of the Probate Act of 1975 or Section 30 of the Guardianship and Advocacy Act and lives in the community, or the person is a ward of a county public guardian or the State Guardian pursuant to Section 13-5 of the Probate Act of 1975 or Section 30 of the Guardianship and Advocacy Act and a court has found that any expenditures from the trust will maintain or enhance the person's quality of life. If the trust contains proceeds from a personal injury settlement, any Department charge must be satisfied in order for the transfer to the trust to be treated as a transfer for fair market value.

(e) The homestead shall be exempt from consideration except to the extent that it meets the income and shelter needs of the person. "Homestead" means the dwelling house and contiguous real estate owned and occupied by the person, regardless of its value. Subject to federal approval, a person shall not be eligible for long-term care services, however, if the person's equity interest in his or her homestead exceeds the minimum home equity as allowed and increased annually under federal law. Subject to federal approval, on and after the effective date of this amendatory Act of the 97th General Assembly, homestead property transferred to a trust shall no longer be considered homestead property.

(f) Occasional or irregular gifts in cash, goods or services from persons who are not legally responsible relatives which are of nominal value or which do not have significant effect in meeting essential requirements shall be disregarded.

(g) The eligibility of any applicant for or recipient of public aid under this Article is not affected by the payment of any grant under the "Senior Citizens and Disabled Persons Property Tax Relief Act" or any distributions or items of income described under subparagraph (X) of paragraph (2) of subsection (a) of Section 203 of the Illinois Income Tax Act.

(h) The Illinois Department may, after appropriate investigation, establish and implement a consolidated standard to determine need and eligibility for and amount of benefits under this Article or a uniform cash supplement to the federal Supplemental Security Income program for all or any part of the then current recipients under this Article; provided, however, that the establishment or implementation of such a standard or supplement shall not result in reductions in benefits under this Article for the then current recipients of such benefits.

(i) The provisions under paragraph (4) of subsection (c) are subject to federal approval. The Department of Healthcare and Family Services shall apply for any necessary federal waivers or approvals to implement by January 1, 2023 the changes made to this Section by this amendatory Act of the 102nd General Assembly.

(Source: P.A. 102-959, eff. 5-27-22.)