You asked (1) whether both the Anthem Blue Cross demutualization cash payments and stock distributions are excluded as income in Connecticut Pharmaceutical Assistance Contract to the Elderly and Disabled (ConnPACE) eligibility determinations and (2) how much of the value of the stock option is excluded if someone later sells it.

Special Act 02-1 requires both the cash payments and stock distributions to be excluded as income in ConnPACE eligibility determinations. But if someone takes the stock and later sells it, the proceeds of the sale are excludable only if the stock is sold during the tax year during which it is distributed or the following two tax years. And the excluded amount is limited to the stock's value on the distribution date, thus any gains on it are counted in an eligibility determination.

If someone sells the stock more than two years after it is distributed, the proceeds would count as income. But since the Department of Social Services (DSS) looks first at a ConnPACE applicant's prior year income, then at the current year's, and takes the lowest figure when determining eligibility, even if someone sold the stock later it should not affect his eligibility since DSS would always look at the prior year's income first.

Likewise, if someone chooses to hold onto the stock indefinitely, it would be considered an asset. However, the ConnPACE program currently has no asset test and it would not be considered in an eligibility determination.

To read more about the Anthem Blue Cross Demutualization, go to 2002-R-0116, 2002-R-0071, 2002-R-0161, and 2002-R-0327.

RC: ts