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Chapter: 1800 Income Program: MSSI, SFP 34 Funds from a loan that are given away in the month of receipt are potential transfers and are subject to transfer penalties if fair compensation is not received.

Some HEC plans may allow for the purchase of annuities and pay interest. Annuity payments and interest payments are unearned income and must be evaluated as such. Refer to 1640.0609.03 for all annuities purchased on or after November 1, 2007. 1840.1011 Royalties (MSSI, SFP) Royalties are payments to the holder of a patent or copyright, to the owner of a mine, for the duplication of a writing, for the use of an invention, for the extraction of a product, and similar items. If the royalties are earned from a royalty related trade or business, they are included as earned income.

The amount withheld for income taxes is included in the amount considered income. A production or severance tax, as with most royalties, is deductible from the gross amount of the royalty.

1840.1013 Capital Gains on Retirement Accounts (MSSI, SFP) The terms “short-term gains” and “long-term gains” actually refer to “capital gains”. Capital gains are defined as profits from the sale of an investment at a higher price than the purchase price.

Sometimes the individual is making decisions about buying and selling stock. In other cases, like a mutual fund, the fund manager makes the buying and selling decisions independent of the individual stock owners. Capital gains are shown on the individual’s statement.

The capital gains outside a tax-sheltered account (meaning outside a deferred compensation account or 401 (k)) are reported to the IRS. Although the individual must report capital gains to the IRS, for Medicaid purposes, any capital gains realized become part of the resource and should not be considered income to the individual. 1840.1100 REIMBURSEMENTS (MSSI, SFP) Reimbursements for past or future expenses are excluded if they do not exceed actual expenses and do not represent a gain or benefit. To be excluded, these payments must be specifically intended and used for expenses other than normal living expenses.

Any part of the reimbursement amount that exceeds the actual expense is included as income. However, reimbursements are not considered to exceed actual expenses, unless the amount is excessive.

Reimbursements for normal household living expenses such as rent or mortgage, personal clothing, or food eaten at home are a gain or benefit and, therefore, are included as income.

The following types of reimbursement are excluded as income:

1. reimbursement from the Uniform Relocation Assistance and Real Property Acquisition Policy Act; 2. reimbursements or flat allowances from the employer that are over and above the basic wages and used for job related expenses such as travel, per diem, uniforms, and transportation to and from the job training site; 3. reimbursements for out-of-pocket expenses incurred by volunteers in the course of their work; 4. medical reimbursements from Workers' Compensation benefits specifically designated for medical expenses;