Page 6

Chapter: 1800 Income Program: MFAM 2 In the absence of specific documentation, divide the income minus allowable expenses by the number of beneficiaries to determine the income amount for each individual. 1830.0116 Structured Settlements (MFAM) Structured settlements are settlements of tort claims involving physical injuries or physical sickness under which settlement proceeds take the form of periodic payments, including scheduled lump sum payments. The full amount of each periodic payment, including the amount attributable to earnings under the annuity contract, is excludable from the settlement recipient’s income. 1830.0118 Vendor Payments (MFAM) A vendor payment is a money payment made for the household’s expenses by an individual or organization from funds not legally owed to the household. Vendor payments are excluded as income. Payments made directly to the household are not vendor payments regardless of the purpose or intent of the payment. 1830.0122 Verification of Income (MFAM) To determine eligibility for Medicaid, verification of income will be performed by data exchange when available. An applicant’s or recipient’s self attestation of income is accepted if the amount stated on the application or renewal is reasonably compatible with information obtained by the Department through electronic sources. Reasonably compatible means both self attestation and electronic sources are below the applicable income standard or when the difference between both amounts is ten percent (10%) or less without regard to the income standard. If the difference is more than 10%, first ask for a reasonable explanation and, if necessary, paper documentation from the individual.

When income cannot be verified by data exchange, such as for individuals with no SSN or who have self-employment income, income must be verified by other acceptable means such as pay stubs, CF-ES 2620, etc.

A pretax income exclusion must be verified before it can be excluded in the MAGI budget. If the individual fails to provide verification determine eligibility without the exclusion. Proof for these pretax income exclusions vary based on the type of deduction and may include: 1. Bills 2. Business records 3. Receipts 4. Bank account statements 5. Paychecks, pay stubs, or employment verification records 6. Current tax returns if the amount is anticipated to be the same: and 7. Any other documents that support the expense or adjustment.

Pretax exclusions are tied to a specific income source and must be evaluated and verified at each annual review or when a change in circumstance is reported. 1830.0200 EARNED INCOME (MFAM) Earned income includes all gross (before taxes or other deductions) wages and salaries including income derived from the sale of blood or plasma, tips from performance of work, wages deferred that are beyond the individual's control, Federal Work Study, National and Community Services Trust Act living allowances through the Peace Corps, VISTA, Americorps, Foster Grandparent Program, Service Corps of Retired Executives, and other volunteer programs. Wages are included as income at the time they are received rather than when earned.

Wages are considered earned income even when withheld at the request of the employee or provided as an income advance on income expected to be earned at a future date.