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Title 8: Medicaid Page 44 Iowa Department of Health and Human Services Employees’ Manual Chapter E: Income Types of Non-MAGI-Related Income Revised April 11, 2025 Third-Party Payments Third-Party Payments 20 CFR 416.1102, 20 CFR 416.1103; P. L. 103-60; Youngberg vs. Iowa DHS, Polk Co. District Court No. AA3294 (June 12, 2000) Direct payment of a person’s bills by a third party is not considered income, unless the bills are for food or shelter. (See Non-MAGI-Related In-Kind Income for how to treat third-party payments for food or shelter.) Third-party payments include medical services payments, such as:  Medical insurance premiums paid directly to the insurance company by someone other than the client.  Insurance company payments for medical care if the payments are equal to or less than the actual cost of the care.  Room and board paid by a third party to a medical institution while a person is institutionalized.  Accident settlement payments to cover medical expenses.

 Benefits from insurance policies that pay a flat rate to an individual if:

• The policy was purchased to pay for medical care and with regard to anticipated charges,

• The benefit is payable only if the policy holder actually receives the type of medical care of which the policy was purchased, and

• The benefit is actually used to pay for the medical care for which the policy was purchased.

When the reason the third party is making a payment is for a cost that SSA or Medicaid may be meeting (i.e., nursing facility or in-home health related care), deduct the third party payment before the Medicaid or SSA payment. Vacation Pay 20 CFR 416.1110(a) Count vacation pay as earned income.