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Payments made by an indemnity health insurance plan are counted as unearned income unless the applicant/recipient uses the payments to pay his medical expenses. A payment or any portion thereof used to pay the applicant's/recipients medical expenses is not counted as income. Once the DFR verifies the applicants/recipient's receipt and usage of indemnity benefits, income will be budgeted accordingly. NOTE: Some payments may fall under the definition of lump sum, others may be regular, or fluctuating. In many of these situations the income will be considered through recovery. The amount of the premium of an indemnity policy is not an income deduction in the post- eligibility income determination of an institutionalized applicant/recipient, nor a medical expense in spend-down determinations. 2840.45.25 INDEMNITY HEALTH INSURANCE PAYMENTS (MED 3)

For MAGI, payments made by an indemnity health insurance plan may or may not be taxable income depending on who paid the premiums for the insurance. Payments are fully taxable if the individual did not contribute to the insurance premium payments, or the employer did not withhold premium payments from the individual’s salary. Such payments from an indemnity health insurance plan are counted in the calculation of MAGI for household income. Payments from an indemnity health insurance plan are not taxable if the individual paid for the premium payments with after tax dollars, and such payments will not be counted in the calculation of MAGI for household income. Payments made by an indemnity health insurance plan may also be partially taxable depending on who paid for the premium payments and whether such payments were with pre-tax or after-tax dollars. Amounts paid to reimburse for medical expenses incurred after the insurance plan was established are not counted as income. 2840.50.00 LONG-TERM CARE INSURANCE PAYMENTS (MED 1, 4) Payments from insurance, including a qualified Indiana Long Term Care Program (ILTCP) or other long-term care insurance policy, are not counted as unearned income if the applicant/recipient uses them to pay medical expenses. They are considered reimbursement of an expense even if payments are made directly to the individual to make the payment. Workers must verify the applicants/recipient’s receipt and usage of the LTC insurance payments. 2845.00.00 BENEFITS RECEIVED DUE TO FEDERAL LAW The benefits that are listed in the following sections are those that are received due to federal statute.