2664.3 Earned Income Requirement

Persons must have verified earned income. For Working Healthy, earned income is income received from wages or self-employment resulting from the performance of services (see 6300 ) which meets the following criteria:

Social Security/OASDI or Medicare Tax Withholding : Evidence of payment or withholding of these taxes must be presented to participate in Working Healthy. These taxes are paid under the Federal Insurance and Contributions Act (FICA). The FICA tax is applicable to the majority of wage and salary payments as employers are required to withhold FICA payments from earned income. Employer letters or statements as well as paycheck stubs may be used to verify FICA withholding. In addition, wages reported on the Kansas Employment Security (KES) ‘BASI’ system also meet this requirement. Generally, the absence of FICA withholding indicates the employer does not consider the individual to be an employee and such income would not be considered earned income for purposes of qualifying for Working Healthy. However, instances exist where wages are not subject to FICA withholding by federal law, such as wages received by a student from the college or university in which the student is enrolled (e.g., a graduate teaching assistant) and certain earnings of a non-resident alien. Eligibility may be approved in these instances if earnings are received and there appears to be an employer-employee relationship. Questionable situations may be referred to KDHE-DHCF Policy Staff for review. Income received in-kind, even if received in return for labor, does not meet the definition. For the self-employed, Social Security and Medicare tax is paid through the Self-Employment Contributions Act (SECA) rather than FICA. Persons claiming self-employment income must have made at least one SECA payment in the past year for the business or self-employment enterprise currently in operation to meet the earned income requirement for Working Healthy. Regular SECA payments must continue to be made and verified for continued eligibility. Verification of payments must minimally be presented annually. There is no eligibility under Working Healthy for a self-employed individual until and unless evidence that the individual is subject to paying SECA taxes is presented. Examples of acceptable proof of SECA taxes includes but is not limited to the following: Tax return including Self-Employment forms filed within the last 12 months (12 months payment requirement can be extended if the current year is not yet due as the tax forms will show the SECA taxes due). NOTE : Individuals that are self-employed are subject to SECA tax payments, however, they may not owe SECA taxes after credits and deductions are applied. Therefore, it is important to note that Working Healthy self-employment criteria is met once the consumer has provided evidence that they are self-employed and subject to SECA taxes. Payment voucher dated within the last 12 months (includes individuals newly self-employed that have not filed the previous year’s tax return yet.

Countable Monthly Earned Income Exceeds the Standard Earned Income Disregard : Countable earned income or self-employment income must exceed the standard earned income disregard of 7240 (2) , currently $65.00 per month. For this test, countable income is determined after all applicable income-producing costs, Impairment Related Work Expenses and Blind Work Expenses have been considered. If there is no remaining income after application of these disregards, there is no eligibility for Working Healthy. Example 1 : The applicant earns $10/week at a local restaurant. Converted gross income equals $43.00 ($10/week times 4.3 = $43.00). No IRWE or BWE expenses are reported. The applicant fails the earned income requirement since countable earned income is less than the $65.00/month earned income disregard. Example 2 : The applicant earns $65.01/month as an occasional night relief clerk at a motel. No IRWE or BWE expenses are reported. The applicant meets the earned income requirement since countable earned income exceeds the $65.00/month earned income disregard.

Minimal Earnings Level of the Hourly Federal Minimum Wage (not applicable to self-employment) : Earned income must be at or above the hourly federal minimum wage. Wages below this level are not considered earned income for Working Healthy purposes. For individuals with multiple jobs, the requirement is met if one position is paid at least he federal minimum wage and countable earnings exceed the standard deduction described above. To find the current minimum wage click this https://www.dol.gov/general/topic/wages/minimumwage then scroll down and click on ‘What is the Minimum Wage?'' NOTE : Earned income that is specifically exempt would not be considered in determining the $65.00 per month countable earned income threshold. However, exempt earned income would be considered in determining the minimum wage requirement. Example : The individual has $300.00 per month earned income that is exempt under the Older Americans Act. That $300.00 could be used to determine if the individual is earning at least minimum wage but could not be used to determine if they meet the $65.00 per month threshold.