4. INCOME AVERAGING

The steps below are followed to determine the best estimate of income.

A. All earned and unearned income received within a minimum time frame of four weeks immediately preceding the application or review must be verified even if not all four weeks’ income is used to calculate the best estimate.

If not all pay stubs for the four week period are available, but the gross income can be verified for each pay interval through year-to-date information, the four week period’s income is deemed to be verified.

B. The Department shall determine, through a careful review of the income documentation and discussion with the individual, if there have been any significant income changes during the four week period. If there have been, and the changes are of a continuous nature, the changes must be taken into consideration when determining the best estimate. For example, if an individual has received an increase in hourly rate, the new hourly rate must be multiplied by the appropriate number of hours (either stable or averaged) to determine the anticipated income.

C. The Department shall determine if any significant income changes are expected in the future. If yes, and the exact nature of the significant income change is known, the Department shall use that information in determining the best estimate of income.

D. The Department shall determine, through careful review of the documentation, the case record, and discussion with the individual if any of the income received is not expected to be representative of the future. For instance, the first pay check of new employment may not represent a full pay period, or a missing week's income may represent a summer plant closing which is not anticipated to occur in the next certification period. Non-representative income (or lack of income) is not used in calculating the best estimate. The case record must be clearly documented to explain why any income was not used, and to show how the best estimate was figured.

E. If income fluctuates to the extent that a four week period is not expected to provide the best estimate of income for the future review period, the Department may use information covering a longer period of time. If the income is from self-employment the Department may use the most recent tax year’s income.

F. The final step is to average the income representative for the eligibility period. If there were significant income changes, averaging is used only for the period of time not affected by the significant change-e.g., if the rate of pay increased, only the hours worked are averaged. The average hours multiplied by the increased rate of pay is then used to determine eligibility and benefits for the one time and prospective periods.

NOTE: If income does not fluctuate it is not necessary to average the income.