Page 17

17

the funds for them are deducted from the employee’s salary:

a) Funds the employer uses to purchase qualified benefits under a cafeteria plan;

b) Employer contributions to a health insurance or retirement fund;

c) The employer’s share of FICA taxes or unemployment compensation taxes, in all cases;

d) The employee’s share of FICA taxes or unemployment taxes paid by the employer on wages for domestic service in the private home of the employer or for agricultural labor only; to the extent the employee does not reimburse the employer.

14. Proceeds of a Loan. Refer to Part 103, Chapter 3, Rule 3.3, for a complete discussion of the definitions associated with loans. For income purposes, the proceeds of a loan are treated as follows:

a) The proceeds of a bona fide loan are not income to the borrower because of the borrower’s obligation to repay. Money received as repayment of the principal of a bona fide loan is not income to the lender; however, the interest received on money loaned is income to the lender.

b) If the loan is not bona fide, the proceeds received in the transaction are unearned income to the borrower in the month received. If the loan is not bona fide, payments toward principal and interest are unearned income to the lender. As indicated above, the interest received by the lender on money loaned is unearned income whether the loan is bona fide or not.

15. Promissory Notes and Property Agreements. Refer to Part 103, Chapter 3, Rule 3.3, for a complete discussion of the definitions associated with promissory notes and property agreements. For income purposes, they are treated as follows:

a) Treatment for the borrower is as follows:

1) Under both SSI and liberalized policy, for the Medicaid client who is the borrower, cash paid by the lender to the borrower is not income if a promissory note or property agreement is bona fide. However, any reserve may be a resource the following month;

2) Under both policies, if the agreement is non-bona fide or non-negotiable, cash paid by the lender to the borrower is income in the month received by the borrower and any retained cash (or property received) may be a resource the following month.

b) Under SSI policy, treatment for the lender is as follows: