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1) Any portion of the arrearage payment that the parent receives and does not give to the adult child is income to the parent.

2) Any amount of the arrearage payment that the parent gives to the adult child is income to the adult child in the month given, not income to the parent.

(a) The one-third reduction does not apply.

3) When an adult child receives an arrearage payment directly from the absent parent, the arrearage payment is income to the adult child.

(a) The one-third reduction does not apply.

c) Child support payments and arrearages received by a parent on behalf of a deceased child or adult child are income to the parent who receives them.

Source: Social Security Act §1902 (r)(2); 42 CFR § 435.601(b) (Rev 1994).

Rule 7.34: Rental Income.

A. Rental income is defined as follows:

1. Rent is payment that a person receives for the use of real or personal property, such as land, housing or machinery.

B. Rental income is treated as follows:

1. In determining Medicaid eligibility for at-home and institutional categories, consider net rental income.

2. Net rental income is gross less the ordinary and necessary expenses paid in the same taxable year.

a) Net rental income is counted as unearned income unless it is earned income from self- employment (such as someone in the business of renting properties).

b) Ordinary and necessary expenses are those necessary for the production or collection of rental income and generally include:

1) Interest on debts;

2) State and local taxes on real and personal property and on motor fuel;

3) General sales tax;

4) Expenses of managing or maintaining the property.