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Families and Children Manual Section: Financial Eligibility Policy Manual Number: 010.020 Chapter: Countable and Excluded Income Legal Authority: 26 USC 6409; 26 USC 36B(d)(2)(B); 42 USC 1396p(c)(2)(D); 42 CFR 435.603; 42 CFR 435.949; 42 CFR 435.952; Section 1902(e)(14)(K) of the Social Security Act; Tenn. Comp. R. & Regs. 1200-13-20-.06(1) 1. Policy Statement Income eligibility for certain TennCare Medicaid categories and CoverKids is determined using the Modified Adjusted Gross Income (MAGI) methodology. In general, countable income includes income types that are taxable under federal tax law and excluded income includes income types that are non-taxable. 2. MAGI Income Types Countable income under the MAGI methodology is based on the taxable income types reported to the Internal Revenue Service (IRS) as part of an individual or household’s income tax return. In an effort to simplify income reporting under the MAGI methodology, the Centers for Medicare & Medicaid Services (CMS) and the IRS identified the most often reported income types. The following income types are listed on the federal application: Jobs, Self-Employment, Rental or Royalty Income, Farming or Fishing Income, Social Security Benefits, Unemployment Insurance, Retirement, Pension, Capital Gains, Alimony, Investment (Interest) Income and Other Income (e.g. canceled debts, court awards, jury duty pay, cash support, gambling, prizes or awards). 3. Countable Income a. Job i. Wages Wages include all compensation from employment, and the term is generally defined to mean gross wages. Gross wages after pre-tax deductions are taken out by an individual’s employer are countable. The pre-tax deductions may include funds for childcare, health insurance or retirement plans that are not taxable. An individual’s pay stub may list his “federal taxable wages”, which subtracts the pre-tax amounts from gross wages. If this amount is provided on a pay stub, the individual should report that number. Wages are counted (considered available to the individual) at the earliest of the following: 1. When received or paid; 2. When credited to the individual’s account; or