Effective Date: December 1, 2022

Previous Policy

A. Income that does not count

Follow the income exemptions as defined in 417 for MAGI-based programs except as noted in this section. The following items are also excluded as income to determine the MAGI-based household income unless otherwise noted.

1. Veteran's benefits (compensation and pensions) defined in 403-2 do not count to determine the MAGI-based household income. Veteran's benefits such as Aid and Attendance, Homebound Care payments, and payments for unusual medical expenses do not count as income. VA educational income for the veteran or family members, including subsistence amounts is not countable.

2. Child support payments do not count whether they are current or arrears. (415-5)

3. Social Security benefits received by a dependent child do not count as income unless the child's income is required to be counted. See 440-3 for when a child's income must count.

4. Federal Tax refunds. Refunds of federal taxes including refundable credits are not counted as income.

5. State and Local Tax Refunds. Only count state or local tax refunds when that amount must be reported as taxable income on the individual's tax return form.

6. Educational income such as scholarships, awards or fellowship grants used for tuition, fees, books, supplies, or other educational expenses. Educational loans are not considered income.

o Count only the amounts used, or that will be used, for living and other non-educational expenses.

o Work study income that the individual reports as wages on the individual's tax return is countable income.

7. Hostile Fire Pay. When an individual is on active military duty serving in a combat zone, the full amount of the person's military pay can be excluded from taxable income. In this case, the income is not countable for the MAGI-based determination of income of that individual. See 419-4 .

8. Pre-tax deductions. If the individual is eligible for Medicaid without deducting pre-tax deductions, it is not necessary to verify these amounts. If the individual is not eligible without deducting them, request verification of the allowable deductions to determine the countable income. If you do not receive the verifications, determine the eligibility without the allowable deductions.

Pre-tax deductions may include:

· Health Insurance premium payments, including pre-tax premium payments for medical, dental or vision plans

· Health Savings Account contributions (including flexible spending accounts)

· Retirement contributions

· Child Care Flex Account contributions

9. Payments to replace property. See 415-9 for policy on how to count payments to replace or repair property.

10. Payments defined in 403-11 . Do not count as income funds received under the provisions defined in this section.

11. Sponsored aliens. Follow policy in 425-2 for MAGI-based households when the sponsor is not the spouse or parent of the alien. If the sponsor is the spouse or parent of the alien, follow the MAGI-based income rules.

12. In-Kind, Unearned Income is not countable. See 413-6.

13. Workers' Compensation- Payments made to an employee or his dependents under a workers' compensation law are exempt as income for the MAGI—based programs.

14. ABLE Accounts. Exclude ABLE account deposits, interest earnings and dividend earnings.

15. Discharged Student Loan Debt.

a. Student loan debt can be discharged if the student dies or becomes disabled. The debt holder may be the student, or a parent.

b. The discharged debt does not count as income for the MAGI-income determination.

16. Parent Mentor Stipends

Nominal amounts paid as a stipend to a parent mentor are excluded from income. The disregard of parent mentor income applies only in the case of parent mentors

working with a grantee organization.

B. Treatment of other sources of income

1. Deposits to Joint Accounts 403-15 .

· Deposits to a joint checking account made by a non-household member do not count as income to the individual.

· Direct deposits of the individual's earnings are countable income.

· Cash gifts deposited to a individual's account for the individual's benefit count only as defined in #4 below.

· Payments from a trust fund, or from other countable sources deposited into a trust account for the individual's benefit count as income of the individual.

2. Excluded Income under 403-4 .

Treat income types defined in 403-4 section B. the way they are treated in that subsection with the following exceptions;

· State and local tax refunds are counted if the tax filer must claim that amount on his or her tax return.

· Supplemental Security Income, State Supplement payments, financial assistance paid under the TANF program or General Assistance program, or Refugee Cash Assistance do not count. However, other income of such household members counts if that individual's income is required to be counted.

· Income from any of the sources defined in 403-4 that are paid in the form of wages, and that the individual would have to report as earned income on a federal tax return is counted for the MAGI-based income determination (even if the individual does not expect to file a tax return.)

· People with a PASS plan. Taxable earned income of an individual who has a PASS plan are countable income if that person's income must be counted in the MAGI determination,

· Food and Shelter. The value of food or shelter paid by an employer that the individual must report as taxable income is countable.

3. Net rental income. Count the net amount of rental income a person receives. The net amount is the gross amount minus the allowable expenses ( 403-5 ).

4. Cash Gifts. All cash received by a tax dependent FROM a tax filer is countable unearned income if all the following apply.

· The cash is received from the tax filer who is claiming the individual on their taxes;

· The individual is not the spouse or child of the tax filer; and

· The average, recurring cash is more than $300.00 per month.

5. Inheritances. Count only the amount of an inheritance that an individual must include as income on his or her tax return. This includes proceeds from life insurance or other death benefits. (Most inheritances do not count as income to the person who inherits the funds.)

6. Interest or dividends. These are countable income for MAGI as shown in 450-1 . Interest earned from a sales contract would be countable income as well.

7. Royalties. Individuals must report the net amount of royalties they earn which may come from the sale of natural resources, literary, artistic or musical works, etc.

8. Personal Injury and TPL Settlements. If any portion of a settlement has to count as income and is paid in a lump sum payment, the payment only counts as income in the month received.

· If an individual receives a payment that is to reimburse medical costs, the amount received is not countable.

· If the person suffered a personal injury, and receives a settlement amount that is to account for pain and suffering, that amount is also not countable.

· If the person did not suffer a personal injury and receives a payment for emotional distress, that portion is countable income and is reported as "Other Income."

· If any portion of a settlement is to repay lost wages, that amount is countable income because the person would have to report it as wages on a tax return.

· If a person receives punitive damages, that portion is taxable and is reported as "Other Income."

9. Sickness and Injury Benefits (Including short-term and long-term disability insurance):

a. Premiums- Pre-tax insurance premiums made partially or completely by an employer are excluded from the employee’s income.

b. Sickness and Injury Payments-

i. When an employer pays for an illness or injury insurance plan, and the premiums were not counted as part of the employee’s income, the payments the employee receives are counted as countable income.

ii. If the employee paid the full amount of the plan (had to include the premium amount in their gross income), the payments the employee receives are not counted as income.

iii. If both the employee and the employer paid for the plan, only the percentage of the amount the employee receives, that is equivalent to the employer’s portion of the premium, will be counted as income to the employee.

Example: The employee pays $25 and the employer pays $75 per month toward the premium for a Short-Term Disability insurance plan. The employee normally makes $4000 gross income per month. The employee gets injured and they need to start using the policy. The insurance policy pays the employee 50% of their regular income: $2000 per month. Since the employer contributed 75% of the insurance premiums monthly, 75% of 2000.00, or 1500.00 would count as the individual’s short-term disability income.

iv. Car Insurance Payments - Disability benefits received for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy are not counted as income.

v. Accidental Death and Dismemberment Payments - Do not count as income compensation received for the following:

· loss of a body part or

· loss of use or function of the body or

· for permanent disfigurement.

10. Self-employment income. Count the individual's net self-employment income. This is the gross self-employment income minus the business expenses allowed by the IRS ( 405-3 ).

· If the individual must provide verification of self-employment income because there is no electronic match data or the electronic match data is not reasonably compatible with the client's statement, verify both the gross self-employment income and the business expenses.

· Accept the individual's ledgers, other bookkeeping system or tax return as verification of the allowable expenses. Only request receipts if the individual has no other record keeping system for expenses.

· The MAGI-based methodology cannot use the 40% deduction from gross income to account for business expenses.

11. Sale of Native American or Alaska Native Significant Items. Exclude payments resulting from the sale of items that have unique religious, spiritual, traditional or cultural significance to Native Americans or Alaska Natives. This exclusion applies to:

· Individuals who make and sell the above mentioned items as a means of self-employment.

· Individuals who own and sell the items but do not make them.

· The exclusion does not apply to the wages of employees of retail establishments who sell significant Native American items.

12. Alimony Payments.

Refer to 403-6 for policy regarding alimony income.

13. Lottery and Gambling Winnings.

a. Count qualified lottery and gambling winnings received as a lump sum as income of the person who receives the winnings using the following formula:

· Count winnings less than $80,000 in the month received;

· Count winnings of $80,000 but less than $90,000 as income over two months, with an equal amount counted in each month; and

· For every additional $10,000 add one month to the period over which total winnings are divided, and count as income in equal installments.

b. Count as income the full amount of the winnings in the month of receipt for all other household members, but do not count in future months.

c. Count the value of "non-cash" winnings like a car or boat, as income in the month received.

d. Before ending someone's eligibility, we must inform them of the opportunity to enroll in a plan through the Exchange, as well as the date when they will no longer be ineligible for Medicaid due to receipt of these winnings.

e. Hardship exemption: if an individual claims that the proration of the lottery winnings will present a hardship for their family, refer the case to BEP. A policy specialist will assess their hardship claim on a case by case basis.

1 4. Travel/Transportation Allowances and Reimbursements.

a. Transportation fringe benefits- Certain employment fringe benefits are excluded as income when their value is under $270 per month. They include:

· Transportation in a commuter highway vehicle, such as a van. At least 80% of the vehicle’s mileage must be reasonably expected to be:

o For transporting employees between one’s home and work place,

o On trips during which employees occupy at least half of the vehicle’s adult seating capacity (not less than six individuals), not including the driver.

· A transit pass , token, fare card, voucher entitling a person to ride public or private mass transit for free or at a reduced rate, or

· Qualified parking . This is parking provided to an employee at or near the employer's place of business. It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by car pool. It doesn't include parking at or near the employee's home.

b. Necessary travel expenses that are incurred while traveling away from home on a temporary job or assignment are reimbursable. An expense doesn’t have to be required to be considered necessary.

· If using one’s own vehicle see Table I for standard mileage rate for business.

· The individual must keep records of all the expenses they incur and any advances received from the employer. Those records can be kept in a log, diary, notebook, or any other written record to keep track of those expenses.

c. Cash reimbursements by employers for the previously mentioned expenses under a bona fide reimbursement arrangement are also excludable.