Effective Date: August 1, 2024

Previous Policy

A. Individual Statement of Income

Calculate the client's statement of monthly income for each individual in the MAGI household for CHIP whose income must be counted as per 440-5. Each person's household composition may not be the same which can result in different countable income for each family member.

Follow the budgeting policies in 435 to arrive at the best estimate possible of monthly income.

1. Calculate gross income . (See sec. 435 for budgeting policy)

a. Add all income reported by the individual as per 440-5. Do not count income excluded under 417 and 419-4.

i. Some income may be prorated over the certification period when the income is expected but is not received monthly. For example, include seasonal income that has a history of being received and is expected in the future.

ii. Income that will be received for only a set period of time, such as unemployment income, will be prorated over the certification period to determine a monthly amount.

iii. Count a lump sum payment only in the month it is received. (Sec. 421)

b. The result is the gross countable income.

2. Deductions from the gross income.

Applicants or recipients must report whether they anticipate having any of the following expenses and the amount of those expenses. An individual does not have to file a tax return to receive a deduction from income for these expenses. These expenses are what the individual expects for the tax year in which the agency is making a CHIP eligibility determination.

Subtract from the gross countable income the following expenses reported by the individual. (IRS form numbers are included only as a possible resource if the agency must request verification from the individual.)

a. Educator expenses up to the limit of $250 per educator per tax year

i. The individual must be an educator.

ii. If the spouse is also an educator, they can each claim up to $250 a year.

b. Contribution to a traditional IRA.

· The individual or spouse must have earned income to take this deduction.

c. Alimony paid by the individual. Allow a deduction for alimony paid by an individual only if the divorce or separation agreement was in place before January 1, 2019. Do not allow a deduction of alimony payments when the divorce or separation agreement was created or modified on or after January 1, 2019.

d. Certain business expenses of reservists, performing artists, and fee-basis government officials. (Form 2106 or 2106-EZ)

e. Health savings account deduction (Form 8889)

f. Moving expenses (Form 3903)

g. Deductible part of self-employment tax (Schedule SE)

h. Self-employed SEP, SIMPLE, and qualified plans

i. Self-employed health insurance deduction

j. Penalty on early withdrawal of savings

k. Student loan interest deduction

Subtract the total deductions for each individual (or couple if filing jointly) from the individual's (or couple's) total gross income. This is the MAGI-based income for that individual.

3. Total Household Income

a. To determine the total household income for each individual, add together the MAGI-based income for each person in that individual's MAGI household whose income must be counted to determine eligibility. (See 440-1 Whose Income Counts for the MAGI Household)

b. Use this amount as the client's statement of income for the compatibility test to decide if the individual is eligible for CHIP.

B. Income from Electronic Data Match

To determine the countable income based on information available through electronic data matches, add income found through available electronic data matches. Use the same budgeting methodology for electronic data match (as applicable) as used to arrive at the best estimate of income using client statement.

1. Earned income:

a. Use the most current available earned income data match as long as it is from the same employer reported by the individual.

b. If the employer does not match what the individual has reported, do not use that source.

c. For earned income, follow the budgeting process defined in 430 to derive a monthly income amount.

2. Unearned income:

a. Use Unemployment Insurance income found on the data match. Prorate the total remaining UI payments over the certification period to arrive at a monthly amount.

b. Use the gross Social Security monthly benefit income found on the data match.

c. If alimony income is available through the ORS data match, use that amount.

Follow the budgeting policies in 430 to arrive at the best estimate of income.

Subtract any allowable expenses from A.2. reported by the individual from the individual's gross countable income determined through electronic data match. This is the MAGI-based income from electronic data match. Add income from all individuals in the individual's MAGI household whose income must be counted to arrive at the total household income for that individual.

C. Reasonably compatible test

1. After calculating the income based on client statement and the income based on electronic data matches, determine if the amounts are reasonably compatible.

a. For a CHIP eligibility decision, income is reasonably compatible if both the client's statement of income and the income based on electronic data match are above the income limit for the MAGI-based Child Medicaid coverage group, and are equal to, below or above the income standard for CHIP.

b. If income is reasonably compatible for a CHIP eligibility decision, do not request verification from the individual. Proceed with the eligibility determination.

c. If eligible for CHIP, the income from the electronic data match will be used to determine the CHIP plan.

Example : The individual reports monthly income of $2900. They have a household size of 4. The electronic data match verifies income of $3200 per month. Client's statement indicates CHIP plan B. The electronic data match indicates CHIP plan C. The worker uses the electronically verified amount of $3200.

2. If income is not reasonably compatible, request the needed verification of income. (See Sec. 705 .) Income is not reasonably compatible for CHIP if the client's statement and the data match income fall one above and one below the Child Medicaid income limit, even if both income amounts are below the maximum CHIP income limit. In this case, request verification from the individual to decide if the child is really Medicaid eligible or CHIP eligible.

a. For example, the income is not reasonably compatible when looking at Child Medicaid, but both amounts are below the maximum CHIP income limit.

b. Request verification of income before denying eligibility for Medicaid.

c. If the verification is not received by the end of the application or review period or the due date (whichever is longer), deny eligibility due to incomplete verification.

d. If verification is received on time, use the verified income amount to determine if the child is eligible for either Medicaid or CHIP.

3. If both income amounts are above the Child Medicaid income limit, but one is above and one is below the maximum CHIP income limit, the amounts are also not reasonably compatible. Request verification of income from the individual. Use the verified income amount to determine the child's eligibility.

4. If the individual exceeds the income limit for CHIP Plan C after the reasonable compatibility test is completed, deduct an amount equal to 5% of the 100% of the FPL for the applicable household size from the income amounts determined. If the individual meets the income limit with the 5% disregard, the individual qualifies for CHIP Plan C.