312.5 Income

When deciding on an individual’s eligibility in a MAGI MA category, the CAO must count the monthly earned and unearned income of every individual included in the individual’s tax household.

 [42 CFR- 435.603(d)

MA financial eligibility is based on current monthly household income.

State and federal laws exclude certain income. Excluded types and sources of income for MAGI-related MA are listed in this chapter. They are not counted in the MA financial eligibility decision.

 [42 CFR- 435.603(e)]

The individual must apply for or get any potential source of income available to him or her.  The individual must cooperate in obtaining the income, unless they can show good cause for not doing so.  If the individual is cooperating, eligibility may not be delayed for the individual or for any child who is apply or receiving MA.

Potential benefits include, but are not limited to, the following:

• Retirement benefits.

• Unemployment compensation.

• State or county retirement or disability benefits.

• Pensions and annuities.

312.51  Earned Income

The CAO must count payments for services as earned income.  Earned income includes, but is not limited to the following:

• Wages (including tip wages).

•  Salaries.

• Commissions.

• Bonuses.

• Severance pay.

• Self-employment.

• Lump Sum-earnings (only in the month it is received).

The CAO must get proof of all earned income and include the proof and the amount in the case record in accordance with Chapter 312.7.

 [42 CFR 435.948(a)(6)]

312.52 Unearned Income

The CAO must look at the total amount of unearned income in the household when determining MAGI-related eligibility.

Unearned income includes, but is not limited to, the following:

• Retirement benefits, private pensions and annuities.

• Unemployment Compensation.

• Retirement, Survivors, and Disability Insurance (RSDI) benefits, Railroad Retirement
  .

NOTE: RSDI income of a child or tax dependent may or may not count. (See Section 312.53.)

• Sick benefits.

• Union benefits.

• Dividends, royalties and interest posted or received in the calendar month.

• Alimony payments.

• Child’s unearned income that includes interest and dividends.

• Rental income when the property is managed by a third party.

• Prizes and awards.
  

NOTE:     A prize is a cash payment won in a contest, lottery, or game relating to luck. An individual usually gets an award because of a decision by a court, board of arbitration, or similar legal body. 

An individual may get a prize as a lump sum or in regular payments. If it is a lump sum, the CAO must consider the payment to be a resource, which is not considered for MAGI-MA.

 55 Pa. Code 140.61

The CAO must get proof of all unearned income and include the proof and the amount in the case record in accordance with Chapter 312.7..

 [42 CFR 435.948(a)(6)]

312.53 Income of Children and Tax Dependents

To determine if the MAGI-related income of a child or tax dependent is countable review these two factors:

• With whom the child or tax dependent resides;

• Whether the child or tax dependent would be required to file a tax return.

Child or Tax Dependent Living with Biological, Adoptive or Step-Parent

• If the child or tax dependent is required to file a tax return for the taxable year in which eligibility for MA is being determined, count all of the MAGI-related income

Example: Mary applies for MA for herself and her son, Marty (16). Mary will file taxes and will claim Marty as a dependent. Marty works part-time and his annual earnings exceed the tax filing threshold for a child or tax dependent. When determining eligibility for both Mary and Marty, Marty’s income is counted.

If the child or tax dependent is not required to file to a tax return for the taxable year in which eligibility for MA is being determined, exclude all of the MAGI-related income

 [42 CFR 435.603 (d)(2)(i)]

Example: Steve applies for MA for himself and his daughter, Amy (17). Neither Steve nor Amy will file taxes, and Amy will not be claimed as a dependent. Amy works part-time and has earnings under the tax filing threshold for a child or tax dependent. When determining eligibility for Steve and Amy, Amy’s income is not counted.

NOTE: The Social Security benefit and Railroad Retirement Tier 1 benefit do not count toward the unearned threshold. See Appendix F for Filing requirements for Tax Dependents.

Child or Tax Dependent Residing with Non-Parent

• When determining the child or tax dependent’s eligibility, count all of the child or tax dependent’s MAGI-related income (regardless of whether the child or tax dependent would be required to file a tax return).

Example: Pauline has custody of her granddaughter, Olivia (8) and is applying for MA for both herself and Olivia. Pauline will claim Olivia as a tax dependent. Olivia receives $775 per month in RSDI (Survivor’s). When determining Olivia’s eligibility, all of Olivia’s income will count in her determination.

• When determining eligibility for the Non-Parent tax filer, exclude the child or tax dependent’s MAGI-related income, if the Non-Parent plans to claim the child or tax dependent.

[42 CFR 435.603 (d)(2)(ii)]

Example: Pauline has custody of her granddaughter, Olivia (8) and is applying for MA for both herself and Olivia. Pauline will claim Olivia as a tax dependent. Olivia receives $775 per month in RSDI (Survivor’s). When determining Pauline’s eligibility, none of Olivia’s income will count in Pauline’s determination.

NOTE: In some situations, an adult can be claimed as a tax dependent.  See Appendix G for Tax Dependent Criteria.

312.54 Excluded Income

The CAO must not count income from certain sources when deciding whether an individual qualifies for MAGI-related MA.

The CAO must verify and record the reason for excluding the income. It may be necessary to verify the amount of excluded income.

The CAO must not count the following excluded income for MAGI-related MA: 

 [42 CFR 435.603(e)]

• Child Support.

• Veteran’s disability benefits.

• Worker’s Compensation.

• Public Assistance Benefit Payments including but not limited to:

• SSI

• Temporary Assistance for Needy Families (TANF)
  

• Depreciation of business expenses.

• A lump sum (only counted as income in the month received). 

 [42 CFR 435.603(e)(1)]

• Scholarships, awards or fellowship grants used for education purposes and not for living expenses.
  

• American Indian or Alaska Native income:

•    Distributions from any property held in trust, subject to Federal restrictions, located within the most recent boundaries of a prior Federal reservation, or otherwise under the supervision of the Secretary of the Interior.

 [42 CFR 435.603(e)(3)(ii)]

•    Distributions and payments from rents, leases, rights of way, royalties, usage rights, or natural resource extraction and harvest from;

• Rights of ownership or possession of any land located within the most recent boundaries of a prior Federal reservation, or otherwise under the supervision of the Secretary of the Interior. 

 [42 CFR 435.603(e)(3)(iii)(A)]]

• Federally protected rights regarding off-reservation hunting, fishing, gathering, or usage of natural resources.

[42 CFR 435.603(e)(3)(iii)(B)]

• Distributions resulting from real property ownership interests related to natural resources and improvements;

• Located on or near a reservation or within the most recent boundaries of a prior Federal reservation, or

• Resulting from the exercise of federally-protected rights relating to such real property ownership interests

•  Payments resulting from ownership interests in or usage rights to items that have unique religious, spiritual, traditional, or cultural significance or rights that support subsistence or a traditional lifestyle according to applicable Tribal Law or custom.

• Student financial assistance provided under the Bureau of Indian Affairs education programs.

Issued September 19, 2014