312.5 Income

When deciding on an individual’s eligibility in a MAGI MA-related 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 in most scenarios. For MA MAGI, some determinations must be reviewed for eligibility based on an annualized calculation. (See Section 312.53, Annualized Income)  

 

Counted and excluded income for MAGI is based on what is included in Adjusted Gross Income (AGI) when filing a tax return with the Internal Revenue Service (IRS).  The following income types are not typically included in AGI, but are considered countable for MA purposes:

 

NOTE:  To determine if RSDI is counted for a child or tax dependent see (Section 312.54, Income of Children and Tax Dependents).  

 

 

Certain 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:

 

 

NOTE:  Early retirement Social Security benefits are considered a potential benefit when the individual reaches age 62.

 

 

312.51  Earned Income

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

 

 

NOTE:  Because MAGI uses IRS guidelines for determining household income, all expenses reported on the household's 1041 Schedule C (Profit or Loss from Business) are allowable deductions for MAGI

 

 

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

Section 312.71, Verification Requirements.

 

 [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:

 

NOTE: RSDI income of a child or tax dependent may or may not count for MAGI-related MA.  (See Section 312.54, Income of Children and Tax Dependents).

 

 

NOTE:  If rental property is not managed by third party consider the income self-employment.

 

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 receive a prize as a lump sum or in regular payments.

 55 Pa. Code 140.61

 

Example:  A father gives $200 every month to his 25 year old son who lives separately.  The father does not claim the son as a tax dependent.  The father does not expect his son to repay this money.  Count $200 as the son's monthly unearned income.

 

 

Example:  A daughter gives $200 every month to her elderly mother, who she claims as a tax dependent.  The daughter does not expect her mother to repay this money.  Count $150 as the mother's unearned monthly income.

 

NOTE:  Cash support is money received on a frequent and regular basis with not expectation of repayment.

 

Child support is not considered cash support.    

 

The CAO must verify all unearned income and include the proof and the amount in the case record in accordance with

Section 312.71, Verification Requirements

 [42 CFR 435.948(a)(6)]

 

312.53 Annualized Income

If a MAGI budget group's monthly income exceeds the monthly income limit and the income is expected to decrease or terminate, an annualized income calculation must be performed.  The expected decrease or termination must be verified in accordance with Section 312.71 Verification Requirements and Section 312.72 Reasonable Compatibility.  

42 CFR 435.603(h)(3)

 

To determine annual household income, total the household's countable earned and unearned income from January 1 through December 31 of the year in which the eligibility is being determined and compare to the annual income limit.

 

Example:  Mary (37) is a single adult who applies for health care.  She works part-time as a school bus driver.  Her current monthly income of $1,360 exceeds the 133% monthly income limit (even with the 5% income disregard applied) for health care coverage (1 person 2015 household limit is $1,305 per month and the 5% disregard is $49.05).  However, Mary indicates that she does not work at all for the months of June, July and August each year and has provided verification from her employer.  Her annual income beginning January 1 and ending December 31 would be $12,240 ($1,360 x 9 months).  The 133% annual income limit for a one person household for 2015 is $15,655.  When her income is annualized, it is under the 133% annual limit and Mary is eligible for health care coverage. 

Example:  John (46) is applying for healthcare for himself and his son, Doug (14).  He submits his application to the CAO on June 29. John was working full-time up until this point.  He had an accident at home and indicates that he will be out of work until October 1.  John’s monthly wages were $2,000 per month and he received his most recent pay on June 26.  He has verification from his employer that he will not receive another pay until he returns to work.  John’s income in the application month exceeds the 133% monthly income limit (even with the 5% income disregard applied) for health care coverage (2 person 2015 household limit is $1,766 per month and the 5% disregard is $66.40).  His annual income beginning January 1 and ending December 31 would be $18,000 ($2,000 x 9 months).  The 133% annual income limit for a two person household for 2015 is $21,187.  Both John and Doug would qualify for health care.

 

312.54  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:

 

 

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

 

 

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.

 


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

 

 

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.

 

 

 

 

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.

 

312.55 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)]

 

 

 

 [42 CFR 435.603(e)(1)]

 

NOTE:  To be considered a gift, a monetary gift must be infrequent and nonrecurring

.

 

A difficulty of care payment is money paid to a non-relative or relative who is under contract with a public or private agency to give care to a person with a mental disability in his or her home.  These payments come under other program titles, including the following:  

 

 

NOTE:  A Family Living Services payment may come as one payment or as two payments (one for services and one for room and board).

 

 

 

NOTE:  Care providers do not have to be related to the are recipient in order for the income exclusion to apply.  

   

 

 [42 CFR 435.603(e)(3)(ii)

]

 [42 CFR 435.603(e)(3)(iii)(A)]]

 

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

 

 

 

 

 

Updated May 19, 2016   Issued September 19, 2014