MAGI-related MA and TANF-related Earned Income Incentive Deduction, PMA19194361 (Published January 18, 2019)
The earned income deductions for TANF-related categories apply to the following persons: 55 Pa. Code § 181.312
A TC/TU person.
A TD parent or stepparent who lives with a child who is receiving TANF, MA or SSI.
A TD caretaker who has care and control of a child who is under age 21 and is receiving TANF, MA, or SSI.
The earned income deductions for GA-related categories apply to all other TD persons.
The deductions from unearned income are the same for TANF-related and GA-related categories.
Each employed individual in a TANF-related category will receive deductions from gross earned income, in the following order:
1. Work expenses (see Section 361.211).
2. Personal expenses (see Section 361.212).
NOTE: If the total amount of the individual's work expenses and personal expenses is less than $120, the CAO must allow a minimum deduction of $120 for work and personal expenses.
3. Earned income incentive deduction, if the individual is qualified to receive the incentive (see Section 361.213).
4. Dependent care expenses (see Section 361.214).
Federal income tax.
Social Security tax.
State income tax.
Wage taxes, such as local and municipal taxes.
Union dues, if they are required.
The CAO must allow the actual expenses deducted by the employer or paid by the person.
Reminder: Each individual is allowed a deduction of at least $120 for work and personal expenses, even if the total amount of the person’s work and personal expenses is less than $120.
Expenses for transportation to and from a job are allowable personal expense deductions. The CAO must determine the transportation costs in one of these ways:
Use the actual cost for public transportation or travel in another person’s car.
Allow 12 cents per mile plus up to $30 for the monthly payment on the person’s car used for work.
Use the actual costs of
operating a vehicle plus up to $30 for the monthly payment on
the person’s vehicle used for work. The CAO must compute the actual
costs as follows:
1. Add the monthly costs for gas, oil, tires, repairs, insurance, and other expenses.
2. Divide the total expenses by the monthly total of miles traveled to obtain the cost per mile.
3. Multiply the cost per mile by the number of miles traveled to and from work during the month.
Reminder: Each individual is allowed a deduction of at least $120 for work and personal expenses, even if the total amount of the person’s work and personal expenses is less than $120.
The CAO must allow an earned income incentive deduction
of 50% of the remaining earned income to each individual who is employed
and who qualifies for the incentive. There is no time limit with receiving
the earned income incentive deduction for MNO.
An employed individual qualifies for the incentive if he or she is any of the following:
A recipient of MNO in the TC or TU category.
A recipient of MNO in the TD category whose child or stepchild (including an unborn child) lives in the household and receives TANF, SSI or MA.
A recipient of MNO in the TD category who has care and control of a child under the age of 21 who receives TANF, SSI or MA.
An applicant who has received cash assistance or MA in a TANF-related category (including Healthy Beginnings) in one of the four calendar months before the month when he or she applied.
An applicant who has received cash assistance or MA in a GA-related category in one of the four calendar months before the month when he or she applied and whose child or stepchild in the household was receiving TANF, MA or SSI at the same time
An applicant who does not
meet any of the above conditions but who is eligible through the incentive
eligibility test
The CAO must apply the incentive eligibility test at application,
as follows:
1. Determine the gross earned and unearned income of each employed applicant in the month when he or she applies.
2. Subtract the work expenses, personal expenses and dependent care expenses from the gross earned income.
3. From the gross unearned income, subtract any expenses that the applicant must pay to receive the income. (See Section 361.23, Unearned Income Deductions—TANF/GA-Related.)
4. Add the employed applicant's net earned and net unearned income.
5. Add the applicant's total net income to the countable net income of the other applicant/recipient group members.
NOTE: If another applicant/recipient group member is employed, allow work expenses, personal expenses, dependent care expenses and the earned income incentive deduction for that individual if he or she is qualified to receive the incentive
6. Compare the total net income of the applicant group with the Standard of Need in Appendix A. Include the unborn child of a pregnant woman who is included in the applicant/recipient group.
If the net income is equal to or less than the Standard of Need, the individual is eligible for the earned income incentive deduction.
If the net income is more
than the Standard of Need, the individual is not eligible for the
earned income incentive deduction. Determine the person’s eligibility
for MNO without the incentive.
If the individual is eligible for the earned income incentive, it will be given to the applicant/recipient group.
If more than one individual in the applicant/recipient
group is employed, the CAO must apply the incentive deduction to the
income of each individual who is qualified to receive the incentive.
The incentive is given for the whole six-month period.
The CAO must review whether an individual is qualified for the incentive at each renewal and whenever a change takes place.
An employed individual can receive a deduction for the work-related cost of care for a dependent child or a sick or incapacitated individual if all of the following conditions are met:
The child or incapacitated individual lives with the employed person.
NOTE: The child or incapacitated individual does not have to be a recipient.
Care cannot be provided by other family members.
No other reasonable plan
can be made for the dependent’s care.
There is no limit on childcare
expenses as long as they are work related. If the CAO sees that a part
of the dependent care expenses is not work related, it must determine
what part of the expenses is for work related hours.
NOTE: For dependent care expenses, the caseworker must use the stated, unproven amount if it is less than or equal to the NMP limit. If the amount is over the NMP limit and the caseworker thinks the amount is “questionable,” the caseworker can ask for proof of the dependent care expense.
Example: Ms. Reese pays $150 a week for childcare while she works and goes to college part-time. The baby-sitter cares for the child for nine hours a day, five days a week, while Ms. Reese works. The baby-sitter also cares for the child a total of five hours a week while Ms. Reese goes to college. Childcare is provided for a total of 50 hours a week. Childcare is provided for 45 hours while Ms. Reese works. The total hourly rate is determined to be $3 an hour ($150 ÷ 50 hours). The total allowable childcare expense is $135 a week (45 hours × $3 an hour).
Each employed individual in the TD category will receive
deductions from earned income in the following order:
1. Work expenses (see Section 361.222).
2. Personal expenses (see Section 361.223).
3. Earned income incentive deduction, if the individual is qualified to receive the incentive and needs the incentive to be eligible for MA (see Section 361.221).
4. Dependent care expenses (see Section 361.224).
The CAO must allow an earned income incentive deduction of $20 plus 50% of the next $60 of earned income to each employed individual who qualifies for the incentive. There is no time limit on when the individual can receive the earned income incentive deduction for MNO.
An employed individual qualifies for the incentive if he or she is:
A recipient of MNO in the TD category.
An applicant who has received cash assistance or MA in a GA-related category in one of the four calendar months before the month of application.
An applicant who does not
meet any of the above conditions but who is eligible through the incentive
eligibility test.
The CAO must apply the incentive eligibility test as follows:
1. Determine the gross earned and unearned income of each employed applicant in the month when he or she applies.
2. Subtract the work expenses, personal expenses and dependent care expenses from the gross earned income.
3. From the gross unearned income, subtract any expenses the individual must pay to receive the income. (See Section 361.23, Unearned Income Deductions—TANF/GA-Related.)
4. Add the employed applicant's net earned and net unearned income.
5. Add the applicant's total net income to the countable
net income of the other applicant/recipient group members.
NOTE:
If another applicant/recipient
group member is employed, allow work expenses, personal expenses,
dependent care expenses and the earned income incentive deduction if that
individual is qualified to receive the incentive.
6. Compare the total net income of the applicant group with the Standard of Need in Appendix A. Include the unborn child of a pregnant woman who is included in the applicant/recipient group.
If the net income is equal to or less than the Standard of Need, the individual is eligible for the earned income incentive deduction.
If the net income is more
than the Standard of Need, the individual is not eligible for the
earned income incentive deduction. Determine the person’s eligibility
for MNO without the incentive
.
If the individual is eligible for the earned income incentive, it will be given to the applicant/recipient group.
The incentive is given for the whole six-month period.
Important: If possible, the CAO must determine a person’s eligibility starting with the earliest retroactive month in which there was a medical need. If the individual is eligible in a retroactive month, the CAO must consider the individual to be a recipient in that month when determining eligibility for the incentive in future months.
The CAO must review whether an individual is qualified for the incentive at each renewal and whenever a change takes place.
An individual can receive deductions for the following actual work expenses:
Federal income tax.
Social Security tax.
State income tax.
Wage taxes, such as local and municipal taxes.
Union dues, if they are required.
There is no minimum deduction. The CAO must allow the actual expenses deducted by the employer or paid by the person.
Expenses for transportation to and from work are allowable personal expense deductions. The CAO must determine transportation costs in one of the following ways:
Use the actual cost for public transportation or travel in another person’s car.
Allow 12 cents per mile plus up to $30 for the monthly payment on the person’s car used for work.
Use the actual costs of
operating a vehicle plus up to $30 for the monthly payment
on the person’s vehicle used for work. The CAO must compute the actual
costs as follows:
1. Add up the monthly costs for gas, oil, tires, repairs, insurance and other expenses.
2. Divide the total expenses by the monthly total number of miles traveled to obtain the cost per mile.
3. Multiply the cost per mile by the number of miles traveled to and from work during the month.
An employed individual can receive a deduction for the work-related cost of care for a dependent child or a sick or incapacitated individual if all of the following conditions are met:
The child or incapacitated individual lives with the person.
NOTE: The child or incapacitated individual does not have to be an MA recipient.
Care cannot be provided by other family members.
No other reasonable plan
can be made for the dependent’s care.
There is no limit on childcare
expenses as long as they are work related. If the CAO sees that a part
of the dependent care expenses is not work-related,
it must determine what part of the expenses is for work related hours.
NOTE:
For dependent care expenses, the caseworker must use the stated,
unproven amount if it is less than or equal to the NMP limit. If the amount
is over the limit, the caseworker can ask for proof of the dependent care
expense.
Example: Ms. Randolph pays $150 a week for childcare while she works and goes to college part-time. The baby-sitter cares for the child for nine hours a day, five days a week, while Ms. Randolph works. The baby-sitter also cares for the child a total of five hours a week while Ms. Randolph goes to college. Childcare is provided for a total of 50 hours a week. Childcare is provided for 45 hours while Ms. Randolph works. The total hourly rate is determined to be $3 an hour ($150 ÷ 50 hours). The total allowable childcare expense is $135 a week (45 hours × $3 an hour).
Each individual with countable unearned income can receive deductions for expenses needed to be eligible for or to receive the income. These expenses include, but are not limited to, the following:
Bank fees for an account that is used for the unearned income.
This includes the cost of standard checks, minimum-balance and per check fees and ATM fees.
Attorney fees.
Court costs.
Transportation costs, including
costs of obtaining the unearned income.
This can be the actual cost of public transportation or the costs of using another person’s car. If an individual uses their own car, the CAO must use the current mileage reimbursement rate established by the U.S. General Services Administration (GSA) (currently 0.67 cents per mile). Effective: January 1, 2024.
The replacement cost of
real or
personal
property that is covered by a personal damage award or
insurance settlement.
The CAO must deduct replacement costs as follows:
Deduct the proven cost that it would take to repair the property.
For the replacement cost of the property, deduct the largest of the following:
The value set by the individual paying the award or by the insurance company.
The value set at the last renewal before the damage minus the value after the damage.
The value that would have been assigned, such as the fair market value of a vehicle.
The proven value of the property at the time of the loss.
Expenses directly related to the type of income, such as charges for burial from an insurance benefit or medical expenses from a personal injury award.
Expenses related to receiving rental income (see Section 361.4, Deductions from Unearned Rental Income).
The amount of delayed or retroactive benefits that must by paid to DHS under a reimbursement agreement.
Updated January 24, 2024, Replacing August 12, 2022