Income is classified as earned or unearned. Voluntary deductions from income are considered to have been received by the individual (e.g., Medicare premiums, credit union shares, etc.). The income guidelines in this section are general guidelines used in determining income eligibility for children and families (i.e., PW, U-18, ARKids, AFDC Medically Needy, Foster Care). These guidelines are not used in AABD Medicaid.

The following sources of income are not considered in determining eligibility for family Medicaid.

1. Home Energy Assistance Program (HEAP) payments.
2. TEA cash payments or reimbursements for participating in an assigned work activity.
3. Supplemental Security Income (SSI) benefits and other income of SSI recipients/eligibles. This includes the income of individuals whose Medicaid continues after SSI stops, certified in the following categories:

1. Disabled Widows or Widowers who would be eligible for SSI if the 1984 Reduction Factor Increase and any subsequent COLAS were disregarded ([MS 2045]) (Categories 11, 31, and 41).
2. Disabled Widows or Widowers over age 60 (Categories 31 and 41) ([MS 2046]).
3. Lynch Rank Eligibles (Categories 11, 31 or 41) ([MS 2030]).
4. Disabled Widows, Widowers, and Disabled Surviving Divorced Spouses (Categories 31 or 41) ([MS 2049].
5. Disabled Adult Children (Categories 31 or 41) ([MS 2050]).

4. Assistance, including educational assistance, from other agencies and organizations to the extent that such payments are not intended to cover food, clothing or shelter with the exception of funds intended for special clothing needed for educational purposes.

Examples include:

1. Basic Education Opportunity Grant (BEOG or PELL)
2. Supplemental Educational Opportunity Grants (SEOG)
3. College Work Study
4. Supplemental State Income Grant (SSIG)

   5.   The Food Stamp bonus coupon allotment.

6. The value of U.S. Department of Agriculture Donated Foods.Items of food produced and consumed by the applicant or other persons in the household.
7. Payments for supporting services or reimbursement of out-of-pocket expenses made to individual volunteers serving as foster grandparents, senior health aides, or senior companions and to persons serving in the Service Corps of Retired Executives (SCORE) and Active Corps of Executives (ACE) and any other programs under Titles II and III, pursuant to Section 418 of Public Law 93-113.
8. Payments to VISTA volunteers under Title I of Public Law 93-113, pursuant to Section 404 (g) of Public Law 93-113.
9. The value of supplemental Food Stamp assistance received under the Child Nutrition Act of 1966, as amended, and the special food service program for children under the National School Lunch Act, as amended. (P. L. 92-443 and P. L. 93-150)
10. Payments made directly to landlords and other vendors.
11. Small cash gifts of $30 or less per person made for a specific occasion (e.g., birthday, Christmas, graduation, etc.).
12. Income tax refunds. That portion of a tax refund due to an Earned Income Credit is totally disregarded as income or resources. All other tax refunds are considered as a resource.
13. The first $50 of the total child support paid directly to the assistance unit and/or collected by the OCSE.
14. Child support refunds paid by the Office of Child Support Enforcement which represents several months of the $50 disregard (e.g., $150 refund for 3 past months of collections).
15. Payments made from the Agent Orange Settlement Fund or any other fund established pursuant to the settlement in the In Re Agent Orange product liability litigation retroactive to January 1, 1989.
16. Governmental (federal, state, or local) rent and housing subsidies, including payments made directly to the applicant/recipient for housing or utility costs, e.g., HUD utility allowances.
17. Bona fide loans from any source (e.g., bank, any other establishment engaged in the business of making loans, or an individual).

A loan is considered bona fide if it meets any of the following conditions.

1. There is a written agreement to repay the money within a specified time, or it was obtained from an individual or establishment engaged in the business of making loans, or
2. The borrower acknowledges the obligation to repay (with or without interest); or
3. The borrower expresses intent to repay either by pledging real or personal property or anticipated income. It is not necessary that the loan be secured solely by specific items of collateral such as real or personal property.  It is only necessary that the borrower express the intent to repay the loan when funds become available in the future and indicate that repayment of the loan will begin when future anticipated income is received.

NOTE: Interest earned on the proceeds of a loan will be counted as unearned income in the month of receipt.

18. Major disaster and emergency payments made to individuals and families under the Disaster Relief Act of 1974 and comparable disaster assistance provided by States, local governments, and disaster assistance organizations.
19. Any type of income which must be disregarded according to federal or state statute. If there is a question to whether a particular payment may be disregarded, the pertinent documents concerning the payment should be submitted to the Office of Program Planning and Development, Slot S332 for a determination. This information should include the specific federal or state statute under which it is believed the disregard treatment is required.

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Earned income includes wages, salaries, tips, commissions, and any other payment, including in-kind earned income, resulting from labor or personal service.

Earned Income Credit (EIC) payments are totally disregarded as income or resources. This disregard applies equally to advance EIC payments which are paid with an employee’s regular earnings and to EIC refunds received as lump sum payments.

In-kind earned income exists when a person is employed by an individual or business but is paid an in-kind benefit rather than wages (e.g., free rent, groceries, etc.). The value of the in-kind benefit will be considered gross earned income.

Some categories of family Medicaid do not require verification of earnings. The self-declaration procedures for these categories are specified in the policy for the individual category. If verification is required for a category, the following verification procedures will apply.

Verification of earnings from employment will be by check stubs, pay slips, or collateral contact with the employer. Sufficient verification must be obtained so that the actual income of the employee can be determined. The worker should not automatically assume that one check stub accurately reflects earnings for an entire month. Verification of payment for the last 30 days will be required. If a person is paid weekly, then the latest 4 consecutive check stubs will be required. If the person is paid every other week or twice a month, then the latest 2 check stubs will be required, and if paid monthly, then the latest check stub will be required. If the client does not have the required verification, then verification from the employer will be required.

Exception: For cases in which the individual has recently started employment and 30 days of verification is not available, the caseworker will compute the income from the best information available. Verification of all, if any, paychecks already received by the individual should be obtained and/or an employer’s statement of anticipated earnings (e.g., hourly wage, number of hours expected to work/week, etc.).

Verification of earnings from self-employment will be by Federal Income Tax Return, purchase, sales, and account books or by any other source which establishes the source and amount of income. As soon as an individual is known to be engaged in a farming, business, or other self-employment enterprise, he will be advised of the necessity of keeping accurate records so that his income can be determined.

Verification of in-kind earned income (e.g., free rent, groceries, etc.) will be obtained from the employer. The verification must include the value of the in-kind benefit (e.g., the rent amount the client would otherwise pay, the cost of groceries provided, etc.) and how often it is provided (e.g., monthly, weekly, etc.). If the amount fluctuates from week to week or month to month, then verification of the in-kind earned income paid during the last 2 months should be obtained.

The gross earned income amount which must be included in the budget is an estimate of the amount which the individual can reasonably be expected to have available in the next month(s).

The estimate of monthly earnings is usually based on the assumption that the earnings received

in the most recent month are reflective of the earnings which will be received in the current and following months. However, in some situations, this assumption will not hold true. Therefore, the estimate of monthly earnings must be based on the latest information which is available at the time the client is interviewed, or at the time verification of earnings is requested in writing.

In most situations, the estimate will be an average of the latest months’ gross earnings. In situations, though, in which the client started employment within the last month, or in which a change (e.g., pay raise, change in number of hours worked, etc.) has occurred within the last month, another method which more accurately reflects the current earnings will be used.

The first step in computing monthly gross earned income of an employee is to determine the average gross pay per pay period. Any advance EIC payments paid to the employee with his regular earnings will be excluded. The average gross monthly earnings are then determined by multiplying the average pay per pay period by the appropriate multiplier for the pay frequency (e.g., weekly, bi-weekly, etc.). The chart below shows for each pay frequency the appropriate multiplier for determining gross monthly earnings.

Pay Frequency Multiplier

Weekly 4.334

Bi-Weekly 2.167

Semi-Monthly 2

Monthly 1

More Often than Weekly None

If the employee is paid more frequently than weekly (e.g., daily), the worker will determine the monthly gross for the latest calendar month by adding all the pay checks received in the month.

In some situations, the above method of obtaining an average pay per pay period cannot be used because the client has not yet worked a full month, or a change has occurred within the past month which has affected current earnings. In these situations, another method which will give a more accurate reflection of the client’s earnings will be used to obtain an average pay per pay period. Therefore, the caseworker should carefully consider the method to be used to ensure that it will give the most accurate reflection of the client’s monthly earnings and document the case narrative accordingly.

Like employee earnings, the monthly amount of self-employment earnings which must be included in the budget is the Agency’s best estimate of earned income which will be available to the individual in a month or months. However, self-employment earnings are usually not as predictable as employee earnings and are often received less frequently than monthly. Therefore, in most situations, a time period longer than one month will be used to determine average monthly self-employment earnings.

Costs directly related to producing the income are subtracted from the self-employment gross before the monthly earnings are included in the budget. Only those costs without which the income could not be produced may be subtracted. Such costs may not include depreciation, personal business and entertainment expenses, personal transportation, purchase of capital equipment and payments on the principal of loans for capital assets or durable goods. For room and board income, a standard $70 per roomer/boarder will be subtracted as the costs related to producing the income.

1. Income Received Less Frequently Than Monthly (Quarterly, Annually, Etc.)

Income of this type may include farming (including soil bank and related diversion payments), cattle ranching, business, or any other type of self-employment enterprise in which the income resulting from work performed over a period of time is received at one time rather than during the period in which the work is being performed.

The first step in computing monthly gross income in these situations is to calculate the gross annual income for the previous calendar year. If available, the individual’s Federal Income Tax Return may be used to determine the annual income and the amount of costs related to producing the income. The annual allowable costs are subtracted from the gross annual income. The remainder is then divided by 12 to arrive at an average monthly amount. This figure is treated as gross earned income in the budget.

If the previous year’s income is not a fair reflection of the current year’s income, the worker will determine, by averaging recent months or other means, an amount which will fairly reflect the current year’s income. If the individual has been self-employed in the current enterprise for less than one year, the case worker will average the income received to date to project future income. The worker will document the case record to clearly reflect the manner in which the income was determined and the justification for considering it a fair reflection of the current year’s income.

2. Income Received Monthly or More Frequently (Weekly, Daily, Etc.)

Income of this type may include room and board, babysitting, sales from Avon, Tupperware, etc., or any other type of self-employment in which the income is received at least monthly as the work is performed.

The first step in computing monthly gross income in these situations is to determine an average monthly gross based on the latest two months’ income. Verification of the latest two months’ gross income and costs related to producing the income will be obtained. After allowable self-employment costs are subtracted from the monthly gross, an average of the latest two months will be determined to arrive at the monthly gross earnings which will be included in the budget.

NOTE: A standard $70 per roomer/boarder will be subtracted as the allowable costs for producing room and board income.

If the latest two month’s income is not a fair reflection of the individual’s current income, then another method to determine the average monthly income will be used (e.g., an average of more than two months’ income). The worker will document the case record to clearly reflect the manner in which the income was determined and the justification for considering it a fair reflection of current income.