Medicaid Policy
Medicaid Policy
A. For all programs, sources of earned income include (but are not limited to):
1. Wages and salaries. This includes holiday, sick and vacation pay that the employer pays. Payments to employees paid on a contractual basis that is not self-employment are treated like wages or salaries. (See 413-3 for information about counting deductions from income. See 431-1 about deductions for health insurance premiums.)
a. Wage advances are counted as income when received, not when the paycheck is received showing a deduction for the advance.
b. Deferred wages are wages that are received later than their normal payment date. Examples of wages that may be deferred include vacation pay, dismissal or severance pay, back pay, bonuses, etc.
For non-MAGI-based programs:
i. Count deferred wages as income in the month they could have been received if they are deferred by choice or by mutual agreement with the employer.
ii. Count wages that are deferred for reasons beyond the control of the employee when the earned income is actually received.
For MAGI-based programs:
i. If the deferred wages are taxable income and will be received sometime during the certification period, count the income as part of the individual's income. Prorate the amount over the certification period.
ii. If an individual's wages are deferred by depositing them into a 401K account, or into a non-taxable account like a Health Savings Account, those wages would not be counted in the household taxable income.
2. Commissions.
3. Tips as reported by the individual. Do not count allocated tips as income. The allocated amount is the amount reported by the employer to IRS based on gross receipts of the business.
4. Training incentive payments and work allowances. Determine the source of the payments to decide if it is counted as income.
5. Profits received from self-employment, including earnings over a period of time for which payment is received at one given time. Examples include payment to independent contractors, poultry raised for sale or bought for resale. (See 419-2 for information about types of businesses; and 419-3 for information about determining countable self-employment income.)
6. Capital gains received from the sale or transfer of assets used in self-employment. This includes gains received from the sale of (a) farmland or depreciable farm equipment; (b) livestock held for breeding, sport or dairy purposes; (c) securities; (d) real estate; or (e) other investment property.
7. Rental Income. Rental income is countable income (415-4 and 419-2).
8. Severance Pay. Severance pay, including the cash out of holiday, vacation, and sick pay received when a person terminates a job, counts in the following way.
a. For non-MAGI based programs
Treat severance pay as a lump sum and count it in the month received (421-3).
b. For MAGI-based programs
Treat severance pay as terminated income, not as a lump sum (435-2).
9. AmeriCorps and the National Civilian Community Corps. CNCS also administers the AmeriCorps program and the new National Civilian Community Corps (NCCC) program. AmeriCorps includes community service projects such as educational programs, environmental activities and disaster relief. The NCCC program is a residential service program for young adults aged 18-24 who participate in various community service projects. Some payments are earned income; others are unearned income in-kind. Count payments from either of these programs as follows:
a. Living allowance stipend. Count as earned income for all Family-related Medicaid program, both the MAGI-based groups and the medically needy groups.
· As of 9/1/2008, this income is exempt for aged, blind and disabled programs.
b. Educational award after completion of service. An individual may receive an educational award that would be paid directly to an educational institution or to a loan-holder to pay off an educational loan.
· For Family medically needy Medicaid programs, count the payment as earned income when it is paid to the educational institution or loan-holder.
· For MAGI-based Medicaid groups, the educational award does not count as income if it is used to cover educational expenses.
· In some cases, the individual may choose to receive an alternative award equal to one-half of the educational award. It is paid directly to the individual. If an individual receives the alternative award as a cash payment, count it as earned income when it is received for both the MAGI-based groups and the Family Medically Needy groups.
· Do NOT count this type of income for aged, blind and disabled programs.
c. Shelter. Any in-kind shelter benefits received are exempt for aged, blind and disabled and all Family-related Medicaid programs (415-10).
B. ABD and Long-term Care
1. College Work Study. When an individual receives college work-study wages under a grant, scholarship or fellowship other than a Title IV of the Higher Education Act of 1965 or Bureau of Indian Affairs program, count as income the portion of wages that are not used to pay necessary educational expenses (415-6). Other student employment at the educational institution that is not a grant, scholarship or fellowship program is counted as regular earned income.
2. Rental Income. Rental income is usually unearned income. See 415-4 for the rules to decide if it is earned or unearned. If the rental income is earned, allow all deductions normally allowed self-employment income (419-2) Also allow earned income deductions described in 431-3.
3. Royalties and Honoraria. Count royalties received in connection with any publication of work of the individual as earned income. Do not deduct expenses incurred to obtain this income. If the individual is self-employed and the publication of work is an integral part of that self-employment, (i.e., writer, composer), see 419-2 on self-employment income.
a. Royalties received for the right to reprint or use copyrighted works of the individual are also considered earned income.
b. Honoraria received for services rendered are counted as earned income. Honoraria include an honorary payment, reward, or donation received for services rendered when no payment would be required by law. (Wages paid to a permanent, temporary, or contractual employee are not considered honoraria because there is a legal obligation to pay the employee.)
c. Royalties and honoraria are counted as income when received, or made available for the individual's use, whichever comes first.
C. MAGI-based Coverage Groups
1. Most taxable earned income is countable for MAGI-based Medicaid programs (440-3).
2. For MAGI-based programs, workers' compensation is not considered countable income (440-4).
D. Medically Needy Family Medicaid Programs
1. Rental Income may be earned income (415-4).
2. Temporary disability insurance or temporary workers' compensation payments which are employer funded, AND made to an individual who remains employed during recuperation from a temporary illness or injury pending the employee's return to the job. If the person does not maintain employee status, and/or the payments are not employer funded, the payments are considered to be unearned income.