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MA-2250: INCOME VIII. COUNTABLE UNEARNED INCOME
A. General Information
Unearned income is all income that is not earned income (e.g., SSA, VA, alimony and support, annuities, in-kind support and maintenance, rentals, etc.)
B. RSDI Benefits
1. Eligibility may be based on:
a. Disability
(1) Disabled workers under 65 and certain members of their families.
(2) Persons who become disabled before reaching age 22 if an insured parent or under certain circumstances a grandparent dies or becomes entitled to retirement or disability benefits.
(3) Disabled widows and widowers 50 or older if the disability began no later than 7 years after the death of an insured spouse or within 7 years after the end of the widow's entitlement to benefits as a parent caring for his children.
b. Dependency or survivorship
The dependents and survivors of disabled, dead or retired individuals who may be eligible for benefits include:
(1) Unmarried children under 18 or up to age 19 if they are enrolled full-time in high school.
(2) Unmarried sons and daughters 18 or over who were disabled before they reached 22 and who continue to be disabled.
(3) A wife under 65 or widow/widower under 62 who is caring for a child that is under 16 or disabled and is entitled to benefits.
(4) A wife 62 or widow 60 or older or a disabled widow 50 or over, even if there are no children entitled to payments.
(5) A dependent husband 65 or over or widower 60 or over; or a disabled dependent widower 50 or over.
(6) Surviving dependent parents 62 or over.
(7) A worker's grandchildren if natural parents are disabled or dead and if the grandchildren are living with and are supported by the grandparent.
(8) Step-children who have lived with a stepparent for 9 months or more.
C. Supplemental Security Income (SSI)
SSI is only countable income to a recipient who is budgeted as long term care.
Only count the $30 SSI maintenance payments made to
a/r's in long term care, regardless of the amount of the SSI payment.
D. Veteran's Benefits
At application and review, explore potential benefits for each budget unit member. Even if the a/r denies that anyone receives the benefit, explore the possibility.
VA benefits increase at different times based on the increase in cost-of-living.
1. Potential eligibles include:
a. Disabled individuals with disabilities incurred or aggravated by military service and the spouse or dependents of such individuals.
b. Permanently and totally disabled veterans including veterans age 65 or older who have sufficient wartime service. The surviving spouse may be eligible for pension also.
c. Surviving spouse and dependent children of veterans who die in service or who died of a service connected disability.
d. Parents of a veteran who died in service or of a service connected disability when the veteran has no other surviving dependents.
2. Verification
a. Contact the VA Regional Office Claims Division, Winston-Salem, 1-800-827-1000 and/or send verification letter (figure 7) to 251 N. Main Street, Winston-Salem, North Carolina 27155.
3. Budgeting
(1) The a/r is a student who is receiving VA benefits to pay for tuition, fees, or other necessary educational expenses;
(2) The VA payment is Aid and Attendance and/or Unreimbursed Medical Expenses (This does not apply to veterans who reside in the North Carolina State Veterans Nursing Home in Fayetteville. Refer to MA-2270 V.), or
(3) The VA payment is the Reduced Improved Pension up to $90 received under
P.L. 102-568.
Aid and Attendance (A&A)
Need for aid and attendance is considered to exist when the veteran is so nearly helpless that he cannot care for himself without the services of another person. VA recipients who receive aid and attendance are entitled to higher VA income limitations or additional VA benefits, depending on the type of pension received. Aid and attendance can be received by:
(a) A VA recipient who is a patient in a nursing home, who is otherwise determined by VA to be in need of the regular aid and attendance of another person; or
(b) A VA recipient who is permanently housebound (unable to leave his home) due to his condition, who is otherwise determined by VA to be in need of the regular aid and attendance of another person.
Unreimbursed Medical Expenses (UME)
Reimbursement from VA for medical bills that the veteran has paid. This can be a lump-sum payment or included in monthly benefits.
Reduced Improved Pension
A institutionalized veteran or a surviving spouse of a veteran may choose to have his Improved Pension reduced to $90 or less under
P.L. 102-568.
NOTE: Veterans may receive A&A,
UME, and/or Reduced Improved Pension included in their pension checks. Remember to determine amount and exclude from countable income.
E. Railroad Retirement Benefits
At application and review, explore potential benefits for each budget unit member. Even if the a/r denies that anyone receives the benefit, explore the possibility.
The potential for Railroad Retirement Benefits is based on the railroad work history of adults and parents of the children in the
b.u.
If the a/r denies receipt of benefits but his Social Security number begins with a 7, he may have been employed by the railroad.
F. Annuities, Pensions and Retirement Benefits
At application and review, explore potential benefits for each budget unit member. Annuities are paid yearly or at specified intervals. They may be purchased from an insurance company or by an employer for services rendered.
Explore the work history of the adults in the
b.u. regarding pensions paid by a former employer, insurance company, or other public/private agency.
If receipt of benefits is denied but there is a record of several years service in a particular organization and retirement in the past six months, contact the employer to determine benefit potential. Benefits also may be provided by a labor union or a fraternal organization.
G. Worker's Compensation
Definition - Benefits resulting from loss of employment due to injury on the job.
At application and review, explore potential benefits for each budget unit member. If receipt of Worker's Compensation is denied but disability/incapacitation occurred during employment, contact the employer to determine eligibility for Worker's Compensation.
(VIII.G.)
2. The countable amount is the gross amount less expenses incurred in obtaining the income or which are necessary for entitlement (such as attorney fees, court costs, filing fees, birth or death certificate fees, and medical fees for exams). You may accept applicant's statement of expenses.
Example: Jessie Snow received a Worker's Compensation award of $3,250. However, in pursuing her claim, she incurred $100 in medical fees and $900 in attorney fees. Deduct the total amount of the legal and medical fees from the $3,250 that is awarded to Ms. Snow. The balance of $2,250 is the amount of her Worker's Compensation income that is countable.
3. Do not deduct expenses if they have already been taken out of the Worker's Compensation award received by the individual.
4. Count as a lump sum if benefits are received as a one-time payment.
5. If benefits will be received on a weekly/monthly basis count the monthly amount received:
a. If expenses have not previously been deducted, convert the expenses to a monthly amount based upon the anticipated number of weeks/months of Worker's Compensation.
b. Deduct expenses from the monthly benefit amount to obtain monthly countable income.
H. Unemployment Insurance (UI)
Definition - Income received by an individual as compensation for loss of employment due to layoff, suspension, or firing. It may include additional amounts paid by unions or employers. At application and review, explore the potential benefits for each budget unit member.
Even though you must complete inquiries on all budget unit members, you cannot require a person not included in the assistance unit to apply for benefits. You can inform the budget unit member of these potential benefits. However, you cannot pend the application or terminate an ongoing case if the budget unit member does not apply.
I. Private Disability or Unemployment Benefits
(VIII.)
J. Sick Pay
Payment made to an employee by an employer or a private third party for sickness or accident disability.
1. Any payments for sickness and accident disability which continues for more than 6 months after work stopped because of sickness or disability, or sick pay which is paid from the employee's own contributions are unearned income.
2. Payments during the first 6 months are earned income (unless paid from the employee's own contributions).
K. Trade Readjustment Benefits
Definition - Benefits for persons who have lost their job because of imports and the federal government has approved their petition for assistance. Persons can only receive this assistance after other unemployment sources have been exhausted. These benefits are not shown on the ESC/UI inquiry.
Count the gross monthly Trade Readjustment Benefit for each budget unit member.
L. Work Release Funds
Definition - Funds to dependents from a prisoner employed under the Department of Correction Work Release Program.
At application and review, explore the potential benefits for each budget unit member, particularly if a child is deprived due to absence of a parent who is in prison.
M. Dividends and Interest for Stocks, Bonds, and Other Investments
N. Income from Trust Funds
O. Educational Loans, Grants and Scholarships
If a budget unit member receives any educational loans, grants, or scholarships not administered by the U.S. Department of Education, and an amount is designated for room and board expenses, count this designated amount as unearned income. These items may be listed as "Living Costs" on the document.
If benefits are received because of attendance at an approved school, apply those benefits toward school expenses not met from a resource received through an educational program administered by the Commissioner of Education. If there is an amount remaining after school expenses have been paid, count it as unearned income.
P. Brown Lung Benefits
Definition - Payments made to persons disabled by lung disease resulting from exposure to raw cotton dust.
Q. Black Lung Benefits
Definition - Payments to a disabled worker, dependents, or survivors, usually as the result of working in a coal mine.
At application and review, explore potential benefits for each budget unit member. If there has been coal mining work and the a/r has a lung ailment explore the possibility.
S. Military Allotments
Benefits received by dependents of military personnel. Explore benefits if spouse/parent of a/r is in the military. Count the gross benefit for each budget unit member.
T. Lump Sum Payment
Definition - A one-time payment, not expected to recur, that is received by a member of the budget unit. This includes personal injury awards. It does not include the receipt of earned income received on a yearly basis such as farm or rental income.
1. Count a lump sum payment as income when:
a. Payment was received in a month included in a request for retroactive coverage for medical expenses.
b. Payment was received in the month of application for ongoing coverage or in any month prior to approval of the case.
c. Payment was received prior to authorization of a case in deductible status.
2. Do not count a lump sum as income when:
a. It is paid directly to another person outside the budget unit.
b. The payment is for past months' benefits from SSI or
RSDI. These payments are disregarded from income and resources for the first six months after receipt.
c. Payment was received as compensation for loss of assets or a lump sum was earmarked for a specific purpose. For example, the a/r receives an insurance settlement to replace a motor vehicle, a home, or for other catastrophic events.
U. Child Support and Alimony
1. Child Support
a. Child support is a payment made by a parent which is available to meet the
a/r's basic needs. It may be paid voluntarily or Pursuant to a court order. Child support paid for a child by an absent parent is always income to the child. It is never income to the parent/relative/guardian.
b. Exclude one-third of the child support received by an ABD Medicaid child, or
c. Exclude one-third of the value of child support received as in-kind support and maintenance.
d. If a financially responsible spouse or parent makes court ordered or IV-D child support payments to a child outside of the home, exclude these payments from the deeming process.
e. Do not exclude the amount of support payments made to a child outside the home when determining countable income for an adult a/r.
2. Alimony
a. Alimony is a court-ordered payment by a spouse (or former spouse) to an a/r.
b. The entire amount of alimony received is countable unearned income to an a/r and is also countable for deeming purposes if received by a financially responsible spouse or parent.
c. Do not exclude the amount of alimony paid out from income.
V. Loans and Promissory Notes
Money received by the a/r as a repayment for a loan is countable unearned income;
1. When the loan is an excluded resource to the a/r count as unearned income the payments received by the a/r. This includes any interest payments.
2. When the loan is a countable resource to the a/r, count only the interest received as unearned income.
3. Money received as a loan (other than educational loans) by the a/r is not countable income if there is an agreed upon timetable and plan for repayment. Refer to MA-2230. Obtain a written statement from the parties involved if there is no formal loan agreement.
(VIII.)
W. Deemed Income From Institutionalized Spouse
1. Count income deemed from an institutionalized spouse to the a/r who is the community spouse.
2. Count income deemed from an institutionalized spouse to the a/r who is a dependent family member.
X. Living Needs Benefits
A living needs benefit is a provision that allows a terminally ill person (or in some cases, individuals permanently confined to a medical institution) to receive all or part of the proceeds of his life insurance policy while living. Depending on circumstances, these payments can be received either as a lump sum or on an ongoing basis.
1. If an a/r has a life insurance policy which allows him to receive his death benefit while living and he meets the insurance companies requirements for receiving the proceeds, he will not be required to file for such proceeds.
2. If an a/r does file for and receive the proceeds, the payment will be considered income in the month received. Any portion remaining in the following month will be considered an available resource.
3. If payment is received on an ongoing basis verify the amount and, count as a monthly benefit.
4. If payment is received as a lump sum:
a. If received in the base period month, disregard as income for the prospective period.
b. If received in the month of application, prior to approval of the case, or prior to authorization of a case in deductible status, count as income.
c. Count the actual amount of payment if received in a month in which there is a request for retroactive coverage.
d. If received in a month after applicant is authorized, do not count as income. Any portion remaining in the month following receipt is a countable resource.
Y. Rental Income
Rental payment which an a/r receives for the use of real or personal property, such as land, housing or machinery is counted as unearned income to the a/r.
(VIII.Y.)
1. How to Count Rental Income
a. Unearned Income
Count rental income as unearned income if the a/r rents property, machinery, rooms, etc. and rental is not done as a business.
b. Earned Income
Count rental income as self-employment if the a/r has a property rental business, rental service, etc.
2. Determination of Net Rental Income
Net rental income is gross rent less allowable operational expenses paid in the base period. Use net rental income in the 6% test when determining if property is income producing for reserve purposes. Refer to MA-2230.
6. Determining Net Rental Income
Determine net rental income for each parcel of real property that is identified by the local tax office as being a separate parcel. Calculate net countable monthly income for each parcel. Then combine to arrive at total net countable monthly income.
If property is listed as one parcel, combine all income and operational expenses from different income producing activities into one net rental income for that parcel.
a. Determine the net annual rental income amount produced by the rental property. DO NOT ROUIND ANY AMOUNTS!
(1) Calculate gross annual rental income:
(a) If receiving the same amount monthly, then multiply this amount by 12 months (i.e., monthly amount X 12 months = gross annual rental income).
(b) If receiving other than monthly, then multiply this amount by the number of times received in a 12 month period (i.e., quarterly monthly X 4 quarters = gross annual rental income).
(2) Calculate gross annual allowable operational expenses.
(a) Allowable Operational Expenses
1) Deduct predictable expenses paid by the a/r which are necessary for the production or collection of rental income. These expenses include but are not limited to the following:
The interest portion of a mortgage payment,
Property taxes,
Insurance,
Maintenance,
Utility costs paid by the a/r,
Labor costs,
Real estate agent's fees,
Sales taxes,
Advertising for tenants,
Verified transportation costs related to rental property operation,
Interest payments on loans for equipment necessary to produce the rental income.
2) Unexpected expenses are unanticipated expenses that are necessary for the collection of rental income and must be paid from rental income (e.g., repairs to an appliance or minor corrections to an existing structure). When an a/r reports an unexpected expense that must be paid from the rental income, treat as a change in situation.
Verify whether the expense is an operational expense (necessary for the collection of rental income) vs. a capital expenditure (increases the value of the property). Only operational expenses are allowable deductions.
If the expense is an allowable operational expense, recompute net countable monthly rental income to determine deductible
(PLA) or PML (LTC).
An operational expense can only be deducted when the rental income is used to meet the expense. Never use other income to offset an operational expense. The net rental income can never be less than $0.
Deduct from the net countable monthly rental income the total expense or if paying in installments, deduct the monthly amount.
If the expense cannot be paid in one month, divide the expense over the number of months in the installment plan or the number of months necessary to allow for total
recoupment. The months required may extend into the next certification period.
It is allowable to not meet 6% income test while the unexpected expense is being deducted from net countable monthly rental income. Flag case to recompute deductible or PML in the month that the expense is expected to be used up.
(VIII.6.a.(2)(a)2))
For PLA, when the change in net rental income results in a decrease in countable income, follow adequate notice requirements.
For LTC cases, change PHL for future months in accordance with EIS reporting requirements and follow notice requirements.
Follow instructions in MA-2230 at review, to use only predictable operational expenses in the base period for the 6% test. Do not use unexpected operational expenses for the 6% test.
Verify operational expenses for the previous calendar year based on expenses on the tax form if using tax statements to determine income, or
Verify operational expenses for the twelve months base period to the application or redetermination interview for a business if using business records.
(b) Non-allowable Expenses
Do not deduct the following expenses from rental income:
1) Operational expenses not paid by the a/r from the income received. If expenses are paid by a third party then do not allow as operational expenses unless a/r reimburses the payee.
2) The principal portion of a mortgage payment. (The principal is deducted from the tax value as an encumbrance in reserve.)
3) A capital expenditure. This is an expense for an addition to or increase in the value of the property and is subject to depreciation for tax purposes (i.e. principal portion of mortgage payment, additions to existing structure, remodeling).
4) The property depreciation amount claimed as a federal income tax deduction.
5) Replacement of an existing feature of the property which could have been repaired (e.g., furnace could be repaired but is replaced with new heating system).
6)
(VIII.6.a.(2)(b))
7) Replacement of an existing feature of the property which could not be repaired with one that is not of comparable value (i.e. replacement of shingle roof with brick tile roof) which results in improvement and increases the value of the property.
(3) Calculate net annual rental income by subtracting gross annual rental income from gross annual allowable operational expenses.
(4) Calculate net countable monthly rental income by dividing by 12 months.
EXAMPLE: monthly gross rent $450
property taxes per year $350
insurance per year $300
other expenses per month $100
$450 X 12 = $5400 annual gross rent
-$ 350 taxes
-$ 300 insurance
$100 X 12 = -$1200 other expenses
$3550 divided by 12 = $295.83 net countable monthly rental income.
DO NOT ROUND, use entire amount in monthly budget
NOTE: If an unexpected expense is reported, then subtract the expense from the net countable monthly rental income.
b. Explain to the a/r that net countable monthly rental income amount received must be included as countable income for
PLA. If a/r is institutionalized then income is countable in determining
PML. Also explain to a/r that it is their responsibility to assure that income included as PML is paid to the facility.
Z. Roomer/Boarder Income
Roomer/Boarder income is a form of rental income in which an individual pays an amount (usually weekly or monthly) to the head of household in return for room and/or board in the household. When an a/r receives income from an individual for whom he has no financial responsibility, always evaluate the living arrangement to determine whether it is a roomer/boarder situation as opposed to a shared household. Refer to MA-2261 to determine criteria for a shared household and whether 1/3 reduction is applicable.
AA. Contributions
1. Cash
a. Always count contributions given in cash on a regular basis to meet the
a/r's needs.
b. When individuals live together and share household expenses such as one paying rent or utilities and one buying food, there is no contribution.
2. In-Kind
Refer to In-kind Support and Maintenance to count contributions of food, shelter or clothing. Do not count items other than food, clothing or shelter (i.e. medical supplies, pampers).
BB. In-Kind Income
In-kind income is support and maintenance in the form of food, clothing, or shelter (including utilities, heating fuel and property taxes).
1. Rules for In-Kind Income
a. Never count more income than 1/3 of the current SSI amount (individual or couple) plus $20.00. (i.e. if the full SSI benefit for one person is $494.00, 1/3 of this amount is $164.66. $164.66 plus $20.00 equals $184.66. This is the maximum value you would count for in-kind support and maintenance).
b. When counting in-kind income, use the full maintenance allowance for the budget unit.
c. Do not count in-kind income when the individual or couple live in the home of another. Use the 1/3 reduced Maintenance Allowance. -Refer to MA-2261.
2. Determining Countable In-Kind Income
If a Medicaid individual/couple receives food, clothing or shelter:
a. Accept the
a/r's statement of the value of in-kind support and maintenance. If questionable or the a/r is unable to provide a statement, verify the value by contacting the provider of the food, clothing or shelter. Obtain receipts or a verbal or written statement of the value.
b. If the amount of support varies, obtain an average for the past six months.
c. Do not count items other than food, clothing or shelter (i.e. payment of phone bill, medicine, pampers or other supplies). Shelter includes utilities, fuel, and property taxes.
d. Never value the support at more than 1/3 of the maximum SSI benefit plus $20.00.
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