Revision 10-1; Effective March 1, 2010

§358.381. General Treatment of Income.

(a) The Texas Health and Human Services Commission (HHSC) follows §1612 of the Social Security Act (42 U.S.C. §1382a) and 20 CFR §§416.1101 - 416.1104 regarding the definition and general treatment of income for the purpose of determining financial eligibility and calculating a co-payment.

(b) A lump sum payment is countable income in the month of receipt and is a resource thereafter.

(c) A person in an institutional setting may retain a personal needs allowance (PNA) in an amount set by the HHSC executive commissioner in accordance with Chapter 32 of the Texas Human Resources Code.

(1) The PNA is not applied toward the cost of medical assistance furnished in an institutional setting.

(2) For a person receiving the reduced SSI federal benefit rate, HHSC issues a supplement to give the person a PNA at the minimum level set by the HHSC executive commissioner.

(d) An action by a fiduciary agent is the same as an action by the person for whom the fiduciary agent acts.

(1) Monies received by a fiduciary agent for another person are not income to the fiduciary agent. If the fiduciary agent is authorized to keep part of the money as compensation for services rendered, the compensation for services rendered is unearned income to the fiduciary agent.

(2) Monies received by a fiduciary agent for another person are charged as income to the person when the monies are received by the fiduciary agent.

§358.382. Variable Monthly Income.

The Texas Health and Human Services Commission averages monthly countable income that is predictable but varies in amount from month to month.

§358.383. Deeming of Income.

The Texas Health and Human Services Commission follows 20 CFR §§416.1160-416.1166 regarding the definition and treatment of deemed income for a person in a noninstitutional setting.

§358.384. Temporary Absence.

The Texas Health and Human Services Commission follows 20 CFR §416.1149 and §416.1167 regarding the definition and treatment of a temporary absence from a person's living arrangement for deeming purposes for a person in a noninstitutional setting.

§358.385. Cafeteria Plan Benefits.

The Texas Health and Human Services Commission exempts cafeteria plan benefits as defined in and based on §125 of the Internal Revenue Code (IRC), except that:

(1) cash received under a cafeteria plan in lieu of benefits is not exempt, but is counted as earned income; and

(2) payroll deductions used to purchase cafeteria plan benefits in addition to or instead of those purchased under a salary reduction agreement are not exempt, but are part of the employee's wages and are counted as earned income.

§358.386. Reduction of Pension and Benefit Checks for Recoupment of Overpayments.

If a person's pension or benefit checks are reduced because of recovery of overpayments, the following apply:

(1) All overpayments except Retirement, Survivors, and Disability Insurance (RSDI).

(A) If a person was receiving Supplemental Security Income (SSI) or assistance under a Medicaid-funded program for the elderly and people with disabilities (MEPD) at the time of overpayment, the Texas Health and Human Services Commission (HHSC) disregards as income the amount being recovered. HHSC counts the net amount of the benefit (that is, the gross benefit minus the amount being recouped) for the purpose of determining eligibility and calculating a co-payment.

(B) If a person was not receiving SSI or assistance under MEPD at the time of overpayment, HHSC counts the recovered amount as income. HHSC counts the gross amount of the benefit for the purpose of determining eligibility and calculating a co-payment.

(2) RSDI overpayments.

(A) If a person receives an overpayment of Social Security (RSDI or Title II) benefits, recoupment is not voluntary. HHSC counts the net amount of the RSDI benefit (that is, the gross RSDI minus the amount being recouped) for the purpose of determining eligibility and calculating a co-payment.

(B) If a person receives an overpayment of SSI benefits and the person is still eligible for SSI, the recoupment is voluntary. HHSC determines if the person signed a voluntary agreement for recoupment. If there is a signed agreement, HHSC counts the gross RSDI for the purpose of determining eligibility and calculating a co-payment. If there is no signed agreement, there should be no recoupment from RSDI benefits.

(C) If a person receives an overpayment of SSI benefits and the person is no longer eligible for SSI, recoupment of any RSDI or Title II benefits is not voluntary. HHSC counts the net amount of the RSDI benefit (that is, the gross RSDI minus the amount being recouped) for the purpose of determining eligibility and calculating a co-payment.

§358.387. Income Exclusions.

(a) The Texas Health and Human Services Commission (HHSC) follows 20 CFR §416.1112 and §416.1124 regarding income exclusions, except when testing income eligibility under the special income limit HHSC does not allow the exclusions:

(1) in 20 CFR §416.1112(c)(4), (5), and (7); or

(2) in 20 CFR §416.1124(c)(12), unless:

(A) the person meets the criteria under §1929(b)(2)(B) of the Social Security Act (42 U.S.C. §1396t(b)(2)(B)); and

(B) the Centers for Medicare and Medicaid Services has authorized HHSC to allow the exclusion.

(b) HHSC also excludes income described in the appendix to Subpart K in 20 CFR Part 416.

§358.391. Treatment of Other Income.

The Texas Health and Human Services Commission follows the federal regulations indicated in the table in this section regarding the treatment of income not otherwise described in this division

Type of Income	Section(s) in 20 CFR:
Assistance received due to a major disaster; repair or replacement of lost, damaged, or stolen resources due to a disaster	416.1150 416.1151
Earned income	416.1110-416.1112
Support and maintenance assistance, including home energy assistance	416.1157
Income used to fulfill a plan to achieve self-support (PASS) for a person who is blind or disabled	416.1180-416.1182
In-kind support and maintenance	416.1130-416.1148
Unearned income	416.1120-416.1124

Revision 09-4; Effective December 1, 2009

A person is eligible for Medicaid if the person:

• is aged, blind or disabled;
• meets the income and resource limits; and
• meets all other requirements for the specific MEPD program.

This chapter covers treatment of income to budget to determine eligibility and, if applicable, co-payment. Treatment of budgets is covered in other chapters.

For purposes of Medicaid, income is anything a person receives in cash or in kind that can be used to meet the person’s needs for food and shelter. It is the receipt of any property or service a person can apply, either directly or by sale or conversion, to meet basic needs for food and shelter. Income is normally counted on a monthly basis; not all income goes into the budget to determine eligibility and the co-payment.

The receipt of a payment – in the form of cash, property, or service – is income in the month of receipt and a resource as of 12:01 a.m. on the first day of the month after receipt.

 

E-1210 Other Terms

Revision 09-4; Effective December 1, 2009

Calendar quarter — A period of three full calendar months beginning with January, April, July or October.

Child — A person who is not married, is not the head of a household, and is either under age 18 or is under age 22 and a student.

Couple — An eligible individual and his or her eligible spouse.

Supplemental Security Income (SSI) benefit rate — The payment amount in the SSI program.

Federal benefit rate — The monthly payment rate for an eligible individual or couple. It is the figure from which countable income is subtracted to find out how much a person’s federal SSI benefit should be. The federal benefit rate does not include the rate for any state supplement paid by us on behalf of the state.

Shelter — Includes room, rent, mortgage payments, real property taxes, heating fuel, gas, electricity, water, sewerage and garbage collection services. A person is not receiving in-kind support and maintenance in the form of room or rent if the person is paying the amount charged under a business arrangement. A business arrangement exists when the amount of monthly rent required to be paid equals the current market rental value.

Income — The receipt of any property or service a person can apply, either directly or by sale or conversion, to meet basic needs for food and shelter.

Countable income — The amount of a client's income after all exemptions and exclusions.

Income of spouse — Income considered when one member of a couple is institutionalized. Income paid to one spouse is considered to be the income of that spouse, unless a fair hearings process establishes otherwise, or the payor provides evidence that the income is augmented for a spouse, such as VA benefits. Income from community property paid to only one spouse is considered the income of that spouse regardless of state law governing community property or division of marital property. (Consult the regional attorney about ownership of income from a trust.)

Revision 09-4; Effective December 1, 2009

There are two major types of income:

• Unearned
• Earned

Income, whether earned or unearned, is received in either of two forms:

Cash — Currency, checks, money orders or electronic funds transfers (EFT), such as:

• Social Security checks;
• unemployment compensation checks; or
• payroll checks or currency.

In-kind — Noncash items such as:

• real property (including shelter);
• food; and
• noncash wages (for example, room and board as compensation for employment).

Income, whether cash or in-kind, is received in either of two ways:

Fixed — Income received on a regular, predictable schedule (usually monthly) and for the same amount each month, such as:

• Social Security checks;
• VA checks; or
• state retirement checks.

Variable — Income that is either received on a varying schedule or for different amounts, such as:

• payroll checks or currency;
• monthly bank interest; or
• gas production checks.

 

E-1310 Relationship of Income to Resources

Revision 09-4; Effective December 1, 2009

In general, anything received in a month, from any source, is income to a person, if it meets the person’s needs for food and shelter. Anything the person owned prior to the month under consideration is subject to the resource counting rules.

An item received in the current month is income for the current month only. If held by the person until the following month, that item is subject to resource counting rules.

Exceptions: Occasionally, a regular periodic payment (for example, wages, pension or VA benefits) is received in a month other than the month of normal receipt. As long as there is no intent to interrupt the regular payment schedule, consider the funds to be income in the normal month of receipt.

A lump sum payment is income in the month of receipt and is a resource thereafter.

 

E-1320 Fiduciary Agent

Revision 09-4; Effective December 1, 2009

An action by a fiduciary agent is the same as an action by the person for whom the fiduciary agent acts.

• Monies received by a fiduciary agent for another person are not income to the fiduciary agent. If the fiduciary agent is authorized to keep part of the money as compensation for services rendered, the compensation for services rendered is unearned income to the fiduciary agent.
• Monies received by a fiduciary agent for another person are charged as income to the person when the monies are received by the fiduciary agent.

Revision 09-4; Effective December 1, 2009

A garnishment or seizure is a withholding of an amount from earned or unearned income in order to satisfy a debt or legal obligation.

Amounts withheld from income as garnishment to satisfy a debt or legal obligation are countable income.

 

E-1410 Division of Marital Income and Property

Revision 16-4; Effective December 1, 2016

A division of income and property in a divorce settlement is not considered a garnishment or lien placed against income. When an individual is paying income to a former spouse, consider court documentation before determining the ownership and accessibility of the income. A legal review of the documentation may be necessary to determine ownership and accessibility of income and a pension plan for each of the former spouses. For verification, use one of the following sources:

• court records;
• records of the agency through which the payments are made;
• official documents in the individual's possession (e.g., legal documents) that establish the amount and frequency of the support; or
• report of contact with the source of the payment that includes the amount and frequency of the alimony or spousal support.

If none of the above sources are available, obtain an individual's sworn affidavit that explains why one of the sources above is not available (for example, the documentation does not exist, the court or agency will not release the information or the source refused to cooperate).

A court may issue an order called a domestic relations order that provides income such as spousal support which may also be called alimony (see E-3320 , Alimony and Support Payments), to the former spouse.

• If the court order indicates the applicant/recipient is paying spousal support payments or alimony to the former spouse, the payment is still considered countable unearned income to the applicant/recipient.
• If the former spouse is the applicant/recipient, the receipt of spousal support payments or alimony is also countable income to the former spouse.

A Qualified Domestic Relations Order (QDRO) is a property settlement that assigns all or a portion of a retirement plan to the former spouse.  An employer or retirement plan administrator may refuse to recognize a QDRO and separate the retirement plan payments to each individual. Consider the portion of the retirement plan payments as income to each individual as stipulated in the QDRO, regardless if the retirement plan administrator pays each individual their portion or only pays the retiree who then pays the former spouse. 

Note: For individuals who are active or retired from the military, a marital division of property may be similar to a domestic relations order or a QDRO. A legal review of the documentation may be necessary to determine ownership and accessibility of income and a pension plan for each of the former spouses.

 

E-1420 Deeming and Court-Ordered Support Payments

If income of an ineligible spouse, parent or ineligible child is garnished to pay court-ordered or Title IV-D enforced support payments, do not consider the income used by these individuals to make support payments. Support payments are payments made under a court order or enforced in compliance with a state agreement under Title IV-D. Title IV-D child support payments are usually made directly to the state.

An irrevocable waiver of income must be evaluated for a transfer of assets penalty. See Chapter I, Transfer of Assets.

Revision 09-4; Effective December 1, 2009

If a person's pension or benefit checks are reduced because of recovery of overpayments, the amount considered as income is based on the source of the payment.

 

E-1610 SSA Overpayments

If a person receives an overpayment of Social Security (RSDI or Title II) benefits, recoupment is not voluntary. HHSC counts the net amount of the RSDI benefit (for example, the gross RSDI minus the amount being recouped) for the purpose of determining eligibility and calculating a co-payment.

If a person receives an overpayment of SSI benefits and the person:

• is still eligible for SSI, the recoupment is voluntary. HHSC determines if the person signed a voluntary agreement for recoupment. If there is a signed agreement, HHSC counts the gross RSDI for the purpose of determining eligibility and calculating a co-payment. If there is no signed agreement, there should be no recoupment from RSDI benefits.
• is no longer eligible for SSI, recoupment of any RSDI or Title II benefits is not voluntary. HHSC counts the net amount of the RSDI benefit (that is, the gross RSDI minus the amount being recouped) for eligibility and applied income purposes.

 

E-1620 All Other Overpayments

If a person was receiving SSI or assistance under MEPD at the time of overpayment, HHSC disregards as income the amount being recovered. HHSC counts the net amount of the benefit (for example, the gross benefit minus the amount being recouped) for the purpose of determining eligibility and calculating a co-payment.

If a person was not receiving SSI or assistance under MEPD at the time of overpayment, HHSC counts the recovered amount as income. HHSC counts the gross amount of the benefit for the purpose of determining eligibility and calculating a co-payment.

Revision 09-4; Effective December 1, 2009

Some things a person receives are not income because the person cannot use those things as food or shelter, or cannot use those things to obtain food or shelter. In addition, what a person receives from the sale or exchange of that person’s own property is not income; the proceeds of the sale or exchange of the person’s property remains a resource. The following are some items that are not income.

E-1710 Medical Care and Services That Are Not Income

Revision 09-4; Effective December 1, 2009

Medical care and services. Medical care and services are not income if they are any of the following:

• Given to a person free of charge or paid for directly to the provider by someone else.
• Room and board a person receives during a medical confinement.
• Assistance provided in cash or in kind (including food or shelter) under a federal, state or local government program whose purpose is to provide medical care or medical services (including vocational rehabilitation).
• In-kind assistance (except food or shelter) provided under a nongovernmental program whose purpose is to provide medical care or medical services.
• Cash provided by any nongovernmental medical care or medical services program.
• Direct payment of the person’s medical insurance premiums by anyone on the person’s behalf.
• The value of any third-party payment for medical care or medical services furnished to a person.
• The value of advice, consultation, training or other services of a strictly social nature furnished to a person.
• Payments from the Department of Veterans Affairs resulting from unusual medical expenses.
• Cash provided under a health insurance policy (except cash to cover food or shelter) if the cash is either:
  • repayment for program-approved services a person has already paid for; or
  • a payment restricted to the future purchase of a program-approved service.
• Third-party resource (TPR) reimbursements to the person (for example, from medical insurers) for a given medical service that do not exceed the amount spent by the person for that same service.

A premium payment for supplementary medical insurance benefits (SMIB) under Title XVIII (Medicare), paid by a third party directly to the Social Security Administration, is not income.

Refunds to a recipient from the state’s Third-Party Recovery Unit are made if TPR payments (for example, from medical insurers) for a given medical service exceed the amount Medicaid paid for that same service. These refunds are income to the person upon receipt.

Examples of medical services include:

• Room and board (food and shelter), provided an individual is an inpatient in a medical treatment facility.
• Payment of bed-hold charges for a nursing facility (NF) resident who is temporarily discharged from the facility.
• In-kind medical items, such as prescription drugs, eyeglasses, and prosthetics and their maintenance. In-kind medical items also include devices intended to make the physical abilities of a person with disabilities equal to those of a person without disabilities, such as electric wheelchairs, modified scooters, specially equipped vehicles, or construction of a carport to a house to protect a specially equipped vehicle. Also included are specially trained animals, such as seeing eye dogs and their maintenance, such as dog food.
• Transportation to and from medical treatment.

E-1720 Social Services That Are Not Income

Revision 18-4; Effective December 1, 2018

A social service is any service, other than medical, that is intended to assist a person with a physical disability or social disadvantage to function in society on a level comparable to that of a person who does not have such a disability or disadvantage. No in-kind items are expressly identified as social services.

Social services. Social services are not income if they are any of the following:

• Assistance provided in cash or in kind (but not received in return for a service the person performs) under any federal, state or local government program whose purpose is to provide social services, including vocational rehabilitation (for example, cash from the Department of Veterans Affairs to purchase aid and attendance).
• In-kind assistance (except food or shelter) provided under a nongovernmental program whose purpose is to provide social services.
• Cash provided by a nongovernmental social services program (except cash to cover food or shelter) if the cash is either:
  • repayment for program-approved services the person already has paid for; or
  • a payment restricted to the future purchase of a program-approved service.

Examples of social service programs:

• Title XX of the Social Security Act provides services directed at the following goals: achieving and maintaining self-sufficiency; preventing and remedying abuse, neglect or exploitation; and preventing inappropriate institutionalization.
• Title IV-B of the Social Security Act, Child Welfare Services, provides for the protection and promotion of the welfare of children.
• Title V of the Social Security Act, Maternal and Child Health and Crippled Children's Services.
• The Rehabilitation Act of 1973 provides services to disabled persons, including vocational rehabilitation, expanding employment opportunities, and promoting self-sufficiency and independence.

Note: Wages and salaries from Title V of the Older Americans Act, such as Green Thumb and Senior Texan Employment Program (STEP), are countable earned income.

Examples of governmental programs that may provide medical and social services in combination are:

• state behavioral mental health programs and programs for individuals with developmental disabilities under the umbrella of services from HHSC; and
• state substance abuse programs.

Examples of nongovernmental organizations that provide medical and social services in combination are the:

• Salvation Army; and
• American Red Cross.

Examples of what is not a social service:

• Training for a specific job skill or trade (vocational training). Do not confuse vocational training with vocational rehabilitation.
• Governmental income maintenance programs, such as SSI, TANF, Bureau of Indian Affairs General Assistance and VA pension or compensation benefits.

Cash received in conjunction with medical or social services:

• Any cash provided by a governmental medical or social services program is not income. An example is cash payments from the Department of Family and Protective Services via the Relative and Other Designated Caregiver Program.
• Any cash from a nongovernmental medical or social services organization is not income if the cash is:
  • for medical or social services already received by the individual and approved by the organization and does not exceed the value of those services; or
  • a payment restricted to the future purchase of a medical or social service.
• Cash from any insurance policy that pays a flat rate benefit to the person without regard to the actual charges or expenses incurred is countable income. An exception to this is if the insurance policy is considered a long-term care insurance policy.

In-kind items received in conjunction with medical or social services:

• In-kind items that meet the definition of medical services are not income regardless of their source.
• Room and board provided during a medical confinement, such as in a medical treatment facility, is not income.
• In-kind items (including food or shelter) provided by a governmental medical or social services program are not income.
• In-kind items (other than food or shelter) provided by a nongovernmental medical or social services organization for medical or social service purposes are not income.
• Food or shelter or other in-kind income provided by a nongovernmental medical or social services organization is income unless excluded under some other section of this handbook (for example, food is provided while a patient is in a medical treatment facility and consequently is not income).

E-1730 Sale of a Resource is Not Income

Revision 09-4; Effective December 1, 2009

Receipts from the sale, exchange or replacement of a resource are not income, but are resources that have changed their form. This includes any cash or in-kind item that is provided to replace or repair a resource that has been lost, damaged or stolen.

Example: If a person sells an automobile, the money a person receives is not income; it is another form of a resource. If fair market value was received for the sale of the automobile, no transfer of assets occurred.

E-1740 Miscellaneous Things That May Not Be Income

Revision 22-4; Effective Dec. 1, 2022

Income tax refunds. Any amount refunded on income taxes the person has already paid, is not income. For co-payment purposes, any refunds of mandatory taxes on earned income are subject to restitution policy (in the month of receipt), to the extent that the withholding tax was excluded in the co-payment budget.

Payments by credit life or credit disability insurance. Payments made under a credit life or credit disability insurance policy on the person's behalf are not income.

Example: If a credit disability policy pays off the mortgage on the person's home after the person becomes disabled as result of an accident, neither the payment nor the increased equity value in the home is income.

Bills paid for the person. Payment of the person's bills by someone else directly to the supplier is not income. However, the value of anything a person receives as result of the payment is counted if it is in-kind income.

Receipt of certain noncash items. Except for shelter or food, any item a person receives and keeps that would be an excluded nonliquid resource, is not income.

Example: A community collects money to buy a specially equipped van, which is the person's only vehicle. The value of this gift is not income because the van does not provide the person food or shelter and will become an excluded nonliquid resource in the month following the month of receipt.

Replacement of income a person has already received. If income is lost, destroyed or stolen and a person receives a replacement, the replacement is not income.

Weatherization assistance. Weatherization assistance

Example: Money received specifically for insulation, storm doors, and storm windows is not income.

Related Policy

Other Terms, E-1210
Nonliquid Resources, F-4200

E-1750 Proceeds of a Loan

Revision 12-2; Effective June 1, 2012

Money a person borrows or money a person receives as repayment of a loan is not income. However, interest a person receives on money a person has lent is income. Buying on credit is treated as though a person were borrowing money and what a person purchases this way is not income.

A loan requires a bona fide agreement that is legally valid and made in good faith. For the borrower, the loan agreement itself is not a resource. The cash provided by the lender is not income, but is the borrower's resource if retained in the month following the month of receipt.

Proceeds (amount borrowed) of either a commercial loan or an informal loan for which repayment is required with or without interest are not counted as income in the month in which they are received. The proceeds are considered to be a resource in the following month(s). To claim exemption of the proceeds of a loan, a person must prove that he acknowledges an obligation to repay and that some plan for repayment exists. If these conditions can be verified, no written contract is required.

Note: Federal Educational Loans (Federal PLUS Loans, Perkins Loans, Stafford Loans, William D. Ford Loans, etc.) under Title IV of the Higher Education Act (HEA) are exempt from income and resources.

See Chapter F, Resources, and Chapter I, Transfer of Assets.

E-1760 Wage-Related Payments

Revision 10-1; Effective March 1, 2010

See Section E-3110, Wages, for a definition of earned income from wages. Employers make various payments on behalf of their employees that are not earnings and are not available to meet food or shelter needs. If an employer pays an employee's share of Social Security (FICA) or unemployment compensation taxes without making a reduction in the employee's wages, the amount the employer pays is considered income.

The following payments by an employer are not income unless the funds for them are deducted from the employee's salary:

• Funds the employer uses to purchase qualified benefits under a cafeteria plan.
• Employer contributions to a health-insurance or retirement fund.
• The employer's share of FICA taxes or unemployment compensation taxes, in all cases.
• The employee's share of FICA taxes or unemployment compensation taxes paid by the employer on wages for domestic service in the private home of the employer or for agricultural labor only, to the extent that the employee does not reimburse the employer.

E-1770 Mandatory Payroll Deductions

Revision 16-2; Effective June 1, 2016

See Section E-3110, Wages, for a definition of earned income from wages. If an employer pays an employee's share of Social Security (FICA) or unemployment compensation taxes without making a reduction in the employee's wages, the amount the employer pays is considered income. The amount the employer pays is not considered income in the following two work situations:

• The employee is in domestic service in the employer's home.
• The employee does agricultural labor only.

When considering a person’s earned income, do not consider mandatory payroll deductions as income for the purpose of determining a co-payment. The mandatory payroll deductions are:

• income tax;
• Social Security tax;
• required retirement withholdings; and
• required uniform expenses.

E-1780 Cafeteria Plan

Revision 09-4; Effective December 1, 2009

A cafeteria plan is a written benefit plan offered by an employer in which:

• all participants are employees; and
• participants can choose, cafeteria-style, from a menu of two or more cash or qualified benefits.

A qualified benefit is a benefit the Internal Revenue Service (IRS) does not consider part of an employee's gross income. Qualified benefits include, but are not limited to:

• accident and health plans (including medical plans, vision plans, dental plans, accident and disability insurance);
• group term life insurance plans (up to $50,000);
• dependent care assistance plans; and
• certain profit-sharing or stock bonus plans under section 401(k)(2) of the Internal Revenue Code. IRS does not exclude from income salary reductions made under 401(k)(1) plans. Salary reductions to fund benefits under 401(k)(1) are counted as wages for eligibility and applied income purpose.

Cash is not a qualified benefit.

A salary-reduction agreement is an agreement between employer and employee whereby the employee, in exchange for the right to participate in a cafeteria plan, accepts a lower salary or foregoes a salary increase.

Most cafeteria plans are funded by salary-reduction agreements. However, employers may make contributions to fund basic benefit levels under a cafeteria plan without a salary-reduction agreement.

Salary reductions to purchase qualified benefits under a cafeteria plan are not part of the employee's wages and are not income for eligibility or co-payment purposes.

Payroll deductions may be used to purchase cafeteria-plan benefits in addition to or instead of cafeteria-plan benefits provided under a salary-reduction agreement or employer contribution. The amount of the individual's payroll deductions for cafeteria plan benefits is the employee's wages and is earned income.

Important: Pay slips that appear to show payroll deductions may actually show how funds from a salary-reduction agreement have been allotted among qualified benefits.

The following indicators on a pay slip may indicate an approved cafeteria plan: Flex, Choices, Sec. 125, or Cafe Plan.

Revision 09-4; Effective December 1, 2009

Many federal statutes, in addition to the Social Security Act, provide exemptions for payments from certain sources. If the income in this section meets certain criteria, exempt the income from the eligibility budget and the budget to determine co-payment.

 

E-2110 Food

Revision 09-4; Effective December 1, 2009

Do not count in the eligibility budget or the budget to determine co-payment any receipts for the following:

• Value of SNAP food benefits (formerly known as food stamps) under the Food and Nutrition Act of 2008 (7 U.S.C. §2017(b)).
• Value of federally donated foods distributed under Section 32 of Public Law 74-320 (49 Stat. 774) or Section 416 of the Agriculture Act of 1949 (63 Stat. 1058, 7 CFR 250.6(e)(9)).
• Value of free or reduced price food for women and children under the:
  • Child Nutrition Act of 1966, Section 11(b) of Public Law 89-642 (80 Stat. 889, 42 U.S.C. 1780(b)) and Section 17 of that Act as added by Public Law 92-433 (86 Stat. 729, 42 U.S.C. 1786); and
  • National School Lunch Act, Section 13(h)(3), as amended by Section 3 of Public Law 90-302 (82 Stat. 119, 42 U.S.C. 1761(h)(3)).
• Services, except for wages paid to residents who assist in providing congregate services such as meals and personal care, provided a resident of an eligible housing project under a congregate services program under Section 802 of the Cranston-Gonzales National Affordable Housing Act, Public Law 101-625 (104 Stat. 4313, 42 U.S.C. 8011).

 

E-2120 Housing and Utilities

Revision 12-2; Effective June 1, 2012

Do not count in the eligibility budget or the budget to determine co-payment any receipt for the following:

• Assistance to prevent fuel cut-offs and to promote energy efficiency under the Emergency Energy Conservation Services Program or the Energy Crisis Assistance Program, as authorized by Section 222(a)(5) of the Economic Opportunity Act of 1964, as amended by Section 5(d)(1) of Public Law No. 93-644 and Section 5(a)(2) of Public Law 95-568 (88 Stat. 2294, as amended, 42 U.S.C. 2809(a)(5)).
• Home energy assistance payments or allowances under title XXVI of the Omnibus Budget Reconciliation Act of 1981, Public Law 97-35, as amended (42 U.S.C. 8624(f)).
• Value of any assistance paid with respect to a dwelling unit under:
  • the United States Housing Act of 1937;
  • the National Housing Act;
  • Section 101 of the Housing and Urban Development Act of 1965;
  • Title V of the Housing Act of 1949; or
  • Section 202(h) of the Housing Act of 1959.
• Payments for relocating, made to persons displaced by federal or federally assisted programs that acquire real property, under Section 216 of Public Law 91-646, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (84 Stat. 1902, 42 U.S.C. 4636).

 

E-2130 Education and Employment

Revision 09-4; Effective December 1, 2009

Do not count in the eligibility budget or the budget to determine co-payment any receipt for the following:

• Grants or loans to undergraduate students made or insured under programs administered by the Secretary of Education under section 507 of the Higher Education Amendments of 1968, Public Law 90-575 (82 Stat. 1063).
• Any wages, allowances or reimbursement for transportation and attendant care costs, unless exempted on a case-by-case basis, when received by an eligible person with a disability employed in a project under title VI of the Rehabilitation Act of 1973, as added by Title II of Public Law 95-602 (92 Stat. 2992, 29 U.S.C. 795(b)(c)).
• Student financial assistance for attendance costs received from a program funded in whole or in part under Title IV of the Higher Education Act of 1965, as amended, or under Bureau of Indian Affairs student assistance programs, if it is made available for tuition and fees normally assessed a student carrying the same academic workload, as determined by the institution, including costs for rental or purchase of any equipment, materials or supplies required of all students in the same course of study, and an allowance for books, supplies, transportation and miscellaneous personal expenses for a student attending the institution on at least a half-time basis, as determined by the institution, under Section 14(27) of Public Law 100-50, the Higher Education Technical Amendments Act of 1987 (20 U.S.C. 1087uu).

 

E-2140 Native Americans – Exempt Income

Revision 09-4; Effective December 1, 2009

 

E-2141 Types of Payments Excluded Without Regard to Specific Tribes or Groups

Revision 09-4; Effective December 1, 2009

Do not count in the eligibility budget or the budget to determine co-payment any receipt for the following:

• Funds held in trust by the Secretary of the Interior for an Indian tribe and distributed per capita to a member of that tribe under Public Law 98-64 (97 Stat. 365, 25 U.S.C. 117b). Funds held by Alaska Native Regional and Village Corporations (ANRVC) are not held in trust by the Secretary of the Interior and therefore ANRVC dividend distributions are not excluded from countable income under this exclusion.
• Distributions received by an individual Alaska Native or descendant of an Alaska Native from an Alaska Native Regional and Village Corporation pursuant to the Alaska Native Claims Settlement Act, as follows: cash, including cash dividends on stock received from a Native Corporation, to the extent that it does not, in the aggregate, exceed $2,000 per individual each year; stock, including stock issued or distributed by a Native Corporation as a dividend or distribution on stock; a partnership interest; land or an interest in land, including land or an interest in land received from a Native Corporation as a dividend or distribution on stock; and an interest in a settlement trust. This exclusion is pursuant to Section 15 of the Alaska Native Claims Settlement Act Amendments of 1987, Public Law 100-241 (101 Stat. 1812, 43 U.S.C. 1626(c)), effective Feb. 3, 1988.
• Up to $2,000 per year received by Indians that is derived from individual interests in trust or restricted lands under Section 13736 of Public Law 103-66 (107 Stat. 663, 25 U.S.C. 1408, as amended).
• Indian judgment funds that are held in trust by the Secretary of the Interior or distributed per capita pursuant to a plan prepared by the Secretary of the Interior and not disapproved by a joint resolution of the Congress under Public Law 93-134, as amended by Section 4 of Public Law 97-458 (96 Stat. 2513, 25 U.S.C. 1408). Indian judgment funds include interest and investment income accrued while such funds are so held in trust. This treatment extends to initial purchases made with Indian judgment funds. This treatment does not apply to sales or conversions of initial purchases or to subsequent purchases.

 

E-2142 Payments to Members of Specific Indian Tribes and Groups

Revision 09-4; Effective December 1, 2009

Do not count in the eligibility budget or the budget to determine co-payment any receipt for the following:

• Per capita payments to members of the Red Lake Band of Chippewa Indians from the proceeds of the sale of timber and lumber on the Red Lake Reservation under Section 3 of Public Law 85-794 (72 Stat. 958).
• Per capita distribution payments by the Blackfeet and Gros Ventre tribal governments to members which resulted from judgment funds to the tribes under Section 4 of Public Law 92-254 (86 Stat. 65) and under Section 6 of Public Law 97-408 (96 Stat. 2036).
• Settlement fund payments and the availability of such funds to members of the Hopi and Navajo Tribes under Section 22 of Public Law 93-531 (88 Stat. 1722), as amended by Public Law 96-305 (94 Stat. 929).
• Judgment funds distributed per capita to, or held in trust for, members of the Sac and Fox Indian Nation, and the availability of such funds under Section 6 of Public Law 94-189 (89 Stat. 1094).
• Judgment funds distributed per capita to, or held in trust for, members of the Grand River Band of Ottawa Indians, and the availability of such funds under Section 6 of Public Law 94-540 (90 Stat. 2504).
• Any judgment funds distributed per capita to members of the Confederated Tribes and Bands of the Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation under Section 2 of Public Law 95-433 (92 Stat. 1047, 25 U.S.C. 609c-1).
• Any judgment funds distributed per capita or made available for programs for members of the Delaware Tribe of Indians and the absentee Delaware Tribe of Western Oklahoma under Section 8 of Public Law 96-318 (94 Stat. 971).
• All funds and distributions to members of the Passamaquoddy Tribe, the Penobscot Nation and the Houlton Band of Maliseet Indians under the Maine Indian Claims Settlement Act, and the availability of such funds under Section 9 of Public Law 96-420 (94 Stat. 1795, 25 U.S.C. 1728(c)).
• Any distributions of judgment funds to members of the San Carlos Apache Indian Tribe of Arizona under Section 7 of Public Law 93-134 (87 Stat. 468) and Public Law 97-95 (95 Stat. 1206).
• Any distribution of judgment funds to members of the Wyandot Tribe of Indians of Oklahoma under Section 6 of Public Law 97-371 (96 Stat. 1814).
• Distributions of judgment funds to members of the Shawnee Tribe of Indians (Absentee Shawnee Tribe of Oklahoma, the Eastern Shawnee Tribe of Oklahoma and the Cherokee Band of Shawnee descendants) under Section 7 of Public Law 97-372 (96 Stat. 1816).
• Judgment funds distributed per capita or made available for programs for members of the Miami Tribe of Oklahoma and the Miami Indians of Indiana under Section 7 of Public Law 97-376 (96 Stat. 1829).
• Distributions of judgment funds to members of the Clallam Tribe of Indians of the State of Washington (Port Gamble Indian Community, Lower Elwha Tribal Community and the Jamestown Band of Clallam Indians) under Section 6 of Public Law 97-402 (96 Stat. 2021).
• Judgment funds distributed per capita or made available for programs for members of the Pembina Chippewa Indians (Turtle Mountain Band of Chippewa Indians, Chippewa Cree Tribe of Rocky Boy's Reservation, Minnesota Chippewa Tribe, Little Shell Band of the Chippewa Indians of Montana and the nonmember Pembina descendants) under Section 9 of Public Law 97-403 (96 Stat. 2025).
• Per capita distributions of judgment funds to members of the Assiniboine Tribe of Fort Belknap Indian Community and the Papago Tribe of Arizona under Sections 6 and 8(d) of Public Law 97-408 (96 Stat. 2036, 2038).
• Up to $2,000 of per capita distributions of judgment funds to members of the Confederated Tribes of the Warm Springs Reservation under Section 4 of Public Law 97-436 (96 Stat. 2284).
• Judgment funds distributed to the Red Lake Band of Chippewa Indians under Section 3 of Public Law 98-123 (97 Stat. 816).
• Funds distributed per capita or family interest payments for members of the Assiniboine Tribe of Fort Belknap Indian Community of Montana and the Assiniboine Tribe of the Fort Peck Indian Reservation of Montana under Section 5 of Public Law 98-124 (97 Stat. 818).
• Distributions of judgment funds and income derived therefrom to members of the Shoalwater Bay Indian Tribe under Section 5 of Public Law 98-432 (98 Stat. 1672).
• All distributions to heirs of certain deceased Indians under Section 8 of the Old Age Assistance Claims Settlement Act, Public Law 98-500 (98 Stat. 2319).
• Judgment funds distributed per capita or made available for any tribal program for members of the Wyandotte Tribe of Oklahoma and the Absentee Wyandottes under Section 106 of Public Law 98-602 (98 Stat. 3151).
• Per capita and dividend payment distributions of judgment funds to members of the Santee Sioux Tribe of Nebraska, the Flandreau Santee Sioux Tribe, the Prairie Island Sioux, Lower Sioux and Shakopee Mdewakanton Sioux Communities of Minnesota under Section 8 of Public Law 99-130 (99 Stat. 552) and Section 7 of Public Law 93-134 (87 Stat. 468), as amended by Public Law 97-458 (96 Stat. 2513; 25 U.S.C. 1407).
• Funds distributed per capita or held in trust for members of the Chippewas of Lake Superior and the Chippewas of the Mississippi under Section 6 of Public Law 99-146 (99 Stat. 782).
• Distributions of claims settlement funds to members of the White Earth Band of Chippewa Indians as allottees, or their heirs, under Section 16 of Public Law 99-264 (100 Stat. 70).
• Payments or distributions of judgment funds, and the availability of any amount for such payments or distributions, to members of the Saginaw Chippewa Indian Tribe of Michigan under Section 6 of Public Law 99-346 (100 Stat. 677).
• Judgment funds distributed per capita or held in trust for members of the Chippewas of Lake Superior and the Chippewas of the Mississippi under Section 4 of Public Law 99-377 (100 Stat. 805).
• Judgment funds distributed to members of the Cow Creek Band of Umpqua Tribe of Indians under Section 4 of Public Law 100-139 (101 Stat. 822).
• Per capita payments of claims settlement funds to members of the Coushatta Tribe of Louisiana under Section 2 of Public Law 100-411 (102 Stat. 1097) and Section 7 of Public Law 93-134 (87 Stat. 468), as amended by Public Law 97-458 (96 Stat. 2513; 25 U.S.C. 1407).
• Funds distributed per capita for members of the Hoopa Valley Indian Tribe and the Yurok Indian Tribe under Sections 4, 6 and 7 of Public Law 100-580 (102 Stat. 2929, 2930, 2931) and Section 3 of Public Law 98-64 (97 Stat. 365; 25 U.S.C. 117b).
• Judgment funds held in trust by the United States, including interest and investment income accruing on such funds, and judgment funds made available for programs or distributed to members of the Wisconsin Band of Potawatomi (Hannahville Indian Community and Forest County Potawatomi) under Section 503 of Public Law 100-581 (102 Stat. 2945).
• All funds, assets and income from the trust fund transferred to the members of the Puyallup Tribe under Section 10 of the Puyallup Tribe of Indians Settlement Act of 1989, Public Law 101-41 (103 Stat. 88, 25 U.S.C. 1773h(c)).
• Judgment funds distributed per capita, or held in trust, or made available for programs, for members of the Seminole Nation of Oklahoma, the Seminole Tribe of Florida, the Miccosukee Tribe of Indians of Florida and the independent Seminole Indians of Florida under Section 8 of Public Law 101-277 (104 Stat. 145).
• Payments, funds, distributions or income derived from them to members of the Seneca Nation of New York under Section 8(b) of the Seneca Nation Settlement Act of 1990, Public Law 101-503 (104 Stat. 1297, 25 U.S.C. 1774f).
• Per capita distributions of settlement funds under Section 102 of the Fallon Paiute Shoshone Indian Tribes Water Rights Settlement Act of 1990, Public Law 101-618 (104 Stat. 3289) and Section 7 of Public Law 93-134 (87 Stat. 468), as amended by Public Law 97-458 (96 Stat. 2513; 25 U.S.C. 1407).
• Settlement funds, assets, income, payments or distributions from Trust Funds to members of the Catawba Indian Tribe of South Carolina under Section 11(m) of Public Law 103-116 (107 Stat. 1133).
• Settlement funds held in trust (including interest and investment income accruing on such funds) for, and payments made to, members of the Confederated Tribes of the Colville Reservation under Section 7(b) of Public Law 103-436 (108 Stat. 4579).
• Judgment funds distributed under Section 111 of the Michigan Indian Land Claims Settlement Act (Public Law 105-143, 111 Stat. 2665).
• Judgment funds distributed under Section 4 of the Cowlitz Indian Tribe Distribution of Judgment Funds Act (Public Law 108-222, 118 Stat. 624).

 

E-2143 Receipts from Lands Held in Trust for Certain Tribes or Groups

Revision 09-4; Effective December 1, 2009

Do not count in the eligibility budget or the budget to determine co-payment any receipt for the following:

• Receipts from land held in trust by the federal government and distributed to members of certain Indian tribes under Section 6 of Public Law 94-114 (89 Stat. 579, 25 U.S.C. 459e).
• Receipts derived from trust lands awarded to the Pueblo of Santa Ana and distributed to members of that tribe under Section 6 of Public Law 95-498 (92 Stat. 1677).
• Receipts derived from trust lands awarded to the Pueblo of Zia of New Mexico and distributed to members of that tribe under Section 6 of Public Law 95-499 (92 Stat. 1680).

 

E-2150 Other – Exempt Income

Revision 16-3; Effective September 1, 2016

Do not count in the eligibility budget or the budget to determine co-payment any receipt for the following:

• Compensation provided to volunteers by the Corporation for National and Community Service (CNCS), unless determined by the CNCS to constitute the minimum wage in effect under the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.) or applicable state law, pursuant to 42 U.S.C. 5044(f)(1). The Corporation merged ACTION and the Commission on National and Community Service and manages three main programs:
  • Senior Corps incorporated the Foster Grandparents, Retired and Senior Volunteer and Senior Companion Programs;
  • AmeriCorps incorporated the VISTA, National Civilian Community Corps programs and the full-time demonstration program established under the 1990 Act; and
  • Learn and Serve America, formerly known as Serve America.
• Any assistance to an individual (other than wages or salaries) under the Older Americans Act of 1965, as amended by Section 102(h)(1) of Public Law 95-478 (92 Stat. 1515, 42 U.S.C. 3020a).
• Amounts paid as restitution to certain individuals of Japanese ancestry and Aleuts for losses suffered as a result of evacuation, relocation and internment during World War II, under the Civil Liberties Act of 1988 and the Aleutian and Pribilof Islands Restitution Act, Sections 105(f) and 206(d) of Public Law 100-383 (50 U.S.C. App. 1989 b and c).
• Payments made on or after Jan. 1, 1989, from the Agent Orange Settlement Fund or any other fund established pursuant to the settlement in the In Re Agent Orange product liability litigation, M.D.L. No. 381 (E.D.N.Y.) under Public Law 101-201 (103 Stat. 1795) and Section 10405 of Public Law 101-239 (103 Stat. 2489).
• Payments made under Section 6 of the Radiation Exposure Compensation Act, Public Law 101-426 (104 Stat. 925, 42 U.S.C. 2210).
• The value of any child care provided or arranged (or any payment for such care or reimbursement for costs incurred for such care) under the Child Care and Development Block Grant Act, as amended by Section 8(b) of Public Law 102-586 (106 Stat. 5035).
• Payments made to individuals because of their status as victims of Nazi persecution excluded pursuant to Section 1(a) of the Victims of Nazi Persecution Act of 1994, Public Law 103-286 (108 Stat. 1450). This provision supersedes previous provisions for the exclusion of certain payments made by the governments of Germany, Austria and the Netherlands, insofar as they are made to victims of Nazi persecution. Payments from:
  • Germany are identified with the acronym ZRBG;
  • the Netherlands are identified with the acronym WUV; and
  • Austria are identified as DIE BEGUENSTIGUNGSVORSCHRIFTEN FUER GESCHAEDIGTE AUS POLITISCHEN ODER RELIGIOESEN GRUENDEN ODER AUS GRUENDEN DER ABSTAMMUNG WURDEN ANGEWENDET (§500FF ASVG), which translates to “The regulations which give preferential treatment for persons who suffered because of political or religious reasons or reasons of origin were applied (§500ff ASVG).”
• Any matching funds from a demonstration project authorized by the Community Opportunities, Accountability, and Training and Educational Services Act of 1998 (Public Law 105-285) and any interest earned on these matching funds in an Individual Development Account, pursuant to Section 415 of Public Law 105-285 (112 Stat. 2771).
• Any earnings, Temporary Assistance for Needy Families matching funds and interest in an Individual Development Account, pursuant to Section 103 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Public Law 104-193, 42 U.S.C. 604(h)(4)).
• Payments made to individuals who were captured and interned by the Democratic Republic of Vietnam as a result of participation in certain military operations, pursuant to Section 606 of the Departments of Labor, Health and Human Services and Education and Related Agencies Appropriations Act of 1996 (Public Law 105-78).
• Payments made to certain Vietnam veterans' children with spina bifida, pursuant to Section 421 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act of 1997 (Public Law 104-204, 38 U.S.C. 1805(a)).
• Payments made to the children of women Vietnam veterans who suffer from certain birth defects, pursuant to Section 401 of the Veterans Benefits and Health Care Improvement Act of 2000 (Public Law 106-419 (38 U.S.C. 1833(c)).

E-2210 Federal Tax Refunds and Earned Income Tax Credits

Revision 22-4; Effective Dec. 1, 2022

Federal tax refund, child tax credit (CTC), and earned income tax credit (EIC) payments are exempt from resources for a period of 12 months after receipt.

An EIC is a special tax credit that reduces the federal tax liability of certain low-income working taxpayers. This tax credit may or may not result in a payment to the taxpayer. EIC payments are allowed as an advance from an employer or as a refund from the Internal Revenue Service.

The CTC is a special refundable federal tax credit that is available to certain low-income taxpayers with earned income. They must be parents, step-parents, grandparents or foster parents with a dependent child. This child tax credit may provide a refund to people even if they do not owe any tax.

Relationship of income to resources. An unspent tax refund, EIC, or CTC payment is not counted as income or resources for the month it is received and for the 12 months following the month of receipt. After the 12-month period, count any remaining funds from the tax refund, EIC, or CTC payment as a resource.

Example: A person receives the payment in May. The payment is excluded as income and resources in May. Any remaining funds from the payment counts as a resource as of the first day of May of the following year.

Related Policy 

Miscellaneous Things That May Not Be Income, E-1740
Certain Federal Income Tax Refunds, E-3160
Exclusions from Resources Provided by Other Statutes, F-2260

E-2220 Student Earnings

Revision 09-4; Effective December 1, 2009

A person who is under age 22 and regularly attending school is considered a student. A student's income is exempt from the eligibility budget and the budget to determine co-payment, up to the monthly limit but not more than the calendar year annual limit.

This exemption may apply to an eligible or ineligible:

• person;
• child;
• spouse; or
• parent.

Apply the exemption:

• consecutively to months in which there is earned income until the maximum yearly limit is exhausted or the person is no longer a student under age 22; and
• only to a student’s own earned income.

The limits are set by the Social Security Administration for the SSI program and published annually in the Federal Register. The monthly and yearly limits are calculated annually based on increases in the cost of living index. Under this calculation, these amounts will never be lower than the previous year's amounts. However, there may be years when no increases result from the calculation.

See "Special Income Exemption for Student" in Appendix XXXI, Budget Reference Chart, for the monthly and yearly amount limits for the exemption.

E-2310 Refunds of Taxes Paid on Real Property or Food

Revision 09-4; Effective December 1, 2009

Exempt from the eligibility budget and the budget to determine co-payment any amount received from any public agency as a return or refund of taxes paid on real property or on food purchased.

 

E-2320 Assistance Based on Need

Revision 09-4; Effective December 1, 2009

Exempt from the eligibility budget assistance based on need that is wholly funded by a state or one of its political subdivisions, including a recognized Indian tribe. Assistance is based on need if it is provided under a program that uses the amount of income as one factor to determine eligibility. The Temporary Assistance for Needy Families (TANF) program is an example.

 

E-2330 Educational Assistance

Revision 09-4; Effective December 1, 2009

If not totally exempt under policy in Section E-2130, Education and Employment, exempt from the eligibility budget and the budget to determine co-payment any portion of a grant, scholarship, fellowship or gift used for paying tuition, fees or other necessary educational expenses at any educational institution, including vocational or technical education. Any portion of such educational assistance that is not used to pay current tuition, fees or other necessary educational expenses, but will be used for paying this type of educational expense at a future date is excluded from income in the month of receipt. This exclusion does not apply to any portion set aside or actually used for food or shelter.

 

E-2340 Home Produce for Personal Consumption

Revision 09-4; Effective December 1, 2009

Exempt from the eligibility budget and the budget to determine co-payment the value of food that a person and household raise, if it is consumed by the household.

 

E-2350 Child Support Payments

Revision 13-2; Effective June 1, 2013

Exempt from the eligibility budget one-third of the total amount of child support payments for an eligible child.

• If a recipient receives child support as fiduciary agent for a child, this is income to the child and not to the recipient, except to the extent that the recipient uses the monies for his/her own needs.
• The eligibility specialist must document how the child support monies are used.

See Section E-3321, Child Support Payments

 

E-2360 Payment Treated Like Other Exemptions

Revision 10-1; Effective March 1, 2010

Treat the following payments based on policy in Section E-2320, Assistance Based on Need, or do not consider payments as income based on policy in Section E-1700, Things That Are Not Income:

• Alaska longevity bonus
• Foster care payments
• Low income energy assistance
• Home energy assistance
• Federal housing assistance
• Disaster assistance

Consider a utility allowance given under any of these to be income, unless the allowance is paid directly to the utility company and the client has no access to the allowance. Utility benefits under Section E-2120, Housing and Utilities, are exempt.

When considering disaster assistance, payments precipitated by an emergency or major disaster are not counted as income or resources when determining Medicaid eligibility.

• A major disaster is any natural catastrophe such as a hurricane or drought, or, regardless of cause, any fire, flood or explosion, which the President determines causes damage of sufficient severity and magnitude.
• An emergency is any occasion or instance for which the President determines that federal assistance is needed to supplant state and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe.
• Disaster Unemployment Assistance is emergency assistance authorized under P.L. 100-107 and received by individuals who are unemployed as a result of a major disaster. Individuals receiving Disaster Unemployment Assistance are not eligible for other unemployment compensation and cannot receive both at the same time.

If precipitated by an emergency or a major disaster, do not consider the following as income:

• Payments received under the Disaster Relief Act of 1974 (P.L. 93-288, Section 312(d)), as amended by the Disaster Relief and Emergency Assistance Amendments of 1988 (P.L. 100-707, Section 105(i)) and disaster assistance comparable to these payments provided by states, local governments and disaster assistance organizations.
• Payments from the Federal Emergency Management Agency (FEMA), Individual and Family Grant Assistance program (IFG), grants or loans by the Small Business Administration (SBA), voluntary disaster assistance organizations, such as the Red Cross, or private insurance payments for losses due to a major disaster such as flood, wind, land movement.
• Each payment made to farmers under the Disaster Assistance Act of 1988 (P.L. 100-387) for crop losses or failure in a disaster.
• Income received from public and private organizations by individuals working in disaster relief efforts and funded under a National Emergency Grant by WIA, Title 1 (P.L. 105-220).
• Disaster Unemployment Assistance.
• Payments for flood mitigation received by a homeowner under the National Flood Insurance Act of 1968, as amended by P.L. 109-64.
• Government payments designated for the restoration of a home damaged in a disaster.

For treatment of resources from disaster assistance, see Section F-2270, Exclusions from Resources Related to Disaster Payments.

 

E-2370 Certain Gifts

Revision 09-4; Effective December 1, 2009

Treat the following gifts based on policy in Section E-2320, Assistance Based on Need, or do not consider the payments as income based on policy in Section E-1700, Things That Are Not Income.

 

E-2371 Certain Gifts

Revision 09-4; Effective December 1, 2009

Gifts from tax-exempt organizations, such as the Make-A-Wish Foundation, to children with life-threatening conditions, as required by Public Law 105-306, effective retroactively to Oct. 28, 1996, are exempt. The exclusions apply to children under age 18. The gift must be from an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 and that is exempt from taxation under Section 501(c). Document the case record with an oral or written statement from the organization that the gift was made based on the child having a life-threatening condition. No additional medical development is necessary.

The following gifts to or for the benefit of a child described above are excluded from income:

• Any in-kind gift not converted to cash.
• A cash gift to the extent that the cash excluded under this provision does not exceed $2,000 in any calendar year. Cash in excess of $2,000 received in a calendar year is subject to regular income counting rules.

If an in-kind gift is converted to cash, the cash counts as income in the month converted. For purposes of this exclusion, an in-kind gift is any gift other than cash, including gifts of food or shelter.

The exclusion also applies to a deeming situation if the gift is made to a parent for the benefit of a child with a life-threatening condition.

 

E-2372 Ticket for Travel

Revision 09-4; Effective December 1, 2009

Do not count the value of any commercial transportation ticket that is received as a gift and is not converted to cash. See Section E-3371, Gifts of Domestic Commercial Transportation Tickets.

 

E-2380 Relocation Assistance

Revision 09-4; Effective December 1, 2009

Relocation assistance provided under Title II of the Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970 (Subchapter II, Chapter 61, Title 42 of the U.S. Code) is excluded from income.

Relocation assistance provided by a state or local government that is comparable to assistance provided under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 that is subject to the treatment required by Section 216 of that Act. State or local relocation assistance payments are excluded from countable resources for nine months after the month of receipt.

 

E-2390 Crime Victims Compensation

Revision 09-4; Effective December 1, 2009

Do not count in the eligibility budget or the budget to determine co-payment any payment received from a fund established by a state to aid victims of crime. Unspent payments received from a fund established by a state to aid victims of crime are excluded from resources for nine months. A person is not required to apply for benefits from a crime victims’ compensation fund.

E-2410 Hazardous Duty Pay

Revision 09-4; Effective December 1, 2009

Do not count hazardous duty pay of a spouse or parent absent from the home because of active military service.

Do not count in the eligibility budget or the budget to determine co-payment any receipt of unearned income for the hostile fire pay or imminent danger pay portion of military income, commonly known as combat pay.

Any unspent hostile fire pay or imminent danger pay becomes a resource if retained into the following month and not otherwise excluded.

In a deeming situation, exclude from deemed resources for the nine-month period following the month of receipt the unspent portion of any retroactive payment of:

• hostile fire and imminent danger pay (pursuant to 37 U.S.C. 310) received by the ineligible spouse or parent from one of the uniformed services; and
• family separation allowance (pursuant to 37 U.S.C. 427) received by the ineligible spouse or parent from one of the uniformed services as a result of deployment to or while serving in a combat zone.

 

E-2420 Excluded Burial Fund Interest

Revision 09-4; Effective December 1, 2009

Do not count in the eligibility budget or the budget to determine co-payment interest earned on excluded burial funds and any appreciation in the value of an excluded burial arrangement that is left to accumulate and become a part of a separately identifiable burial fund. If the burial funds increase by more than $1,500 because of contributions by client actions, the amount in excess of $1,500 is a countable resource.

 

E-2430 Certain Designated Accounts

Revision 09-4; Effective December 1, 2009

Public Law 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, requires the representative payees of SSI recipients under age 18 to establish designated accounts when there are retroactive payments for more than six months payable to the recipients. These designated accounts, including accrued interest or other earnings produced by the accounts, are excluded from countable resources. This exclusion was effective Aug. 22, 1996.

Do not count in the eligibility budget or the budget to determine co-payment interest or other earnings on any designated account established for SSI recipients under age 18 for retroactive benefits, as required by Public Law 104-193, effective Aug. 22, 1996.

 

E-2440 Certain Health-Related Payments

Revision 10-1; Effective March 1, 2010

The following payments, regardless of when received, are not counted as income and are excluded from resources:

• Payments from the Ricky Ray Hemophilia Relief Fund.
• Payments made from any fund established pursuant to a class settlement in the case of Susan Walker v. Bayer Corporation, as required by Public Law 105-33, effective Aug. 5, 1997.
• Payments from the Energy Employees Occupational Illness Compensation Act (EEOICA) (Public Law 106-398, October 2000) for medical benefits and compensation.

Revision 13-2; Effective June 1, 2013

Earned income may be in cash or in-kind. Payment of earned income may be:

• wages,
• net earnings from self-employment,
• farm income,
• payments for services performed in a sheltered workshop or work activities center,
• certain royalties and honoraria, or
• certain refunds of federal income taxes and advance payments by employers made in accordance with the earned income credit provisions of the Internal Revenue Code.

To budget variable earned income:

• determine an average pay amount,
• convert income to a monthly amount, and
• project income for future months if anticipated to continue.

Converting Monthly Income

The eligibility system will convert income that is received other than monthly to a monthly amount by using the following conversion process below:

• Divide yearly income by 12.
• Multiply weekly income by 4.33.
• Add amounts received twice a month (semi-monthly).
• Multiply amounts received every other week by 2.17 (bi-weekly).

Weekly earnings are converted to monthly amounts by multiplying weekly earnings by 4.33. For example, if weekly earnings are $150, the calculation is: $150 weekly earnings X 4.33 = $649.50 monthly earnings.

Bi-weekly earnings are converted to a monthly amount by averaging the bi-weekly earnings, then multiplying the average bi-weekly earnings by 2.17. For example, if average bi-weekly earnings are $300, the calculation is: $300 average bi-weekly earnings X 2.17 = $651 monthly earnings.

When projecting earned income, if there is verification of the actual amount of earnings received during an entire calendar month, use the actual amount received instead of the above procedures for converting weekly and bi-weekly earnings to a monthly amount. For example, the client earns $150 each week. During July, he received the following payments: $150 on July 1, $150 on July 8, $150 on July 15, $150 on July 22, and $150 on July 29. The amount budgeted is the actual income received in July ($750), not $649.50 ($150 weekly earnings X 4.33 = $649.50). $649.50 would be used as the projected income for following months beginning in August.

Note: When income is new or terminated and only a partial month's income is received in the start or terminated month, do not convert the income. Use actual, unconverted income.

 

 

E-3110 Wages

Revision 10-2; Effective June 1, 2010

Wages are what a person receives (before any deductions) for working as someone else's employee.

Wages include salaries, commissions, bonuses, severance pay and any other special payments received because of employment. They may also include the value of food, clothing or shelter, or other items provided instead of cash, referred to as in-kind earned income.

If a person is a domestic or agricultural worker, the law requires the value of food, clothing or shelter, or other items provided instead of cash, be treated as in-kind unearned income.

Note: If a person receives wages from an S Corporation and is also a shareholder of the S Corporation, consult the regional attorney.

Wages or Self-Employment

Under certain conditions, services performed as an employee may be considered self-employment rather than wages. Typically, services provided by ministers, real estate agents or newspaper vendors are considered self-employment rather than wages. Statutory employees are independent contractors and are treated as self-employed individuals. There are four categories of statutory employees:

• agent drivers or commission drivers;
• certain full-time life insurance salespeople;
• full-time traveling or city salespeople; and
• home workers.

Kinds of Wages

Some, but not all, forms of wages are:

Salaries — Payments (fixed or hourly rate) received for work performed for an employer.

Commissions — Fees paid to an employee for performing a service (for example, a percentage of sales). Commissions are wages when paid if the payment stems from an employer-employee relationship. The wages of a salesperson paid on a straight commission basis are the gross commissions paid minus any amounts paid specifically as advances or reimbursements for travel or business expenses incurred in the employer's business. Advances against commissions to be earned in the future are wages when paid.

Bonuses — Amounts paid by employers as extra pay for past employment (for example, for outstanding work, length of service, holidays, etc.) as part of the employment relationship.

Severance Pay — Payment made by an employer to an employee whose employment is terminated independently of his wishes or payment is made due to voluntary early retirement and normally considered earned wages. When an employee's severance pay is budgeted, contact state office for special treatment of some severance pay.

Military Basic Pay — The service member's wage, which is based solely on the member's pay grade and length of service. When military personnel wages are budgeted, contact state office for special treatment of the service member's compensation.

Special Payments Received Because of Employment —Items such as vacation pay, advanced/deferred wages, etc. Payments are not wages after the first six months. Any payments, or portion thereof, received by an employee during the first six months period, which according to the employer, are attributable to the employee's own contributions to the plan are not wages. Such payments are a return on the employee's premium rather than pay for service.

Note: Workers' compensation payments are not wages.

References:

• Section E-1300, Types of Income
• Section E-1700, Things That Are Not Income
• Section E-1760, Wage-Related Payments
• Section E-1770, Mandatory Payroll Deductions
• Section E-1780, Cafeteria Plan
• Section E-3120, Self-Employment

 

 

E-3120 Self-Employment

Revision 10-1; Effective March 1, 2010

Net earnings from self-employment are the gross income from any trade or business that a person operates, less allowable deductions for that trade or business. Net earnings also include a person's share of profit or loss in any partnership to which a person belongs. These are the same net earnings that a person would report on a federal income tax return.

If a person is both employed and self-employed, his earned income consists of his wages plus net earnings from self-employment. Typically, services provided by ministers, real estate agents or newspaper vendors are considered self-employment rather than wages. Statutory employees are independent contractors and are treated as self-employed individuals. There are four categories of statutory employees:

• agent drivers or commission drivers;
• certain full-time life insurance salespeople;
• full-time traveling or city salespeople; and
• home workers.

See Section E-6000, Self-Employment Income, for more details on treatment of this type of earned income.

 

 

E-3130 Farm Income

Revision 09-4; Effective December 1, 2009

Farm income is earned income when either the person or spouse is doing the farming or operating the farm as a business. See Section E-6000, Self-Employment Income, for more details on treatment of this type of earned income.

 

 

E-3140 Certain Payments in a Sheltered Workshop

Revision 09-4; Effective December 1, 2009

Payments for services performed in a sheltered workshop or work activities center are what a person receives for participating in a program designed to help a person become self-supporting, even though payment does not meet the definition of wages.

 

 

E-3150 Certain Royalties and Honoraria

Revision 09-4; Effective December 1, 2009

Royalties that are earned income are payments to a person in connection with any publication of the person's work. Honoraria that are earned income are those portions of payments, such as an honorary payment, reward or donation, received in consideration of services rendered for which no payment can be enforced by law.

If a person receives a royalty as part of a trade or business, see Section E-3120, Self-Employment. See Section E-6000, Self-Employment Income, for more details on treatment of this type of earned income.

If a person receives another type of royalty or honorarium, investigate unearned income policy.

 

 

E-3160 Certain Federal Income Tax Refunds

Revision 09-4; Effective December 1, 2009

Refunds on account of earned income credits are payments made to a person under the provisions of Section 43 of the Internal Revenue Code of 1954, as amended. These refunds may be greater than taxes a person has paid. A person may receive earned income tax credit payments along with any other federal income tax refund a person receives because of overpayment of the person's income tax. Advance payments of earned income tax credits are made by the employer under the provisions of Section 3507 of the same code. A person can receive earned income tax credit payments only if a person meets certain requirements of family composition and income limits.

Federal income tax refunds made on the basis of taxes a person has already paid are not income to a person, as stated in Section E-1740, Miscellaneous Things That May Not Be Income.

 

 

E-3170 Census Bureau Wages

Revision 10-1; Effective March 1, 2010

The census is a count of everyone living in the United States and is mandated by the U.S. Constitution. The U.S. Census Bureau conducts the census every 10 years.

Wages paid by the Census Bureau for temporary employment related to census activities are excluded income for the Medicare Savings Programs (MSP). Do not include these wages in the eligibility budget for MSP.

These wages for temporary employment are not countable income in the month of receipt, but are considered a resource thereafter.

Wages paid by the Census Bureau for temporary employment related to census activities are included in eligibility or co-payment budgets for any other Medicaid for the Elderly and People with Disabilities (MEPD) program that is not an MSP.

For cases with a combination of regular Medicaid benefits and an MSP, the wages are countable in the eligibility budget (and co-payment, if applicable) for the regular Medicaid program, but are excluded in the eligibility budget for MSP.

Example: Individual is being considered for Pickle with Qualified Medicare Beneficiary (QMB) benefits. The wages paid by the Census Bureau for temporary employment related to census activities are included in the eligibility budget for Pickle, but are excluded in the eligibility budget for QMB.

Revision 16-2; Effective June 1, 2016

Unearned income is any income that is not earned. Unearned income may be in cash or in-kind. Unearned income includes these types of income:

• In-kind
• Fixed
• Other

Income tax refunds are subject to restitution policy (in the month of receipt) for co-payment purposes, to the extent that withholding tax was not included in the co-payment budget.

To determine the amount of unearned income, consider the amount actually available to the person. Reduce the gross amount by any ordinary or necessary expenses incurred in receiving the unearned income. For example, compensation for damages incurred in an accident would be the settlement amount less any legal, medical or other expenses. Medicare premiums, other health insurance premiums and income tax withheld from unearned income are not deductible expenses for eligibility determination. Income tax withheld from unearned income is also not a deductible expense for the co-payment calculation.

Revision 09-4; Effective December 1, 2009

This section includes sources of unearned income.

E-3310 Annuities, Pensions and Other Periodic Payments

Revision 09-4; Effective December 1, 2009

This unearned income is usually related to prior work or service. It includes, for example, private pensions, Social Security benefits, disability benefits, veterans' benefits, workers' compensation, railroad retirement annuities and unemployment insurance benefits. Payments from these sources are usually stable and fixed. See Section E-4000, Fixed Income.

E-3311 Medicaid Qualifying Trust Payments

Revision 09-4; Effective December 1, 2009

A Medicaid-qualifying trust is one that the person, his spouse, guardian or anyone holding his power of attorney establishes using the person's money, and the person is the beneficiary.

Amounts distributed from the trust to the person or used for the person's health, personal or other maintenance needs are countable income.

For example, if terms of the trust direct the trustee to pay a health care provider for medical services, the person is receiving the benefit of payment although no money is paid directly to him, and the amount is countable income.

E-3312 Testamentary and Inter Vivos Trusts Payments

Revision 09-4; Effective December 1, 2009

Resources in a testamentary or inter vivos trust are countable if the person is the trustee and has the legal right to revoke the trust and use the money for his own benefit. If he does not have access to the trust, the trust is not counted as a resource. If a trust is not counted as a resource, payments or disbursements from the trust made to or on behalf of the person are considered income. Payments or disbursements used to purchase medical or social services for the person are not considered income to the person.

E-3313 Revocable and Irrevocable Trusts

Revision 09-4; Effective December 1, 2009

Payments from the corpus or income generated by the corpus, to or for the benefit of the person, excluding payments for medical/social services, are income.

Payments from the corpus or income generated by the corpus for any other purpose are a transfer of assets.

E-3314 Exception, Special Needs and Pooled Trust

Revision 09-4; Effective December 1, 2009

Any distribution to or for the benefit of the person from corpus or income generated by the trust, except payments for medical and social services, is countable income. A payment to or for the benefit of the person is counted under trust provisions only if such payment is ordinarily counted as income.

E-3315 Qualified Income Trust (QIT)

Revision 10-1; Effective March 1, 2010

Income directed to the trust is disregarded from countable income when testing eligibility for institutional settings.

Any source of non-exempt/non-excludable income which is not directed to the QIT account during the calendar month of receipt is countable income for that month.

If countable income exceeds the special income limit, the person is income-ineligible for the month. Applicants may not be certified for any calendar month(s) in which they are income-ineligible. For active persons, restitution is requested in the amount of the vendor payment for any calendar month(s) in which they are income-ineligible.

Notes:

• When a person does not pay a full month's co-payment because of hospitalization or because Medicare covered 100 percent of the cost of a partial month, the accumulated funds in the QIT trust are not a countable resource, and transfer of assets is not involved.
• A person receiving Home and Community-Based Services waiver services with a QIT covering all waiver costs is not denied. Most waiver programs are based on a waiver for the institutional program. In a waiver program, the applicant with a QIT is receiving the benefit of the contracted rates as opposed to the private rates.

Examples:

• The applicant entered the nursing facility and applied for Medicaid in July. Income totals $4,600. The QIT calls for all income to be directed to the trust account. However, the trustee did not deposit the July income checks to the trust account until Aug. 2. The entire $4,600 is countable income for July, and the applicant is ineligible for that month.
• The person was certified for Medicaid in September. The QIT calls for all income (totaling $4,600) to be directed to the trust account. During the redetermination in August, the eligibility specialist learns that income checks for June were not deposited to the trust account until July. Because the person was ineligible for June, the eligibility specialist requests restitution for that month in the amount of the co-payment.

E-3320 Alimony and Support Payments

Revision 16-4; Effective December 1, 2016

Alimony and spousal support payments are cash or in-kind contributions to meet some or all of an individual's needs for food or shelter. Alimony (sometimes called maintenance) is an allowance made by a court from the funds of one spouse to the other spouse in connection with a suit for separation or divorce. Support payments may be made voluntarily or because of a court order.

Alimony and spousal support payments are unearned income to the individual receiving the payments. Verify the amount and frequency of alimony or spousal support payments.

For verification, use one of the following sources:

• court records;
• records of the agency through which the payments are made;
• official documents in the individual's possession (e.g., legal documents) that establish the amount and frequency of the support; or
• report of contact with the source of the payment containing the amount and frequency of the alimony or spousal support.

If none of the above sources are available, obtain an individual's sworn affidavit that explains why one of the sources above is not available (for example, the documentation does not exist, the court or agency will not release the information, or the source refused to cooperate). See E-1410, Division of Marital Income and Property.

If the alimony is not received in cash, determine its current fair market value.

To determine countable income, deduct any expenses that may have been incurred in obtaining the income, such as legal fees and court costs.

Determine whether the alimony is to be treated as a lump-sum payment, infrequent or irregular income, or regular and predictable income.

E-3321 Child Support Payments

Revision 13-2; Effective June 1, 2013

Consider payments as child support if:

• a court ordered the support, or
• the child's parent or the person making the payment states the purpose of the payment is to support the child.

Consider cash gifts or donations as cash contributions, not child support. A cash gift or donation is money that only benefits the child for a specific purpose, such as a birthday present, or to purchase clothes, toys or personal items.

Child support collected through the Office of Attorney General (OAG) may be distributed through warrants, direct deposits or the Texas Debit Card. A person also may receive payments through another state's Office of Attorney General. Several other states use debit accounts for the distribution of child support payments.

When child meets definition in D-1210, Definition of a Child:

• Child support payments (including arrearage payments) made on behalf of the child are unearned income to the child when the payment is made available to the child. One-third of the amount of a child support payment made to or for an eligible child by an absent parent is excluded. (See E-2350, Child Support Payments, for more information.)

When child does not meet definition in D-1210:

• Child support payments (excluding arrearages) made on behalf of the child are income to the child whether or not the child lives with the parent or receives any of the child support payment from the parent. Such support payments are not subject to the one-third reduction.
• Child support arrearage payments the parent receives and does not give to the adult child are income to the parent. Any amount of the payment the parent gives to the adult child is income to the adult child in the month given, not income to the parent. The one-third child support exclusion does not apply.

If a recipient receives child support for a child (including an adult child) but uses the money for the recipient's personal or household needs instead of the child's, count it as unearned income to the recipient. Do not count the amount actually used for or provided to the child as income to the recipient.

The eligibility specialist must document how the child support monies are used.

If a single payment covers two or more children (including at least one who is not an applicant/recipient) and the support order does not specify a portion for each child, prorate the payment among all of the children. When two or more children receive child support from the same father and one is an eligible child, the payment is always prorated.

E-3330 Dividends, Interest and Royalties

Revision 09-4; Effective December 1, 2009

Dividends and interest are returns on capital investments, such as stocks, bonds or savings accounts.

Royalties include compensation paid to the owner for the use of property, usually copyrighted material such as books, music or art, or natural resources such as minerals, oil, gravel or timber. Royalty compensation may be expressed as a percentage of receipts from using the property or as an amount per unit produced.

To be considered royalties, payments for the use of natural resources also must be received:

• under a formal or informal agreement whereby the owner authorizes another person to manage and extract a product (for example, timber or oil); and
• in an amount that is dependent on the amount of the product actually extracted.

An outright sale of natural resources by the owner of the land or by the owner of rights to use of the land constitutes the conversion of a resource. Proceeds from the conversion of a resource are not income.

Royalties are unearned income unless they are:

• received as part of a trade or business, or
• received by a person in connection with any publication of the person's work (for example, from publication of a manuscript, magazine article or artwork).

If royalties are earned income, see Section E-3150, Certain Royalties and Honoraria.

E-3331 Interest and Dividends

Revision 10-1; Effective March 1, 2010

Interest and dividends are returns on loans or investments such as stocks, bonds or savings accounts.

Dividends from insurance policies are not included because those dividends are refunds of overcharges on premiums. Appendix XXXV, Treatment of Insurance Dividends, indicates that when dividends are:

• paid directly to the policy holder, disregard dividends when paid. Count the dividend(s) as a resource if retained after the month of receipt;
• applied to future premium payments, disregard dividends as income or a resource;
• used to purchase term insurance, disregard dividends as income or a resource. Term insurance is not a resource per Section F-4226, Term and Burial Insurance; and
• accumulating in a separate account, count accumulated dividends as a resource, regardless of face value. Treat as a savings account, both as a resource and as income for interest generated.

Note: The dividend accumulation is a countable resource, like the balance of a savings account. The interest earned on the dividends would be excluded from income when paid. Interest left to accumulate becomes part of the countable resources.

References:

• Section E-3331.1, Treatment of Interest/Dividends on Fully Countable Resources
• Section E-3331.2, Treatment of Interest/Dividends on Certain Excluded or Partially Excluded Resources
• Section E-3331.3, Treatment of Interest/Dividends on All Other Resources
• Section F-4220, Personal Property

E-3331.1 Treatment of Interest/Dividends on Fully Countable Resources

Revision 09-4; Effective December 1, 2009

Determine if any interest or dividends are accrued on fully countable resources.

• Do not count the interest or dividends as income in the eligibility budget regardless of the amount or frequency.
• Count the interest or dividends as income in the co-payment budget.

Examples:

• An individual owns an excluded whole life participating insurance policy with a total face value of $1,500. Since this is a participating policy, the policy is accumulating dividends. The accumulating dividends are countable. Like a savings account, the accumulating dividends are accruing interest. Since the accumulating dividends are countable, do not count the interest income from the accumulating dividends in the eligibility budget.
• An individual owns a savings account with a balance of $800. The savings account is a fully countable resource. The savings account is accruing interest quarterly. Since the saving account is countable, do not count the interest income from the savings account in the eligibility budget.

E-3331.2 Treatment of Interest/Dividends on Certain Excluded or Partially Excluded Resources

Revision 16-4; Effective December 1, 2016

Determine if any interest or dividends are accrued on certain excluded or partially excluded resources.

• Do not count the interest or dividends as income in the eligibility budget or co-payment budget if from one of the following sources.

The following are excluded or partially excluded resources based on federal statutes other than the Social Security Act:

• Agent Orange Settlement Funds;
• Nazi Persecution, including Austrian Social Insurance Funds and Netherlands WUV Payments to Victims of Persecution;
• Corporation for National and Community Service (CNCS) (formerly ACTION) Programs;
• Restricted Allotted Indian Lands;
• Individual Development Accounts (IDAs) – TANF Funded;
• IDAs – Demonstration Project;
• Japanese-American and Aleutian Restitution Funds;
• Low Income Energy Assistance;
• Department of Defense (DOD) Payments to Certain Persons Captured and Interned by North Vietnam;
• Radiation Exposure Compensation Trust Funds;
• Ricky Ray Hemophilia Relief Fund;
• Payments to Veterans' Children with Certain Birth Defects; and
• Achieving a Better Life Experience (ABLE) Account.

See Section E-2000, Exempt Income, for other sources and for treatment of interest or dividends accrued on other unspent types of payments.

Example: An individual in a nursing facility received a payment for being a former prisoner of North Vietnam. The payment made by the Department of Defense is not a countable resource. The payment was deposited into an account that accrues interest. Do not count interest accrued on the unspent portion from the payment in the eligibility or co-payment budgets.

E-3331.3 Treatment of Interest/Dividends on All Other Resources

Revision 09-4; Effective December 1, 2009

Determine if any interest or dividends are accrued on all other resources.

• Count the interest or dividends accrued according to the treatment of that particular resource as outlined in the handbook as income in the eligibility budget.
• Count the interest or dividends accrued according to the treatment of that particular resource as outlined in the handbook as income in the co-payment budget.

Examples:

Interest accrued on retained amounts of SSA/SSI lump sums during the nine-month resource exclusion period is not excluded as income. However, some or all of the amount earned may be excluded as infrequent or irregular income.

Burial funds — Continue to follow policy for burial funds in Chapter F, Resources, in all aspects of calculating countable resources and consideration of the interest accrued.

Steps to follow:

When the source of the dividend or interest is received on ...	then ...
a fully countable resource,	the dividends or interest are not counted as income regardless of the frequency and amount in the eligibility budget. Count in the co-payment budgets.
certain excluded or partially excluded resource,	the dividends or interest are not counted as income in either the eligibility or co-payment budgets.
all other resources (different than those above),	the dividends or interest are counted as income in the eligibility or co-payment budgets according to the treatment of that particular resource as outlined in the handbook.

Exclude interest and dividends if they meet the definition of infrequent or irregular income as specified in Section E-9000, Infrequent or Irregular Income.

See Appendix XVI, Documentation and Verification Guide.

Note: In a spousal situation, if the institutionalized person is diverting income to the community spouse, a joint bank account balance is equally divided between the two. Even though only one-half of this balance is countable for the institutionalized person, treat the interest/dividends as if accrued on a fully countable resource.

E-3331.4 Treatment of Interest and Dividends Earned on an Achieving a Better Life Experience (ABLE) Account

Revision 16-4; Effective December 1, 2016

An Achieving a Better Life Experience (ABLE) program allows an individual with a disability or family members of the individual to establish a tax-free savings account to maintain health, independence and quality of life for the benefit of the individual with a disability. The individual must meet the criteria of the state's ABLE program in which the individual enrolls. The ABLE account funds can be used for the individual's disability-related expenses, which supplement, but do not replace, private insurance and/or public assistance.

Interest and dividends earned on an ABLE account are not countable income to the designated beneficiary.

Income of the designated beneficiary of an ABLE account, or an individual whose income is counted when determining eligibility, that is deposited into an ABLE account, remains countable when determining eligibility.

Contributions to an ABLE account from individuals other than the designated beneficiary, and any distributions from an ABLE account, are not considered income to the designated beneficiary.

Request information to verify an ABLE account. Verification must include the following information:

• name of the designated beneficiary;
• state ABLE program administering the account;
• name of the person who has signature authority (if different from the designated beneficiary);
• name of the financial institution; and
• ABLE account number.

Verification documents may vary among states. Examples of acceptable documentation include participation agreements, ABLE account contracts, financial statements, and annual income tax filing documents.

E-3331.5 Treatment of Interest/Dividends on School-Based Savings Accounts

Revision 16-4; Effective December 1, 2016

School-Based Savings Accounts are accounts set up by students or their parents at financial institutions that partner with school districts. Individuals may set up school-based savings programs through savings accounts, Certificates of Deposit (CDs), Series I savings bonds, and Tuition Savings Plans under IRS Code, Section 529 or U.S.C. Section 530.

Interest earned on School-Based Savings Accounts is excluded from income.

Related Policy

F-2320, School-Based Savings Accounts

E-3332 Income from Joint Bank Accounts

Revision 10-1; Effective March 1, 2010

In this context, the term "spouse" includes a spouse whose income is considered in the co-payment determination process. Interest payments on joint bank accounts are considered as follows:

• If the co-holders of the account are not eligible for SSI, TANF or MAO, or do not have spouses or parents whose incomes are deemed to the applicant/recipient, all interest payments and deposits made by the ineligible co-holders are considered as income of the applicant/recipient.
• If one or more co-holders are eligible for TANF, SSI or MAO, or are spouses or parents whose incomes are deemed to the applicant/recipient, a deposit by the co-holder, spouse or parent is not considered to be income to the applicant/recipient.

All interest payments and deposits are divided equally among the applicant/recipient, spouse or parent.

If an applicant/recipient has disproved ownership of all or a part of the funds in a joint account, deposits by co-holders are not considered as income before the change in the account designation. Interest payments are income to the eligible individual in proportion to the amount of the funds owned.

References:

Section F-4121, Joint Bank Accounts
Section E-3331, Interest and Dividends

Determine ownership by verifying bank records and obtaining statements from the co-holders of the account.

E-3333 Mineral and Timber Rights

Revision 09-4; Effective December 1, 2009

Ownership of Land and Mineral/Timber Rights

If the person owns the land to which the mineral rights or timber rights pertain, the current market value of the land can be assumed to include the value of the mineral rights. Additional development is unnecessary.

Ownership of Mineral Rights/Timber Rights Only

If the person does not own the land to which the mineral rights pertain, obtain a current market value estimate from a knowledgeable source.

Some documents concerning royalty payments will provide both a gross and a net payment amount. When the difference between the gross and the net figures is due to income taxes withheld or windfall profit tax deductions, use the gross figure when determining income.

When the difference between the gross and net figures represents a production or severance tax (most oil royalties will be reduced by this tax), use the net figure when determining income. The production or severance tax is a cost of producing the income and, therefore, is deducted from the gross income.

Document location/address of property in the case comments section. Document percentage of interest owned in case comments; the accessibility to interest in land resources; and whether land resources are excluded as a resource.

Document calculation of countable equity value in case comments if not excluded.

Notes:

• Clearance of value is not required for subsequent reviews unless circumstances that may change countability or value occur.
• If the mineral rights are non-producing, a $100 "default value" should be assigned. Document reason for $100 default value in case comments.
• If eligibility is negatively impacted by the "default value," a specific value must be verified.

Sources for verifying the value of land resources:

• Tax statement, if assessed.
• Contact a knowledgeable source in the community using telephone contact documentation. (Sources include oil and gas producers, tax assessors/collectors and petroleum lease agents – land men.)
• Form H1242, Verification of Mineral Rights, completed by an authorized employee of the producing company.
• IRS formula of 40 times the average monthly payout in assessing the value of mineral rights for inheritance purposes (to be used only when no other source is available). In TIERS, use "other acceptable" and document information in case comments.

Sources to verify ownership include:

• Copies of deeds, wills or leases. If the terms of the deeds, wills or leases are difficult to understand, obtain the assistance of legal staff.
• Copy of royalty statement.
• Division order, if producing.
• Statement from the person about amount of interest (ownership).
• Completed Form H1242.

Conversion of a resource from the sale of timber is not considered income except when:

• The owner leases the land or resource rights. The income received from the lease is unearned income.
• The sale of the natural resource is part of the person's trade or business. The income received is self-employment income.

Some documents concerning royalty payments will provide both a gross and a net payment amount. When the difference between the gross and the net figures is due to income taxes withheld or windfall profit tax deductions, use the gross figure when determining income.

Note: Consider whether royalty payments are excludable as irregular and/or infrequent income. See Section E-5000, Variable Income.

E-3333.1 Indian Fishing Rights

Revision 09-4; Effective December 1, 2009

In accordance with Public Law 100-647, effective Nov. 10, 1988, income received by a member of an Indian tribe from the exercise of recognized fishing rights is treated as unearned income for SSI and Medicaid purposes. Fishing rights must have been secured as of March 17, 1988, by a treaty, Executive Order or Act of Congress.

E-3340 Rents

Revision 19-2; Effective June 1, 2019

Rent is payment, either as cash or in-kind, that a person receives for the use of real or personal property, such as land, housing or machinery. Rental income is considered unearned income unless it is derived from self-employment, such as rental properties.

Budgeting Rental Income and Expenses

Ordinary and necessary expenses in the same taxable year are deducted from rental payments. These include only those expenses necessary to produce or collect rental income, and the expenses must be deducted when paid, not when they are incurred. Some examples of deductible expenses are interest on debts, state and local taxes on real and personal property and on motor fuels, general sales taxes, and expenses of managing or maintaining the property.

IRS tax records can be used, however, depreciation or depletion of property is not considered a deductible expense.

Net rental income (gross rent less expenses incurred in producing or collecting income) is used when budgeting. Expenses are deducted from the month in which they were paid, regardless of when they were incurred. If deductible expenses exceed gross rent in a month, subtract the excess expenses from the following month's gross rent and continue doing this as necessary until the end of the tax year in which the expense is paid. Do not carry excess expenses over to the next tax year or use them to offset other income.

For both the eligibility and co-payment budgets, regular variable income policy applies. If the monthly rental income is fixed and there are no allowable expenses to deduct, the eligibility budget may be projected for 12 months. Eligibility can also be certified on an annual basis, whether the income is fixed or not, if it is in the person's best interest to do so.

For co-payment purposes, project income and expenses for only six months at a time. Anticipated expenses must be projected for the review period when they are expected to occur. For example, at the January annual renewal staff budget tax deductions based on the amount of taxes paid last year.

Note: The most recent federal tax return, including Schedule E, is helpful in identifying past expenses and in estimating future rental income.

Related Policy

Documentation and Verification Guide, Appendix XVI
Rental Income Paid to a Third Party, E-3341
Mortgage Payment Made by Third Party, E-3342
Prorating Rental Expenses, E-3343
Rental Expenses, E-3344

E-3341 Rental Income Paid to a Third Party

Revision 09-4; Effective December 1, 2009

If the rental agreement is between the authorized representative and the tenant, and the authorized representative provides a statement to the effect that he does not and will not make the payments available to the person, the rental payments are not considered to be the person's income.

A referral to Adult Protective Services (APS) may be appropriate.

However, if the authorized representative is the person's guardian or power of attorney (POA), the payments are countable income to the person, unless extenuating circumstances indicate otherwise.

If the rental agreement is between the person and the tenant, the payments are income to the person, regardless of whether the authorized representative is make them available.

If the authorized representative is not making the rental payments available to the person, a referral to APS may be appropriate.

E-3342 Mortgage Payment Made by Third Party

Revision 09-4; Effective December 1, 2009

If the person's homestead is vacant and a third party is making the person's mortgage payments using his (the third party's) own funds, these payments are not income to the person.

If the person's home is rented and the lease agreement specifies that the tenant pays the person's mortgage company in lieu of rent, these payments are countable income to the person and are treated as rental income.

If the person's home is rented and there is no lease agreement, voluntary payments of the person's mortgage by the tenant directly to the mortgage company are considered to be a "gift" to the person and are countable income.

E-3343 Prorating Rental Expenses

Revision 09-4; Effective December 1, 2009

In multiple family residences, if the units in the building are of approximately equal size, prorate allowable expenses based on the number of units designated for rent compared to the total number of units. If the units are not of approximately equal size, prorate allowable expenses based on the number of rooms in the rental units compared to the total number of rooms in the building. (The rooms do not have to be occupied.)

For rooms in a single residence, prorate allowable expenses based on the number of rooms designated for rent compared to the number of rooms in the house. Do not count bathrooms as rooms; basements/attics are counted only if they have been converted to living spaces.

For land rental, prorate expenses based on the percentage of total acres for rent. There are various types of land rental, including hunting/fishing leases, pasture leases, sharecropping and other farm income not derived from self-employment.

E-3344 Rental Expenses

Revision 09-4; Effective December 1, 2009

The following table lists some common deductions that arise in budgeting rental income. The list is not intended to be all-inclusive; supervisory approval should be obtained when questionable deductions arise.

Expense	Deductibility
Money paid to or for employees not living in the home	Allowable
Money paid to or for employees living in the home	Allowable
Federal, state or local income taxes	Allowable
Sales tax	Allowable
Property tax	Allowable
Utilities for rental property	Allowable
Advertising for tenants	Allowable
Realtor or management company fees	Allowable
Supplies	Allowable
Actual expenses for roomers	Allowable
Interest for loans on property	Allowable
Depreciation related to self-employment	Allowable
Net loss from same period	Allowable
Real estate insurance	Allowable, except for liability insurance
Farming-related expenses (feed, seed, plants, seedlings, farm supplies, breeding fees, fertilizer and lime, crop insurance, crop storage, fees for livestock testing, etc.)	Allowable for self-employment farming Allowable for unearned income farming only if part of the lease agreement
Repairs or maintenance of property	Allowable if property is rented or between tenants Not allowable, if prior to initial rental of property
Capital asset purchases	Not allowable
Capital asset improvements	Not allowable
Payment on principal of loan for income-producing property	Not allowable
Travel to/from property	Not allowable
Net loss from previous period	Not allowable
Depreciation related to unearned income (for example, rental income)	Not allowable

E-3350 Death Benefits

Revision 09-4; Effective December 1, 2009

Count payments a person gets that were occasioned by the death of another person, except for the amount of such payments that a person spends on the deceased person's last illness and burial expenses. Last illness and burial expenses include related hospital and medical expenses, funeral, burial plot and interment expenses, and other related costs.

Example: If a person receives $2,000 from their uncle's life insurance policy and spends $900 on his last illness and burial expenses, the $1,100 balance is unearned income. If a person spends the entire $2,000 for the last illness and burial, there is no unearned income.

Note: This section does not refer to a person's receipt of proceeds as a result of cashing in his insurance policy. In that situation, consider the proceeds according to the policy for conversion of resource.

Verify countable proceeds of a life insurance policy by one or more of the following methods:

• obtaining a statement from the insurance company;
• viewing or obtaining a copy of the insurance payment check, deposit slip or bank statement; or
• viewing or obtaining receipts or copies of the checks written to pay last illness and burial expenses.

E-3360 Prizes and Awards

Revision 18-2; Effective June 1, 2018

A prize is generally something a person wins in a contest, lottery or game of chance.

An award is usually something a person receives as the result of a decision by a court, board of arbitration or the like. An award is also something of value conferred or bestowed on someone because of merit or need. Awards do not involve competition.

If a prize or award is not in cash, count the current fair market value of the prize or award, less any expenses involved in obtaining it. For example, deduct legal fees from an award received because of a lawsuit.

Consider income from prizes and awards according to frequency and the nature of the prize or award. Count a prize or award as unearned income in the month of receipt. Review Section E-9000, Infrequent or Irregular Income, to determine if the prize or award is to be treated as a lump-sum payment, infrequent or irregular income, or regular and predictable income. Consider regular and predictable awards as monthly unearned income.

See Appendix XVI, Documentation and Verification Guide.

Reference: Section E-3390, Texas Lottery Commission

E-3365 Inheritances

Revision 17-4; Effective December 1, 2017

An inheritance is cash, other liquid resources, noncash items or any right in real or personal property received at the death of another. An inheritance is income in the month of receipt unless the inherited item would be an excluded resource.

Example: An individual inherits a vehicle valued at $4,000 and the individual does not own any other vehicles.  Per policy in F-4221 Automobile, one vehicle is excluded regardless of value. Because the vehicle is an excluded resource, the value of the vehicle is not considered as income in the month ownership is received.

Inheritances as a result of the death of another person, to the extent that they are used to pay the expenses of the deceased's last illness and burial, are not considered income.

Notes:

• A person may not have access to their inheritance pending legal action.
• Waiving an inheritance may result in a transfer of assets penalty.

If the inheritance is not received in cash, determine its current fair market value. To determine countable income, deduct any expenses that may have been incurred in obtaining the inheritance, such as legal fees and court costs.

Determine whether the inheritance is to be treated as a lump-sum payment, infrequent or irregular income, or regular and predictable income.

See Section E-5000, Variable Income, and Section E-9000, Infrequent or Irregular Income.

See Appendix XVI, Documentation and Verification Guide.

E-3370 Cash Gifts and Contributions

Revision 17-4; Effective December 1, 2017

A gift is something a person receives which is not repayment to a person for goods or services a person provided and which is not given to a person because of a legal obligation on the giver's part.

A gift is something that is given irrevocably (i.e., the giver relinquishes all control).

Donations and contributions may meet the definition of a gift.

• A donation is a gift given by a person typically for charitable purposes and/or to benefit a cause without expectation of return.
• A contribution is a gift or payment to a common fund or collection.

A cash gift or contribution is considered unearned income in the month of receipt.

The value of any non-cash item (other than food or shelter) is considered unearned income in the month of receipt.  A non-cash item is not considered income if the item would become a partially or totally excluded non-liquid resource if retained in the month after the month of receipt.

Expenses involved in obtaining the income are excluded.

If the gift is not received in cash, determine its current fair market value. To determine the countable amount, deduct any expenses that may have been incurred in obtaining the gift, such as legal fees and court costs.

Determine whether the gift is to be treated as a lump-sum payment, infrequent or irregular income or regular and predictable income.

Examples

Gift of cash

A cash gift is counted as unearned income in the month of receipt. Review the infrequent or irregular income policy.

Gift of a car

A gift of a car that qualifies as an excluded resource if retained into the month after the month of receipt is not income. If the car does not qualify as an excluded resource (e.g., it is a second car), the car is counted as income in the month it is received and a resource beginning the next month.

See Section E-5000, Variable Income, and Section E-9000, Infrequent or Irregular Income.

See Appendix XVI, Documentation and Verification Guide.

E-3371 Gifts of Domestic Commercial Transportation Tickets

Revision 09-4; Effective December 1, 2009

The value of domestic commercial transportation tickets (given as a gift to the person or spouse) is not income unless converted to cash. Domestic transportation is limited to the 50 states, District of Columbia, Commonwealth of Puerto Rico, Virgin Islands, Guam, American Samoa and Northern Mariana Islands.

E-3372 Effective Date of Receipt of Inheritance; Disclaimers

Revision 09-4; Effective December 1, 2009

Real Property — The effective date of receipt is the date of death unless there is a contested will. If there is a contested will, the effective date of receipt is the date the will is probated.

Personal Property — The effective date of receipt is the date the person actually takes possession.

Note: Prior to Aug. 11, 1993, a disclaimer to an inheritance is not considered as a transfer of resources if transacted before receipt of an inheritance. The disclaimer must be a written statement acknowledged before a notary or other person authorized to take acknowledgement of conveyances of real property.

Examples:

• The will specifies $50,000 in cash for the person. Date of death is 1/5/92, disclaimer is signed 2/5/92 and will is probated 3/5/92. No transfer.
• The will specifies $50,000 in cash for the person. Date of death is 1/5/92, will is probated 2/5/92 and disclaimer is signed 2/10/92. Transfer provisions apply.
• The will specifies 50 acres for the person. Date of death is 3/6/93. If the disclaimer is signed before death, there is no transfer. If after, there is a transfer.
• There is no will. Date of death is 6/20/93. Through descent and distribution, the person will inherit an undivided half-interest in 50 acres. If the disclaimer is signed before death, there is no transfer. If after, there is a transfer.

After Aug. 11, 1993, a disclaimer of inheritance may result in a transfer of assets penalty regardless of the date the disclaimer is signed or effective.

See Chapter I, Transfer of Assets.

E-3373 Facility Payments

Revision 09-4; Effective December 1, 2009

The facility may allow a resident's family to use personal funds to pay an agreed-upon amount (in addition to the Medicaid rate) in order to have a private room.

For Medicaid eligibility purposes, if the family pays the difference, consider how it is being paid.

• If the money is given directly to the person in order to pay the difference to the facility, then that amount is considered income to the person.
• If the family pays the facility directly, do not consider the amount paid as income to the client.

E-3380 Support and Maintenance In Kind

Revision 09-4; Effective December 1, 2009

This is food or shelter furnished to a person based on the living arrangement. See Section E-8000, Support and Maintenance.

E-3390 Texas Lottery Commission

Revision 18-2; Effective June 1, 2018

Count the gross amount of winnings as unearned income in the month received, regardless of the frequency of pay.

The following Texas Lottery Commission information displays on the Data Broker combined report, if applicable:

• winner's full name, date of birth and Social Security number;
• paid date;
• gross, net and tax withheld amounts;
• check ID, claim number and date claim created;
• void date; and
• debt offset (is the same as recoupment), reason for the offset, and the agency name the offset is to, withholding amount, withholding number, withholding sequence number, check ID, and Agency ID.
• Example: Applicant wins $1,000/month; however, there is a debt offset (recoupment) of $100 from the Office of Attorney General (OAG) for child support. The income budgeted will be $1,000.

Note:

• Provide the void date only if the Texas Lottery Commission voids a check.
• In these situations, the winning are not counted as income.

The information provided by the Texas Lottery Commission through Data Broker is considered verification of winnings.

Notes:

• Staff must budget the gross amount reported by the Texas Lottery Commission.
• Some winners may elect to place their winnings in a trust fund.

Reference:

Trust Funds, F-6000

Revision 18-2; Effective June 1, 2018

The Social Security Administration (SSA) pays Social Security benefits (RSDI) under provisions of the Social Security Act. Black Lung benefits under the Coal Mine Health and Safety Act of 1969. are also Social Security benefits.

A person who receives Social Security benefits may be enrolled in Medicare Part B, in which case the Medicare (SMIB) premiums are taken out of the Social Security checks before the checks are received. Determine whether the person is enrolled. If so, add the SMIB premium (see Appendix XXXI, Budget Reference Chart) to the benefit received to determine the total Social Security benefit used to determine eligibility.

Note: An SMIB premium may be different if a beneficiary enrolled late in Medicare or is eligible for a variable SMIB premium. The person may also have Medicare Part D taken out of the Social Security check.

See Appendix XVI, Documentation and Verification Guide.

For applications, verify gross benefits.

For reviews, if the recipient’s statement agrees with the conversion amount and there is no indication that the RSDI benefit has changed, do not reverify.

Verify the amount of Social Security benefit by one or more of the following methods:

• Obtain an SOLQ/WTPY.
• View or obtain a copy of the person’s award notice (letter) from the SSA.
• Obtain information from the SDX computer tape if the recipient has SSI and RSDI and is now in an institutional setting.
• Contact a representative of the SSA using telephone contact documentation.
• View or obtain a copy of the person’s most recent benefit check or direct deposit slip. This method is least desirable because it may not show the gross amount.
• At review, use the conversion amount in the system of record if there is no indication that the RSDI is different from the converted amount.

Note: The Social Security Administration refigures SSA benefits if the individual has earnings from the previous year and other changes. This refiguring usually occurs during October, but may occur at other times. Staff may need to obtain an SOLQ/WTPY at redeterminations to ensure they have current/updated amounts. See Section F-2150, SSI and RSDI Retroactive Lump Sum Payments; Section F-2151, Examples of SSI and RSDI Retroactive Lump Sum Payments; and Section E-1610, SSA Overpayments.

Revision 09-4; Effective December 1, 2009

Railroad retirement benefits may be paid to a person or to the person's dependents or survivors. Some examples of railroad retirement benefits are sick pay, annuities, pensions and unemployment insurance benefits.

If a person is enrolled in Medicare Part B under his/her railroad retirement annuity number, determine the total railroad retirement benefit by adding the current SMIB premium amount to the benefit received.

See Appendix XVI, Documentation and Verification Guide.

Revision 12-1; Effective March 1, 2012

The U.S. Department of Veterans Affairs (VA) has numerous programs that make payments. Treatment of VA payments depends on the nature of the payment. The most common types of VA payments are:

• pension;
• compensation;
• dependency and indemnity compensation;
• educational assistance;
• aid and attendance allowance;
• housebound allowance;
• payment adjustment for unusual medical expenses;
• clothing allowance;
• payments to Vietnam veterans' children with spina bifida.

Note: VA aid and attendance allowance, housebound allowances and payment adjustment for unusual medical expenses are exempt from both eligibility and co-payment. However, if these payments are deposited into a qualifying income trust (QIT) account, they are countable for co-payment.

E-4310 Augmented and Apportioned VA

Revision 09-4; Effective December 1, 2009

The VA determines the designated beneficiary of a check based on the laws and regulations for payment of each benefit.

Augmented VA payment. A VA pension payment that has been increased for dependents is an augmented VA payment. For Medicaid purposes, the augmented benefit includes a designated beneficiary's portion and one or more dependents' portions. An augmented VA benefit usually is issued as a single payment to the veteran or the veteran's surviving spouse. When veteran’s benefits are augmented for a dependent, the dependent's portion is not countable income to the applicant/recipient (the veteran or veteran's surviving spouse) of the check. If the applicant/recipient is the dependent, the applicant/recipient’s portion is countable income to the applicant/recipient.

Apportioned VA payment. A VA compensation payment made directly to the dependent of a living veteran is an apportioned payment. Apportionment is direct payment of the dependent's portion of VA benefits to a dependent spouse or child. The VA decides whether and how much to pay by apportionment on a case-by-case basis. Apportionment reduces the amount of the augmented benefit payable to the veteran or veteran's surviving spouse.

A portion of a VA benefit paid by apportionment to a dependent spouse or child is VA income to the dependent spouse or child. It is not a support payment from the designated beneficiary.

See D-6350, Veterans Benefits, for requirements to apply for benefits.

E-4311 VA Pensions

Revision 10-1; Effective March 1, 2010

Pension payments are based on a combination of service and a nonservice-connected disability or death.

Needs-Based Pensions and the $20 General Exclusion

Most VA pension payments are based on need. As such, these payments are unearned income to which the $20 general income exclusion does not apply.

Pension payments are usually paid monthly; however, when the monthly payment due is less than $19, VA will pay quarterly, biannually or annually. VA may also make an extra payment if an underpayment is due.

Pensions are paid to:

• a wartime veteran determined permanently and totally disabled for nonservice-related reasons;
• the surviving spouse; or
• the child of a veteran because of the nonservice-related death of the veteran.

There are several periodic payments from VA benefits:

• VA compensation
• VA pension
• VA Dependency and Indemnity Compensation (DIC) payments

Because VA pensions and parents' DIC payments are generally based on need, the $20 general income exclusion in the eligibility determination is not applied.

Exceptions:

The following pensions are not based on need:

• Pensions based on a special act of Congress.
• Pensions based on the award of the Medal of Honor.
• Pensions based on service in the:
  • Spanish American War (April 21, 1898, through July 4, 1902);
  • Indian Wars (January 1, 1817, through Dec. 31, 1898); or
  • Civil War (1861-1865).

These pensions are unearned income and the $20 general exclusion does apply to these exceptions. Assume that a VA pension is needs-based unless there is evidence to the contrary. See G-4110, Twenty-Dollar General Exclusion.

E-4311.1 1979 VA Pension Plan

Revision 10-1; Effective March 1, 2010

The Jan. 1, 1979, increase in VA pension benefits caused many SSI recipients to become ineligible. Public Law 96-272 gave protection to a person drawing VA pension benefits "grandfathered" from Dec. 31, 1978. A person who has been eligible for a VA pension since before 1979 is not required to apply for an increase in VA payment for medical expenses known as aid and attendance or housebound benefits. These additional payments are for unusual medical expenses and are considered exempt income that does not affect eligibility or co-payment.

Refer persons who have changed to the 1979 pension plan or who initially obtain entitlement to a VA pension after Jan. 1, 1979, to apply for aid and attendance or other potentially available benefits. However, do not monitor for the person’s compliance to apply for other benefits when it is to increase the VA payment for medical expenses since aid and attendance or housebound benefits are considered exempt income that does not affect eligibility or co-payment.

Determine whether the person is receiving an aid and attendance or housebound allowance as part of his/her VA benefit.

See D-6351, VA Pension or Compensation.

E-4311.2 $90 VA Pension and Institutional Setting

Revision 24-1; Effective March 1, 2024

VA law 38 U.S.C. 5503 says that the amount of the VA pension for an institutionalized Medicaid recipient who does not have a spouse or child cannot exceed $90 per month. This cap also applies to a surviving spouse with no child. 

If a single veteran or a single surviving spouse of a veteran is eligible for Medicaid-covered nursing home care, the maximum pension benefit is reduced to $90 for any month after the month of admission. This reduced pension is an aid and attendance allowance in all cases and not income.

The $90 VA pension may not be used to determine what the person in an institutional living arrangement must pay toward the cost of care. The limited VA pension, up to the amount of $90, is not counted as income in the eligibility or co-payment budget.

There is no association between the reduced pension and the personal needs allowance (PNA). If a veteran has income from other sources, the income from other sources may be considered countable. Calculate the co-payment to determine the amount of the veteran’s liability toward the cost of care.

Do not refer a person living in an institutional setting who receives the $90 VA pension to apply for other benefits when it is to increase the VA payment for medical expenses. VA aid and attendance and housebound allowances are considered exempt income and do not affect eligibility or co-payment. 

Allow a PNA for a person with capped $90 VA aid and attendance and other income. Review the examples below:

• Non-SSI Medicaid recipient in an institutional living arrangement with VA aid and attendance capped at $90 per month and receiving other income. Allow a PNA of up to $75, for a total up to $165 which is $90 plus up to $75.
• For a person living in an ICF/IID facility, the $90 capped VA aid and attendance and PNA calculation does not impact the Protected Earned Income Allowance.

When a veteran is receiving the $90 capped VA aid and attendance and does not have any other source of income to deduct the $75 PNA from, the person will have $90 for their personal expenses, and the co-payment is zero. If a veteran has a $90 capped VA aid and attendance, and the veteran's other source of income is less than $75, the PNA will be up to, but not exceed, $75. This person will have up to $165 which is $90 plus up to $75. The PNA deduction comes first in the order of all co-payment deductions, including those for incurred medical expenses (IME).

If a person living in a facility only receives a VA pension capped at $90 per month, certify the person for Medicaid, if the person meets other program requirements. Refer the person for SSI. VA aid and attendance and housebound allowances are not considered income for SSI purposes.

Related Policy

VA Pension or Compensation, D-6351

E-4312 VA Compensation

Revision 11-4; Effective December 1, 2011

VA compensation is unearned income and is based primarily on service in the armed forces. Payments are made to veterans, dependents or survivors.

The VA makes compensation payments to a veteran because of a service-related disability. The VA also makes compensation payments to a spouse, child or parent of a veteran because of the service-related death of the veteran.

Note: If a person or a recipient moves from a community setting to an institutional setting, entitlements to additional VA benefits may be appropriate due to a change in the situation or increased medical needs. If a person is a veteran or an unmarried widow or widower of a deceased veteran, explore possible entitlement to VA benefits. If the person is potentially eligible but no payment is reported, the person may be required to file for a VA benefit. See D-6350, Veterans Benefits, for requirements to apply for benefits.

Budgeting Information

Because VA compensation is not based on need, deduct the $20 general income exclusion in the eligibility determination. See G-4110, Twenty-Dollar General Exclusion.

Note: The $20 exclusion does not apply to VA pensions or parents' DIC payments.

Neither the beneficiary's award letter nor the VA check indicates whether aid and attendance is included in a person's total VA payment. To verify the type and amount of benefits received, contact the VA using Form H1240, Request for Information from Bureau of Veterans Affairs and Client's Authorization.

Do not include aid and attendance allowance, housebound allowance and VA reimbursement for unusual medical expenses as a part of the total VA benefit. See E-4315, VA Aid and Attendance and Housebound Payments.

E-4313 Dependency and Indemnity Compensation

Revision 11-4; Effective December 1, 2011

Dependency and Indemnity Compensation (DIC) is a monthly benefit paid to eligible survivors of certain deceased veterans:

• Military service member who died while on active duty.
• Veteran whose death resulted from a service-related injury or disease.
• Veteran whose death resulted from a non service-related injury or disease, and who was receiving, or was entitled to receive, VA compensation for service-connected disability that was rated as totally disabling:
  • for at least 10 years immediately before death;
  • since the veteran's release from active duty and for at least five years immediately preceding death; or
  • for at least one year before death if the veteran was a former prisoner of war who died after Sept. 30, 1999.

The surviving spouse is eligible if he/she:

• validly married the veteran before Jan. 1, 1957;
• was married to a service member who died on active duty;
• married the veteran within 15 years of discharge from the period of military service in which the disease or injury that caused the veteran's death began or was aggravated;
• was married to the veteran for at least one year; or
• had a child with the veteran; and
  • cohabited with the veteran continuously until the veteran's death or, if separated, was not at fault for the separation; and
  • is not currently remarried.

Note: A surviving spouse who remarries on or after Dec. 16, 2003, and on or after attaining age 57 is entitled to continue to receive DIC.

The $20 exclusion does not apply to VA pensions or parents' DIC payments.

A surviving child is eligible if the child is:

• unmarried; and
• under age 18, or between the ages of 18 and 23 and attending school.

Whenever there is no surviving spouse of a deceased veteran entitled to DIC, the children of the deceased veteran are eligible for DIC.

Additional allowances could be included in the DIC benefit for aid and attendance or housebound.

Neither the beneficiary's award letter nor the VA check indicates whether aid and attendance is included in a person's total VA payment. To verify the type and amount of benefits received, contact the VA using Form H1240, Request for Information from Bureau of Veterans Affairs and Client's Authorization.

Do not include aid and attendance allowance, housebound allowance and VA reimbursement for unusual medical expenses as a part of the total VA benefit. See E-4315, VA Aid and Attendance and Housebound Payments.

E-4314 Educational Assistance

Revision 09-4; Effective December 1, 2009

The VA provides educational assistance through different programs, including vocational rehabilitation. Medicaid policies on income and resources depend on the nature of the VA program. The veteran’s period of eligibility to receive benefits for educational assistance are as follows:

• Veterans generally have up to 10 years after leaving the service to complete their education.
• Veterans enrolled in a vocational rehabilitation program have up to 12 years to complete the program.
• Veterans participating under the Chapter 33 program, “Post-9/11 GI Bill,” have up to 15 years to complete their education.

Dependents and survivors of veterans may also be eligible for educational benefits. The VA makes payments under Chapter 35, Survivors and Dependents Educational Assistance Program (a non-contributory program), to:

• children (between ages 18 and 26) of veterans who died in the service;
• surviving spouses of veterans who died in the service;
• children of living veterans who are 100% disabled due to a service-connected injury; and
• spouses of living veterans who are 100% disabled due to a service-connected injury.

Note: Survivors and dependents have 10 years from the date of the veteran's service-connected death or date of 100% disability to participate in this program.

Do not consider as income the following:

• Payments made by VA to pay for tuition, books, fees, tutorial services or any other necessary educational expenses.
• Payments made as part of a VA program of vocational rehabilitation, including any augmentation for dependents.
• Any portion of a VA educational benefit that is a withdrawal of the veteran’s own contribution is conversion of a resource and is not income. However, any portion of the withdrawal that is retained into the month following the month of receipt is a countable resource.

References: The policy in the following items details VA payments that are either not considered as income or exempt as income.

• E-1720, Social Services that are Not Income
• E-2130, Education and Employment
• E-2330, Educational Assistance

Do consider the following as income:

• The portion of the VA educational payment designated as a stipend for shelter.
• Payments made by VA that are used to pay for those things other than necessary educational expenses.

Note: The $20 general income exclusion applies to countable VA educational assistance and these payments are subject to deeming. See G-4110, Twenty-Dollar General Exclusion.

E-4315 VA Aid and Attendance and Housebound Payments

Revision 16-4; Effective December 1, 2016

VA pays an allowance to veterans and dependents who are in regular need of the aid and attendance of another individual or who are housebound. This allowance is combined with the individual’s pension or compensation payment.

This special VA allowance can be paid to:

• disabled veterans;
• disabled veterans’ spouses;
• widows; or
• parents.

If an individual is in an institutional setting (for example, a nursing facility) because of mental or physical incapacity, the VA presumes eligibility for aid and attendance.

Based on policy regarding medical expenses paid by a third party, do not consider in the eligibility and co-payment budgets the following VA payments:

• aid-and-attendance allowances;
• housebound allowances; and
• reimbursement for unusual medical expenses.

Reference: E-1720, Social Services That Are Not Income.

Exception: If aid-and-attendance allowances, housebound allowances and reimbursements for unusual medical expenses are deposited into a QIT, the amount deposited is countable for co-payment budgeting. Aid-and-attendance allowances, housebound allowances, and reimbursements for unusual medical expenses are not countable for co-payment budgeting if separated from the pension or compensation benefit before depositing the VA pension into a QIT. Separating and depositing the VA pension amount does not invalidate the QIT. 

If it appears that the individual may be entitled to an aid-and-attendance allowance and is not receiving one, refer the individual to the VA. While living in the community, an individual receives a housebound allowance, but that allowance is adjusted to the aid-and-attendance allowance if the individual moves to an institutional setting. Do not monitor for the individual’s compliance to apply for other benefits when it is to increase the VA payment for medical expenses since aid-and-attendance or housebound benefits are not considered income and will not affect eligibility or co-payment.

Neither the beneficiary's award letter nor the VA check indicates whether aid-and-attendance is included in an individual's total VA payment. To verify the type and amount of benefits received, contact the VA using Form H1240, Request for Information from Bureau of Veterans Affairs and Client's Authorization.

When the income is not considered for the eligibility and co-payment budgets, enter aid-and-attendance allowance, housebound allowance, and VA reimbursement for unusual medical expenses as a separate income source. See Appendix XVI, Documentation and Verification Guide.

E-4316 VA Clothing Allowance

Revision 09-4; Effective December 1, 2009

A lump sum clothing allowance is payable in August of each year to a veteran with a service-connected disability for which a prosthetic or orthopedic appliance (including a wheelchair) is used. The allowance is intended to help defray the increased cost of clothing due to wear and tear caused by the use of such appliances.

A VA clothing allowance is not income.

Reference: E-1720, Social Services That Are Not Income

E-4317 Payments to Vietnam Veterans' Children with Spina Bifida

Revision 09-4; Effective December 1, 2009

Do not consider the following types of VA benefits as income or resources for Medicaid purposes:

• VA payments made to or on behalf of certain Vietnam veterans' natural children, regardless of their age or marital status, for any disability resulting from spina bifida suffered by such children.
• VA payments made to or on behalf of certain Korea service veterans' natural children, regardless of their age or marital status, for any disability resulting from spina bifida suffered by such children.
• VA payments made to or on behalf of women Vietnam veterans’ natural children, regardless of their age or marital status, for certain birth defects.

Note: Interest and dividends earned on unspent payments are exempt from income.

Reference: E-2150, Other – Exempt Income

E-4318 VA Contracts

Revision 09-4; Effective December 1, 2009

A VA contract for payment of nursing facility services does not affect Medicaid eligibility. If an application is filed, proceed with the eligibility determination. If the person is certified while the contract is still in effect, the VA contract is reported as a third-party resource on Form H1039, Medical Insurance Input.

Revision 15-3; Effective September 1, 2015

There are two types of annuities:

• An annuity can be a periodic payment calculated on an annual basis that is a return on prior service. A civil service payment is an example of this type of annuity. It is treated the same as pension or retirement income.
  
  Example: A person retired from federal service in 1980 after 30 years of employment. Her gross annual Civil Service Annuity (CSA) payment is $5,400, which is paid in 12 monthly installments of $450 each. Because this type of annuity produces a stream of income only, it has no resource value. The monthly payment is countable income.
• An annuity can also be a contract or agreement for an amount to be paid yearly or at other regular intervals in return for prior payments made by the person. For this type of annuity, the language of the annuity dictates whether disbursements are countable income and describes the payment schedule. See Section F-7000, Annuities, for treatment of pre-DRA and post-DRA annuities.

Pension or retirement payments may be made directly by a former employer or from a fund, insurance or any similar source. An example of a retirement payment is teacher retirement.

Determine the gross and net amounts of the monthly payments. Also determine whether the organization making the payments is providing any other benefits to the person.

Note: When income tax is withheld from retirement, pension or disability benefits, use the gross income amount for the eligibility and co-payment calculations.

See Chapter G, Eligibility Budgets, and Chapter H, Co-Payment.

See Appendix XVI, Documentation and Verification Guide.

Certain pension and retirement payments allow for the person to request a reduced amount. If the reduction is irrevocable, accept the reduced amount in determining the person's eligibility. However, for a person in an institutional setting (for example, a nursing facility or a Home and Community-Based Services waiver program), investigate the reduction for transfer of assets in Chapter I, Transfer of Assets.

If the person is receiving a reduced benefit, ask the person to provide a written statement from an official of the organization addressing the amount of the original benefit, the amount of the reduced benefit, the date of the reduction, and information about the revocability or irrevocability of the reduction.

If the pension or retirement payments are revocable, the person must apply for maximum entitlements.

Reference: Section I-1400, Transfer of Income

If a person’s income from annuities, pensions and retirement plans is greater than the special income limit, but not enough to pay private-pay costs in an institutional setting, the person can consider a QIT. QITs allow people to legally divert their income into a trust, after which the income is not counted for eligibility purposes. For more information, see Appendix XXXVI, Qualified Income Trusts (QITs) and Medicaid for the Elderly and People with Disabilities (MEPD) Information. The payments are countable in the co-payment budget.

Revision 09-4; Effective December 1, 2009

Workers' compensation benefits are unearned income. A portion of a person's workers' compensation may be designated for medical, legal or related expenses. Request the person to provide verification of payment and, in addition, any expense required to obtain the benefit.

A person who suffers a work-related injury or illness may be eligible for workers' compensation benefits. These benefits are administered by the Industrial Accident Board under the Texas Workers' Compensation Act. If a person dies as a result of a work-related injury or illness, his dependents or beneficiaries may be eligible for workers' compensation benefits.

Determine the monthly amount of workers' compensation benefits by multiplying the weekly benefit by 4.33. (These benefits are usually paid on a weekly basis.) Also determine the expected duration of the workers' compensation benefits.

Determine and exclude the portion, if any, of the workers' compensation that is considered an expense required to obtain the benefit.

Reference: See Section D-7400, Use of Third-Party Resources, for policies governing recovery of Medicaid payments when additional workers' compensation is received for medical expenses incurred after Medicaid eligibility began.

Verify workers' compensation benefits by one or more of the following methods:

• Viewing or obtaining a copy of the person's notice of workers' compensation benefits.
• Obtaining a letter from an official of the Industrial Accident Board.
• Viewing or obtaining copies of the person's weekly checks (least desirable method).
• Obtaining proof of any medical, legal or other related expenses if that information is not included in information already provided.
• Documenting a contact with a knowledgeable source.

Revision 11-4; Effective December 1, 2011

Unemployment benefits are unearned income.

A person who loses employment may be entitled to unemployment benefits through the Texas Workforce Commission (TWC). To receive unemployment benefits, a person must file an application with TWC. Determine the expected duration and the amount of the unemployment benefits per month. Unemployment benefits may be received on a weekly or biweekly schedule.

Reference: Do not use TWC's Form B-11 to verify unemployment benefits. This form does not verify the actual receipt or amount of benefits.

Verify unemployment benefits by one or more of the following methods:

• Obtain TWC information through a Data Broker report.
• Obtain a letter from TWC.
• Document a contact with a representative of TWC.
• View or obtain a copy of the person's most recent benefit checks.

Data Broker report will verify quarterly earnings and unemployment benefits. Information is obtained using the person's name and Social Security number. A match will result if the person has applied, is receiving or has received unemployment benefits with TWC. Result response time is generally immediate.

A match by name will provide the person's name, alias name, address, telephone number, Social Security number and date of birth.

Available information includes:

• if the person has applied for benefits;
• wages the person earned (per quarter) during the past 24 months;
• the status of a current claim; and
• the amount of weekly unemployment benefits, deductions and payment dates.

Revision 09-4; Effective December 1, 2009

Disability benefits are unearned income.

Some insurance policies pay benefits based on the period of time a person is disabled and not on the amount of medical expenses. These policies may be called "income maintenance" policies. Benefits from these policies are unearned income to the extent that they are not used to pay for medical expenses.

Disability benefits normally are paid to a person who has suffered injury or impairment. These payments may be from an employer, insurance or other public or private fund.

Determine the source of the benefit. If the source is covered by one of the unearned income items, such as Social Security or a private pension, use the procedures for that item.

Revision 09-4; Effective December 1, 2009

Average monthly income that is predictable but varies in amount from month to month. Types of monthly income that require averaging include, but are not limited to:

• earned income;
• royalty income; and
• interest income.

Variable income can be from one source or a combination of sources.

For eligibility budgets, treatment of variable income is the same whether the person is in the community or in an institutional setting.

Treatment of variable income in co-payment budgets applies only to a person in an institutional setting (for example, a Home and Community-Based Services waiver program or a nursing facility).

There are additional treatments for variable income for the co-payment budgets that include reconciliation and restitution. See Chapter H, Co-Payment.

As specified in Section E-9000, Infrequent or Irregular Income, do not average income for the eligibility test that meets the definition of irregular or infrequent.

See Chapter G, Eligibility Budgets, for instructions on determining income eligibility. The examples in this section are for demonstration purposes only. They may not reflect the current spousal allowance amounts.

Revision 09-4; Effective December 1, 2009

1. The person has income that fluctuates from month to month (such as earnings, royalties, dividends, interest, rents, etc.) and the average from all sources is $5 or more.
2. Variable income from any combination of sources was received during at least three of the preceding six months, is anticipated to reoccur, and the average from all sources is $5 or more.
   
   Example: The person entered a nursing facility (NF) in January and applied for Medicaid the same month. During the six months preceding the month the case is worked (February), the person received the following variable income payments, all of which are anticipated to reoccur during the projection period (March through August).
    

   Month	Source #1	Source #2	Payment Received
   Aug.
   Sept.	$20		X
   Oct.
   Nov.		$20	X
   Dec.
   Jan.

   
   Because the person did not receive variable income from all sources during at least three of the preceding six months, do not average and project variable income, even though the payments are anticipated to reoccur with the same frequency during the coming six months.
   
   Note: If an eligibility budget is being calculated for the prior month of November, the $20 payment received that month is excluded as infrequent/irregular income in the eligibility budget. There is no co-payment for November because the person did not enter the NF until January.
3. In spousal impoverishment cases, the community-based spouse received variable income from any combination of sources during at least three of the preceding six months, the variable income is anticipated to reoccur, and the monthly average from all sources is $5 or more.
   
   Example: The person entered the NF in January and applied for Medicaid the same month. The person has no variable income. However, the community-based spouse receives monthly royalty payments from a mineral lease. During the six months preceding the month the case is worked (February), the community-based spouse received monthly royalties as follows: August = $25; September = $30; October = $20; November = $15; December = $22; and January = $25.
   
   Because the community-based spouse received variable income during at least three of the preceding six months, all payments are anticipated to reoccur during the coming six months, and the average from all sources is $5 or more ($25 + $30 + $20 + $15 + $22 + $25 = $137 ÷ 6 months = $22.83 monthly average), the eligibility specialist projects the $22.83 average as the community-based spouse's income in the co-payment calculation.
4. For applications, variable income that is anticipated to reoccur is calculated into the co-payment budget for the month of certification and is projected over the next six months. If eligibility is being tested for prior months, the amount of variable income actually received during a given month is budgeted as income for that month.
5. For ongoing cases, variable income (earned or unearned) is not calculated into the co-payment budget until the month following the month in which the person received his/her first variable payment.
   
   Example: (Reviews Only) The person's first monthly variable payment (such as earned income or interest) is received in October. This payment is calculated into the co-payment budget in November to be effective December.

Revision 09-4; Effective December 1, 2009

1. Variable income is received from all sources in fewer than three of the preceding six months and is not anticipated to increase in frequency. Variable income that is not projected is restituted at the annual redetermination, if the amount in the month of receipt is $5 or more.
   
   Example: The person entered an NF in January and applied for Medicaid in the same month. During the six months preceding the month the case is worked (February), the person received the following variable payments, which are anticipated to reoccur during the projection period (March through August).
    

   Month	Source #1	Source #2	Payment Received
   Aug.
   Sept.	$20		X
   Oct.
   Nov.		$20	X
   Dec.
   Jan.

   
   Because the person did not receive variable income from all sources during at least three of the preceding six months, do not average and project variable income, even though these payments are anticipated to reoccur with the same frequency during the coming six months.
   
   Note: If an eligibility budget is being calculated for the prior month of November, the $20 payment received that month is excluded as infrequent/irregular income in the eligibility budget. There is no co-payment budget for November because the person did not enter the NF until January.
2. Variable income is received during three of the preceding six months from any combination of sources, but payment from at least one of the sources is not anticipated to reoccur during the next six months, and payments from remaining sources were not received during three of the preceding six months.
   
   Examples:
   • The person entered an NF in January and applied for Medicaid the same month. During the six months preceding the month the case is worked (February), the person received the following unearned variable payments, but the payment from Source #3 was a one-time payment and is not anticipated to continue.

     Month	Source #1	Source #2	Source #3	Payment Received
     Aug.	$30			X
     Sept.
     Oct.		$30		X
     Nov.
     Dec.
     Jan.			$50	X

     
     Although the person received variable income from all sources during three of the preceding six months, the payment from Source #3 is not anticipated to reoccur. Therefore, the variable payments from Sources #1 and #2 are not averaged and projected for future months.
     
     Note: If eligibility is being determined for the prior month of October, the unearned variable income of $30 received during that month is not countable income, as the amount is less than the infrequent or irregular exclusion of the first $60 unearned in a calendar quarter. (See Section E-9000, Infrequent or Irregular Income.) There is no co-payment budget for October because the person did not enter the NF until January.
   • The person entered the NF in January and applied for Medicaid the same month. During the six months preceding the month in which the case is worked (February), the person received the following variable payments, but the payment from Source #3, received in October, was a one-time payment and is not anticipated to recur.

     Month	Source #1	Source #2	Source #3	Payment Received
     Aug.	$20			X
     Sept.		$20		X
     Oct.			$20	X
     Nov.
     Dec.	$20	$20		X
     Jan.

     
     Because the person received variable income from Sources #1 and #2 during three of the preceding six months, the income from Sources #1 and #2 is averaged and projected into the co-payment budget for the coming six months (March through August). However, since the one-time $20 payment from Source #3 is not anticipated to recur, it is not included in the average of variable income to be projected.
3. Variable income from all sources was received during three of the preceding six months and is anticipated to recur, but the average of income from all sources is less than $5.
   
   Example: The person entered the NF in January and applied for Medicaid the same month. During the six-month period preceding the month in which the case is worked (February), the person received the following variable payments, all of which are anticipated to recur.
    

   Month	Source	Payment Received
   Aug.	$2	X
   Sept.	$1	X
   Oct.	$2	X
   Nov.	$5	X
   Dec.	$3	X
   Jan.	$4	X

   
   The person received variable payments from all sources during each of the six preceding month; however, because the average of all payments is less than $5 ($2 + $1 + $2 + $5 + $3 + $4 = $17 ÷ 6 months = $2.83) and is not anticipated to increase, that average is not projected into the co-payment budget.

Revision 09-4; Effective December 1, 2009

If a person routinely receives variable income that is anticipated to continue, use an average of variable income received during the six months preceding the application file date, or the six months preceding any month up to the certification month, and project that average for the coming six-month period. Schedule a special review for the sixth month after the case is certified to re-budget applied income.

Examples:

• The person applied in January and is now being certified in February. The eligibility specialist verifies that the person received variable income totaling $300 from August through January, which is anticipated to reoccur, and obtains an average of $50 per month ($300 ÷ 6 months). This average ($50) is budgeted as variable income in the applied income calculation. A special review is scheduled for the following August, six months from the certification date.
• The person applied in January and is now being certified in March. The eligibility specialist has the option of averaging variable income for any one of the following six-month periods:
  • July through December (six months prior to January, the month in which the application was filed);
  • August through January (six months preceding February, which is a month prior to the March certification month); or
  • September through February (six months prior to the certification month of March).

If variable income is received on a monthly basis and is anticipated to continue, the amount to be projected is an average of variable income received during preceding months. If variable income was received during all six of the preceding months, divide the total received by 6; if there are only five months of variable income, divide the total by 5; if there are only four months of variable income, divide the total by 4, and so on.

Examples:

• The application was filed in January and is being certified in February. The person began receiving monthly variable income six months ago, in August. Variable income received from July through December totaled $400. The average to be projected over the coming six months is $66.67 ($400 total ÷ 6 months = $66.67). A special review is scheduled for the following August to re-budget variable income.
• The application was filed in January and is being certified in February. The person began receiving monthly variable income two months ago, in December. Variable income received for December and January totals $75. The average to be projected over the coming six months is $37.50 ($75 total ÷ 2 months = $37.50). A special review is scheduled for the following August to re-budget variable income.

In spousal impoverishment cases, if the community spouse has variable income that is anticipated to continue, in the co-payment budget use an average of variable income received during the six months preceding the application file date, or the six months preceding any month up to the certification month, and project that average for the coming six-month period. Schedule a special review for the sixth month after the case is certified to re-budget applied income.

Note: If the co-payment is $0 and there is a wide margin of variability for variable income, semi-annual reviews are not required. Variable income should be re-budgeted at each annual redetermination.

Note: Cases with significant month-to-month differences in income amounts should be reviewed quarterly rather than every six months. This quarterly averaging will minimize the impact on a person if he receives income in very low amounts for several months. If the monthly average of variable income from all sources is less than $5, the variable income need not be budgeted for applied income purposes.

If variable income from all sources was received during at least three of the preceding six months and is anticipated to reoccur, total the variable income received during the preceding six months and divide by six to determine the initial budget. Schedule a special review for the sixth month after the case is worked to re-budget applied income.

Example: The application is worked in February. The preceding six months are August through January. Variable income totaling $65 from two different sources was received in August, October, December and January and is anticipated to continue. The average to be projected (from March through August) is $10.83 ($65 ÷ 6 months = $10.83).

Spend down situations. Amounts of variable income received during preceding months may differ from amounts anticipated for future months. In these situations, obtain a statement of anticipated income amounts from the source, if possible. If the source cannot provide a statement, expected income must be determined based on other information.

Examples:

• Interest income — The person entered an NF in September, and her Medicaid application is being worked in February. She owns an interest-bearing bank account, but has been spending down resources since September. The current bank account balance is sufficient to continue generating interest. The eligibility specialist budgets the anticipated interest amount based on the best estimate available, considering the reduced account balance and current interest rates, rather than averaging the interest posted during preceding months when the account balance was much higher. A special review is scheduled for no later than August to reconcile.
• Rental income — The amount of rental income to be projected is a net amount based on gross rents anticipated to be received, less allowable expenses anticipated to be paid, during the six months following the month the case is worked (the month the case is certified).

Revision 09-4; Effective December 1, 2009

When projecting variable income, it is permissible to overlap months (or to skip a month), if verification is unavailable.

Examples:

The redetermination is in February and verification of variable income for January is unavailable. The options are:

• Average variable income from July through December (total divided by six months), and project that average through the following August. (This is true even though variable income received in July was used in the average calculated at the preceding semi-annual review in August [when the income from the preceding February through July was averaged].) Also at this February semi-annual review, reconcile the months of August through December.
  
  Note: Do not reconcile for July because that month was reconciled at the previous semi-annual review last August. Never reconcile the same month twice!
• Average variable income from August through December (total divided by five months), and project that average through the following August. Reconcile for August through December.

Options at the next redetermination (the following August):

• Average variable income received from January through July (total divided by seven months), and project that average through the following February. Reconcile for January through July.
• Skip January altogether, and average February through July (total divided by six months), and project that average through the following February. Reconcile for January through July.
• If verification of variable income received in July is unavailable, average variable income received from February through June (total divided by five months), or variable income received from January through June (total divided by six months), and project that average through the following February.

Revision 16-4; Effective December 1, 2016

For earned income to be considered self-employment, either the person individual or the individual's spouse must be actively involved or materially participating in producing the income. See Section E-3100, Types of Earned Income.

Materially participating. An individual business owner is determined to be materially participating if the individual meets any one of the following criteria:

• the individual engages in periodic advice and consultation with the tenant, inspection of the production activities, and furnishing of machinery, equipment, livestock and production expenses;
• the individual makes management decisions that affect the success of the enterprise;
• the individual performs a specified amount of physical labor to produce the commodities raised; or

• the individual does not meet the full requirements above, but the individual's involvement in crop production is nevertheless significant.

Consider income from the sale of timber "farm" income if:

• the timber was grown on the farm;
• the income is not treated as capital gains; and
• the timber operations are incidental to or tied in with the operation of the farm to constitute one business.

Revision 09-4; Effective December 1, 2009

Net earnings (gross income less allowable deductions) are used in budgeting. Net earnings from self-employment also include any profit or loss incurred in partnership agreements (within a self-employment related context). Verified net losses from self-employment can be deducted from other earned income received in the same year the loss was incurred.

In a couple case, the loss can be deducted from either spouse's earned income, regardless of which spouse incurred the loss.

Losses cannot be deducted from unearned income or carried over from a previous period.

E-6210 Self-Employment Expenses

Revision 22-2; Effective July 8, 2022

The chart below contains a list of common types of expenses related to self-employment income. The chart is not intended to be all-inclusive. Submit a policy clearance request when questionable deductions arise or to determine how to budget self-employment expenses not listed in the chart.

Self-Employment Expenses

Allowable self-employment expenses are based on costs that can be deducted from federal income taxes per the IRS Schedule C, Form 1040 - Profit or Loss from Business.

Expense Types	MEPD Programs
Advertising	Allowed
Car and truck expenses	Allowed
Commissions and fees	Allowed
Contract labor	Allowed
Costs not related to self-employment	Non-Allowed
Costs related to producing income gained from illegal activities, such as prostitution or the sale of illegal drugs	Non-Allowed
Depletion	Allowed
Depreciation	Allowed
Employee benefit programs	Allowed
Insurance	Allowed
Interest *	Allowed
Legal and professional services	Allowed
Net loss that occurred in a previous period	Non-Allowed
Office expenses	Allowed
Pension and profit-sharing plans	Allowed
Rent or lease **	Allowed
Repairs and maintenance	Allowed
Supplies	Allowed
Taxes and licenses	Allowed
Travel, meals and entertainment	Allowed
Travel to and from place of business	Non-Allowed
Utilities	Allowed
Wages	Allowed
Other expenses	Allowed

*Interest includes mortgage, interest paid to banks, or other interest.

**Rent or lease may include rent of vehicles, machinery, equipment, or other business property.

When determining transportation costs, the person may choose to use the standard mileage reimbursement rate of 62.5 cents per mile instead of keeping track of actual expenses.

The IRS Schedule F, Form 1040 - Profit or Loss from Farming, lists the deductible expenses for farm income.

Revision 09-4; Effective December 1, 2009

The procedure for calculating the eligibility budget may differ, and will depend on which method is more advantageous to the person.

 

E-6310 Annual Projection

Revision 16-4; Effective December 1, 2016

Divide the individual's entire taxable year's income (as shown on the previous year's income tax,  IRS Schedule C, Form 1040 - Profit or Loss from Business, or IRS Schedule F, Form- 1040 - Profit or Loss from Farming, Schedule F) equally among 12 months. This procedure should be followed even if the business is seasonal, starts late in the year, or ceases operation before the end of the taxable year.

Note: If the payments were received no more than once per calendar quarter, the income is considered as infrequent or irregular. If the total earnings for each calendar quarter are $30 or less, the income is not counted in the eligibility budget and is considered in the co-payment budget. If the total earnings for each calendar quarter exceed $30, allow the $30 deduction and count the excess income in the eligibility budget. Consider the income for the co-payment budget.

If the person's tax statement is used to predict variable income, there is no need to set a six-month special review to redetermine eligibility unless a change has been reported.

 

E-6320 Six Months Projection

Revision 16-4; Effective December 1, 2016

When the previous year's tax statement is unavailable, or if using the IRS Schedule F, Form 1040 - Profit or Loss from Farming, or the IRS Schedule C, Form -1040 - Profit or Loss from Business, makes the person individual ineligible, request verification of earnings and allowable deductions for the previous six months. In this situation, a six-month special review is required.

Revision 09-4; Effective December 1, 2009

Follow established variable income procedures when calculating the co-payment budget. Pay attention to anticipated rate of receipt in projecting co-payment, as there is often a high degree of variability in the receipt of self-employment income. Schedule a special review when lump sum payments are anticipated to occur, so that restitution can be requested. Monitor the case and adjust the budget (if applicable) when projected variable income is expected to cease.

Because most self-employment income involves deductible expenses, inform the person to keep accurate records of all incurred expenses and receipts.

Revision 16-4; Effective December 1, 2016

1. An individual who resides in a nursing facility owns a 160-acre farm where the individual's spouse continues to live. One hundred acres of land are set aside in a Conservation Reserve Program (CRP). The other 60 acres are farmed by the couple's son, who pays all expenses. In return for use of the land, the son pays the individual one-quarter of the net profit he produces. For several years, the individual has received $6,000 from the CRP during the month of September. The son's most recent IRS Schedule C form shows net farming income of $7,000 for the year.
   
   Action:
   
   The income from the land set aside for CRP is considered lease or rental income. As neither the individual nor the individual's spouse participates in the production of farm income, this is also considered rental income and no deductions are given for expenses. If expenses are incurred by either the individual or the individual's spouse, consider these expenses as deductions in netting the income. Other common examples of lease income include hunting or fishing leases, subsidy payments, surface exploration, or bonuses. An individual supplements their Social Security income by making quilts. The quilts are sold through a consignment shop, which keeps 10 percent of the sales price. Each month the individual produces and sells two quilts, which retail for $450 each. The material for each quilt costs $75; additionally, the individual pays her niece $150 per quilt to do the actual quilting stitch. The individual's business is run out of a rented apartment, which includes a living area, kitchen, bathroom, and two bedrooms. One of the bedrooms is used as the workshop. The individual pays $400 per month in rent; utilities for the apartment run $150 per month. The individual is also repaying their son at the rate of $50 per month for money he loaned the individual for the purchase of a new sewing machine, which is used to produce the quilts.
    
2. An individual supplements their Social Security income by making quilts. The quilts are sold through a consignment shop, which keeps 10 percent of the sales price. Each month the individual produces and sells two quilts, which retail for $450 each. The material for each quilt costs $75; additionally, the individual pays her niece $150 per quilt to do the actual quilting stitch. The individual's business is run out of a rented apartment, which includes a living area, kitchen, bathroom, and two bedrooms. One of the bedrooms is used as the workshop. The individual pays $400 per month in rent; utilities for the apartment run $150 per month. The individual is also repaying their son at the rate of $50 per month for money he loaned the individual for the purchase of a new sewing machine, which is used to produce the quilts.
   
   Action:
    

   Amount	Action
   $900.00	gross monthly income (two quilts @ $450 each)
   – 90.00	consignment fee (10 percent of $900)
   –150.00	cost of materials ($75 X 2)
   –300.00	payment to niece ($150 X 2)
   –100.00	rental expense for work space ($400/four rooms)
   – 37.50	utility expense for work space ($150/four rooms)
   $222.50	net monthly income from sale of two quilts

   
   
   Note: The $50 payment on the principal of the loan to the son is not an allowable expense. Similarly, if the individual bought the sewing machine outright (purchase of a capital asset), the purchase would also not be an allowable deduction. However, the rental of a sewing machine would be allowable. See the chart in the previous section.
    

3. An eligible couple produces a yearly cotton crop. The couple belongs to a co-op that stores the cotton to await a better price. The co-op members receive coupons, which are actually a loan against the eventual sale price of the crop.

   Action:

   Proceeds from the sale of the crop become income in the month the individual actually receives the profit. Any coupons cashed against the eventual sale price of the crop are considered income at the time they are cashed.

Revision 09-4; Effective December 1, 2009

If the living arrangement is in a community setting, deeming of income and resources affect the budget. See Section D-4200, Living Arrangements.

If a person lives in the same household with an ineligible spouse or parent and parent's spouse, if any, the income of the ineligible person(s) may be counted with the income of the person. This countable income of the spouse or parent is said to be "deemed" to the person. Although an ineligible parent's income may be earned income, it is counted as unearned income after being deemed to the person.

If neither a person's spouse nor child is in an institutional setting, deeming from spouse-to-spouse or parent-to-child applies in household situations. Only those residing in the household are considered part of the household for deeming purposes. For the purposes of deeming, the household comprises the eligible person, the spouse and any children of the couple (or either member of the couple), or the eligible child, the parent(s) and other children of the parent(s). See Section D-4210, Deeming, for exceptions to the household situations for deeming.

Deeming only applies in household situations. Unless temporarily absent, only those persons residing in the household are a part of the household for deeming purposes. A person is not a member of the household for deeming purposes if he is absent from home for a period that is not a temporary absence. A temporary absence exists when a person (eligible person or child, or ineligible spouse, parent or child) leaves the household but intends to, and does, return in the same month or the following month. If the absence is temporary, deeming continues to apply. An ineligible spouse or parent who is absent from a deeming household solely because of an active duty military assignment continues to be considered a member of the household for income deeming purposes. If the absent service member's intent to continue living in the household changes, deeming stops beginning with the month following the month in which the intent changed.

Revision 16-3; Effective September 1, 2016

The following exceptions apply to deeming of income:

• If the individual's spouse, parent or parent's spouse is a member of a TANF group, the income of the spouse, parent or parent's spouse is not deemed to the individual.
• All income used to determine eligibility for assistance based on need is excluded for deeming purposes. For example, if the individual's spouse, parent or parent's spouse is a member of a TANF group or is eligible for SSI, that individual's income is not deemed to the individual. Note: Most VA pensions are based on need. See Section E-4311, VA Pensions.
• In certain Home and Community-Based Services waiver programs, an ineligible spouse's or parent(s)'s income is not deemed to an individual.
• Deeming does not apply when an eligible individual and ineligible spouse are living in an institution, even when they are sharing a room. Deeming does apply in non-institutional care situations, such as adult foster care and personal care facilities, if payment for care does not include payment for medical services and/or supplies.
• If an ineligible spouse or parent becomes eligible, discontinue deeming beginning with the month the spouse or parent becomes eligible.
• If spouses separate or divorce, discontinue deeming beginning with the first of the month following the month of the event.
• If an ineligible parent(s) or child no longer lives in the same household, discontinue deeming beginning with the first month following the month in which either the parent(s) or child leaves the household.
• When a child attains age 18, discontinue deeming in the month following the month the child attained age 18.
• When an ineligible spouse or parent(s) dies, discontinue deeming beginning with the month following the month the spouse or parent(s) died.

Revision 09-4; Effective December 1, 2009

Deeming procedures begin when:

• an ineligible spouse or parent(s) begins living in the same household with a person, with the first month following the month of change; and
• an eligible spouse or parent(s) becomes ineligible, in the first month that the spouse or parent(s) become ineligible.

Revision 11-1; Effective March 1, 2011

Exempt income is not included in the income budget for deeming or eligibility.

Exempt certain types of income that may be received by people living in the household who are:

• a person's ineligible spouse;
• an ineligible parent;
• a parent's ineligible spouse; or
• any ineligible children.

Do not deem the following types of income to the person:

• all income in Section E-2000, Exempt Income;
• all cash or in-kind payments in Section E-1700, Things That Are Not Income;
• the value of in-kind support and maintenance provided to the ineligible person;
• income used by the ineligible person to make support payments under a court order or an agreement authorized by Title IV-D. The amount exempted is stated in the court order or agreement or the amount of the actual payment, whichever is less;
• payments made to the ineligible person through block grants or other government programs that include family care services and attendant services; and
• income based on need such as SSI, TANF and most VA pensions.

Common exempt income sources used in deeming:

• Amount of income of a dependent who is receiving SSI or TANF, because this income has already been considered in determining the dependent's need for SSI or TANF.
• Infrequent or irregular income.
• Payments for foster care of a child if the child is not eligible for SSI and was placed in the person's home by a public or private, nonprofit child placement or child care agency.
• Student earnings.
• Value of meals and benefits provided under the Child Nutrition Act of 1966.
• Value of meals provided under the National School Lunch Act, as amended by Public Law 90-302 of 1968.
• Payments by the Federal Disaster Assistance Administration authorized by the Disaster Relief Act, as amended.
• Value of any housing assistance payment paid on a house under the United States Housing Act of 1937, the National Housing Act, Section 101 of the Housing and Urban Development Act of 1965, or Title V of the Housing Act of 1949, as authorized by Public Law 94-375.

Note: Consider a utility allowance given under any of these titles to be income, unless the allowance is paid directly to the utility company and the person has no access to the allowance.

 

E-7410 Military Unearned Income

Revision 09-4; Effective December 1, 2009

Note: Do not count the hostile fire pay or imminent danger pay portion from military income as income during the month of receipt. Any unspent hostile fire pay or imminent danger pay becomes a resource if retained into the following month and not otherwise excluded.

For the nine-month period following the month of receipt, exclude from deemed resources the unspent portion of any retroactive payment of:

• hostile fire and imminent danger pay (pursuant to 37 U.S.C. 310) received by the ineligible spouse or parent from one of the uniformed services; and
• family separation allowance (pursuant to 37 U.S.C. 427) received by the ineligible spouse or parent from one of the uniformed services as a result of deployment to or while serving in a combat zone.

Revision 11-3; Effective September 1, 2011

In-kind S/M is unearned income in the form of food or shelter or both. Federal requirements stipulate that S/M, along with other forms of unearned income, be considered when determining Medicaid eligibility.

Do not consider S/M in budgeting for Medicaid Buy-In for Children (MBIC).

Two rules are used to determine the value of S/M a person receives:

• the one-third reduction rule; and
• the one-third reduction + $20 rule.

See Appendix XXXI, Budget Reference Chart.

Base the decision on which rule to use on:

• the person’s living arrangement; and
• whether a person receives:
  • both food and shelter; or
  • either food or shelter.

 

E-8110 One-Third Reduction Rule

Revision 09-4; Effective December 1, 2009

Reference: Appendix XIV, Chart A

Instead of determining the actual dollar value of in-kind S/M as unearned income, use the one-third reduction rule; that is, count one-third of the federal benefit rate (FBR) as additional income if a person (or a person and the person's eligible spouse):

• live in another person's household for a full calendar month, except for temporary absences; and
• receive both food and shelter from the other person's household.

Example: Bess Black lives in her son's home. There are no other household members. Monthly household expenses total $650 ($325 pro-rata share). Mrs. Black contributes nothing toward household expenses. Count one-third of the FBR as S/M.

The one-third reduction rule applies in full or not at all. If a person lives in another person's household, and the one-third reduction rule applies, do not apply any income exclusions to the reduction amount. However, do apply appropriate exclusions to any other earned or unearned income received.

If the one-third reduction rule applies, do not count any other in-kind S/M received.

 

E-8120 One-Third Reduction + $20 Rule

Revision 13-4; Effective December 1, 2013

If a person receives in-kind S/M and the one-third reduction rule is not applicable, use the one-third reduction + $20 rule. Instead of determining the actual dollar value of any food or shelter a person receives, presume that it is worth a maximum value. This presumed maximum value is one-third of the federal benefit rate (FBR), plus the amount of the general income exclusion ($20).

The one-third reduction + $20 rule allows a person to show that the S/M is not equal to the presumed maximum value. Do not use the one-third reduction + $20 rule if the person shows that:

• the current market value of any food or shelter the person receives, minus any payment the person makes for them, is lower than the presumed maximum value; or
• the actual amount someone else pays for the person’s food or shelter is lower than the presumed maximum value.

Use the one-third reduction + $20 rule as part of the unearned income if either:

• the person chooses not to question the use of the presumed maximum value, or
• the presumed maximum value is less than the actual value of the food or shelter the person receives.

Use the actual value of the food or shelter received as part of the unearned income if the person shows that the presumed maximum value is higher than the actual value of the food or shelter the person receives.

Note: A religious order has an express obligation to provide full support and maintenance for members of the order who have taken a vow of poverty. Due to this express obligation, in-kind support and maintenance subject to the one-third FBR + $20 must be developed. Income turned over by a member to the religious order is considered to be in fulfillment of the vow of poverty and is not considered a contribution toward the food and shelter received from the order.

 

E-8121 Community Attendant Services

Revision 09-4; Effective December 1, 2009

Reminder: If a person receives S/M and the one-third reduction + $20 rule applies, count the presumed maximum amount, that is, 1/3 federal benefit rate (FBR) + $20. If the person is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, prior to denial the person must be offered an opportunity to rebut and show that the actual value of the S/M is less.

If a person is applying for or receiving Community Attendant Services (CAS), count 1/3 FBR + $20 as S/M. If the person is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, prior to denial the person must be given an opportunity to rebut and show that the actual value is less.

Example: Jim Morgan, a CAS applicant, lives in his sister's home. The sister's husband and their child also live there. Mr. Morgan does not pay his pro-rata share of household expenses. Count 1/3 FBR + $20 as S/M. If Mr. Morgan is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, prior to denial Mr. Morgan must be given an opportunity to rebut and show that the actual value is less. Monthly household expenses total $1,050 ($262.50 pro-rata share). Mr. Morgan contributes $200 per month toward general household expenses. The actual value is $62.50 ($262.50 pro-rata share − $200 client's contribution = $62.50).

Note: No S/M for Home and Community-Based Services waivers.

 

E-8130 Support and Maintenance (S/M) Items

Revision 09-4; Effective December 1, 2009

What Is S/M	What Is Not S/M
Food/board	Value of Supplemental Nutrition Assistance Program (SNAP) food benefits (formerly known as food stamps)
Shelter/room	Cable TV
Mortgage	Telephone bill (basic, plus extra services and long distance)
Real property taxes (less any tax rebate credit)	Credit card bills
Rent	VA clothing allowance for medical reasons
Heating fuel (for example, coal, wood and butane)	Life insurance premiums
Gas	Medical care
Electricity	Transportation
Water	Repair of roof, plumbing, etc.
Sewer	General upkeep on home
Garbage removal	Lawn maintenance
Property insurance required by mortgage holder	Paint for the house

 

E-8140 Exceptions to Counting Support and Maintenance (S/M) Income

Revision 18-1; Effective March 1, 2018

The general rule is to count S/M to a person when he or she receives food or shelter, regardless of who is liable for payment of the cost of the food or shelter item received.

There are numerous exceptions to the general rule. When an exception applies, the food or shelter a person receives is not countable S/M. Some of these exceptions result from federal statutory exclusions that specifically exclude from income the value of food or shelter received. Other exceptions result from situations in which the food or shelter received does not constitute income in accordance with regulations.

Do not count S/M if a person receives food or shelter that:

• is specifically excluded by federal law (for example, the Disaster Relief and Emergency Assistance Act) (see Section E-2000, Exempt Income);
• meets the criteria for exclusion of infrequent or irregular unearned income (see Section E-9000, Infrequent or Irregular Income);
• has no current market value;
• is provided under a governmental (federal, state or local) medical or social service program (see Section E-1700, Things That Are Not Income);
• is assistance based on need from a state or one of its political subdivisions (see Section E-2000, Exempt Income);
• is provided by someone living in the same household whose income is subject to deeming to the person;
• is food or shelter received at school by a child under age 22, not subject to deeming, who receives food or shelter only at school while temporarily absent from his parental household;
• is food or shelter received during a temporary absence;
• is received as a replacement of a lost, damaged or stolen resource (this includes temporary housing) (see Section E-1740, Miscellaneous Things That May Not Be Income, and Section E-2000, Exempt Income);
• is excluded under an approved plan for self-support;
• is received because of payments made under the terms of a credit life or credit disability policy (see Section E-1740); or
• is received during medical confinement in an institution.

Support and maintenance are not included as income in the eligibility budget if the person:

• is in an institutional setting and eligibility is being tested for a Home and Community-Based Services waiver program (Note: Community Attendant Services is not a Home and Community-Based Services waiver program); or
• is in an institutional setting for the month, but entered after the first of the month.

Example: Mr. John Bono lives in his own home. His daughter reports that she pays Mr. Bono's garbage removal bill directly to the vendor each calendar quarter, which amounts to no more than $20. Because S/M meets the definition of infrequent or irregular income, it is not counted in the eligibility budget.

Support and maintenance are also not included as income in the eligibility budget if the person:

• lives with a deemor (ineligible spouse/parent) and there are no non-deemors in the household;
• lives in a commercial room-and-board establishment;
• is placed in personal care, adult foster care or supervised living by a public agency, such as Adult Protective Services (APS) or HHSC; or
• pays his pro-rata share of all household expenses.

Example: Alice Beckman lives with her son in his home. Monthly household food and shelter expenses total $350 ($175 pro-rata share). Ms. Beckman contributes $185 per month toward general household expenses. Because Ms. Beckman pays more than her pro-rata share of general household expenses, there is no S/M.

Support and maintenance are also not included as income in the eligibility budget if the person:

• lives in a public assistance household, defined as one in which each member receives cash or vendor payments from one of the following:
  • Temporary Assistance for Needy Families (TANF);
  • SSI;
  • Refugee Assistance Act of 1980;
  • a Bureau of Indian Affairs (BIA) general assistance program;
  • payments based on need provided by a state/local government income maintenance program;
  • Veterans Affairs (VA) pension for veterans or widows;
  • VA dependency and indemnity compensation (DIC) for parents; or
  • payments under the Disaster Relief Act of 1974; or
• is receiving free use of land on which the shelter the person owns is located, or free use of shelter situated on land the person owns.

Example: Marcie Bennett lives in her own mobile home on property owned by her daughter. The daughter charges her no rent for use of the land. Ms. Bennett pays all of her food and utility expenses. There is no S/M because the use of land alone is not a shelter cost.

Example: Janet Smith lives in a mobile home owned by her daughter. The mobile home is situated on a lot owned by Ms. Smith. The daughter does not charge Ms. Smith rent for use of the mobile home. There is no S/M because the use of shelter alone (but not the land) is not a shelter cost.

 

E-8150 Food, Clothing or Shelter as Wages

Revision 09-4; Effective December 1, 2009

If a person receives food, clothing or shelter that constitutes wages or remuneration for work, this is earned income valued at its current market value (CMV) or current market rental value (CMRV).

In this situation, the principles of S/M do not apply; however, the earned income exclusions of $65 and one-half the remainder do apply, unless eligibility is being determined under the institutional income limit.

Example: Joe Ball works as an apartment manager. His employer pays him $300 per month in cash wages and provides a free room, which has a monthly rental value of $200. Because provision of the room by Mr. Ball's employer constitutes wages, Mr. Ball receives $500 in earned income each month. This in-kind earned income in the form of shelter is valued at its CMRV ($200), and the one-third reduction rule and the one-third reduction + $20 rule do not apply. The earned income exclusions of $65 and one-half the remainder apply to Mr. Ball's total earnings of $500 ($300 cash wages + $200 free room), unless eligibility is being determined under the institutional income limit.

 

E-8160 Living Arrangement

Revision 09-4; Effective December 1, 2009

Use a person’s living arrangement to determine if S/M is being received and whether the S/M is to be valued under the one-third reduction rule or under the one-third reduction + $20 rule. Some common living arrangements are:

• noninstitutional care;
• home ownership;
• rental liability, including flat fee for room and board;
• public assistance (PA) households (that is, presumed sharing);
• separate consumption;
• separate purchase of food;
• sharing;
• earmarked sharing; and
• home of another.

E-8210 Household of Another Person

Revision 09-4; Effective December 1, 2009

E-8211 Contributing Less Than Pro-Rata Share

Revision 09-4; Effective December 1, 2009

Reference: Appendix XIV, Chart A

If a person contributes less than his or her pro-rata share of general household expenses, use the one-third reduction rule. No opportunity for rebuttal is offered.

Example: Alice Beckham lives with her son in his home. General household expenses total $350 ($175 pro-rata share). Mrs. Beckham contributes only $125 per month. Count 1/3 FBR as support and maintenance.

E-8212 Contributing an Earmarked Share of Food and Shelter

Revision 15-4; Effective December 1, 2015

If a person contributes a specific amount for food and/or shelter, but the amount contributed is less than the person's pro-rata share for each earmarked expense, use the one-third reduction rule. No rebuttal is offered.

Example 1: A person lives in his sister's home with his sister, the sister's spouse and child. The monthly household food expenses total $240 ($60 pro-rata share); the monthly household shelter expenses total $320 ($80 pro-rata share). The person pays his sister $55 a month for food and nothing for shelter. The person does not pay his pro-rata share of either food or shelter expenses. Count 1/3 FBR as S/M.

Example 2: Another person lives in his daughter's home with her family of five. The household receives SNAP food benefits for all six members, but these benefits do not cover the household's total food expenses. The person does not contribute toward the food expenses not covered by SNAP, nor does he pay anything toward shelter costs. Count 1/3 FBR as S/M.

E-8213 Contributing an Earmarked Share of Either Food or Shelter

Revision 09-4; Effective December 1, 2009

If a person contributes an earmarked pro-rata share of either food or shelter expenses, but not both, count 1/3 FBR + $20. If the person is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, prior to denial the person must be given an opportunity to rebut and show that actual value is less.

Example: Emily Fairchild lives with her brother and his family of three. Ms. Fairchild contributes her pro-rata share of shelter expenses but not of food expenses. Count 1/3 FBR + $20 as S/M. If the person is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, prior to denial Mrs. Fairchild must be given an opportunity to rebut and show that the actual value is less. Monthly household food expenses total $240 ($60 pro-rata share); monthly household shelter expenses total $320 ($80 pro-rata share). Ms. Fairchild contributes $50 per month for food and $85 per month for shelter. The actual value is $5.00 ($140 client's total pro-rata share - $135 client's total contribution = $5.00).

Example: Gladys Haley lives with her son in his home. She pays her pro-rata share of food expenses but not of shelter expenses. Count 1/3 FBR + $20 as S/M. If the person is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, prior to denial Ms. Haley must be given an opportunity to rebut and show that the actual value is less. Monthly household food expenses total $200 ($100 pro-rata share); monthly household shelter expenses total $400 ($200 pro-rata share). Ms. Haley contributes $100 for food, but does not contribute anything for shelter. In this situation the actual value is $200 ($300 total pro-rata Share - $100 client's contribution = $200.) Count the presumed maximum S/M of 1/3 FBR + $20 if this is less than the actual value.

E-8214 Separate Food Purchases

Revision 15-4; Effective December 1, 2015

If the person purchases his food separately from other household members, then shelter is the only consideration. Count 1/3 FBR + $20. If the person is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, the person must be offered an opportunity to rebut and show that the actual value is less.

Example: A person lives in her daughter's home. The daughter's spouse and their two children also live there. The person purchases her food separate from the rest of the household, but does not pay her pro-rata share of shelter expenses. Count 1/3 FBR + $20. If the person is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, prior to denial, the person must be given an opportunity to rebut and show that the actual value is less. The monthly household shelter expenses total $700 ($140 pro-rata share), and the person contributes $100. The actual value is $40 ($140 pro-rata share – $100 person's contribution = $40).

E-8220 Ownership or Rental Liability

Revision 09-4; Effective December 1, 2009

A person has an ownership interest or rental liability, and someone else is directly paying all or part of the person's pro-rata share of household expenses. Cash is not given to the person.

If the person is the householder (has ownership interest or rental liability), count 1/3 FBR + $20. If the person is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, prior to denial the person must be given an opportunity to rebut and show that the actual value of the S/M is less.

Note: The one-third reduction rule never applies if the person is the householder.

E-8221 Receipt of Support and Maintenance (S/M) from Inside the Household

Revision 09-4; Effective December 1, 2009

A person living in his or her own household may be provided in-kind S/M from other household members living in the household.

Note: S/M should be developed only if the 1/3 FBR + $20, in combination with other countable income, would cause ineligibility.

If the person is the householder, others live with him/her, but he/she pays a pro-rata share of household expenses, there is no S/M.

Example: Scott Nance lives in his own home. His daughter and her two children live with him. Household shelter expenses are as follows: annual property taxes of $1,200 ($100 monthly) and monthly utility costs of $110. The pro-rata share of shelter costs is $52.50 ($100 taxes + $110 utilities = $210 total shelter expenses divided by 4 household members = $52.50 pro-rata share). Household food expenses total $550 ($137.50 pro-rata share). Thus, the pro-rata share of total household expenses is $190 ($52.50 for food + $137.50 for shelter = $190). Mr. Nance's daughter pays the taxes and utilities of $210 per month; Mr. Nance pays the $550 for food. Since Mr. Nance pays more than his pro-rata share of household expenses, there is no S/M.

If the person is the householder and others live with him/her, but he/she does not pay his pro-rata share of household expenses, count 1/3 FBR + $20. If the person is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, prior to denial the person must be given an opportunity to rebut and show that the actual value is less.

Examples:

• Vicki Neal lives in her own home. Her adult son lives with her. Ms. Neal and her son purchase their food separately, but she does not pay her pro-rata share of shelter expenses. Count 1/3 FBR + $20 as S/M. If Ms. Neal is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, prior to denial Ms. Neal must be given an opportunity to rebut and show that the actual value is less. Ms. Neal pays the cost of butane, which is $35 per month. Her son pays the entire electricity bill of $80 per month directly to the vendor. Thus, shelter costs total $115 ($57.50 pro-rata share). The actual value is $22.50 ($57.50 pro-rata share - $35 client's contribution = $22.50 S/M).
• Donna Hipple lives in her own home. Her adult son lives with her. Ms. Hipple does not pay her pro-rata share of household expenses. Count 1/3 FBR + $20 as S/M. If Ms. Hipple is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, prior to denial Ms. Hipple must be given an opportunity to rebut and show that the actual value is less. Monthly household expenses consist of $500 for shelter ($250 pro-rata share) and $300 for food ($150 pro-rata share). Ms. Hipple buys all food ($300), and her son pays all shelter costs ($500). Since the pro-rata share of total household expenses is $400 ($250 pro-rata for shelter + $150 pro-rata for food = $400), the actual value of S/M is $100 ($400 pro-rata share - $300 Ms. Hipple's contribution = $100).

E-8222 Receipt of Support and Maintenance (S/M) from Outside the Household

Revision 18-4; Effective December 1, 2018

If the person is the householder (has ownership interest or rental liability) and someone else outside the household is directly paying all or part of the person's pro-rata share of household expenses, count 1/3 of the Federal Benefit Rate (FBR) + $20.

If counting 1/3 FBR + $20 does not make the person ineligible, no further development of S/M is needed.

If counting 1/3 FBR + $20 results in ineligibility, prior to denial, allow the person the opportunity to rebut and show that the actual value of the S/M is less.

Example: Elizabeth Smith lives alone in a rented apartment. Her rent is $1400 a month. Ms. Smith pays $700 and her daughter, who does not live in the household, pays the other $700 directly to the landlord. Ms. Smith pays all other bills. Current Market Rental Value (CMRV) $1400 -$700 = $700 > 1/3 FBR +$20.  S/M = 1/3 FBR + $20.

Note: The one-third reduction rule never applies if the person is the householder.

E-8222.1 Rental Subsidy - Receipt of Support and Maintenance (S/M) from Outside the Household

Revision 18-4; Effective December 1, 2018

Reference: Appendix XIV, Chart B

Rental subsidy is unearned income that represents S/M from outside the household. Rental subsidy policy applies only when:

• someone in the household has a rental liability;
• the rental property is owned by a parent or child of someone in the household; and
• the One-Third Reduction Rule (1/3 FBR) does not apply.  

If the amount of rent required by the property owner equals or exceeds either the current market rental value (CMRV) or 1/3 FBR + $20, then there is no rental subsidy countable as outside S/M.

If the amount of rent required by the property owner is less than both the CMRV and 1/3 FBR + $20, then the rental subsidy countable as outside S/M is the lessor of the:

• difference between 1/3 FBR + $20 and the amount of rent required; or
• difference between the CMRV and the amount of rent required.

Example: Royce Jones, a disabled adult, lives alone in a home owned by his parents. He pays all his own utilities, but does not pay the CMRV. Mr. Jones pays $50 per month rent. His parents state that the normal rate to rent the house is $250 per month (not including utilities). The difference between the CMRV and the rent value is $200 ($250 - $50). The difference between 1/3 FBR + $20 and the amount of rent required is $126.66 ($176.66 - $50). Because $126.66 is less than $200, $126.66 is countable S/M.

Notes:

• As Rental Subsidy considers only the rental expense, explore potential S/M for remaining household expenses (e.g., utilities or food). 
• Accept owner declaration of CMRV. Contact with a knowledgeable source, such as a realtor, is not required unless the eligibility specialist considers the value questionable.

Related Policy

Receipt of Support and Maintenance (S/M) from Inside and Outside the Household, E-8223

E-8223 Receipt of Support and Maintenance (S/M) from Inside and Outside the Household

Revision 09-4; Effective December 1, 2009

If a person receives S/M from both inside and outside the household, count 1/3 FBR + $20. If the person is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, prior to denial the person must be given an opportunity to rebut and show that the sum of S/M from inside the household and S/M from outside the household is less.

Example: Bob Davis lives in his own home. His daughter and her child live with him. He receives S/M from both inside and outside the household. Count 1/3 FBR + $20 as S/M. If he is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, prior to denial Mr. Davis must be given an opportunity to rebut and show that the actual value is less. Monthly household food expenses total $300 ($100 pro-rata share). Monthly household shelter expenses total $600 ($200 pro-rata share). The daughter buys the food, but Mr. Davis gives her $50 per month. Mr. Davis' son pays all shelter costs directly to the vendors (taxing authority and utility company). In this situation, the actual value of S/M is $250 ($100 pro-rata share for food - $50 client's contribution = $50 S/M from inside the household + $200 S/M from outside the household = $250). Count the maximum S/M of 1/3 FBR + $20 if this is less than the actual value.

E-8311 Companion Case Not Contributing Pro-Rata Share

Revision 15-4; Effective December 1, 2015

If a person and the person's ineligible spouse do not contribute their pro-rata share of household expenses, count 1/6 Couple FBR (1/3 Couple FBR divided by 2) as S/M for the person. Do not consider the S/M received by the ineligible spouse (the other 1/6 Couple FBR) in the eligibility determination when deeming.

Example: A couple lives in their daughter's home. The daughter's spouse and their three children also live there. Only one member of the couple is applying for the Qualified Medicare Beneficiary (QMB) program. The couple does not contribute toward household expenses. Count 1/6 Couple FBR (1/3 Couple FBR divided by 2) as S/M. No S/M is considered for the ineligible spouse in the eligibility budget when deeming.

 

E-8312 Companion Case Contributing Pro-Rata Share

Revision 15-4; Effective December 1, 2015

If a person and the person's ineligible spouse contribute their pro-rata share of either food or shelter expenses but not both, count 1/6 Couple FBR + $10 as S/M for the person. (The S/M attributable to the ineligible spouse is not counted in the eligibility budget when deeming.) If the person is income-eligible, no further development is required. If counting 1/6 Couple FBR + $10 results in ineligibility, the person must be offered an opportunity to rebut and show that the actual value is less.

Example: A couple lives in their son's home. The son's spouse also lives there. Only one member of the couple is applying for QMB. The couple pays more than their pro-rata share of food expenses, but does not pay their pro-rata share of shelter expenses. Count 1/6 Couple FBR + $10 as S/M for the applicant spouse. (Do not consider S/M received by the non-applicant spouse in the eligibility budget when deeming.) If the applicant is income-eligible, no further development is needed.

If counting 1/6 Couple FBR + $10 results in ineligibility, prior to denial, the applicant must be given an opportunity to rebut and show that the actual value is less. The monthly household food expenses total $600 ($150 pro-rata share for one person x 2 = $300 pro-rata share for the couple); the monthly household shelter expenses total $750 ($187.50 pro-rata share for one person x 2 = $375 couple's pro-rata share). The couple contributes $350 ($175 each) for food, but does not contribute toward shelter. The actual value is $162.50 ($300 couple's pro-rata share for food + $375 couple's pro-rata share for shelter = $675 couple's total pro-rata share – $350 couple's contribution = $325 actual value for both spouses divided by 2 = $162.50 actual value for the applicant). Count the maximum S/M of 1/6 Couple FBR + $10 if this amount is less than the actual value. Any S/M received by the non-applicant spouse is not considered in the eligibility budget when deeming.

 

E-8313 Couple Case Not Contributing Pro-Rata Share

Revision 09-4; Effective December 1, 2009

If neither spouse in a couple case contributes a pro-rata share of household expenses, count 1/3 Couple FBR.

 

E-8314 Couple Case Contributing Pro-Rata Share

Revision 15-4; Effective December 1, 2015

If both spouses in a couple case contribute their pro-rata share of either food or shelter expenses but not both, count 1/3 Couple FBR + $20. If the couple is income-eligible, no further development is needed. If counting 1/3 Couple FBR + $20 results in ineligibility, prior to denial, the couple must be given an opportunity to rebut and show that the actual value is less.

Example: A couple lives with their daughter in the daughter's home. The couple pays their pro-rata share of food expenses but not shelter expenses. Count 1/3 Couple FBR + $20 as S/M. If couple is income-eligible, no further development is needed. If counting 1/3 Couple FBR + $20 results in ineligibility, prior to denial, the couple must be given an opportunity to rebut and show that the actual value is less. The monthly household food expenses total $350 ($116.66 pro-rata share for one person x 2 people = $233.32 pro-rata share for the couple). The monthly household shelter expenses total $600 ($200 pro-rata share for one person x 2 people = $400 pro-rata share for the couple). The couple contributes $250 ($125 each) for food, but does not contribute toward shelter. In this situation, the actual value is $383.32 ($233.32 couple's pro-rata share for food + $400 couple's pro-rata share for shelter = $633.32 total pro-rata share – $250 couple's contribution = $383.32). Count the maximum S/M of 1/3 Couple FBR + $20 if this is less than the actual value.

 

E-8320 Ownership or Rental Liability

Revision 09-4; Effective December 1, 2009

 

E-8321 Couple Case Not Contributing Pro-Rata Share

Revision 15-4; Effective December 1, 2015

If the person and spouse do not pay their pro-rata share of household expenses, count 1/3 Couple FBR + $20. If the couple is income-eligible, no further development is needed. If counting 1/3 Couple FBR + $20 results in ineligibility, prior to denial, the couple must be given an opportunity to rebut and show that the actual value is less.

Example: A couple lives in their own home. Their adult son lives with them. The couple does not contribute their pro-rata share of household expenses. Count 1/3 Couple FBR + $20 as S/M. If the couple is income-eligible, no further development is needed. If counting 1/3 Couple FBR + $20 results in ineligibility, prior to denial, the couple must be given an opportunity to rebut and show that the actual value is less. The monthly household expenses total $750 ($250 pro-rata share for one person x 2 people = $500 pro-rata share for the couple). The son pays the shelter costs of $350 per month. The couple buys all of the food, paying $400 ($200 each) per month. The actual value is $100 ($500 couple's pro-rata share – $400 couple's contribution = $100).

 

E-8322 Companion Case Not Contributing Pro-Rata Share

Revision 15-4; Effective December 1, 2015

If a person and the person's spouse do not pay their pro-rata share of household expenses, count 1/6 Couple FBR + $10 as S/M for the person. (Do not consider S/M received by the ineligible spouse in the eligibility determination when deeming.) If the person is income-eligible, no further development is needed. If counting 1/6 Couple FBR + $10 results in ineligibility, prior to denial, the person must be given an opportunity to rebut and show that the actual value is less.

Example: A couple lives in their own home. Only one member of the couple is applying for QMB. Two of their adult children live with them. The couple does not pay their pro-rata share of household expenses. Count 1/6 Couple FBR + $10 as S/M for the applicant. (The amount of S/M received by the non-applicant spouse is not considered in determining eligibility when deeming.) If the applicant is income-eligible, no further development is required. If counting 1/6 Couple FBR + $10 results in ineligibility, prior to denial, the applicant must be given an opportunity to rebut and show that the actual value is less. The monthly household expenses total $1,200 ($300 pro-rata share for one person x 2 people = $600 couple's pro-rata share). The children pay the shelter costs of $900 per month, and the couple buys all food, paying $300 ($150 each) per month. The actual value of S/M for the applicant is $150 ($600 couple's pro-rata share – $300 couple's contribution = $300 actual value for both spouses divided by 2 = $150 actual value to the applicant). (The remaining $150 S/M attributed to the non-applicant spouse is not considered in determining eligibility when deeming.) Count the maximum S/M of 1/6 Couple FBR + $10 if this is less than the actual value.

 

E-8323 Companion Case with Contributions Toward Household Expenses

Revision 15-4; Effective December 1, 2015

If an ineligible spouse's contribution toward household expenses exceeds the ineligible spouse's pro-rata share, then the excess amount is allocated equally as a contribution among the eligible spouse and the couple's children (if any). Persons among whom the ineligible spouse's excess contribution is allocated (for example, the eligible spouse and the couple's children) are referred to as the "deeming unit."

Example: A couple and their 14-year-old child live in a home they are buying. One of the spouse's adult sisters also lives with them. The other spouse is the only one applying for ME-Pickle. The couple pays more than their pro-rata share of food expenses, but does not contribute toward shelter.

Count 1/6 Couple FBR + $10 as S/M for the applicant. (Do not consider S/M received by the non-applicant spouse or the child in the eligibility determination when deeming.)

If the applicant is income-eligible, no further development is required. If counting 1/6 Couple FBR + $10 results in ineligibility, the applicant must be given an opportunity to rebut and show that the actual value is less. The monthly household food expenses total $450 ($112.50 pro-rata share); the monthly household shelter expenses total $600 ($150 pro-rata share). The non-applicant spouse buys all food ($450), but does not contribute toward shelter expenses. The applicant and the child do not personally contribute. The non-applicant spouse's sister pays all remaining household expenses ($600).

The non-applicant's "excess contribution" is $187.50 ($112.50 pro-rata share for food + $150 pro-rata share for shelter = $262.50 total pro-rata share – $450 non-applicant's contribution = -$187.50 excess contribution). The $187.50 is divided equally as a contribution among the applicant and the child in the deeming unit. Thus, $187.50 divided by 2 = $93.75 each as a contribution by the applicant and the child. The actual value of the applicant's S/M is $84.38 ($112.50 pro-rata share for food + $150 pro-rata share for shelter = $262.50 total pro-rata share – $93.75 applicant's contribution = $168.75 actual value of S/M for both spouses divided by 2 = $84.38), which is less than 1/6 Couple FBR + $10.

Revision 09-4; Effective December 1, 2009

In rent-free shelter, no household member has ownership interest or rental liability. This type of S/M is subject to the maximum of 1/3 of FBR + $20.

In rent-free shelter situations, a person outside the household provides the dwelling, but the household has no obligation to pay rent in return for shelter.

If the household contributes nothing for shelter, count 1/3 FBR + $20 as S/M. If the person is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, prior to denial the person must be given an opportunity to rebut and show that the actual value is less. Actual value is based on the current market rental value (CMRV).

Example: Margie Ballard lives in a house owned by her son. She purchases her food and pays all utilities. Her son allows her to live in the home without paying rent. The son reports the CMRV (without utilities) to be $250. Count 1/3 FBR + $20 as S/M. If the person is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, prior to denial Ms. Ballard must be given an opportunity to rebut and show that the actual value is less. In this situation, the actual value is the CMRV of $250. Count the maximum S/M of 1/3 FBR + $20 if this is less than the actual value.

Example: Keith Linder lives in a house owned by his son. The son has requested that Mr. Linder pay his (the son's) monthly mortgage payments of $150 directly to the mortgage-holder in lieu of rent. Mr. Linder pays his own utilities. The son reports the CMRV (without utilities) to be $175. Since the son has requested that Mr. Linder pay his mortgage payment in lieu of rent, this is allowed as a shelter expense. Count 1/3 FBR + $20 as S/M. If Mr. Linder is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, prior to denial Mr. Linder must be given an opportunity to rebut and show that the actual value is less. The actual value is $25 ($175 CMRV - $150 payment on loan = $25).

The actual value of S/M may be reduced by the amount of the household's voluntary payments directly to the provider only for the property owner’s mortgage, real property taxes or rent (in sublease situations). Use only these voluntary payments made directly to vendors to reduce the actual value of the S/M.

Example: Barry Williams lives in a house owned by a relative. He pays his own utilities. The relative allows him to live there free of charge, but states that the CMRV (without utilities) is $300 per month. Although Mr. Williams pays no rent, last month he voluntarily paid his relative's annual real property taxes of $1,000 (or $83.33 monthly prorated taxes) directly to the taxing authority. Mr. Williams' payment of $83.33 for taxes does not equal the CMRV ($300). Count 1/3 FBR + $20 as S/M. If he is income-eligible, no further development is needed. If counting 1/3 FBR + $20 results in ineligibility, Mr. Williams must be given an opportunity to rebut and show that the actual value is less. In this situation, the actual value of the S/M is $216.67 ($300 CMRV - $83.33 client's voluntary payment = $216.67). Count the maximum S/M of 1/3 FBR + $20 if this is less than the actual value.

Revision 09-4; Effective December 1, 2009

Receipt of in-kind S/M must be re-evaluated if a person changes his/her permanent living arrangement. Temporary absences from the permanent living arrangement do not affect S/M.

Example: A person lives in her own home. A friend lives with her. The friend pays more than her own pro-rata share of household expenses, so the person receives S/M of 1/3 FBR + $20. On March 8, the person was hospitalized and was subsequently discharged to her son's home on March 25. The person remained in the son's home while convalescing until April 12, when she returned to her own home. Because the person did not change her permanent living arrangement, continue to count 1/3 FBR + $20 as S/M.

E-8610 Excess Contributions Towards Household Expenses

Revision 09-4; Effective December 1, 2009

If an ineligible parent's contribution towards household expenses exceeds that ineligible parent's pro-rata share, then the excess amount is allocated equally as a contribution among the parent's children (eligible and ineligible) and eligible spouse (if any). Persons among whom the ineligible parent's excess contribution is allocated (for example, children and eligible spouse, if any) are referred to as the "deeming unit."

 

E-8620 Child Living with Parents and Siblings Only

Revision 11-4; Effective December 1, 2011

If an eligible child lives only with his parent(s) and minor children, no S/M is developed for that child.

Example: John Voss, aged 14, is applying for ME-SSI Prior. He lives with his parents and two younger siblings in a home owned by his parents. John does not personally contribute toward household expenses. There is no S/M because John lives with his parents and minor siblings.

 

E-8630 Child Living in Own Household with Parents and Another Adult

Revision 15-4; Effective December 1, 2015

If an eligible child lives with his parent(s) and another adult in his parent’s(s’) household, the child may receive S/M subject to the maximum of 1/3 FBR + $20. (Any S/M received by the parent(s) or ineligible children is not considered in the eligibility determination when deeming.) Any contribution by a parent of the eligible child toward household expenses that is in excess of the parent's own pro-rata share is divided equally as a contribution among all members of the deeming unit (for example, the ineligible parent's children and eligible spouse, if any).

Example 1: A child, age 14, is applying for ME-SSI Prior. He lives with his parents and two minor siblings in a home owned by his parents. His aunt also lives in the home. The applicant does not personally contribute toward household expenses. Count 1/3 FBR + $20 as S/M. If the applicant is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, the applicant must be given an opportunity to rebut and show that the actual value is less. The general household expenses total $1,200 ($200 pro-rata share). One of the applicant’s parents contributes $500 toward household expenses; the other parent does not contribute. The applicant’s aunt pays $700. The one parent’s excess contribution is $300 ($500 contribution – $200 pro-rata share = $300 excess contribution). The $300 is divided equally among the applicant and his two siblings. Thus, $300 divided by 3 = $100 applicant’s contribution. The actual value of S/M received by the applicant is $100 ($200 pro-rata share – $100 applicant’s contribution = $100 actual value of S/M), which is less than 1/3 FBR + $20.

Example 2: Same situation as above, except that both of the applicant’s parents now contribute — one parent contributes $200 and the other parent contributes $300. The applicant’s aunt contributes $700. Count 1/3 FBR + $20 as S/M. If the applicant is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, the applicant must be given an opportunity to rebut and show that the actual value is less. The one parent does not have an excess contribution ($200 contribution – $200 pro-rata share = $0 excess contribution). The other parent’s excess contribution is $100 ($300 contribution – $200 pro-rata share = $100 excess contribution). The $100 is divided equally as a contribution among the parents' children in the household. Thus, the applicant’s contribution is $33.33 ($100 excess contribution divided by 3 children = $33.33). The actual value of S/M received by the applicant is $166.67 ($200 pro-rata share – $33.33 applicant’s contribution = $166.67), which is less than 1/3 FBR + $20.

Example 3: Same situation, except that both of the applicant’s parents each contribute $275 ($550 total) and the aunt contributes $650. Count 1/3 FBR + $20 as S/M. If the applicant is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, the applicant must be given an opportunity to rebut and show that the actual value is less. The excess contribution for each of the applicant’s parents is $75 ($275 parent's contribution – $200 pro-rata share = $75 excess contribution). The total excess contribution for both parents is $150 ($75 x 2 = $150). The $150 is divided equally as a contribution among all three children. Thus, the applicant’s contribution is $50 ($150 divided by 3 = $50). The actual value of S/M received by the applicant is $150 ($200 pro-rata share – $50 applicant’s contribution = $150), which is less than 1/3 FBR + $20.

Example 4: Same situation, except that one of the applicant’s parents is an SSI recipient and contributes nothing personally toward household expenses. Count 1/3 FBR + $20 as S/M for the applicant. If the applicant is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, the applicant must be given an opportunity to rebut and show that the actual value is less. The applicant’s non-SSI parent contributes $500 toward household expenses, and the aunt contributes $700. The contributing parent’s excess is $300 ($500 contribution – $200 pro-rata share = $300 excess contribution). The $300 is divided equally as a contribution among all members of the deeming unit (the three children and the eligible parent). The applicant’s contribution is $75 ($300 divided by 4 people = $75). The actual value of S/M received by the applicant is $125 ($200 pro-rata share – $75 applicant’s contribution = $125), which is less than 1/3 FBR + $20.

 

E-8640 Child Living with Parents in Household of Another Person

Revision 11-4; Effective December 1, 2011

If an eligible child lives with his parent(s) in someone else's household, and the child does not contribute his pro-rata share of household expenses, the child receives S/M valued at 1/3 FBR. (Any S/M received by the parent(s) and ineligible children is not considered in the eligibility determination when deeming.) Any excess contribution by an ineligible parent (for example, contribution in excess of that parent's pro-rata share) is divided equally among the parent's children and eligible spouse (if any).

Example: Rachel Brown, aged 14, is applying for ME-SSI Prior. She lives with her mother and aunt in the aunt's household. General household expenses total $420 ($140 pro-rata share). Rachel has no income, but her mother contributes $200 toward household expenses. The mother's excess contribution is $60 ($140 pro-rata share - $200 mother's contribution = - $60 mother's excess contribution). This $60 is divided equally among the mother's children in the household (Rachel is the only one) and the mother's eligible spouse (there is none). Thus, Rachel's contribution is $60. Since Rachel's contribution of $60 does not equal her pro-rata share ($140) of household expenses, count 1/3 FBR as S/M. No rebuttal is offered.

If an eligible child lives with his/her parent(s) in someone else's household and the child contributes his pro-rata share of either food or shelter expenses, but not both, count 1/3 FBR + $20 as S/M. (Any S/M received by the parent(s) and ineligible children is not considered in the eligibility determination when deeming.) If the child is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, the person must be given an opportunity to rebut and show that the actual value is less. Any excess contribution by a parent (for example, contribution in excess of the parent's pro-rata share) is divided equally as a contribution among the parent's children and eligible spouse (if any).

Example: Sonia Barrett, aged 14, is applying for ME-SSI Prior. She lives with her parents and her aunt in the aunt's household. Household food expenses total $350 ($87.50 pro-rata share); household shelter expenses total $500 ($125 pro-rata share). Each of Sonia's parents contributes $150 ($300 total) for food expenses. The parents do not contribute toward shelter expenses. Sonia has no income. Count 1/3 FBR + $20 as S/M. If she is income-eligible, no further development is required. If counting 1/3 FBR + $20 results in ineligibility, the person must be given an opportunity to rebut and show that the actual value is less. The excess contribution for each parent is $62.50 ($87.50 pro-rata share for food + $125 pro-rata share for shelter = $212.50 total pro-rata share - $150 parent's contribution = $62.50 excess contribution per parent). The total excess contribution for both parents is $125 ($62.50 per parent x 2 parents = $125). The $125 is divided equally among all of the parents' children in the home (Sonia is the only one). Thus, Sonia's contribution is $125. The actual value of S/M received by Sonia is $87.50 ($87.50 pro-rata share for food + $125 pro-rata share for shelter = $212.50 total pro-rata share - $125 Sonia's contribution = $87.50), which is less than 1/3 FBR + $20.

Revision 09-4; Effective December 1, 2009

Food and shelter are not considered in the eligibility or co-payment budgets for the month of entry to a long-term care facility (for example, a nursing facility).

Revision 09-4; Effective December 1, 2009

See Appendix XVI, Documentation and Verification Guide.

Revision 09-4; Effective December 1, 2009

An infrequent payment is a payment that is received no more than once per calendar quarter.

An irregular payment is a payment made without an agreement or understanding and without any reasonable expectation that payment will occur again.

Revision 09-4; Effective December 1, 2009

Income is not considered infrequent when it is received:

• more than once per calendar quarter from a single source; or
• only once during a calendar quarter from a single source and another payment was received from the same source in the month immediately preceding or the month immediately following. It does not matter that the payments fall into different calendar quarters.

Note: If the payment in the month immediately preceding or the month following is not a normal quarterly payment from that source, consider this one-time payment as irregular.

Determine the calendar quarter in which the income is received. Calendar quarters are:

• January - March;
• April - June;
• July - September; and
• October - December.

Based on the receipt of the infrequent or irregular income, exclude the following amount of income from the eligibility budget:

• the first $30 per calendar quarter of earned income; and
• the first $60 per calendar quarter of unearned income.

Revision 09-4; Effective December 1, 2009

Exclude income that is either infrequent or irregular, as defined in Section E-9100, Definitions. In order to be excluded, the income need only be one or the other (infrequent or irregular).

If income is infrequent or irregular and the total from all sources per calendar quarter is greater than $30 earned or $60 unearned, count the amount that exceeds the $30 or $60. Apply the exclusion to the first infrequent or irregular income received in a calendar quarter.

The infrequent or irregular income exclusion applies only to the eligibility budget. Infrequent or irregular income must be considered for the co-payment budget.

For income received too infrequently or irregularly to be averaged for a projected co-payment, follow procedures for restitution in Section H-8300, Restitution, through Section H-8350, Steps for Submitting Restitution Payment.

Revision 09-4; Effective December 1, 2009

One of the most common types of unearned income received infrequently or irregularly is interest or dividends. For treatment of this type of income consider the following:

• If the income source is either interest or dividends, first consider if the income is countable or not based on policy in Section E-3331, Interest and Dividends.
• If the interest or dividend income is determined non-countable in the eligibility budget based on policy in Section E-3331, do not consider infrequent or irregular policy.
• If the interest or dividend income is determined to be countable in the eligibility budget based on policy in Section E-3331, consider infrequent or irregular policy.

Example 1: Received $25 on March 31 and $26 on June 30. Each was received only once during a calendar quarter from a single source and meets Infrequent or Irregular. Both payments are excluded in the eligibility budget as they are less than $60 per calendar quarter. Consider for co-payment budget.

Example 2: Received $29 on March 1 from book royalty (earned income) and $58 on March 31 from oil royalty (unearned income). Each was received from a different source only once during a calendar quarter and meets Infrequent or Irregular. Both payments are excluded in the eligibility budget, as they are less than $30 earned and $60 unearned per calendar quarter. Consider for co-payment budget.

Example 3: Received $50 mineral royalty on March 31 and $49 mineral royalty on April 30. Each was received only once during a calendar quarter, but the April 30 payment was received in the month immediately following the payment in the previous quarter, thus does not meet the definition of infrequent. Consider both the $50 and $49 in the eligibility and co-payment budgets.

Exception: If the payment in the month immediately preceding or the month following is not a normal quarterly payment from that source, consider this one-time payment as irregular. The regular quarterly payment is still considered as infrequent.

Example 4: Mineral royalty payment of $15 received in the second month of each quarter. The mineral royalty payment has been routinely excluded as infrequent as the individual has no other infrequent or irregular income. The oil company changes its accounting system and, as a result, in June the individual receives $2.03 one-time payment in addition to the regular $15 mineral royalty payment in May. The $15 is still excludable as infrequent, but the unexpected $2.03 is irregular. The total of this calendar quarter is $17.03 and less than $60 and is not counted in the eligibility budget. Consider for co-payment budgets.

Example 5: A person's daughter gives her $100 for her birthday in January. The person also purchased a lottery ticket in March and won $25. Both are considered irregular. Both were received in the same quarter.

The $60 infrequent or irregular exclusion reduces the $100 payment in January, as it was the first infrequent or irregular income received in that quarter. This leaves $0 exclusion and $40 is counted in the eligibility budget for the month of January. Because the lottery winning was in the same quarter as the gift income, there is $0 remaining exclusion and the $25 is counted in the eligibility budget for the month of March.

These payments are considered in the co-payment budgets.

Example 6: The person's daughter gives her $100 in January and then in February gives her another $50. The daughter stated she will continue to periodically give her mother money, but not on a set schedule. The person also purchased a lottery ticket in March and won $25. All were received in the same quarter. The gift income is not considered infrequent or irregular. The lottery winnings are considered irregular, as they are not anticipated to continue.

As the two gift incomes are not considered irregular or infrequent, they must be counted in the month of receipt – $100 in January and $50 in February. The $60 infrequent or irregular exclusion reduces the $25, as it was the first infrequent or irregular income received in that quarter. This leaves a countable balance of $0 in the eligibility budget for the month of March.

These payments are considered in the co-payment budgets.

Example 7: The person's daughter gives her $100 for her birthday in January. The person also purchased a lottery ticket in March and won $25. Then in April the person purchases another lottery ticket and wins $40. All sources are irregular, as they are not anticipated to continue. Two sources were received in the same quarter (January - March) and one in the next quarter (April - June).

The $60 infrequent or irregular exclusion reduces the $100, as it was the first infrequent or irregular income received in that quarter. This leaves a countable balance of $40 in the eligibility budget for the month of January. Since the lottery winning was in the same quarter as the gift income, there is $0 remaining exclusion and the $25 is counted in the eligibility budget for the month of March.

The April lottery winnings of $40 can be reduced by the $60 infrequent or irregular exclusion, as it is the first infrequent or irregular income received in that quarter. Thus $0 is counted in April and $20 of the infrequent or irregular exclusion remains to be used if other infrequent or irregular income is received within that quarter.

Example 8: Don Edwards has three separate mineral royalty accounts from one oil company. He received a payment of $20 from Account A in January; $20 from Account B in February; and $20 from Account C in March.

Do not count any of the three payments in the eligibility budgets because:

• each is from a separate source;
• no payment is received more frequently than once per quarter; and
• total infrequent unearned income does not exceed $60 per calendar quarter. The $60 infrequent or irregular exclusion reduces the $20 payment in January to $0, leaving $40 exclusion that can still be applied. The remaining $40 exclusion is then applied to the $20 February payment, reducing it to $0, leaving $20 exclusion that can still be applied. The remaining $20 exclusion is then applied to the $20 March payment, reducing the countable to $0.
  • $60 unearned exclusion
  • − $20 January
  • = $40 exclusion remaining/$0 countable amount for January
  • − $20 February
  • = $20 exclusion remaining/$0 countable amount for February
  • − $20 March payment
  • = $0 exclusion remaining/$0 countable for March

These payments are considered in the co-payment budgets.

At the case review the following year, verification is received on the mineral royalties on all three accounts in January. Each mineral royalty payment was $35, for a total of $105.

This income is still considered infrequent and is greater than $60. The total in this calendar quarter is $105.

If income is infrequent or irregular and is greater than $30 earned or $60 unearned, count the amount that exceeds the $30 or $60. Apply the exclusion to the first infrequent or irregular income received in a calendar quarter.

$105 − $60 = $45 counted in the eligibility budget.

Note: If the change in frequency continues, an adjustment may be needed for the co-payment budget.

Example 9: Harry Jones has three separate mineral royalty accounts from one oil company. He received a payment of $50 from Account A in January; $20 from Account B in February; and $75 from Account C in March.

Consider these payments in the eligibility budgets because total infrequent unearned income does exceed $60 per calendar quarter.

The $60 infrequent or irregular exclusion reduces the $50 payment in January to $0, leaving $10 exclusion that can still be applied. The remaining $10 exclusion is then applied to the $20 February payment, reducing it to $10, leaving $0 exclusion. Ten dollars from the February payment is counted in the eligibility budget and the $75 March payment is counted in the March eligibility budget.

• $60 unearned exclusion
• − $50 January
• = $10 exclusion remaining/$0 countable amount for January
• − $20 February
• = $0 exclusion remaining/$10 countable amount for February

These payments are considered in the co-payment budgets.

Example 10: Emma Washington has received a mineral royalty payment of $20 in January and $20 in March.

Count both mineral royalty payments because the total payment is from a single source and is received more than once in the calendar quarter. This does not meet the definition or infrequent or irregular.

Example 11: Lucy Horton received a mineral royalty payment of $15 in the calendar quarter. In the month that the mineral royalty is paid, however, Ms. Horton also receives a cash gift of $20 from her nephew.

The mineral royalty payment is considered as infrequent and the cash gift is considered as irregular. Total the income received from both sources. Because the total does not exceed $60 in the calendar quarter, do not count either payment in the eligibility budget.

These payments are considered in the co-payment budgets.

Note: In the examples, the unearned income is considered as lump-sum payments. Restitution may be requested for nursing facility cases. (Restitution is not appropriate for non-nursing facility cases.)