Revision 09-4; Effective December 1, 2009

 

E-5100 Calculations for Variable Income

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.

 

E-5200 When to Project Variable Income

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.

 

E-5300 When Not to Project Variable Income

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.

 

E-5400 How to Budget Variable Income at Applications

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).

 

E-5500 How to Budget Variable Income at Redeterminations

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.