2405 Treatment of Income

Georgia State Seal

Georgia Division of Family and Children Services
Medicaid Policy Manual

Policy Title:

Treatment of Income

Effective Date:

December 2022

Chapter:

2400

Policy Number:

2405

Previous Policy Number(s):

MT 58

Updated or Reviewed in MT:

MT-68

Requirements

Money received is considered to be either earned or unearned. Different rules apply to each type. Either type may be cash or in-kind.

Basic Considerations

Earned income consists of, but is not limited to the following types of payments:

  • wages

  • net earnings from self-employment (NESE)

  • payments for services performed in a sheltered workshop or work activities center

  • royalties and honoraria

  • sick pay received within six months after work stopped.

Wages include but are not limited to the following:

  • salaries

  • bonuses

  • severance pay

  • other special payments received because of employment

  • the value of food or shelter in lieu of wages (in-kind earned income). In-kind earned income is counted in ABD Medicaid COAs only.

Unearned income is all income that is not earned. The following are types of unearned income:

  • alimony

  • annuities, pensions, and other periodic payments

  • benefits received as the result of another’s death to the extent that the total amount exceeds the expenses of the deceased person’s last illness and burial paid by the recipient

  • dividends, interest, and royalties

  • in-kind support and maintenance (ISM)

  • prizes and awards

    For MAGI COAs, Lottery and Gambling lump sum winnings which are received in a single payment are counted as income (if less than $80,000 only count in month received, if $80,000 or more count equal amount over a period of time).

  • rent.

Income Not Included in Determining Financial Eligibility

The following are not considered income, and are disregarded when determining Medicaid eligibility:

  • bills paid by a third party (vendor payment) for an item other than food, shelter, or clothing

  • conversion of a resource, such as selling a car to get cash.

    The cash received from conversion of a resource is not counted as income in the month of conversion. Any cash remaining on the first day of the month following the month of the conversion is a resource.

  • credit life or credit disability insurance payments

  • earned income tax credits (EITC)

  • income tax refunds

  • non-cash items which will be excluded or partially excluded as resource after the month of receipt, such as a vehicle excluded because it is used for medical treatment.

    Food and shelter are always assigned a value as ISM and included in the eligibility budget as unearned income for ABD Medicaid A/Rs in LA-A, B or C.

  • medical or social services provided as cash or in-kind

  • proceeds of a loan

  • rebates and refunds

  • replacement of income which is lost, stolen, or destroyed after receipt (e.g., replacement government checks)

  • return of erroneous payments

  • value of personal services (e.g., mowing the lawn)

  • Veteran’s Aid and Attendance

  • Veteran’s Household Allowance

  • Veteran’s Unusual Medical Expense (UME) reimbursement

  • weatherization assistance (storm doors, windows, insulation, etc.)

Sick Pay

Consider a payment made to or on behalf of an employee by an employer or a private third party because of sickness or accident disability to be Sick Pay.

Consider any Sick Pay received through the six full months after the month work stopped because of sickness or accident to be earned income. Thereafter, consider as unearned income.

In-Kind Items

For ABD Medicaid, develop the value of food and shelter or other items provided in lieu of wages for the possibility of earned income.

Include the value of the food and/or shelter as ISM (unearned income) using the presumed maximum value (PMV) rule if both the following conditions are met:

  • the food and/or shelter is furnished for the employer’s convenience and on his/her premises

  • the shelter is provided as a condition of employment

If either of the above conditions is not met, include the current market value (CMV) of the food and/or shelter as wages. Consider as earned income payments that an individual receives for services performed in a sheltered workshop or work activities center while participating in a program designed to help him/her become self-supporting.

Payments for Services Performed in a Sheltered Workshop or Work Activities Center

Consider a work environment to be a sheltered workshop if it is a nonprofit organization or institution whose purpose is the following:

  • to carry out a recognized program of rehabilitation for handicapped workers

  • to provide such individuals with remunerative employment or other occupational activity of an educational or therapeutic nature.

Consider a work environment to be a work activity center if it is planned and designed exclusively to provide therapeutic activities for handicapped workers whose physical or mental impairment is severe as to make their productive capacity inconsequential.

Income from a Terminated Source

If an A/R reports a terminated source of income, the facts regarding the termination, the date on which the final payment of income was received must be verified only if questionable (ABD only). For Family Medicaid, the termination of an income source within 30 days of the application must be verified. This includes the last day employed and date last pay was received.

For reviews, any terminated income that has not been reported since the last application or review should be verified. This includes the last day employed and date last pay was received.

The Work Number can be used to verify terminated income from a specific employer. Clearinghouse must still be checked for other employment and for any other discrepancies.

Procedures

Determine whether the specific type(s) of income received by the A/R is included or excluded in the eligibility and patient liability/cost share budgets by referring to Chart 2499.1 - Treatment of Income in Medicaid.

Include income in the budget at the earliest of the following points:

  • when it is received

  • when it is credited to the individual’s account

  • when it is set aside for the individual’s use.

If the income is to be included in the budget, determine how much of the income is included. Refer to 2504 Determining Countable Income.

Apply the appropriate income deductions, based on whether the income is earned or unearned, when the income is included in the eligibility and patient liability/cost share budgets. For ABD Medicaid, refer to 2505 Income Deductions and 2552 Patient Liability/Cost Share Deductions. For Family Medicaid refer to 2655 Family Medicaid Deductions.

Income Considerations

Eligibility based on income is determined by resolving the following series of questions:

  • What is the income limit for type of assistance requested?

  • Whose income is considered?

  • What is the source of the income?

  • Is the income available to the AU to meet its needs?

  • Is the income included or excluded?

  • How often is the income received?

Income of the following individuals may be considered when determining eligibility:

  • AU or BG members

  • Persons whose income must be deemed to the AU

  • Deemed income of sponsors of aliens

  • Ineligible aliens

  • Ineligible parents

  • Penalized individuals

Refer to Chapter 2500, ABD Financial Responsibility and Budgeting, and Chapter 2650, Family Medicaid Budgeting.

Lottery and Gambling Winnings For MAGI COAs:

  • Winnings of $80,000 but less than $90,000 are counted as income over two months.

  • For every additional $10,000 one month is added to the period.

  • Total winnings are divided in equal installments.

  • Winnings counted over multiple months apply only to the individuals who received the winnings.

  • Winnings at $1,260,000 or higher will be divided by 120 months for equal installments.

  • The winnings are only counted in the subsequent months for the individual that received the winnings. The month of receipt is counted for the entire household budget group.

  • A notice must be sent to the affected individuals with the date on which qualified winnings will no longer be counted.

For Non-MAGI COAs, Lottery and Gambling Winnings should be treated as income in the month of receipt and any remainder counted as a resource starting the month after receipt.

Documentation

For each type of income received, the following must be documented:

  • Source of income

  • Individual(s) receiving income

  • Frequency (monthly, weekly, bi-weekly, etc.) of payment

  • Day of week income is received

  • Gross amount

  • Source of verification.

If the date of receipt of income or the amount of income cannot be reasonably anticipated, the income is not counted. The decision must be documented.

In addition, the following information must be documented if the income is earned:

  • Beginning/ending date of employment (if applicable)

  • Employer’s name, address, and telephone number

  • Date on which new or increased earnings are received.

Verification

For Pregnant Women and Newborn COAs, the A/R’s statement of the source and amount of income, earned or unearned may be accepted unless questionable. For all other Family Medicaid COAs, all income must be verified.

For Family Medicaid, client statement is acceptable verification for excluded income.

For ABD Medicaid, the A/R’s statement is only acceptable for Q Track COAs. Verification is required when information available to the agency contradicts the A/R’s statement or the statement is otherwise questionable.

Verification of income, if required by policy, is obtained in the following order:

  • The A/R should provide verification from the payment source.

  • If the A/R cannot obtain the verification, the agency must request it directly from the payment source.

  • Verification can be obtained from a collateral source, a person who has knowledge of the income, if verification cannot be provided by the payment source.

  • The statement of the A/R may be accepted if all other attempts to verify income are unsuccessful and the A/R has cooperated with previous attempts to obtain verification.

Means of Verification - all Medicaid COAs

Verification of income can be provided in a variety of ways, including:

Whenever a job is reported, the Work Number should always be the first source of verification checked. When requesting other forms of verification, the case should be documented that the information was not found in the Work Number.