Adult Medicaid Manual MA-2250 INCOME

VIII. COUNTABLE UNEARNED INCOME

A. General Information

Unearned income is all income that is not earned income (e.g., Social Security benefits, Veteran’s benefits, alimony and support, annuities, in-kind support and maintenance, rentals, etc.)

REISSUED 12/01/10-CHANGE NO. 20-10

(VIII.A.)

1. Explore potential benefits for each b.u. member at each application/ redetermination. Document discussion in the case record. If it appears there is a potential for benefits even though a/r denies receipt, explore the possibility.

2. Count benefits to which the a/r is entitled if he has waived, renounced, or delayed receipt and the amount of entitlement can be verified. If entitlement cannot be verified, refer to MA-2303, Verification Requirements for Applications.

3. In determining eligibility in a Private Living Arrangement, and in step one of Long Term Care budgeting, if a benefit amount is reduced to recoup an overpayment, verify and use the entitlement benefit to which the client is entitled.

In step two of LTC budgeting, count the benefit amount the a/r is actually receiving after the recoupment of an overpayment.

4. Benefits are not available for a child when the representative payee other than the caretaker refuses to use them for the child's needs.

a. Notify the Social Security office or other agency immediately so that a change of payee may be made.

b. Flag the case for review in one month. A change of payee action should not take more than one or two months.

B. RSDI Benefits

1. At application and review, explore potential benefits for each b.u. member. The potential depends on the situation of children as well as the work history of parents or specified relatives. Even if the a/r denies that anyone receives the benefit, explore the possibility. The a/r is required to apply for all benefits to which he is entitled.

2. RSDI benefits increase each January based on the increase in cost-of-living.

REISSUED 11/01/07-CHANGE NO. 22-07

(VIII.B.)

3. Persons who lost SSI eligibility due to receipt of Social Security may be entitled to have part or all of their Social Security benefits excluded when determining their Medicaid eligibility. This is called “passalong.” When an individual is ineligible for Medicaid based on RSDI benefits or an increase in RSDI benefits, refer to MA-2110, Passalong, to evaluate for passalong eligibility.

a. Eligibility may be based on:

(1) Disability

(2) Disabled workers under 65 and certain members of their families.

(3) Persons who become disabled before reaching age 22 if an insured parent or a grandparent under certain circumstances dies or becomes entitled to retirement or disability benefits.

(4) Disabled widows and widowers 50 or older if the disability began no later than 7 years after the death of an insured spouse or within 7 years after the end of the widow's entitlement to benefits as a parent caring for his children.

b. Dependency or survivorship

The dependents and survivors of disabled, dead or retired individuals who may be eligible for benefits include:

(1) Unmarried children under 18 or up to age 19 if they are enrolled full-time in high school.

(2) Unmarried sons and daughters 18 or over who were disabled before they reached 22 and who continue to be disabled.

REISSUED 11/01/07-CHANGE NO. 22-07

(VIII.B.3.b.)

(3) A wife under 65 or widow/widower under 62 who is caring for a child that is under 16 or disabled and is entitled to benefits.

(4) A wife 62 or widow 60 or older or a disabled widow 50 or over, even if there are no children entitled to payments.

(5) A dependent husband 65 or over or widower 60 or over; or a disabled dependent widower 50 or over.

(6) Surviving dependent parents 62 or over.

(7) A worker's grandchildren if natural parents are disabled or dead and if the grandchildren are living with and are supported by the grandparent.

(8) Step-children who have lived with a stepparent for 9 months or more.

4. Verification sources

You may use the Medicare card to help establish the Social Security claim number.

a. State Online Query (SOLQ) screen 4 lists as monthly benefit credited. Refer to EIS 1107.

b. Third Party Query (TPQY). Refer to MA-2440, Automated SOLQ Procedures.

c. On-line Bendex listing. Bendex lists the entitlement amount less the Part B premium if not bought in.

(1) If the a/r is on the Buy-in (SMI Premium payer = 340), use the Bendex amount.

(2) If the a/r is not on Buy-in, (SMI - Premium payer = SELF), add the Medicare B premium amount to RSDI check amount to arrive at the RSDI entitlement amount. Use this amount to determine eligibility.

REISSUED 06/01/11-CHANGE NO. 11-11

(VIII.B.4.)

d. Award letter. However, SOLQ is preferable as benefits may have increased subsequent to the award letter.

e. Send an SSA-1610, Social Security - Public Assistance Agency Information Request and Report to your local SSA district office. Permission is not required to make this inquiry. Use as a last resort.

5. Except for 6. below, count the monthly RSDI entitlement amount for each budget unit member when:

a. The benefit amount is reduced to recoup an overpayment, or

b. The a/r is not yet on the State Buy-in.

Note: The a/r can file a hardship case with SSA to request waiving or lowering a recoupment amount. Also, until the month the a/r is eligible to be added to the State Medicare Buy-In, count the Medicare premium toward deductible expenses or as an unmet medical need.

6. Count the RSDI amount actually received in step two of LTC budgeting.

C. Supplemental Security Income (SSI)

SSI is only countable income to a recipient who is budgeted as long term care.

1. Only count the $30 SSI maintenance payments made to a/r’s in long term care, regardless of the amount of the SSI payment.

2. Verification sources.

a. On-line SDX listing. The SDX reflects the benefit amount of the current month.

b. Third Party Query (TPQY).

c. Award letter. However, TPQY is preferable as benefits may have increased subsequent to the award letter.

REVISED 06/01/11 - CHANGE NO. 11-11

(VIII.C.2.)

d. SSA-1610, Social Security - Public Assistance Information Request and Report. Send to SSA district office.

e. Copy of the check.

D. Veteran's Benefits

At application and review, explore potential benefits for each budget unit member. Even if the a/r denies that anyone receives the benefit, explore the possibility. Refer to www.ncveterans.com and click on US Veterans Benefits Admin. to locate information regarding types of VA benefits and requirements for pension and compensation. To locate Veterans Service Officers in your county, click Veterans Service Officers on the right.

The veteran or survivor must file an application with the VA to establish or apply for entitlement amounts to increased benefits (improved pension, aid and attendance, or homebound rating). VA benefits increase at different times based on the increase in cost-of-living.

1. Potential eligibles include:

a. Disabled individuals with disabilities incurred or aggravated by military service and the spouse or dependents of such individuals.

b. Permanently and totally disabled veterans including veterans age 65 or older who have sufficient wartime service. The surviving spouse may be eligible for pension also.

c. Surviving spouse and dependent children of veterans who die in service or who died of a service connected disability.

d. Parents of a veteran who died in service or of a service connected disability when the veteran has no other surviving dependents.

2. Appointment of NC Division of Veteran’s Affairs as a/r’s representative

The Division of Veteran’s Affairs (DVA) assists veterans and their families in obtaining Veteran’s Benefits. DVA is working with DMA to make sure all a/r’s and financially responsible individuals receive the maximum veteran’s benefits to which they are entitled. In order to aid this task, DVA may be appointed as a “Claimant’s Representative” by the veteran or family member signing VA form 21-22, Appointment of Veterans Service Organization as Claimant’s Representative. The signed VA form 21-22 also enables DVA to verify veteran’s benefits for dss.

REVISED 06/01/11 - CHANGE NO. 11-11

(VIII.D.2.)

Take the following actions:

a. Obtain a copy of VA form 21-22, Appointment of Veterans Service Organization as Claimant’s Representative from the VA website: http://www.vba.va.gov/pubs/forms/VBA-21-22-ARE.pdf) and fill in the following blocks:

(1) In block 1, writer the name of veteran

(2) In block 2, write the VA file number (if available)

(3) In block 3A, write “North Carolina Division of Veterans Affairs”

(4) In block 3B, write “Veterans Service Officer”

(5) In block 4, write the Social Security Number of the veteran

(6) In block 7, write the name of the claimant (a/r)

(7) In block 8, write the address of the claimant (a/r)

(8) In block 12, write the date of the appointment (must be the same as the date signed in block 16)

(9) Have the a/r sign in block 15. VA will not accept the signature of a POA. If the a/r is incapable of signing, the a/r’s “X” is acceptable if witnessed by any two individuals. The witnesses must sign their names next to the “X.”

(10) In block 16, write the date signed (must be the same as the date of appointment in block 12)

b. Contact a/r’s identified as being potentially eligible for veteran’s benefits (see D.1. above) using cover letter DMA-5026 and VA form 21-22, Appointment of Veterans Service Organization as Claimant’s Representative. Cover letter DMA-5026 informs the a/r that he must either sign VA form 21-22 or provide proof that he has applied for veteran’s benefits within 12 days.

c. If the a/r chooses to sign the VA 21-22, Appointment of Veterans Service Organization as Claimant’s Representative, fax the signed form to the DVA District Service Officer identified in 2d. below.

REISSUED 06/01/11 - CHANGE NO. 11-11

(VIII.D.2.)

d. Determine the appropriate DVA District Service Officer.

(1) Go to the NCDVA web site www.ncveterans.com.

(2) Click on the link to the left labeled “veterans service officers.”

(3) Click on the county where the individual for whom you are verifying benefits resides.

(4) The page that opens provides the District Number. Do not contact the individuals listed on this page. Use the drop down box labeled “North Carolina District Service Officers” and locate the appropriate District Number. Click on the “Go” button. The page that opens provides the appropriate District Officer’s name and contact information. (see example in VIII.D.3.i. below)

3. Verification of benefits through DVA:

a. Fill out the top portion of the DMA-5027, Verification of Veteran’s Benefits,

If you do not have the VA claim number, leave that space blank. There is a space in the DVA portion of the DMA-5027, Verification of Veteran’s Benefits, for DVA to supply the VA claim number if not provided by the county.

b. Determine the appropriate DVA District Service Officer.

c. Go to the NCDVA web site www.ncveterans.com.

d. Click on the link to the left labeled “veterans service officers.”

e. Click on the county where the individual for whom you are verifying benefits resides.

f. The page that opens provides the District Number. Do not contact the individuals listed on this page. Use the drop down box labeled “North Carolina District Service Officers” and locate the appropriate District Number. Click on the “Go” button. The page that opens provides the appropriate District Officer’s name and contact information.

g Fax the DMA-5027, Verification of Veteran’s Benefits to the District Service Officer identified in 2. f. above.

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(VIII.D)

h. When DMA-5027, Verification of Veteran’s Benefits, is returned by fax, complete the lower portion of the form to determine the amount of the veteran’s benefit that is countable income.

i. Follow up questions should be addressed to the individual from DVA who completed the DMA-5027, Verification of Veteran’s Benefits.

Example: Applicant is a veteran who lives in Alamance County. Go to the DVA web site and click on the “veterans service officers by county” link. Click on “Alamance County” and see that it is in District 7. Locate “District 7” in the drop down menu and click on “Go.” The page that opens shows the name, title, telephone number, fax number, e-mail address, etc. for the District Service Officer for Alamance.

4. Other verification methods (the following methods of verification may not give an accurate picture of countable income)

a. Award letter. However, a general increase may have occurred since the date of the award letter,

or

b. Current check

5. Budgeting

a. Count the monthly VA benefit entitlement for the budget unit member unless:

(1) The a/r is a student who is receiving VA benefits to pay for tuition, fees, or other necessary educational expenses;

(2) The VA payment is Aid and Attendance and/or Unreimbursed Medical Expenses; this does not apply to veterans who reside in a North Carolina State Veterans Nursing Home. Refer to MA-2270, Long Term Care Need and Budgeting; or

(3) The VA payment is the Reduced Improved Pension up to $90 received under P.L. 102-568.

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(VIII.D.5)

b. Aid and Attendance (A&A)

(1) Aid and Attendance benefits are only issued to veterans or the spouse of veterans. The Adult Helpless Child allowance is not the same as Aid and Attendance and is countable unearned income.

(2) Need for aid and attendance is considered to exist when the veteran is so nearly helpless that he cannot care for himself without the services of another person. VA recipients who receive aid and attendance are entitled to higher VA income limitations or additional VA benefits, depending on the type of pension received. Aid and attendance can be received by:

(a) A VA recipient who is a patient in a nursing home, who is otherwise determined by VA to be in need of the regular aid and attendance of another person; or

(b) A VA recipient who is permanently housebound (unable to leave his home) due to his condition, who is otherwise determined by VA to be in need of the regular aid and attendance of another person.

c. Unreimbursed Medical Expenses (UME)

Reimbursement from VA for medical bills that the veteran has paid. This can be a lump-sum payment or included in monthly benefits.

d. Reduced Improved Pension

An institutionalized veteran or a surviving spouse of a veteran may choose to have his Improved Pension reduced to $90 or less under P.L. 102-568.

e. Contact VA to verify amounts for A&A, UME, educational benefits, and Reduced Improved Pension. You may contact the school directly for educational benefits.

(1) Exclude the amount for A&A and/or UME, educational benefits, and/or Reduced Improved Pension from VA benefits in both private living and long term care budgeting except for veterans who reside in North Carolina State Veterans Nursing Homes. Refer to MA-2270, Long Term Care Need and Budgeting.

REISSUED 06/01/11 - CHANGE NO. 11-11

(VIII.D.5.e.)

(2) Veterans may receive A&A, UME, and/or Reduced Improved Pension included in their pension checks. Remember to determine amount and exclude from countable income.

6. Contact VA to verify the type of VA benefit received. Remember that the VA benefit is subject to change, so re-verify the benefit amount at every application and redetermination

a. Pension: DO NOT DEEM VA PENSION IN PLA BUDGETING (Refer to MA-2260, Financial Eligibility Requirements-Private Living Arrangement). Veterans Pension, except Reduced Improved Pension, is countable unearned income to the individual in either PLA or LTC.

(1) In PLA budgeting, do not give the $20.00 general exclusion to an individual who has VA pension unless he has other sources of income (e.g., Social Security).

(2) In Step II of long term care budgeting do not give the $20.00 general exclusion to any unearned income. Allow only a personal needs allowance (PNA). (Refer to MA-2270, Long Term Care Need and Budgeting for PNA).

b. Compensation: Countable unearned income to the individual. (The $20 general exclusion may be applied).

If the a/r is a veteran receiving compensation because his disability is service-connected, his VA payment will be based on his percentage of disability. An individual who is in a nursing home is considered to have a 100% disability. (An individual can be classified as disabled with as little as a 10% disability. Therefore, disability determination by VA does not meet disability requirements for Medicaid purposes). Compensation to a disabled veteran is not reduced by other income.

c. Parent Disability and Indemnity Compensation, DIC:

(1) Countable unearned income to the parent. The $20 general exclusion may be applied.

(2) If a/r’s adult child died in service or died of a service-connected disability, the a/r may be eligible for Disability and Indemnity Compensation (DIC). The amount of the VA payment may be reduced by his other income if he is in a private living arrangement. However, if he is in a nursing home, he should be eligible for the maximum payment.

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(VIII.D.6.)

d. Surviving Dependent DIC:

(1) Countable unearned income to the individual. (The $20 general exclusion may be applied)

(2) If the a/r is the surviving spouse of a veteran who died in service or died of a service-connected disability, the VA benefit amount will be based on the veteran's rank at the time of death or discharge. (Disability Indemnity Compensation to a surviving spouse or child is not reduced by other income.)

E. Railroad Retirement Benefits

At application and review, explore potential benefits for each budget unit member. Even if the a/r denies that anyone receives the benefit, explore the possibility.

The potential for Railroad Retirement Benefits is based on the railroad work history.

If the a/r denies receipt of benefits but his Social Security number begins with a 7, he may have been employed by the railroad.

Railroad Retirement Benefits (RRB) information may be requested by letter. Provide the applicant's name and social security number or railroad retirement claim number.

Mail written requests to:

Quorum Business Park

7508 E. Independence Blvd., Suite 120

Charlotte, NC 28228-9409

Telephone (877) 772-5772

Fax (704) 344-6429

The a/r or financially responsible person may also access the Railroad Retirement Benefits information from the website at: www.rrb.gov.

1. Verification sources

a. Use the award letter. However, a general increase may have occurred since the date of the award letter.

b. Examine a current check.

c. The client's Railroad Retirement (RRB) suspension notice is verification of suspended payments.

2. Count the gross monthly Railroad Retirement benefit for each budget unit member.

3. Benefits increased because of a dependent child are income to the RR beneficiary, not the child.

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(VIII.E.)

4. Survivor benefits paid to or for a child is income to the child.

F. Annuities, Pensions and Retirement Benefits

At application and review, explore potential benefits for each budget unit member. Annuities are paid yearly or at specified intervals. They may be purchased from an insurance company or by an employer for services rendered.

Explore the work history of the adults in the b.u. regarding pensions paid by a former employer, insurance company, or other public/private agency.

If receipt of benefits is denied but there is a record of several years service in a particular organization and retirement in the past six months, contact the employer to determine benefit potential. Benefits also may be provided by a labor union or a fraternal organization.

1. Verification sources

a. Annuities

Contact the insurance company or employer.

b. Pensions

Contact the payer of the benefit.

c. Retirement

(1) Contact the payer of the benefit.

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(VIII. F. 1.c)

(2) For a retired employee receiving U.S. Civil Service or Federal Employee Retirement System payments because of disability, retirement, or death, do not use a check alone to verify the amount of the payment, because the check is not reliable evidence of the gross amount. Use notices or other documents in the a/r’s possession, or contact the Office of Personnel Management toll free at (888) 767-6738 or send written inquiries to:

Office of Personnel Management

Retirement Operations Center

PO Box 45

Boyers, PA 16017

2. Count the gross entitlement amount as income to the entitled retiree or individual survivor, even when additional monies for other family members are included in the payment.

G. Worker's Compensation

Definition - Benefits resulting from loss of employment due to injury on the job.

At application and review, explore potential benefits for each budget unit member. If receipt of Worker's Compensation is denied but disability/incapacitation occurred during employment, contact the employer to determine eligibility for Worker's Compensation.

1. Verification sources

a. Contact the employer.

b. Current check.

c. Award letter. However, an increase may have occurred since the date of the award letter.

2. The countable amount is the gross amount less expenses incurred in obtaining the income or which are necessary for entitlement (such as attorney fees, court costs, filing fees, birth or death certificate fees, and medical fees for exams). You may accept applicant's statement of expenses.

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(VIII.G. 2)

Example: Jessie Snow received a Worker's Compensation award of $3,250. However, in pursuing her claim, she incurred $100 in medical fees and $900 in attorney fees. Deduct the total amount of the legal and medical fees from the $3,250 that is awarded to Ms. Snow. The balance of $2,250 is the amount of her Worker's Compensation income that is countable.

Do not deduct expenses if they have already been taken out of the Worker's Compensation award received by the individual.

3. Count as a lump sum if benefits are received as a one-time payment.

4. If benefits will be received on a weekly/monthly basis count the monthly amount received:

a. If expenses have not previously been deducted, convert the expenses to a monthly amount based upon the anticipated number of weeks/months of Worker's Compensation.

b. Deduct expenses from the monthly benefit amount to obtain monthly countable income.

H. Unemployment Insurance Benefits (UIB)

Definition - Income received by an individual as compensation for loss of employment due to layoff, suspension, or firing. It may include additional amounts paid by unions or employers. At application and review, explore the potential benefits for each budget unit member.

1. Verification sources

a. On-line ESC inquiry.

b. Award letter. However, a general increase may have occurred since the date of the award letter.

c. Current check.

2. Convert UI benefits to a monthly amount. Use this amount to determine eligibility. Flag the case to recalculate the budget when benefits end, if known.

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(VIII. H.)

3. See MA-2430, Automated Inquiry and Match Procedures, to determine when to complete an ESC/UI on-line inquiry and on whom. At redetermination, an inquiry is not required for a.u. members as they will be included in the quarterly paper match. Refer to 8. below. An inquiry is also not required at redetermination for individuals in a nursing home, retirees or under age 16.

4. Even though you must complete inquiries on all budget unit members, you cannot require a person not included in the assistance unit to apply for benefits. You can inform the budget unit member of these potential benefits. However, you cannot pend the application or terminate an ongoing case if the budget unit member does not apply.

5. Except for assistance unit members listed in 7. below, the assistance unit member must apply for UI when you find in the on-line UI inquiry that:

a. The assistance unit member is "monetarily eligible;" and

b. There is no "File Date" or the "File Date" is earlier than the 12 months prior to the month of application.

6. If the "File Date" is within the 12 months prior to the month of application, do not refer the applicant to ESC. Do not count the amount of UI as income to the assistance unit member unless you verify he actually receives this income.

7. Even if the following assistance unit members are shown as monetarily eligible in the ESC/UI Inquiry, do not refer those who are:

a. Employed 30 hours or more per week; or

b. Disabled or has applied for disability and determination is pending; or

c. Institutionalized; or

d. Incapacitated for 30 days or more as evidenced by a hospital stay, doctor's statement, or receipt of disability checks; or

e. Pregnant. Evidence proving the pregnancy must be provided.

f. Retired and no longer available for work.

8. Application

When you determine an assistance unit member is required to apply for UI, take the following action:

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(VIII.H.8.)

a. Send a DMA-5097/5097S. Refer to MA-2303, Verification Requirements For Applications.

(1) Notify the assistance unit member that he is required to apply for unemployment benefits.

(2) Tell the applicant that he must report the date he applies for unemployment benefits as well as the receipt of the benefits.

b. Verify the application for unemployment benefits by completing an on-line UI inquiry. Refer to the EIS Manual, for instructions.

(1) If the applicant has not applied for UIB by the 45th day, count the "phantom" benefits beginning with the 46th day.

(2) If the applicant has applied for UI but has not received any benefits, process the application. Do not count any UI income until it is actually available. Flag the case to review for future receipt of benefits.

(3) If the applicant has applied for and has begun receiving UI, determine the monthly UI amount to count. Process the application using this amount.

(4) If the applicant waives, renounces his right to, or fails to comply with the requirements to receive UI, count the phantom benefits (i.e. "WBA" on the on-line UI screen.) effective with the month of application.

9. Ongoing Cases

a. Quarterly ESC/UI Match

Upon receipt of the quarterly ESC/UI Match, review the report to determine if any of your recipients are listed.

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(VIII.H.9.a.)

(1) If so, complete on-line inquiry to determine “File Date.”

(2) When the "File Date" is within the 12 months prior to the first month of the next certification period, no referral to ESC is needed.

b. When you determine a recipient is required to apply for UI, take the following action:

(1) Notify the recipient that he is required to apply for unemployment benefits.

(a) Tell the recipient that he must report the date he applies for UIB as well as the receipt of the benefits.

(b) Follow the appropriate timeframes.

(2) Verify the recipient's application for unemployment benefits by completing an on-line UI inquiry. Refer to the EIS Manual, Vol. 1, 1106 for instructions.

(a) If the recipient fails to apply for UI by the deadline date, count the "phantom" benefit if it can be verified. If not, send a timely notice. On the timely notice, explain that termination is for failure to apply for all benefits to which he may be entitled.

(b) If the recipient applies for UI by the deadline but has not begun receiving benefits, continue eligibility.

1) Inform the recipient of his responsibility to notify the caseworker within 10 calendar days once entitlement for the benefit is determined.

2) Flag the case for review to determine if entitlement is established or the recipient is receiving UI.

(c) If the recipient applies for and begins receiving UI by the deadline set, determine the monthly UI amount to count. Complete the redetermination.

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(VIII.H.9.b.(2))

(d) If the recipient waives, renounces his rights to, or fails to comply with requirements to receive UI benefits, count the phantom benefits (i.e. “WBA” on the on-line UI screen) when determining his eligibility.

I. Private Disability or Unemployment Benefits

1. Definition - Benefits paid by private insurance plans for persons incapacitated/unemployed.

2. At application and review, explore the potential benefits for each budget unit member. If receipt of benefits is denied, but the a/r is disabled and has a history of employment, contact the employer to determine benefit potential/amount and duration.

a. Verification sources:

(1) Contact the payer of the benefit.

(2) Current check or award letter. However, an increase may have occurred since the date of the letter.

b. Count the gross monthly benefit amount received by each budget unit member.

J. Sick Pay

Payment made to an employee by an employer or a private third party for sickness or accident disability.

1. Count any payments for sickness and accident disability which continues for more than 6 months after work stopped because of sickness or disability, or sick pay which is paid from the employee's own contributions.

2. Payments during the first 6 months are earned income unless paid from the employee's own contributions.

3. Verification sources

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(VIII.J.3.)

a. Contact the employer.

b. Current check.

4. Count the gross monthly amount of sick pay for each budget unit member.

K. Trade Readjustment Benefits

Definition - Benefits for persons who have lost their job because of imports and the federal government has approved their petition for assistance. Persons can only receive this assistance after other unemployment sources have been exhausted. These benefits are not shown on the ESC/UI inquiry.

At application and review, explore the potential benefits for each budget unit member.

1. Verification sources

a. Contact ESC.

b. Current check.

c. Award letter. However, an increase may have occurred since the date of the letter.

2. Count the gross monthly Trade Readjustment Benefit for each budget unit member.

L. Work Release Funds

1. Definition - Funds to dependents from a prisoner employed under the Department of Correction Work Release Program.

2. At application and review, explore the potential benefits for each budget unit member, particularly if a child’s parent is in prison.

a. Verification sources

(1) Check county department of social services' records.

(2) On-line Department of Correction inquiry. Refer to the EIS Manual.

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(VIII.L.2.)

b. Count the gross amount of work release for each budget unit member. If some dependents are not budget unit members, divide the amount of the check equally between the dependents, (i.e. assign a share to each dependent).

3. Use the EIS Automated Referral System to notify the child support enforcement staff (IV-D) that the assistance unit is receiving work release funds. Any court order for support has to be amended due to work release funds. If there was no court order, the local child support staff may find it appropriate to pursue court action.

4. Upon receipt of a DC-190, Work Release Action Form, the county director must designate who is responsible for contacting a prisoner's dependents whether known to the agency or not to determine their needs. The designee must contact the prisoner's dependents.

a. The prisoner's dependents may include:

(1) Spouse,

(2) Dependent children,

(3) Parents of the prisoner,

(4) Parents of the prisoner's spouse,

(5) Other relatives for whom the prisoner has assumed responsibility in the past.

b. Report to prison officials any legal dependents not previously acknowledged. Do not consider as dependents:

(1) Remarried spouses, or

(2) The parent of the dependent children if the parents were never married.

c. Determine the dependent's need for work release funds. Disregard any other income or resources available to the dependents.

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(VIII.L.4.c.)

To determine the needs:

(1) Use the amount for monthly needs specified below for the number of dependents, and

(2) Add to this number for the dependents monthly payments on health and life insurance, medical expenses not covered by Medicaid, school lunches, expenses for college, vocational or technical courses not being met by loans, scholarships, grants, etc.

Number of Dependents	Monthly Needs
1	$362
2	472
3	544
4	594
5	648
6	698
7	746
8	772
9	812
10	860
11	896
12	946
13	992
14	1,042
For each additional dependent, add: $50

(3) Notify the Department of Correction within 2 weeks.

(4) Return two DSS-1664's with a copy of the court order if there is a valid order which indicates a specific amount to be paid for the support of some of the dependents claimed by the prisoner. Failure to return the court order can delay payment.

(5) Return one DSS-1664 with a copy of the court order if the order specifies support is to be paid through the county.

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(VIII.)

M. Income from Trust Funds

At application and review, explore the potential benefits for each budget unit member.

1. Verification sources

a. Examine the trust fund documents.

b. Contact the executor or administrator of the trust fund. This may be:

(1) A family relative,

(2) The Clerk of Court,

(3) A lawyer, or

(4) The trust department of a local bank.

c. Contact the lawyer who handled the legal aspects of the trust funds.

d. Contact the local office of the Internal Revenue Service as all trust funds must be reported. A signed release statement is required.

2. Refer to MA-2230, Financial Resources, for guidelines for evaluating trusts for income and resources.

3. Count the income from trusts received by Medicaid a/r or financially responsible person.

N. Educational Loans, Grants and Scholarships

1. If a budget unit member receives any educational loans, grants, or scholarships administered by any source other than under the Higher Education Act of 1965 (HEA) or Bureau of Indian Affairs, (BIA) and an amount is designated for room and board expenses (maintenance), count this designated amount as unearned income. These items may be listed as "Living Costs" on the document.

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(VIII.N.)

2. Any portion of 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. Exclude from resources for 9 months beginning the month after the month it was received. See MA-2230 Financial Resources. (This applies to undergraduate as well as graduate students).

3. Verification source - Contact the provider in writing or by telephone.

a. Verify if the assistance is received yearly or on a basis other than yearly.

4. Determine how much of the educational grant, loan, or scholarship to budget.

a. If the educational loan, grant, or scholarship (other than HEA or BIA) is received on a yearly basis:

(1) Subtract the allowable yearly expenses of tuition, books, fees, equipment, special clothing needs, required school insurance, and child care services necessary for school attendance.

(2) Determine if the remainder will be used for future educational expenses and if so, it is excluded income. If not, count as unearned income.

b. If the educational loan, grant, or scholarship (other than HEA or BIA) is received on a basis other than yearly:

(1) Subtract the allowable expenses of tuition, books, fees, equipment, special clothing needs, required school insurance and child care services necessary for school attendance for the same number of months the loan, grant, or scholarship covers.

(2) Determine if the remainder will be used for future educational expenses and if so it is excluded income. If not, divide the remainder by the number of months it is intended to cover to determine a monthly amount. Use this amount as countable monthly unearned income.

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(VIII.N.4.)

c. If the a/r or financially responsible person receives financial educational assistance under HEA or BIA and another form of educational grant, loan or scholarship, subtract the allowable educational expenses from the other educational assistance prior to subtracting from assistance received under HEA or BIA.

O. Brown Lung Benefits

Definition - Payments made to persons disabled by lung disease resulting from exposure to raw cotton dust.

1. At application and review, explore potential benefits for each budget unit member. If there has been textile work explore the possibility, particularly if lung ailments exist. Count the gross benefit for each budget unit member.

2. Verification sources

a. Contact the Industrial Commission, Department of Economic and Community Development. The Commission is housed in the Department of Commerce at 430 N. Salisbury Street, Raleigh, N.C. 27611. Include a/r’s file number, name of former employer, and the date of the accident. Attach a signed consent for release of information.

b. Award letter. However, an increase may have occurred since the date of the letter.

c. Current check.

P. Black Lung Benefits

Definition - Payments to a disabled worker, dependents, or survivors, usually as the result of working in a coal mine.

At application and review, explore potential benefits for each budget unit member. If there has been coal mining work and the a/r has a lung ailment explore the possibility.

1. Verification sources

a. Contact the U.S. Department of Labor, Black Lung District Office, 500 Springdale Plaza, Spring St., Mt. Sterling, Kentucky, 40353 for checks dated the 15th of the month. Attach a signed consent for release of information, or

REVISED 11/01/10 - CHANGE NO. 13-10

(VIII.P.1.)

b. Contact your local Social Security District Office for checks paid the first week of the month.

c. Current check.

d. Award letter. However, an increase may have occurred since the date of the award letter.

2. Count the gross amount of monthly Black Lung Benefits for each budget unit member.

Q. Military Allotments

Benefits received by dependents of military personnel. Explore benefits if the spouse/parent of the a/r is in the military.

1. Verification sources:

Attach a signed, valid consent form for release of information.

a. Copy of the check or a current bank statement showing a direct deposit.

b. Award letter. However, an increase may have occurred since the date of the letter.

c. The a/r or financially responsible person may also, while still in the office and by using the public computers, if available, access the military allotment pay table and a copy of the service members Leave and Earnings statements from the website at, http://www.dfas.mil/militarypay.html by clicking on “myPay,” "Military Pay Tables” or other appropriate links on this site depending on the information needed.

To access immediate allotment information by computer or by telephone, to request a mailed allotment statement, the a/r or financially responsible person would need his password and the following information:

(1) The allotment amount.

(2) The social security number of the active/retired service member

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(VIII.Q.2.c.)

(3) The six or nine digit financial institution company code where the allotment is direct deposited or the address where the allotment is being mailed.

d. The military allotment verification contact telephone number for a member in the Army Reserves is 1-877-462-7782. For the Army National Guard, the number is 1-877-276-4729. The a/r or financially responsible person may call to request a copy of a military allotment. The county caseworker may call for a current address to submit allotment verification requests. Attach a signed valid consent form for release of information

e. Caseworkers may contact the military payment information center for current addresses by calling 1-888-332-7411.

R. Lump Sum Payment

Definition - A one-time payment, not expected to recur, that is received by a member of the budget unit. This includes personal injury awards. It does not include the receipt of earned income received on a yearly basis such as farm or rental income.

1. Count a lump sum payment as income when:

a. Payment was received in a month included in a request for retroactive coverage for medical expenses.

b. Payment was received in the month of application for ongoing coverage or in any month prior to approval of the case.

c. Payment was received prior to authorization of a case in deductible status.

2. Do not count a lump sum as income when:

a. It is paid directly to another person outside the budget unit.

b. The payment is for past months' benefits from SSI or RSDI. Disregard these as income. (Refer to MA-2230, Financial Resources)

c. Payment was received as compensation for loss of assets or a lump sum was earmarked for a specific purpose. For example, the a/r receives an insurance settlement to replace a motor vehicle, a home, or for other catastrophic events.

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(VIII.R.)

3. Verification sources

a. Provider of benefit.

b. Copy of check.

c. Award letter.

4. Applications

a. Retroactive Period

Count the lump sum payment as income for the retroactive certification period during which it is received.

b. Prospective Period

Calculate the deductible when the lump sum is received at any time during the application process:

(1) Upon receipt of the lump sum, add the lump sum to the other countable income.

(2) Use this total income to determine a deductible for the assistance unit.

5. Ongoing Cases

While a lump sum payment would be income for an authorized case in the month of receipt, benefits received prior to receipt of a lump sum payment cannot be reduced. Therefore, treat lump sum payments to authorized cases as reserve in the month following receipt. Refer to MA-2230, Financial Resources.

S. Child Support and Alimony

Child support is a payment made by a child’s absent parent which is available to meet the child’s basic needs. It may be paid voluntarily, under a court order or enforced in compliance with a State agreement under title IV-D.

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(VIII.S.)

1. Child Support

a. Child support paid for a child by an absent parent is income to the child. (See VIII. S. 2 below for arrearages paid for a child over age 18).

(1) Exclude one-third of the child support received by an ABD Medicaid child, or

(2) Exclude one-third of the value of child support received as in-kind support and maintenance.

b. If a financially responsible person makes court ordered or IV-D child support payments to a child outside of the home, exclude these payments from the deeming process.

c. Do not exclude the amount of support payments made to a child outside the home when determining countable income for the non-custodial parent who is the a/r.

2. Child Support Arrearages Paid For A Child Over Age 18

Child Support arrearages paid for a child over age 18 is income to the custodial parent/relative/guardian.

3. Alimony

Alimony is a court-ordered payment by a spouse (or former spouse) received by an a/r, or financially responsible person.

a. The entire amount of alimony received is countable unearned income to an a/r and is also countable for deeming purposes if received by a financially responsible person.

b. Do not exclude the amount of alimony paid out from income.

4. Base Period

a. Applications

The base period is the 6 calendar months prior to the month of application or number of months receiving if less than 6 calendar months.

Use income from base period (not actual) when determining eligibility for retroactive Medicaid benefits.

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(VIII.S.3.)

b. Redeterminations

The base period is the:

(1) The base period is the 6 calendar months prior to the month of redetermination.

(2) If a/r or financially responsible person has been receiving the benefit for less than 6 months, use the number of months receiving.

5. Verification sources

a. Clerk of Court (if the caretaker receives the support from that office).

b. Access verification through the Online Verification System (OLV) or the Child Support Automated Collection and Tracking System (ACTS).

c. Signed statement from spouse or ex-spouse when the caretaker receives the support directly from him.

d. Provisions of the separation agreement/divorce decree.

6. Disagreements

If a/r’s statement and the available records disagree, try to resolve the difference. If you are unable to resolve the difference, use the lower amount.

7. Count as support any income received from a spouse. This includes money sent through the State Child Support Enforcement Section in the base period month.

8. Verify the support for six months.

9. If support began/changed in the past 6 month period, project an average based upon the number of months available.

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(VIII.)

T. Loans and Promissory Notes

Money received by the a/r as a repayment for a loan is countable unearned income.

1. When the loan is an excluded resource to the a/r or financially responsible person, count as unearned income the payments received by the a/r.

2. When the loan is a countable resource to the a/r or financially responsible person, do not count payments received as income.

3. Money received as a loan (other than educational loans) by the a/r is not countable income if there is an agreed upon timetable and plan for repayment. Refer to MA-2230, Financial Resources. Obtain a written statement from the parties involved if there is no formal loan agreement.

U. Deemed Income from Institutionalized Spouse

1. Count income deemed from an institutionalized spouse to the a/r who is the community spouse.

2. Count income deemed from an institutionalized spouse to the a/r who is a dependent family member.

V. Living Needs Benefits

A living needs benefit is a provision that allows a terminally ill person (or in some cases, individuals permanently confined to a medical institution) to receive all or part of the proceeds of his life insurance policy while living. Depending on circumstances, these payments can be received either as a lump sum or on an ongoing basis.

1. If an a/r has a life insurance policy which allows him to receive his death benefit while living and he meets the insurance company's requirements for receiving the proceeds, he will not be required to file for such proceeds.

2. If an a/r does file for and receive the proceeds, count the payment as income in the month received. Any portion remaining in the following month will be considered an available resource.

3. If payment is received on an ongoing basis verify the amount and count as a monthly benefit.

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(VIII.V.)

4. If payment is received as a lump sum:

a. If received in the base period month, disregard as income for the prospective period.

b. If received in the month of application, prior to approval of the case, or prior to authorization of a case in deductible status, count as income.

c. Count the actual amount of payment if received in a month in which there is a request for retroactive coverage.

d. If received in a month after applicant is authorized, do not count as income. Any portion remaining in the month following receipt is a countable resource.

5. Verification source – Contact the insurance company who is administering the policy.

W. Rental Income

Rental payment which an a/r receives for the use of real or personal property, such as land, housing or machinery is counted as unearned income to the a/r.

1. How to Count Rental Income

a. Unearned Income

Count rental income as unearned income if the a/r rents property, machinery, rooms, etc. and rental is not done as a business.

b. Earned Income

Count rental income as self-employment if the a/r has a property rental business, rental service, etc.

2. Determination of Net Rental Income

Adjusted gross rental income is gross rent less allowable operational expenses paid in the base period. Use adjusted gross rental income in the 6% test when determining if property is income producing for reserve purposes. Refer to MA-2230, Financial Resources.

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(VIII.W.)

3. Verification Sources of Rental Income and Operational Expenses

a. A/R’s business records.

b. A/R’s IRS tax statement.

c. Renter's statements or receipts. Obtain a signed rental statement at application and every redetermination.

d. Information available from the banks or real estate agents.

4. Base Period for Rental Income Received other than Monthly

Use the following base period for computing rental income received other than monthly:

a. Applications

(1) The base period is the prior calendar year's income as listed on tax records or up to 12 months income from current business records prior to the month of application or review if there are no tax records.

(2) Number of months operating the business or rental property if less than 12 calendar months.

b. Retroactive Medicaid

Always use monthly income computed from the base period (not actual income) when determining eligibility for retroactive Medicaid.

c. Redeterminations

(1) The base period is the prior year's income as listed on tax records, or up to 12 months income from current business records prior to the month of interview or review if there are no tax records, or

(2) 12 calendar months which must end with the first month of the subsequent certification period, or

(3) If the number of months is less than 12 use the actual number of months the recipient has been in business.

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(VIII.W.)

5. Base Period for Rental Income Received Monthly

The base period for regular monthly rental income is the calendar month prior to the month of application or review.

6. Determining Net Rental Income

a. Determine net rental income for each parcel of real property that is identified by the local tax office as being a separate parcel. Calculate net countable monthly income for each parcel. Then combine to arrive at total net countable monthly income.

If property is listed as one parcel, combine all income and operational expenses from different income producing activities into one net rental income for that parcel.

b. Determine the net annual rental income amount produced by the rental property. DO NOT ROUND ANY AMOUNTS!

(1) Calculate gross annual rental income:

(a) If receiving the same amount monthly, then multiply this amount by 12 months (i.e., monthly amount X 12 months = gross annual rental income).

(b) If receiving other than monthly, then multiply this amount by the number of times received in a 12 month period (i.e., If received quarterly, multiply by 4 quarters = gross annual rental income).

(2) Calculate gross annual allowable operational expenses.

(a) Deduct predictable expenses paid by the a/r which are necessary for the production or collection of rental income. These expenses include but are not limited to the following:

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(VIII.W.6.b.(2).(a))

1) The interest portion of a mortgage payment,

2) Property taxes

3) Insurance,

4) Maintenance,

5) Utility costs paid by the a/r,

6) Labor costs,

7) Real estate agent's fees,

8) Sales taxes,

9) Advertising for tenants,

10) Verified transportation costs related to rental property operation.

11) Interest payments on loans for equipment necessary to produce the rental income.

(b) Unexpected expenses are unanticipated expenses that are necessary for the collection of rental income and must be paid from rental income (e.g., repairs to an appliance or minor corrections to an existing structure). When an a/r reports an unexpected expense that must be paid from the rental income, treat as a change in situation.

1) Verify whether the expense is an operational expense (necessary for the collection of rental income) vs. a capital expenditure (increases the value of the property). Only operational expenses are allowable deductions.

2) If the expense is an allowable operational expense, recalculate net countable monthly rental income to determine deductible (PLA) or Patient Monthly Liability (PML) for Long Term Care.

(i) An operational expense can only be deducted when the rental income is used to meet the expense. Never use other income to offset an operational expense. The net rental income can never be less than $0.

(ii) Deduct from the net countable monthly rental income the total expense or if paying in installments, deduct the monthly amount.

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(VIII.W.6.b.(2)(b))

(iii) If the expense cannot be paid in one month, divide the expense over the number of months in the installment plan or the number of months necessary to allow for total recoupment. The months required may extend into the next certification period.

(iv) It is allowable to not meet the 6% income test while the unexpected expense is being deducted from net countable monthly rental income. Flag case to recalculate deductible or PML in the month that the expense is expected to be used up.

3) For PLA, when the change in net rental income results in a decrease in countable income, follow adequate notice requirements.

4) For LTC cases, change PML for future months in accordance with EIS reporting requirements and follow notice requirements.

5) Follow instructions in MA-2230, Financial Resources, at review, to use only predictable operational expenses in the base period for the 6% test. Do not use unexpected operational expenses for the 6% test.

(c) Regardless of whether rental income is received monthly or other than monthly:

1) Verify operational expenses for the previous calendar year based on expenses on the tax form if using tax statements to determine income, or

2) Verify operational expenses for the twelve months base period to the application or redetermination interview for a business if using business records.

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(VIII.W.6.b(2))

(d) Non-allowable Expenses

Do not deduct the following expenses from rental income:

1) Operational expenses not paid by the a/r from the income received. If expenses are paid by a third party then do not allow as operational expenses unless a/r reimburses the payee.

2) The principal portion of a mortgage payment. (The principal is deducted from the tax value as an encumbrance in reserve.

3) A capital expenditure. This is an expense for an addition to or increase in the value of the property and is subject to depreciation for tax purposes (i.e. principal portion of mortgage payment, additions to existing structure, remodeling).

4) The property depreciation amount claimed as a federal income tax deduction.

5) Replacement of an existing feature of the property which could have been repaired (e.g., furnace could be repaired but is replaced with new heating system).

6) Replacement of an existing feature of the property which could not be repaired with one that is not of comparable value (e.g., replacement of shingle roof with brick tile roof) which results in improvement and increases the value of the property.

(3) Calculate adjusted gross annual rental income by subtracting allowable annual operational expenses from gross annual rental income.

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(VIII.W.6.b.)

(4) Determine countable adjusted gross monthly rental income by dividing by 12 months.

EXAMPLE

monthly gross rent		$	450
property taxes per year		$	350
insurance per year		$	300
other expenses per month		$	100
$450 X 12 = $5,400		$	5,400
	-	$	350	taxes
	-	$	300	insurance
$100 X 12 = $1,220	-	$	1,220	other expenses
	=	$	3,550
$3,550 divided by 12	=	$	295.83	adjusted gross countable monthly rental income

DO NOT ROUND, use entire amount in monthly budget.

NOTE: If an unexpected expense is reported, then subtract the expense from the countable adjusted gross monthly rental income.

c. Explain to the a/r that net countable monthly rental income amount received must be included as countable income for PLA. If a/r is institutionalized then income is countable in determining PML. Also explain to a/r that it is his responsibility to assure that required PML amount is paid to the facility.

X. Roomer/Boarder Income

Roomer/Boarder income is a form of rental income in which an individual pays an amount (usually weekly or monthly) to the head of household in return for room and/or board in the household. When an a/r receives income from an individual for whom he has no financial responsibility, always evaluate the living arrangement to determine whether it is a roomer/boarder situation as opposed to a shared household.

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(VIII.X.)

Refer to MA-2261, One Third Reduction, to determine criteria for a shared household and whether 1/3 reduction is applicable.

1. Verify the amount paid by the roomer/boarder(s). If variable, obtain a monthly average for the base period.

2. Refer to Rental Income above to determine base period and allowable and non-allowable operational expenses.

3. Verify monthly operational expenses.

a. If rent does not include food, food costs are an unallowable operational expense. If the rent includes food, verify food costs by receipts or statement of a/r.

b. Determine the number of rooms in the house. Exclude bathrooms and any rooms such as attics, basement, or garages unless they have been converted into living quarters.

c. Divide total operational expenses by the total number of rooms.

4. Determine countable income.

a. Multiply the average operational expense per room obtained in 3.c. above by the number of rooms rented.

b. The resulting amount is deducted from the rent to determine net countable income.

Example – Roomer/Boarder rents one room in a 5 room house for $100.00 per month. Total operational expenses are $200.00 per month. $200.00/5 = $40.00. $100.00 - 40.00 = $60.00 per month countable income.

Y. Contributions

1. Cash

Always count contributions given in cash on a regular basis to meet a/r’s needs.

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(VIII.Y.1.)

When individuals live together and share household expenses such as one paying rent or utilities and one buying food, there is no cash contribution.

2. In-Kind

Refer to In-Kind Income below to count contributions of food and shelter. Do not count items other than food or shelter (e.g., medical supplies, pampers).

3. Verification Source

Contributor's statement.

4. Base Period

a. Verify the contribution amount for the past six months.

b. If contributions began/changed in the past six month period, project an average based upon the number of months available.

Z. In-Kind Income

In-kind income is support and maintenance in the form of food or shelter (including utilities, heating fuel and property taxes).

1. When an individual or couple lives in the household of another, determine whether to use the full income limit (maintenance amount) or the 1/3 reduced income level. (Refer to MA-2261, 1/3 Reduction)

a. If 1/3 reduction income limit is used, do not count in-kind income.

b. If full income limit is used, count contributions of food or shelter given to the individual or couple as in-kind income.

2. Determining Countable In-Kind Income

If a Medicaid individual/couple receives food or shelter:

a. Verify the income by contacting the provider of the food or shelter. Obtain from the provider a written statement of the value.

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(VIII.Z.2.)

b. If the amount of in-kind income varies, obtain an average for the past six months.

c. Do not count items other than food or shelter (e.g., payment of phone bill, medicine, pampers or other supplies). Shelter includes rent, mortgage payment, utilities, fuel, and property taxes.

d. Never count more in-kind income than 1/3 of the current SSI amount (individual or couple) plus $20.00. This is the maximum value you would count for in-kind support and maintenance. Less can be counted based on the actual amount verified of the value of in-kind support and maintenance.

AA. Severance Pay

Severance pay is extra pay given to an employee by his former employer when the employee is dismissed through no fault of his own. Count gross when considering severance pay.

1. Severance pay may be paid out in one of the following ways:

a. In one payment, treat as a lump sum payment. Refer to VIII.

b. In a series of payments, treat as income received on a regular basis: monthly, weekly, etc. Refer to IV. for base period instructions.

2. If the severance pay has ended, treat it as terminated income. Refer to V.

3. Verify the amount and payment schedule by:

a. Seeing the check stub,

b. Seeing wage verification form, or

c. Contacting the former employer.

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(VIII.)

BB. Gaming Proceeds for Eastern Band of Cherokee Nation

Members of the Eastern Band of Cherokee Indians receive a distribution of profits as permitted under P.L. 98-64 from gaming operations on their reservations. Payments are made semi-annually in June and December. The receipt of a per capita payment or an increase in the amount of the per capita payment is not considered a change. A change in per capita payment is defined as a change in the frequency of the receipt of the per capita payment.

1. Applications

a. Count the per capita payment as unearned income for the month it is received. Count the payment when determining the first month of eligibility only.

b. If there is any remaining income after the month of receipt, count in reserve.

2. Ongoing

a. Count the per capita payment as unearned income for the month it is received. Because of the timely notice required, the payment will not affect the ongoing case as income.

b. If there is any remaining income after the month of receipt, count in reserve.

3. Payments to minors or incompetent adults are paid into trust funds administered by the tribe or fiscal agent. The trust funds are accessible only upon petition to the tribe, and if approved they are limited to medical or educational purposes.

a. Payments made directly into a trust are not counted.

b. Payments made to parents/guardians are countable when determining the child’s eligibility. Refer to VIII. for treatment of income from trusts.

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(VIII.BB.)

4. Verification

a. Obtain a copy of the check, or

b. Obtain a copy of the award letter.

c. Contact the source at the following address;

Eastern Band of Cherokee Indians

Post Office Box 455

Cherokee, North Carolina 28719

(828) 497-7040

5. Refusal to Receive Per Capita Payments

Tribal members may refuse to accept the per capita payment by signing a waiver.

a. Verify the tribal member’s refusal to receive the payment by obtaining a copy of the waiver.

b. If the tribal member signs the waiver before distribution of the payment, do not count the per capita payment.

c. For LTC budgeting, if an applicant/recipient refuses a per capita payment, consider as a transfer of assets.

CC. Indemnity Policy Payments

Indemnity policies are insurance policies that pay a flat rate benefit without regard to the actual charges or expenses incurred. These payments are not restricted to the payment of a medical service and can be used as the a/r decides. Request verification from the a/r and if questionable, contact the insurance carrier to determine the amount received. These payments are budgeted as unearned income in the month of receipt regardless of how used.

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(VIII.)

DD. Long Term Care Insurance

If the insurance company makes payments, directly to the individual, count payments as unearned income. If the insurance company makes payment directly to the nursing facility, it is considered a third party payment. Refer to MA-2400, Third Party Recovery.

Copies of checks or a statement from the insurance company are acceptable forms of verification.

EE. Gambling Winnings, Lottery Winnings and Other Prizes

1. Definition

Gambling winnings, lottery winnings and prizes are generally things won in a game of chance, lottery or contest. Count these winnings as unearned income. Do not subtract gambling losses from gambling winnings in determining an individual’s countable income. If an individual has a choice between an in-kind item and cash, count the cash offered as unearned income. This is true even if the individual chooses the in-kind item and regardless of the value of the in-kind item.

2. Verification

a. If a recipient receives winnings or prizes use documentation that the individual has in his possession to verify the income. If there is not sufficient documentation to verify the income, obtain a signed statement from the individual regarding:

(1) The date the item was received,

(2) Type of item received,

(3) Individual’s estimate of the value of the item if not cash; and

(4) Source of the item

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(VIII.EE.2.)

b. Accept an individual’s signed estimate of the value of the item or actual value if cash, unless you have reason to doubt the estimate. If you doubt the estimate, determine the item’s current market value with an independent source. Determine the nature of the item and apply the appropriate instructions pertaining to income.

FF. Royalties (Also see VII. J. above)

1. Definition

Royalties include compensation paid to the owner for the use of property, usually copyrighted material (e.g., books, music, and art) or natural resources (e.g., 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.

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

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

a. Under a formal or informal agreement whereby the owner authorizes another individual to manage and extract a product (timber or oil) and

b. In an amount that is dependent on the amount of the product actually extracted.

3. Royalties are unearned income unless they are received as part of a trade or business, or received by an individual in connection with any publication of his/her work.

REISSUED 12/01/10 – CHANGE NO. 20-10

(VIII.FF.)

4. Verification

a. Verify that payments received meet the definition of royalty by examining the agreement between the parties involved or documents in the a/r or financially responsible person’s possession. 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 amount of income to budget. When the difference between the gross and net figures represents a production or severance tax, use the net figure when determining the amount of income to budget. If the agreement or documents are unclear, unavailable, or informal, contact the company or source of the payment.

b. Include in the case record copies of documents and/or information provided by the payment source including the reason the royalty is being received, amount(s) (including the type of tax(es) if any, which are being deducted, and the frequency of receipt of payments.

GG. Tobacco Transition Payment Program, (Tobacco Buyout)

1. Eligible tobacco quota owners and tobacco quota growers who applied for the program receive annual installment payments over a 10 year period. Payments are distributed during the first few months of each calendar year.

2. In October 2005, after the first installment payment was made, tobacco quota owners/growers were permitted to enter into an assignment or successor-in-interest contract with an approved financial institution and receive cash payment in exchange for the balance of the annual installment payments.

3. If a/r or financially responsible person is receiving yearly allotment payments, determine if the balance of the tobacco allotment contract can be sold to an approved financial institution for a lump sum cash payment. The list of approved financial institutions can be found at www.fsa.usda.gov.

4. When the balance of the allotment contract owned by the tobacco quota owner is verified as non-salable to an approved financial institution for a lump sum payment, the annual payments will be counted as unearned income in the year of receipt. Refer to VII. above, and VIII. below for further information regarding Tobacco Transition Payment Program allotment payments.

REVISED 12/01/10 – CHANGE NO. 20-10

(VIII.GG.)

5. The Commodity Credit Corporation, CCC-960, “Tobacco Transaction Payment Notification of Contract approval and Appeal Rights” does not apply the maximum discount rate to contracts with family members, transfers upon death of a tobacco quota grower or owner, individuals who entered into an assignment or successor-in-interest contract prior to 10/22/2004, and one year contracts made with “Tobacco Transaction Payment Notification of Approval and Appeal Rights” CCC approved financial institutions.

6. For an assignment contract made with a third party in exchange for other property, the property obtained is a conversion of a resource in the month the contract is completed, and becomes the new resource as of the first moment of the month following the assignment month.

7. Evaluate all assignment successor-in-interest contracts made in 5. and 6.. above for a potential transfer of asset sanction. Refer to MA-2240, Transfer of Assets.

HH. Pigford/Brewington vs. Glickman Settlement

This is a settlement for black farmers who were discriminated against when applying for farm loans. Taxes may be withheld by the government. Since this is a one-time payment, refer to VI. B. 34, above for treatment as a lump sum payment.