24-01 Version of 3.2 Financial

3.2.1 Income
1. 3.2.1.1 Child Support
2. 3.2.1.2 Income Tests
3.2.2 Assets
3.2.3 Divestment
3.2.4 Benefit Amount

After determining non-financial eligibility for CTS, the financial eligibility of the household is considered. When determining initial or ongoing financial eligibility for CTS, both income and assets of non-financially eligible children and other members of the Standard Filing Unit (see Section 3.1.1 Standard Filing Unit (SFU)) are counted. Income and assets of a child-in-common in the home and their parent who is not receiving Supplemental Security Income (SSI) are also counted when determining financial eligibility, unless they are excluded under Buening (see Section 3.3 Buening Cases – Special Rules for Two Parent Cases). Income and assets of any members of the household who receive SSI are disregarded.

If the household passes the financial eligibility tests, the amount of CTS benefits to be issued are based on the number of non-financially eligible children.

3.2.1 Income

Income of adults and children is counted prospectively when determining eligibility for CTS. Both earned income from work and unearned income, such as Social Security benefits, are counted.

Some income is not received regularly; it is paid in a lump sum amount. Examples are refunds and backpay awards from Social Security or unemployment compensation insurance, union settlements and compensatory time pay-outs or windfall payments like lottery winnings, personal injury awards or inheritances. Lump sum payments are counted as either earned or unearned income in the month they are received. When the dollar amount of the lump sum makes the group ineligible for CTS, ineligibility may continue beyond the month the lump sum was received. The number of total months of ineligibility is calculated by dividing the group’s income by the Assistance Standard for the group size (see Section 5.2 income tables).

Note:

Federal income tax refunds and tax credits (including advance payments of credits) are completely disregarded as income, regardless of whether they are received regularly or in a lump sum.

3.2.1.1 Child Support

Effective January 1, 2010, disregard all child support, including the assigned and the directly received portions, when determining eligibility for the CTS program. This income is to be disregarded for the gross and net income tests. If child support back payments are received as a lump sum, they are not subject to the lump sum policy. However, unspent child support income is still considered an available asset in the month after it was received.

3.2.1.2 Income Tests

Each group applying for CTS must pass two income tests as described in this section.

3.2.1.2.1 Group Size

The determination of income eligibility and benefit amount depends on the group size. For income eligibility, the group size is based on the number of all non-financially eligible children under age 19. It also includes any non-financially ineligible children-in-common in the home, their half siblings, and their parent who is not receiving SSI, unless the children-in-common are excluded under Buening (see Section 3.3 Buening Cases – Special Rules for Two Parent Cases).

3.2.1.2.2 Gross Income Test

The Gross Income Test compares the gross income to the gross income limit for the group size (see Section 5.2 income tables). This test looks at gross deemed, earned, and unearned income before applying any disregards, including earned income of minors who are students. A CTS assistance group (AG) must first pass the Gross Income Test before proceeding to the Net Income Test. Failing the Gross Income Test makes the household ineligible for CTS.

3.2.1.2.3 Net Income (Assistance Standard) Test

The Net Income Test compares the income that remains after certain deductions to the Net Income Limit, or Assistance Standard for the group size (see Section 5.2 Income Tables). Deductions from gross income that are allowed in this test include:

$90 work-related expense for each employed/self-employed individual.
Dependent care deduction of $200 per month for each child under the age of 2 and $175 per month for each incapacitated adult and each child age 2 or older.
Disregard of $30 or $30 and one-third of earned income (when applicable).
Child support paid to someone outside of the AG.

The Net Income Test includes the income of all minors, regardless of their school status or number of hours of employment, at application for CTS. However, for employed minors who have received CTS in one of the previous four months, use the following to determine how to count earned income:

Do not count the employment income of full-time students, regardless of the number of hours worked per week.
Do not count the employment income of part-time students working less than 30 hours per week.
Count the employment income of any part-time student working 30 hours or more per week but apply $90 and $30 and one-third disregards.
Count the employment income of any minor who is not in school but apply $90 and $30 and one-third disregards.

A household that fails the Net Income Test is ineligible for CTS.

3.2.2 Assets

With the exception of SSI recipients, the assets of all members of the CTS single assistance group are counted when determining asset eligibility for CTS. The combined assets owned by the assistance group are totaled and counted toward a $1,000 asset limit. Liquid assets include, but are not limited to, cash and savings, cash value of life insurance policies, U.S. Savings Bonds, proceeds from a loan (if available for living expenses), and equity value of any non-home real property. Some exclusions apply:

One irrevocable funeral trust per group member and one burial plot per group member are disregarded.

Student loans are disregarded.

Irrevocable trusts are exempt assets.

Federal income tax refunds, the Child Tax Credit and the Earned Income Tax Credit (EITC) (including advance payments of tax credits) are disregarded in the month of receipt and the following 12 months after receipt.

The first $1,500 equity value of one vehicle is disregarded.

Sometimes assets are owned by more than one person. When this occurs, CTS policy requires that each person be assigned an equal share of ownership.

3.2.3 Divestment

Divestment is the change of legal title or other right of ownership to non-exempt real or personal property, within 2 years of the date of application for CTS, for less than fair market value (minus the cost of the transaction). Divestment may make the group ineligible for CTS for a period of time. Divestment does not occur when property is divided in a divorce action, repossessed, lost due to foreclosure, or when an inheritance is disclaimed.

Anyone who divests within 2 years before the date of application or within 2 years of the date of a CTS eligibility review is presumed to have divested to receive CTS. The person who divests and anyone for whom s/he is legally responsible and for whom CTS is requested are ineligible for CTS.

If the amount divested by a CTS group, plus their other assets, total less than $1,000, the divestment is not a barrier to eligibility for CTS.

If the amount divested by a CTS group, plus their other assets, total more than $1,000, the divestment is a barrier to eligibility for CTS until 2 years have passed or the group has expended an amount equal to the divestment. Calculating this expenditure involves comparing the divested amount to the group’s incurred medical expenses, plus the Assistance Standard (see Section 5.2 income tables) for the family size. Once the group expends enough, the divestment is cured.

3.2.4 Benefit Amount

When a household passes all the financial tests, the CTS benefit amount is based on the number of non-financially eligible children (see Section 5.2.6 CTS Benefit Amounts).

This page last updated in Release Number: 24-01
Release Date: 04/03/2024
Effective Date:04/03/2024