15.4 Unearned Income

Unearned income is income that the member receives from sources other than employment. Unless it is disregarded income (see Section 15.3 Exempt/Disregarded Income) or an income deduction (see Section 15.7 Income Deductions), count gross unearned income in the person’s income total.

When two payments from the same income source are received the same month due to mailing cycle adjustments, count each payment only for the month it is intended. Income sources commonly affected by such mailing cycle fluctuations include general assistance, other public assistance programs, SSI , and SSA benefits.

Note: Occasionally, a regular periodic payment (e.g., title II, or VA benefits) is received in a month other than the month of normal receipt. As long as there is no intent to interrupt the regular payment schedule, consider the funds to be income in the normal month of receipt.

15.4.1 Income from Trusts

A trust is any arrangement in which a person (the "grantor") transfers property to another person with the intention that the person (the "trustee") hold, manage, or administer the property for the benefit of the grantor or of someone designated by the grantor (the "beneficiary").

The term "trust” includes any legal instrument or device or arrangement which, even though not called a trust under state law, has the same attributes as a trust. That is, the grantor transfers property to the trustee and the grantor's intention is that the trustee hold, manage, or administer the property for the benefit of the grantor or of the beneficiary.

The grantor can be:

The Medicaid member.
The spouse of the Medicaid member.
A person, including a court or administrative body, with legal authority to act in place of or on behalf of the member or the member’s spouse. This includes a power of attorney or guardian.
A person, including a court or an administrative body, acting at the direction or upon the request of the member or the member’s spouse. This includes relatives, friends, volunteers, or authorized representatives.

All payments (including interest, and dividends,) from a trust to the beneficiary are unearned income to the beneficiary. See Section 15.4.9 Interest/Dividend Income for instructions on counting interest.

If the beneficiary does not receive payments (including interest and dividends ) from the trust, but they are added back to the trust principal, do not count them as income to the beneficiary if the beneficiary is elderly , blind, or disabled.

Note: If the grantor is an institutionalized person, or acting on behalf of an institutionalized person, payments from any trust, both revocable and irrevocable, that are not to or for the benefit of the institutionalized person are divestment (see Section 17.13 Trusts).

15.4.2 Sick Benefits

Sick benefits are payments received from insurance such as income continuation.

15.4.3 Unemployment Compensation

Count normal UC that is received. Count UC that is intercepted to collect child support as if the UC beneficiary actually received the intercepted dollars.

15.4.4 Retirement Benefits

Retirement benefits include work-related plans for providing income when employment ends. Examples of retirement benefits include:

Pension disability or retirement plans administered by an employer or union
Accounts owned by the individual, such as IRA s
Plans for self-employed individuals, sometimes referred to as Keogh plans.

Periodic payments made from a work-related retirement benefit plan should be counted as income in the month of receipt.

Any periodic payments from individually owned accounts (e.g., IRA) should not be counted as income in the month of receipt. They are considered the same as withdrawals from an applicant’s savings account.

Consider IRAs, Keoghs, or other retirement funds that are completely cashed in as a conversion from one asset form to another.

Example 1: Mike withdraws $2,000 he has in an IRA and deposits it into a savings account. Continue to treat the $2,000 as a countable asset. This is just a conversion from one form of an asset to another.

15.4.5 General Relief and Charity

Count unrestricted General Relief and charitable payments as follows:

Subtract the process month's Family Allowance from the AFDC Assistance Standard for this size fiscal group.
Multiply the difference by 12 to get the maximum payment you can disregard.
Ignore any payment that is less than the maximum.
Subtract from the maximum the amount of any payment that is greater than the maximum.
Count the remainder as unearned income.

15.4.6 Gifts

A gift is something a person receives which is not repayment for goods or services the person provided and is not given because of a legal obligation on the giver’s part. To be a gift, something must be given irrevocably (that is, the donor relinquishes all control).

Treat non-cash gifts as an asset, as you would an asset of a similar type. A cash gift is unearned income only in the month of receipt. Count the gift as an asset in the months following the month of receipt

Disregard cash gifts (such as for birthdays, graduation, and Christmas) that total $30 or less, for each AG member, for each calendar quarter.

15.4.7 Land Contract

Count any portion of monthly payments received that are considered interest from a land contract as unearned income. Do not count the principal as income, because it is the conversion of one asset form to another. Deduct from the gross amount any expenses the person is required to pay by the terms of the contract.

If the income is received less often than monthly, prorate the income to a monthly amount. Do not begin budgeting this monthly amount until the person first receives a payment after becoming eligible.

Example 2: Bob receives land contract payments from Farmer Brown twice a year, one $500 payment in March and another $500 payment in September.

If Bob is applying in February prorate the land contract payments Bob receives after he becomes eligible. In March when Bob receives a $500 land contract payment, divide the total income ($500) by the frequency of the payments (six months) to get the budgeted income amount of $83.33 per month ($500/6 months = $83.33). Begin budgeting this amount in March.

15.4.8 Loans/Promissory Notes

If an AG member makes a loan or promissory note (except a land contract), treat the repayments as follows:

Count the interest as unearned income in the month received.
Count any repayments toward the principal of the loan, whether it is a full payment, a partial payment, or an installment payment, as an asset.
If an AG member receives a loan and it is available for current living expenses, count it as an asset. Do this even if there is a repayment agreement. If it is not available for current living expenses, disregard it.

15.4.9 Interest/Dividend Income

15.4.9.1 EBD Interest/Dividend Income

15.4.9.1.1 Excluded Sources of Interest or Dividend Income

15.4.9.1.2 Interest and Dividends Income not excluded for EBD

15.4.9.1 EBD Interest/Dividend Income

Most interest and dividend earnings are excluded income so are not counted when determining Medicaid eligibility. See Section 15.4.9.1.1 Excluded Sources of Interest or Dividend Income for excluded sources of interest or dividend income and Section 15.4.9.1.2 Interest and Dividends Income Not Excluded for EBD for interest and dividend income not excluded for EBD.

Most interest and dividend income from a resource excluded under SSI rules, will be an excluded source of income for all Medicaid Eligibility and post- eligibility determinations. The are, however, some exceptions (see Section 15.4.9.1.2 Interest and Dividends Income Not Excluded for EBD).

15.4.9.1.1 Excluded Sources of Interest or Dividend Income

Do not count the following sources of interest or dividend payments:

1. Interest or dividend income from a non-exempt resource, such as savings accounts, checking accounts, stocks, bonds, etc.
2. Medicaid resources that are exempt by federal statute other than the Social Security Act:
1. - Agent Orange Settlement Payments.
  - Austrian Social Insurance Payments.
  - Corporation for National Community Service (CNCS) (formerly ACTION) Programs.
  - Interests of Individual Development Accounts (IDAs) - TANF Funded.
  - Individual Development Accounts (IDAs) - Demonstrated Project.
  - Japanese-American and Aleutian Restitution Payments.
  - Low Income Energy Assistance.
  - Payments to Victims of Nazi Persecution.
  - Netherlands WUV Payments to Victims of Persecution.
  - Department of Defense (DOD) Payments to Certain Persons Captured and Interned by North Vietnam.
  - Radiation Exposure Compensation Trust Fund.
  - Ricky Ray Hemophilia Relief Fund.
  - Payments to Veterans' Children with Certain Birth Defects.
1. Interest and dividends that accrue to revocable and irrevocable trusts.
2. Interest and dividends from a life insurance policy.

15.4.9.1.2 Interest and Dividends Income Not Excluded for EBD

Count the following interest and dividends income for Medicaid:

1. Interest earned on the unspent portion of Earned Income Tax Credits.
2. Interest earned on the unspent portion of Child Tax Credits.
3. Interest and dividends on gifts to children with life threatening conditions.
4. Interest earned on the unspent portion of federal, state, or local relocation assistance payments.
5. Interest earned on the unspent portion of retroactive Social Security or SSI Payments.
6. Interest earned on the unspent portion of Crime Victim's Compensation Payments.
7. Interest portion on repayments of promissory notes or other loan agreements as non-exempt unearned income.
8. Count interest and dividend payments from a revocable or irrevocable trust as non-exempt unearned income, only when the trustee makes an actual payment of the interest or dividend to the trust beneficiary.

Count the non-excluded interest and dividend income listed above as unearned income only when it:

1. Is received regularly and frequently, and
2. Is more than $20 a month.

15.4.10 Social Security Benefits

Count Social Security Benefits as unearned income in the month received.

15.4.11 Property Settlement

See Section 16.7.10 Property Settlement.

15.4.12 Lump Sum Payments

See Section 16.7.11 Lump Sums Payments.

15.4.13 Money for School

15.4.13.1 Total Disregards

15.4.13.2 Partial Disregards

15.4.13.3 Workforce Investment Act (WIA)

For elderly/disabled cases, apply the disregards listed in Section 15.4.13.1 Total Disregards and Section 15.4.13.2 Partial Disregards but count all other money that is derived from any other student loan or grant not listed below. Use the Student Financial Aids Report (F-16021) to obtain the type and amount of the student's aid package. Also, use it to inform the student financial aids office of assistance granted.

See Section 15.4.13.3 Workforce Investment Act for instructions on how to treat income that is earned under the WIA .

15.4.13.1 Total Disregards

For elderly/disabled cases, totally disregard all of the following sources of money for education or training:

1. Supplemental Educational Opportunity Grant (SEOG),
2. Perkins Loans (formerly NDSL ),
3. Federal Direct Student Loan Program (Formerly GSL & FFELP ),
4. Wisconsin Direct Student Loan (WDL),
5. Talent Incentive Program/State Student
6. Incentive Grant (TIP/SSIG),
7. College Work Study Program (CWSP), and
8. Basic Educational Opportunity Grants (BEOG or PELL).
9. Wisconsin Indian Grant (WIG), and
10. Bureau of Indian Affairs Grant (BIAG).
11. Any other undergraduate loan or grant made or insured under any program administered by the U.S. Commissioner of Education.
12. Any other loans and grants obtained and used under conditions that prevent their use for current living costs.
13. County training program allowances granted by the IM agency.

15.4.13.2 Partial Disregards

For elderly/disabled cases, partially disregard all other money for education or training as follows:

1. Determine the cost of tuition, fees, books, transportation essential to education or training, and day care.
2. Subtract the total in "1" from the grant, loan, scholarship, etc. total.
3. Count any remaining money as unearned income:
1. Only as of when the student gets the money; and
2. Over the months the money is intended to cover.

Example 1: The remaining $600 of a grant is intended to cover January through June.

If it's received in:

May, count $100 in each of the income months of May and June;
July, budget $0;
December, count $100 in each of the income months of January through June.

15.4.13.3 Workforce Investment Act

For both Family and Elderly /Disabled MA cases, disregard all unearned income from WIA to any adult or minor participating in WIA, including:

1. "Need-based payments" paid to persons as allowances to enable them to participate in a training program.

1. "Compensation in lieu of wages" paid to persons in "tryout employment". This is arranged when private-for-profit opportunities aren't available and is generally limited to persons under age 22. Ask any applicant under age 23, or the local WIA staff if he or she is participating in "tryout employment". If he or she is, count this as unearned income.

1. "Payments for supportive services" paid to persons in training programs who are not able to pay for training related expenses (e.g., transportation, health care, child care, meals).

Earned WIA income is paid in the form of wages from on-the-job training (OJT) and work experience activities. Disregard all earned WIA income of a minor for up to a total of six months per calendar year. Negotiate with the MA group which six months of income to disregard. The six months need not be consecutive. Budget WIA income earned by a minor in other than these six months according to (Section 15.5.8. Student Income).

Count the earned WIA income of adult participants.

The Job Corps Program is a part of WIA. Consider a minor who's participating in the Job Corps a student when you calculate the income disregards for full-time students, and part-time students who are not employed full-time.

Consider Job Corps payments to adult participants as unearned WIA income.

15.4.14 Child Support

Count child support income as unearned income.

Child support payments (including arrearage payments) made to or on behalf of a disabled child are counted as unearned income to the child.

One-third of the amount of a child support payment made to or for a disabled child by an absent parent is excluded as income. This income exclusion applies to both court ordered and voluntary child support payments.

This exclusion only applies to payments made by an absent parent. Sometimes a family is reunited, and the parent is still making child support payments, in compliance with a court order, even though that parent is now living with the child. Under these circumstances, the one third income exclusion is not allowed, since the parent is no longer considered to be an absent parent.

The one third income exclusion described above only applies to EBD Medicaid eligibility determinations; it does not apply to BadgerCare Plus eligibility determinations.

15.4.15 Profit Sharing

Count profit sharing income as unearned income.

15.4.16 Income Received by Members of a Religious Order

Count any compensation that a member of a religious order receives, not related to gainful employment, as unearned income even if the compensation is turned over to the order.

Count the compensation as earned income if it meets the criteria in Section 15.5.12 Income Received by Members of a Religious Order.

15.4.17 Federal Match Grants for Refugees

Some refugee resettlement agencies have grants available for refugees for their second, third, and fourth month after arrival in the U.S. These are cash grants and can vary in the amount issued. Count these payments as unearned income.

15.4.18 Gambling Winnings

Gambling winnings are counted as unearned income in the month of receipt. Gambling losses cannot be used to offset the winnings.

15.4.19 Payments to Native Americans

Disregard the first $500 of the monthly income from Tribal Per Capita payments from gaming revenue. If the payments are received less than monthly, prorate the gross payment amount over the months it is intended to cover and disregard $500 from the monthly amount.

This applies to eligibility determinations for all Medicaid subprograms for elderly, blind, or disabled persons except:

Senior Care and Long Term Care programs such as Institutional Medicaid, Family Care, and HCBW s including Partnership and PACE . For these subprograms, count all income from Tribal Per Capita payments from gaming revenue as unearned income.

15.4.20 Alimony, Maintenance, and Other Spousal Support Payments

Count all alimony, maintenance, and other spousal support payments.

This page last updated in Release Number: 15-01

Release Date: 06/10/2015

Effective Date: 06/10/2015