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Wisconsin Department of Health and Family Services Medicaid Eligibility Handbook |
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Wisconsin Department of Health and Family Services Medicaid Eligibility Handbook |
Unearned income Income is anything you receive in cash or in kind that you can use to meet your needs for food, clothing, and shelter. is income that the client receives from sources other than employment. Unless it is disregarded income (4.1.2) or an income deduction (4.1.3), count it in the person’s income total.
A trust is any arrangement in which a person ( the "grantor" ) transfers property to another person with the intention that that 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 MA client.
The spouse of the MA client.
A person, including a court or administrative
body, with legal authority to act in place of or on behalf of the client
or the client’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 client or the client’s spouse. This includes relatives, friends, volunteers or authorized representatives.
All payments ( including interest, dividends, and rent ) from a trust to the beneficiary are unearned income to the beneficiary. See (4.1.4.9) for instructions on counting interest.
Do not count withdrawals from the trust principal as income when the withdrawals are in addition to or are an exception to payments under the terms of the trust agreement. These withdrawals are a conversion of an asset from one form to another.
If the beneficiary does not receive payments ( including interest, dividends, and rent ) 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.
Count them as income to the beneficiary if the beneficiary is Family MA. Except: Do not count the payments if they are irrevocable interest payments from an irrevocable trust. An “irrevocable trust” is a trust that cannot, in any way, be revoked by the grantor.
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 (4.7.13).
Sick benefits received from insurance such as income continuation.
Count UC that is intercepted to collect child support as if the UC beneficiary actually received the intercepted dollars. For Family Care Non-MA, count UC as earned income.
Retirement benefits include work-related plans for providing income when employment ends (e.g. pension disability or retirement plans administered by an employer or union)
Other examples of retirement funds include accounts owned by the individual, such as Individual Retirement Accounts ( IRA ) and 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. Payments from an ineligible spouse’s work related pension account are also counted as income to the ineligible spouse
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. Only interest earned on the funds in a retirement fund should be counted as income according to (4.1.4.9).
Consider IRAs, Keoghs, or other retirement funds that are completely cashed in as a conversion from one asset form to another.
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Example: 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. Treat any interest that Mark receives as income in the month received. |
Count unrestricted General Relief and charitable payments as follows:
Subtract the process month's Family Allowance
from the 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.
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 in the month of receipt. It is an asset in the months after the month of receipt
Disregard cash gifts (such as for birthdays, graduation, and Christmas) that total $30 or less, for each assistance group member, for each calendar quarter.
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.
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Example: 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. |
If an AG member makes a loan (except a land contract), treat the repayments
as follows:
Count the interest as unearned income in the month
received. In the months following the month the interest payment
was received, count the interest payment as an asset.
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.
Count interest income (except from life insurance) as unearned income when it:
Is received regularly and frequently, and
Is more than $20 a month.
When income is received less often than monthly, prorate (4.1.6.1.2) it to a monthly amount. Wait until the person first receives it after becoming eligible, then begin the proration with the month in which the payment is received.
If the prorated amount is $20 or less, disregard it as inconsequential income. If more than $20, budget it as unearned income.
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Example 1: In a Family MA application, made June 16, 1991, a group member receives interest payments of $54 every three months. The next interest payment date is July 30, 1991. Do not count any of this interest income during June. Prorate the payment over July, August, and September. The interest is: $54/3 = $18. Since $18 is less than $20, do not count the interest. |
When interest is paid regularly, but the amount fluctuates, average the payments to get a monthly amount.
When you discover that interest has accumulated in an account, count all of the accumulated interest as unearned income. Do not count these interest dollars as an asset.
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Example 2: In May, $12 is posted to an account as monthly interest on principal of $800. May income is $12 and the May asset is $800. In June, $12.50 is posted as interest on a balance of $812. June income is $12.50 and the June asset is $812. |
If interest is not paid regularly (neither you nor the client can reasonably predict when it will be available), count the interest as unearned income in the month in which it is received.
Count Social Security Benefits as income in the month received.
See Assets, 4.5.7.10.
See Assets, 4.5.7.11.
See Money for School, 4.4.
Count child support income as unearned income.
Count profit sharing income as unearned income.
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 4.1.5.13
This page last updated in Release Number : 04-02
Release Date: 07/01/03
Effective Date: 07/01/03
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