|
463 Earned
income (Self-employment) |
469 Deductions
(Aged, blind, disabled |
|
Code |
Effective |
ParaReg Text |
|
|
Net income from real property shall be
considered in determining the SOC and shall be computed by subtracting from
gross income taxes and assessments, interest on encumbrance payments,
insurance, utilities, upkeep and repairs. (§50508(a)) |
|
|
461-2 |
|
Gross unearned income includes Social Security
payments, annuities, pensions, retirement benefits, disability, veteran's
benefits, unemployment insurance, gifts or contributions, loans which do not
require repayment, inheritance of liquid assets, dividends and interest
payments, etc. (§50507(a)) |
|
461-2A |
|
For all MFBU (MBU) budget determinations
undertaken on or after |
|
461-2B |
|
Implementation of the Tinoco case holding that SDI be treated as earned income requires
that SDI be verified as well as the amount of such SDI payments. SDI is paid
for disability arising from a nonwork-related injury which renders the recipient
unable to work. The SDI benefit is generally paid biweekly for up to a year.
(ACWDL No. 96-09, February 14, 1996) |
|
461-3 |
|
All student assistance payments provided to
students under authority of Title IV of the Higher Education Act of 1965 and
Bureau of Indian Affairs education assistance, are exempt for purposes of
determining Medi-Cal income eligibility and property eligibility
(notwithstanding §50483). |
|
461-4 |
|
Annuities purchased on or after o Payments from the annuity shall be
considered income in accordance with Article 10. o If payments are deferred at any
time, the cash surrender value of the annuity shall be considered available
property. A. PERIOD CERTAIN ANNUITIES o Once the individual or spouse
receives or takes steps to receive periodic payments of principal and
interest, the balance of the annuity shall be considered unavailable. o Payments must be scheduled to
exhaust any balance remaining in the annuity, at or before the end of the
annuitant's life expectancy, based upon the life expectancy tables compiled
by the Actuary of the Social Security Administration and set forth in §9J of
the Medi-Cal Eligibility Procedures Manual (MEPM). Use the tables with the age of the
annuitant as of the date the annuity was purchased or the date the payment
plan was established, whichever is the most recent. o If the years of expected life for
the annuitant, based on the life expectancy tables compiled by the Actuary of
the Social Security Administration, is less than the years of scheduled
payments under the terms of the annuity, and if the annuity cannot be
restructured, then the payments in excess of the annuitant's life expectancy
shall be considered a transfer of property for less than fair market value
that may be a disqualifying transfer. o Any predetermined specified amount
or number of payments set aside for any other individual (other than for the
sole benefit of the spouse) shall be considered a transfer of property that
may be a disqualifying transfer. o After payments to the annuitant
begin, if payments are later designed to be made to any other individual
(other than for the sole benefit of the individual or spouse), the payments
shall be considered a transfer of income that may be a disqualifying transfer
in the future. Note: Whenever an
annuity has not been properly annuitized, counties shall advise the
individual that he/she must attempt to have the annuity annuitized in
accordance with these procedures. When
it is necessary to advise an applicant/beneficiary that he/she must annuitize
the annuity in accordance with these procedures, provide the
applicant/beneficiary with the annuitant's life expectancy by entering the
Secretary's tables using the annuitant's current age. The balance of the annuity shall be
considered unavailable once steps have been taken to annuitize the annuity in
accordance with these procedures until the payment(s) are received. Counties shall also consider whether the
undue hardship provisions apply before taking adverse actions. (See MEPM §9 J V - I) When undue hardship is considered and found
not to apply, the notice of action shall state that "the undue hardship
provisions were considered and found not to apply." (MEPM §9J-13, 14) |
|
|
Gross earned income includes but is not
limited to wages (including meal allowances), salaries, bonuses, and
commissions from an employer or business enterprise, tips, and net profits
from self-employment, including net income from real or personal property
which requires continuous and appreciable effort on the part of the applicant
or beneficiary. (§§50503(a)(1), (2), (8), and (11)) |
|
|
462-2 |
|
For all MFBU (MBU) budget determinations
undertaken on or after |
|
462-2A |
|
Implementation of the Tinoco case holding that SDI be treated as earned income requires
that SDI be verified as well as the amount of such SDI payments. SDI is paid
for disability arising from a nonwork-related injury which renders the
recipient unable to work. The SDI benefit is generally paid biweekly for up
to a year. (ACWDL No. 96-09, February 14, 1996) |
|
462-3 |
|
Temporary Workers' Compensation (TWC) benefits are treated
as earned income effective 1. The $90
work expense deduction (§50553.1). 2. The
student exemptions (§50543). 3. The $30,
or $30 and one-third deduction (§50553.3). 4. The
dependent care deduction (§50553.5). (All-County Welfare Directors Letter (ACWDL) No. 95-63,
October 24, 1995; Sawyer v. Belshé, U.S. District Court, N.D.
Cal., CIVS-94-0028 GEB JFM) |
|
|
The net profit from self-employment shall be
an estimation of the annual net income for the current year based on the
federal tax return filed for the previous year. If there is no tax return for
the previous year or there is evidence that using the tax return would give
an inaccurate estimation of income, the county shall use current business
records. In these circumstances, net profit shall be determined by
subtracting all business deductions that are directly related to the
production of goods or services, and without which the goods and services
could not be produced. Personal expenses such as income tax payments, lunches
and transportation to and from work are not allowable deductions. The
following expenses are not to be allowed even though they may be authorized
for federal tax purposes: entertainment costs, depreciation, purchase of
capital equipment expenditures and payments on the principal of loans for
capital assets or durable goods. (§50505) |
|
|
463-2 |
|
The CDHS has issued the following "GUIDELINES FOR
DETERMINING WHETHER AN INDIVIDUAL IS SELF-EMPLOYED". INDICATORS OF SELF-EMPLOYMENT > The individual defines for himself
the scope and nature of his work and daily work activities, including
work-duration; and such activities are not supervised or determined by
another (except pursuant to a limited term, contractual arrangement). > If the person is "selling"
services (as opposed to selling goods), and:
(1) The relationship between the parties is contractual, and changes
in the definition or extent of the services provided by the contractor
require changes in the contractual agreement; (2) The contractor exercises a
pattern of entering into contractual arrangements with others,
simultaneously, or in succession, and of providing bargained-for,
contractually defined services pursuant to an explicit (oral or written)
agreement. > Others assume limited or no liability
for the individual's work and for the individual during the course of his or
her work (unless it is part of an indemnity agreement or other contractual
arrangement). > The individual does not work at
another's facility nor makes substantial use of another's capital (unless
under a limited term contract). > The individual's employment requires
that he or she own substantial equipment, which is subject to depreciation,
and the individual "bargains-for", and receives, compensation which
reflects the cost of such depreciation. > The person files an income tax
return attesting that he/she is a self-employed person (e.g., files a
Schedule C). > The person or entity providing
compensation to the individual for his or her services does not (and will
not) deduct Social Security taxes or federal taxes from the compensation
payment. Consideration is given to each of the above indicators in
conjunction with any other factors that may be pertinent to an individual's
job situation. In the case of
conflicting measurements, the indicators above are arranged in a hierarchy of
perceived importance. (Medi-Cal Eligibility Procedures Manual §10M-1, 2,
effective |
|
463-3 |
|
The CDHS considers certain self-employment expenses as
deductible, and others nondeductible. Allowable
Expenses: Expenses which
are directly related to the production of goods and services, and which are
subtracted from business revenue to compute net business income include the
following: 1. Material and supply costs. 2. Wages and other benefits paid to
employees. 3. Payment for rental of space or
equipment. 4. Payment of interest on loans for
capital assets or durable goods. 5. Transportation costs to call upon
customers or deliver goods. 6. Maintenance and repair costs. 7. Other necessary costs of doing
business (e.g., advertising, business dues and publications, and insurance). Expenses
Not Allowable: Certain
expenses, although connected to business activities, are not considered to be
directly related to the production of goods or services, and cannot be
subtracted from business revenue for purposes of determining net business
income. These non-allowable expenses
include: 1. Entertainment costs. 2. Depreciation. 3. Expenditures to purchase capital
equipment. 4. Payments on the principal of loans
used to acquire capital assets or durable goods. 5. Meals and transportation to and from
work. (Medi-Cal Eligibility Procedures Manual §10M-2, effective |
|
|
Fluctuating income, except for self-employment
income, is to be determined by estimating the amount which is to be received
during the month. Actual income shall be used if it is known at the time the
SOC determination is being made. (§50518) |
|
|
464-2 |
|
Income shall be converted to monthly income by
multiplying weekly income by 4.33 or biweekly income by 2.167 if the
beneficiary wishes to receive Medi-Cal for more than two months, and if the
beneficiary is to receive the income for a full month. (§50517) |
|
|
The responsibility of a relative to contribute
to the cost of health care services of a Medi-Cal applicant or beneficiary
shall be limited to spouse for spouse and parent for child. Relative
responsibility shall be spouse for spouse when the spouses are living
together in the home. (§50351(a)) |
|
|
465-2 |
|
Parents who are living with a child are
responsible relatives and their income and resources are to be used in
determining the child's Medi-Cal eligibility. In addition, a parent living
away from the home is to be considered a responsible relative if (a) the
child is 18 years of age or older but under 21 and (b) the parent claims the
child as a dependent for income tax purposes. (§50351) |
|
|
Income which is not available to meet the
needs of a person or family shall not be considered in determining that
persons or family's share of cost (SOC). (§50515(a)) |
|
|
466-2 |
|
Counties were instructed to deem as
unavailable income, under §§50513 and 50515, amounts which were deducted for
purposes of collecting overpayments from public or private benefit payments.
Examples of benefit payments which are subject to this exclusion are entitlement
payments, payments made due to a beneficiary's impairment, DIB, UIB, and
retirement, pension or annuity benefits. (All-County Welfare Directors Letter
(ACWDL) No. 92-39, June 15, 1992) |
|
466-3 |
|
Prior to April 1, 2000, it was the CDHS position that when
a medically needy person resides in a licensed board and care facility, that
portion of the individual's monthly income which is (A) paid to the facility
for residential care and support, and (B) in excess of the maintenance need
level for the individual, is considered unavailable income. (§50515(a)(3)) In the Pettit v.
Bontá lawsuit, the court found the
Medi-Cal program was required to allow persons in licensed board and care
residential facilities the ability to apply incurred expenses for personal
care services to their share of cost (SOC). Effective April 1, 2000, individuals in licensed board and
care residential facilities are to be allowed a standard $315 personal care
services income deduction in lieu of the excess maintenance need deduction
for residential care and support indicated in 22 California Code of
Regulations §50515(a)(3). If the
excess maintenance need deduction allows for a lower SOC than the standard
$315, then the excess maintenance need deduction is to be used instead. For those individuals determined to have a lower SOC for
any prior month(s), the "SOC Case Make-up Inquiry Request" (SOCR)
screen of the "Medi-Cal Eligibility Data System" (MEDS) needs to be
checked to determine whether or not any of the SOC was met. - For those months where none of the
SOC was met, change the SOC to the new amount and advise the beneficiary to
bill for services as appropriate. - For those months where part or of
the SOC was met, follow instruction described in Article 12C of the Medi-Cal
Procedures Manual for "Processing Cases When SOC has Been Reduced
Retroactively". (All-County Welfare Directors Letter No. 00-56, |
|
466-3A |
|
If the medically needy person is in a licensed
board and care facility, that person receives the income exclusion set forth
in §50515(a)(3), regardless of whether the facility characterizes the
individual as receiving assisted living services. (All-County Welfare
Directors Letter No. 99-31, June 28, 1999) |
|
466-4 |
|
Generally, the "name on the check"
determines the owner of income from the check. However, sometimes agencies,
such as the Social Security Administration, issue benefits for more than one
person in a check made out to that person, or to another person who is not
the check's owner. Thus, counties must verify the beneficial owner of the
income so that they can properly allocate income to the actual owner of the
income. (Medi-Cal Eligibility Procedures Manual §8F-10) |
|
|
Income in kind is any support or maintenance received in
kind from a person other than a responsible relative for: (1) Housing. (2) Utilities.
(3) Food. (4) Clothing. (§50509) Income in kind shall be considered as income only if the
entire item of need is provided.
(§50509(b)) |
|
|
|
There is a $90 deduction from earned income
for mandatory deductions and work-related expenses for an AFDC-MN or MI
person. (§50553.1) |
|
|
468-2 |
|
A deduction from earned income for dependent
care expenses shall be allowed an AFDC-MN or MI person if the person has
reasonable and necessary costs of obtaining care for a child or incapacitated
person in the MFBU and the county determines that adequate care cannot be
provided by another member of the MFBU. The maximum amount of deduction is
$200 for a child under two years of age, and up to $175 for all others.
(§50553.5) |
|
468-3 |
|
Court ordered alimony or child support or
child support paid pursuant to an agreement with a District Attorney (DA)
shall be deducted from the income of an AFDC-MN or MI beneficiary when it is
actually paid by the beneficiary. The amount deducted is the lesser of the
amount actually paid, and that specified in the court order or DA agreement.
(§50554) |
|
468-4 |
|
There is a $30 plus one-third of the remainder
deduction from nonexempt earned income of certain AFDC- MN and MI individuals.
The individual must have been eligible for and receiving a cash grant (or
eligible for such grant except for an overpayment adjustment) in one of the
four months immediately prior to the month in which the deduction will be
applied; and the individual must not have received the $30 plus one-third
deduction in AFDC cash payments for four consecutive months, unless there was
an intervening 12-month period when the individual was not an AFDC recipient.
There is a $30 deduction for a period of eight months following the end of
the four consecutive month period. (§50553.3) |
|
468-5 |
|
When a State has elected to participate in the
MN program, it must determine income for individuals under age 21 and
caretaker relatives by deducting those amounts which would be deducted in
determining eligibility under the State's AFDC plan. (42 Code of Federal
Regulations §435.831(b)(2)) |
|
468-6 |
|
For all MFBU (MBU) budget determinations
undertaken on or after April 1, 1996, as part of an eligibility determination
for a "new case", and for continuing cases which have been flagged,
treat verified State Disability Insurance (SDI) received by an AFDC-MN or MI
beneficiary whose income is counted in the SOC calculation as earned income.
Apply the $90 work expense deduction (§50553.1), the student exemption
(§50543), the $30 or $30 and one-third deduction (§50553.3) and the dependent
care deduction (§50553.5) if applicable. (All-County Welfare Directors Letter
(ACWDL) No. 96-09, February 14, 1996, implementing Tinoco v. Belshé, U.S.
District Court, N.D. Cal., C 94-0947 WHO, January 1996) |
|
468-7 |
|
Temporary Workers' Compensation (TWC) benefits are treated
as earned income effective January 1, 1996, for persons who are not
ABD-linked MN persons, are either AFDC-MN or MI persons or in the same MFBU
with an AFDC-linked MN or MI person, and whose income is counted in the
Medi-Cal budget. There are four potential deductions from earned income: 1. The $90
work expense deduction (§50553.1). 2. The
student exemptions (§50543). 3. The $30,
or $30 and one-third deduction (§50553.3). 4. The
dependent care deduction (§50553.5). (All-County Welfare Directors Letter (ACWDL) No. 95-63,
October 24, 1995; Sawyer v. Belshé, U.S. District Court, N.D.
Cal., CIVS-94-0028 GEB JFM) |
|
|
There shall be a deduction of $20 from the
combined nonexempt unearned income of all aged, blind, or disabled (ABD) MN
persons and the spouse or parents of these persons. (§50549.2(a)) Any unused
portion of this $20 deduction shall be subtracted from the earned income of
the ABD person, or that person's spouse or parents (§50549.2(b)) |
|
|
469-2 |
|
Court-ordered alimony or child support paid
pursuant to an agreement with a DA shall be deducted from the income of the
ABD-MN beneficiary when actually paid, not to exceed the amount in the court
order or DA agreement. (Gibbins v. Rank; All-County Welfare Director's
Letter No. 87-77, modifying §50554.) |
|
469-3 |
|
When a state has elected to participate in the
MN program, it must determine income for aged, blind, or disabled individuals
by deducting those amounts which would be deducted in determining eligibility
under SSI. |
|
469-4 |
|
The first $65 (as well as any remaining
portion of the $20 unearned income deduction) plus one-half of the remainder
shall be deducted from the combined nonexempt earned income of all aged,
blind, or disabled MN persons and the spouse or parents of these persons.
(§50551.3) |
|
469-5 |
|
In addition to earnings deductions set forth
in §50551.3, the actual cost of work related expenses shall be deducted from
the nonexempt earned income of a blind person. (§50551.4) |