South carolina department of health and human services medicaid policy and procedures manual



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SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES

MEDICAID POLICY AND PROCEDURES MANUAL
CHAPTER 203 – MAGI – Income and Budgeting

Page




203.01 Introduction


(Eff. 01/01/14)

Effective January 1, 2014, the Affordable Care Act (ACA) mandates that income counting and budgeting be determined according to Modified Adjusted Gross Income (MAGI) methodology for Pregnant Women (PW), Children (PHC) and Parent Caretaker Relative (PCR) eligibility groups. Income is counted based on the whether income is or is not taxable. MAGI methodology also eliminates existing income disregards and replaces them with a general 5% Federal Poverty Level (FPL) disregard when needed.



203.02 Definitions

(Eff. 01/01/14)


Income

Money received by a member of the MAGI household from any source. Income may be classified as either Earned or Unearned.

Earned Income

  • Wages – All money earned by a MAGI household member through the receipt of salary or commission as an employee; or

  • Self-Employment Earnings – Income earned directly from one’s own business, trade or profession rather than specified as salary or wages from an employer.

Unearned Income

Any income that does not fall into the categories defined under Earned Income.

Income Limits

The MAGI household must have net countable income at or below the appropriate categorical standard and the number of individuals in the MAGI household. Income limits are based on family size. (Refer to MPPM 103.03 for categorical standard.)



203.03 Counting Income

(Eff. 01/01/14)


Applicants who fall under a MAGI category are to be assessed for eligibility using MAGI methodology. This section describes how income is counted for the financial eligibility determination. The basic rule for income is: MAGI income for ALL individuals who are considered part of a MAGI household must be counted unless an individual meets one of the three exceptions listed below (Medicaid Rules Summary and Calculations).

      1. Calculations

        1. Included in Calculating Income:

          1. Adjusted Gross Income (AGI)

          2. + Excluded Foreign Income

          3. + Tax Exempt Interest Income

          4. + Non-Taxable Social Security Benefits

          5. = Modified Adjusted Gross Income (MAGI)

        2. Not Included in Calculating Income:

          1. Certain Scholarship and Fellowship Income

          2. Certain Native American Income

          3. Certain Alaska Native Income

Income is budgeted prospectively Countable income is based on the representative income received in consecutive pay periods within 35 days prior to and including the: (i) application signature date, (ii) review signature date, (iii) date the application/review is received/stamped in the Medicaid office, or (iv) date a review is completed in MEDS (the Act on Decision date)/ ACCESS. The income receipt date – not the pay period ending date is used to determine countable income.



203.04 Income Calculation

(Eff. 01/01/14)


The following income calculation rules will only apply to members of the MAGI household as determined in MPPM Chapter 202. Each individual in a household is assessed separately. Only the income of individuals who fall into an exception will be exempt from the income calculation.

203.04.01 Individuals Whose Income Is Counted

(Eff. 01/01/15)


Follow the steps detailed below to determine the Household Income.
Step 1: Determine the Medicaid/CHIP Household Income for Each Household.

Determine the sum of each eligible household member’s MAGI-based income. An eligible household member is one who does not fall under an exception, noted below in Step 2. Apply the following income rules:



  • An amount received as a lump sum is counted as income only in the month received.

  • Scholarships, awards, or fellowship grants used for education purposes (such as tuition, textbooks, etc.), but not for living expenses, are excluded from income.

  • Certain distributions, payments and student financial assistance for American Indians/Alaska Natives are excluded from income. See SC MPPM 203.07.01.

  • Household income equals the sum of the MAGI of every non-excepted member of the individual’s household.

  • If the parent is a non-tax filer/dependent, his/her income is counted only for the household consisting of his/her spouse and any children living with that parent.

The income of a stepparent is counted if the stepparent lives in the MAGI household.
Note: For purposes of Medicaid and CHIP eligibility, the above rules apply regardless of the rule applied for purposes of the Marketplace/APTC eligibility.
Step 2: Determine if a Household Member Is Excepted from Income Counting

Consider each exception for all household members.


First Exception – Is the individual’s parent in this MAGI household?

    • If yes – is the individual expected to be required to file a tax return? (i.e., is the individual’s annual income expected to exceed the minimum threshold below which an individual may opt not to file a tax return)

      1. If yes, the individual’s income must be included in this MAGI household’s total MAGI income.

      2. If no, the individual’s income should NOT be included in this MAGI household’s total MAGI income.

    • If no, the individual’s income must be included in this MAGI household’s total MAGI income unless another exception applies.


Second Exception – Is the individual the tax dependent of someone in this MAGI household who is not the individual’s spouse or parent?

    • If yes – is the individual expected to be required to file a tax return?

      1. If yes, the individual’s income must be included in this MAGI household’s total MAGI income.

      2. If no, the individual’s income should NOT be included in this MAGI household’s total MAGI income.

    • If no, the individual’s income must be included in this MAGI household’s total MAGI income unless another exception applies.


Third Exception – Is the individual a married minor?

    • If yes –is the individual expected to be required to file a tax return?

      1. If yes, count the income of the married minor and all of his/her tax dependents.

      2. If no and the married minor is a non-filer or a tax-dependent) then count the income of the married minor and the income of his/her (i) spouse, (ii) children, and/or (iii) parents, if living in the same household.

    • If no, evaluate above exceptions to determine if income must be counted, unless:

      1. The individual is a parent under age 19 who is applying on his/her child’s behalf.


Fourth Exception – Is the individual a minor parent?

    • If yes – is the individual expected to be required to file a tax return?

      1. If yes, the minor’s income is deemed to the minor parent and any individuals filed as a tax dependent by that minor parent.

      2. If no (the minor parent will be a non-filer or a tax-dependent), the minor parent’s income is deemed to only him/herself, and any children living with that minor parent.

    • If no, the individual’s income must be included in this MAGI household’s total MAGI income unless another exception applies

The chart below indicates how to treat the income of various individuals for eligibility determination.




INDIVIDUAL

SPECIAL INSTRUCTIONS

Dependent Child in the home not required to file a tax return

The earned income of a Dependent Child who is in the MAGI household is excluded unless the parent is not included in the household.


Dependent Child in the home required to file a tax return

The earned income of a Dependent Child who is in the MAGI household is included if the child is required to file a tax return.


Parent(s) in the home

All income must be counted unless specifically excluded.

Parent absent due to military obligation

Military pay is counted as earned income for the month intended. Clothing Maintenance Allowance (CMA) is deducted from monthly gross earned income.

Caretaker relative other than the parent(s) of the child(ren)

Count income if the needs of the individual are included, unless specifically excluded. If married, spouse of the caretaker relative (if living in home) must be included in MAGI household.

Stepparent in home, child(ren) in common

Count income of stepparent

Stepparent in home, no child(ren) in common

Count income of stepparent

Stepparent in home, each parent had own child(ren), no child(ren) in common,

Count income of stepparent

Ineligible or unverified alien/ citizenship status

Count the needs and income, of the non-citizen parent as well as the needs of the non-citizen siblings. If not legally responsible, disregard income and needs. The unverified alien member is not eligible for Medicaid.

Parent or child who fails to meet citizenship and/or identity requirements

If parent/child fails to meet requirements for citizenship and/or identity, include parent/child’s needs and income; however, the parent/child is not eligible for Medicaid.




Procedure to Determine Countable Monthly Income

MEDS
See Section 203.04.01 B (below) for MAGI Workbook instructions.
ACCESS


  1. Establish a 35 day window prior to and including the application signature date, review signature date, the date the application/review is received/stamped in the Medicaid office, or the date a review is completed in ACCESS .

  2. Evaluate the available income documentation dated within the 35 day window. Determine countable income using the most recent consecutive pay periods provided (four weeks for weekly; two pay periods for bi-weekly and semi-monthly; one pay period for monthly), unless one or more of those paychecks is determined not to be representative, for example, significantly higher or lower than usual. If the income is not representative, refer to MPPM 201.03.03 for budgeting procedures.

  3. Add the representative weeks of pay.

  4. Divide the total income by the number of representative pay dates to get the average income per pay date.

  5. Multiply the average income per pay date according to the frequency of receipt as follows. Drop all numbers after the penny, and do not round.




  • Multiply the average weekly income or payment by 52 and then divide by 12.

  • Multiply the average bi-weekly income or payment by 26 and then divide by 12.

  • Multiply the average semi-monthly income or payment by 2.

  • Count income or payments received on a monthly basis in total.

The total of the above amounts is the monthly gross income.







Example:
Bobby Flay works at Hamburgers-R-Us. He files an application on February 27 and provides the following pay stubs for the last four weeks:

$253.23 February 6

$265.25 February 13

$235.38 February 20

$245.64 February 27
Note: It would also have been acceptable if he had provided pay stubs for January 30, February 6, February 13, and February 20.
His monthly gross earned income is computed as follows:
$253.23 + $265.25 + $235.38 + $245.64 = $999.50
$999.50 divided by 4 = $249.875 Drop the 5 in .875 and use $249.87 in the next step.
Convert to an annual amount: $249.87 x 52 = $12,993.24

Convert to a monthly amount: $12,993.24 ÷ 12 = $1,082.77 to use for budgeting.









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