Below is a summary of sections I believe to be relevant to my practice as an elder law attorney. This summary is not comprehensive and is subject to change.
1840.0100. Income Concepts. Earned and unearned income, infrequent/irregular income, availability of income, diversion of income, 3rd party payments, deeming of income; and verification of income.
1840.0102. Deductions from Gross Income. Some deductions withheld from gross income must still be included as income. Examples of such deductions are:
· Premiums for Supplemental Medicare Insurance (taken out of Social Security)
· Premiums for health insurance
· Premiums for life insurance
· Federal and state income taxes (only Federal in Florida)
· Social Security taxes
· Optional deductions
· Garnished or seized payment
· Guardianship fees
· Child support (if not redirected irrevocably from source)
1840.0108.03. Joint Bank Accounts. When an individual Medicaid applicant is joint account holder, a deposit into the account specifically designated for another account holder is not income to the individual MA. But interest payments to the account are divided equally among the account holders. But interest earned on bank accounts is excluded as unearned income for eligibility determination purposes (but does count when calculating patient responsibility).
1840.0109.01. Availability of Income for Institutional Care. Income solely owned by community spouse is not considered when determining if institutionalized individual’s income is within program standards. Once eligibility has been determined, the community spouse’s income is considered based on the following policy:
Income derived from jointly owned assets is considered available to whom it is paid unless trust or other instrument indicates otherwise. If payment is made:
· Solely to the community spouse, income is available only to the community spouse;
· To both spouses, ½ of income is considered available to each spouse; or
· To the institutional spouse, CS and others, then income is deemed available in proportion to each spouse’s interest in the asset.
If an asset producing income is transferred to community spouse, then income is not counted toward institutional spouse.
1840.0109.04. Availability of Inheritance. An individual’s inheritance becomes unearned income when it actually becomes available to the individual, but in no case later than when the estate is closed.
If an inheritance is included as an asset as a result of “deeming,” and the individual later inherits the asset, the income from the inheritance is excluded at that time.
1840.0110. Income Trusts. To qualify, an individual’s gross income cannot exceed 300% of the SSI federal benefit rate (see Appendix A-9 – Financial Eligibility Standards). If a Medicaid applicant has income above the ICP income limit, they can become eligible by setting up and funding a qualified income trust (which must be irrevocable, composed only of income [i.e. SS, pensions or other income sources], state must receive the balance in the trust upon death of the individual up to amount of medical assistance paid on their behalf).
Appendix A-22 is Guidance for Reviewing Income Trusts.
Individual must deposit sufficient income into the income trust in month income is received to reduce their countable income (outside the Miller Trust) wo within the program income standard.
Funds deposited into the qualified income trust / miller trust are not subject to transfer penalties provided they are paid out of the trust for medical care of the individual.
1840.0111. Transfer of Income. Transfers of income will be treated like transfers of assets. For example, if an individual receives an inheritance and transfers it in the month received (or if a stream of income is transferred), penalty periods of ineligibility may be imposed.
BUT, transfers of income into a qualified income trust are not considered transfers without FMV unless the trust document does not allow monthly disbursements of all funds for the benefit of the individual.
1840.0112. Payments to Joint Owners.
1840.0118. Vendor Payments. Direct payments to a creditor or vendor on behalf of an individual are vendor payments and are excluded as available income to the individual (unless the vendor payment results in the individual directly receiving income).
1840.0119.01. Examples of Vendor Payments.
· Rent payments made directly to landlord by third party.
· Rent or mortgage payments made to landlords or mortgagees by DCF, HUD or by state/local housing authorities.
· Payments made directly to utility or phone company by a third party.
· Court ordered payments to 3rd party
1840.0119.02. Medicare Part B Premiums. Premium payments for supplemental medical insurance under Medicare are not included as income when the payment is made by a third party insurer.
1840.0123. Verification of Income. Income must be verified and documented by the source. E.g. a check or bank deposit is not sufficient because they do not necessarily include deductions.
For SSI recipients, SDX (state data exchange) serves as acceptable verification of both Title II (SSD) and SSI benefit amounts. Verification for the SSI recipient must still be obtained.
1840.0200. Earned Income. Even withheld wages are considered earned income. Wages or paid salaries received after employment has ended (e.g. severance packages or payment for accrued vacation time) are still considered earned income.
Sick pay is also earned income as long as the individual plans to return to work after recovering.
1840.0204. Sale of Blood or Plasma.
1840.0207. Verification of Earned Income. Acceptable forms of verification: W-2 and income tax returns, wage receipts, wage statements, pay stubs, and employment verification form.
1840.0313. Self-Employment Income. Net earned income is total gross income less deductions allowable under IRS code, including individuals share of ordinary net income (or loss) from partnerships even though profits have not yet been distributed.
1840.0500. REAL ESTATE INCOME.
1840.0501. Rental Income. Rental payments are unearned income and include payment for using real or personal property less allowable ordinary and necessary expenses.
1840.0504. Computation of Rental Income. Allowable ordinary and necessary expenses (which can be deducted from unearned rental income) include:
· Real estate taxes
· Interest on debts
· Repairs (i.e. minor corrections to existing structure)
· Cost of advertising for renters
· Lawn service
· Interest and escrow; and
· Homeowner’s Insurance
Expenses of managing rental property are allowable if the expenses are reasonable and necessary. To be considered reasonable, the charge for managing the individual’s rental property is limited to 10% or less of the gross rental income. Higher managing expenses may be allowed if the individual can present evidence (e.g. two statements from a knowledgeable source) that such charges are the standard in the particular geographic area of the property.
Unacceptable expenses include: (i) capital expenditures (an addition); and (ii) principal portion of the mortgage payment.
Rest of section describes how to compute ongoing budget months when actual expenses are not yet known.
1840.0600. IN-KIND BENEFITS. Non-cash or in-kind benefits are excluded from income (e.g. meals, clothing, public housing, produce from garden, food stamps, clothing allowances for disabled veterans, medical and social service program payments or in-kind benefits).
1840.0700. SUPPORT. Support payments (paid by legal or non-legal parent intended for support or maintenance) is included as unearned income (e.g. court ordered child support, money for basic living expenses or for recreation / transportation).
1840.0705. Alimony. Individual’s countable income cannot be reduced because court has ordered part of that income to be paid to a spouse. Court ordered support received by the spouse is unearned income.
A legal agreement or court order alone does not constitute income. The payment must actually be received.
1840.0706. Child Support. For ICP, Hospice and HCBS, the full amount of child support is included as unearned income.
1840.0800. ASSISTANCE FROM GOVERNMENT AGENCIES. Income Tax Refunds and earned tax credits/refunds are excluded as income.
1840.0819. Developmental Disability Payments. SILA payments are excluded as income.
1840.0820. Supplemental Security Income (SSI). SSI payments are included as unearned income.
1840.0824. Assistance Payments Based on Need. Income based on need (e.g. TCA, RAP) are included as unearned income unless specifically excluded (i.e. provided by public program that uses income or assets as criteria to determine eligibility and amount of payments; and that program is wholly funded by a state or political subdivision of a state or Indian tribe).
1840.0901. Verification of Unearned Income. Following sources are acceptable:
· BENDEX or SDX Tapes
· SSA document (award letter)
· VA award letter
· Pension or award letter
· Unemployment compensation award letter
· Child support court statement
· Bank account statements to verify monthly interest/dividend income of more than $10/month (accept individual’s statement for monthly interest/dividend income of $10 or less). Bank account interest is only included in patient responsibility calculations.
1840.0903. Gross Benefits. Gross benefit amount is considered unearned income. Deductions for optional items such as health insurance and Medicare premiums continue to count as income.
1840.0904. SSA Income. Counts as unearned income.
1840.0905. Annuities, Pensions and Retirement Income. Including 401(k)s, IRAs, SEPs, etc… all included as unearned income.
1840.0906. Veterans Benefits and Payments.
1840.0906.02. Veterans Payments-Pension. Pensions are unearned income, but can exclude the amount of aid and attendance and housebound allowances, and unreimbursed medical expenses.
1840.0906.04. Veterans Administration (VA) Improved Pension.
1840.0906.05. VA Aid and Attendance.
1840.0906.06. VA Housebound Allowance.
1840.0908. Workers Compensation Payments. Included as unearned income.
1840.0909. Railroad Retirement Payments. Included as unearned income.
1840.1910. Unemployment Compensation. Included as unearned income.
1840.0913. Life Insurance Policy Proceeds. Included/counted as unearned income in the month received, after deducting any expenses paid from the proceeds for the deceased person’s last illness (i.e. hospital, medical and non-medical expenses) and burial expenses.
1840.1000. DIVIDENDS & INTEREST. Count interest and dividend income from individual and community spouse, when income diversion is involved in determining patient responsibility, unless interest/dividends can be excluded for another reason (i.e. infrequent or irregular excluded due to federal law). If $10 or less, don’t count.
1840.1002. Interest on CDs. Excluded as income for eligibility purposes. But count in patient responsibility determination when it becomes available.
1840.1003. Interest on Retirement Funds. If interest earned on retirement funds can be accessed and principal is included as an asset, interest is excluded as unearned income. If interest cannot be accessed, it becomes part of fund principal and is an excluded asset.
If the retirement fund is excluded as an asset because it is paying periodic payments, both the interest and principal portions of the payment are counted as unearned income to the individual in eligibility and patient responsibility calculations.
In patient responsibility calculations, include the income of the eligible individual as well as the spouse.
1840.1004. Savings Bonds. Interest on some bonds (series E) is not available until the bond is redeemed. On other bonds, interest is paid periodically while the bond remains owned. Interest in series H bonds is paid semiannually.
Interest on savings bonds is excluded as unearned income in eligibility calculations, but included in patient-responsibility calculations.
1840.1005. Stock Dividends. Included (even if in the form of additional shares) as income.
1840.1006. Mortgages and Promissory Notes. If an asset to the individual, exclude interest portion as income for eligibility purposes (but is counted toward patient responsibility).
If the mortgage is excluded as an asset, both interest and principal portions of payment are counted as unearned income in eligibility and patient responsibility calculations (for both individual and spouse).
1840.1007. Medical Insurance Payments. If made directly to individual; counts as income unless it’s for reimbursement purposes; restrictions make them unavailable for food, clothing or shelter; or payments are made directly to medical provider.
1840.1009. Annuities and other Retirement Funds. See section 1840.1003 above.
1840.1010. Reverse Mortgages / Home Equity Loan / HELOC. HELOCs only reduce equity in home if payments are received (simply being available does not count toward reducing equity). These proceeds are loans and therefore not income. But if retained in following month, will be deemed an asset. See DCF’s policy on loans in section 1640.0609.03.
1840.1011. Royalties. Are counted as income.
1840.1013. Capital Gains on Retirement Accounts. Just become part of the asset, not counted as income.
1840.1300. INCOME FROM OTHER SOURCES.
1840.1301. Loans. Loans are excluded income if there is intent to repay.
When individual is borrower: Proceeds from valid loan are not income in month of receipt. Amount remaining from loan in month following receipt is considered as an asset to the borrower.
When individual is the lender: Valid and negotiable loans are considered a countable asset; only the interest portion of payment is excluded as income to the lender. The principal portion of the payment is conversion of an asset, not income. If not valid, entire payment (principal and interest) is counted as income.
1840.1303. Trusts. A trust is a right of property held by one party for the benefit of another. If beneficiary has a right to the income, then that portion is counted as unearned income as it becomes available. If beneficiary has no right to income from the principal of the trust and the income is added to the principal, then the earnings are not considered income.
See Medicaid ESS Manual Sections 1640.0576.01 – 1640.0576.11 for more information on Trusts as assets.
1840.1305. Gifts. May be excluded as income if infrequent or irregular.
1840.1305. Prizes and Awards. Counted as income unless excluded as infrequent or irregular.
OTHER FLORIDA ELDER LAW ATTORNEY MEDICAID MANUAL SUMMARIES
Chapters 800-1400 (Technical Requirements)
Chapter 1600 (Assets) see link just above.