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State of Wisconsin |
HISTORY |
The policy on this page is from a previous version of the handbook.
33.6.6 Self-Employment Earnings
33.6.8.1 Allocated Income From a Medicaid Member’s Spouse
Income information for SeniorCare is based on the applicant ’s good faith estimate of income for the next 12 months beginning with the month of application. Last year’s information from tax returns or other sources may be used as a guide when determining the estimate.
All income should be rounded to the nearest whole dollar when entering the amount on the application or renewal application.
There is no asset test for SeniorCare. In general, cash that is received as a result of converting an asset from one form to another is not income. This includes withdrawals from savings and/or checking accounts, CD s, or money market accounts. However, special provisions apply to retirement benefits (see Section 33.6.7.1 Retirement Benefits) and Cobell buy-out payments (see Section 16.7.11.2 Lump Sum Payments Under the Settlement of the Cobell v. Salazar Class-Action Trust Case). Income generated from any assets that the SeniorCare participant may have is considered budgetable income and must be reported on the application or renewal application.
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Example 1: Eric has a savings account with $5,000 in it. Eric’s savings account is considered an asset, but the interest that he anticipates earning is countable income.
Eric anticipates withdrawing $1,000 from his savings account during the coming year. This amount does not count as income. It is an asset that has been converted to cash. Only the interest Eric anticipates receiving from the savings account is countable income. Any withdrawals from his savings account are considered the conversion of an asset and are not counted as income. |
The income of a spouse who is in the SeniorCare FTG is included in the estimate of the annual, budgetable income even if he or she does not apply or is nonfinancially ineligible.
Annual income is determined prospectively from the month of application through the next 12 calendar months. Income exempted for Medicaid eligibility is also exempted for SeniorCare (see Section 15.3 Exempt and Disregarded Income), including EITC and income tax refunds (see Section 15.5.7 Income Tax Refunds).
Budgetable income consists of projected gross annual income, except for self-employment income, which uses net income (see Section 33.6.6 Self-Employment Earnings).
In the following income related sections, policy is defined according to the categories on the SeniorCare Application form, F-10076. All income listed in the following sections should be prospectively budgeted for a 12-month period beginning with the month of application.
When calculating anticipated gross annual Social Security income, add any deductions for Medicare Part B or D and court-ordered guardianship fees, alimony, and/or child support to the net payment amount.
Exception: If a SeniorCare applicant is receiving Medicare premium assistance (see Section 32.1 Medicare Savings Programs), his or her monthly payment already includes the Medicare Part B premium.
The applicant should contact the SSA at 1-800-772-1213 if he or she does not know his or her Medicare premium amount.
When the applicant is a surviving spouse receiving benefits under his or her spouse’s Social Security number, the amount should be considered the applicant’s income and reported under the applicant’s income column of the application.
Budgetable gross earnings consist of all gross earned income, except for self-employment income, which uses net income (see Section 33.6.6 Self-Employment Earnings). Gross earnings include the following:
The SeniorCare applicant must report the estimated gross amount of all interest and dividends that he or she expects to receive in the next 12 months, beginning with the month of application. Sources of interest and dividends include, but are not limited to, the following:
Payments do not need to be directly received. If they are rolled back into the asset, they still must be reported.
Irrevocable interest that a SeniorCare applicant receives for an irrevocable burial trust is not budgetable income.
Note: Unlike Medicaid, income that is received irregularly and infrequently and is under $20 per month should be reported as budgetable income for SeniorCare applicants.
Budgetable income consists of all anticipated capital gains that would be reportable as capital gains to the IRS for tax purposes. All anticipated losses should be subtracted from the gross capital gains amount, and the net capital gain amount should be reported if it is greater than zero. Negative amounts should not be reported and will not be used to offset other types of income.
The principal or initial investment in the capital asset that the person receives in cash when he or she sells the asset is not considered income. That portion is considered a conversion of an asset from one form to another.
All anticipated payments (including interest, dividends, and withdrawals from principal) from a trust to the applicant are counted as income.
Irrevocable interest that a SeniorCare applicant receives for an irrevocable burial trust is not budgetable income.
Note: Unlike Medicaid, withdrawals from principal are counted for SeniorCare as income in the month received.
Each person who is a holder in a joint savings account is assigned an equal share of the interest earned. The applicant or applicant’s spouse should report only his or her share of the interest.
If the applicant and his or her spouse are not living together and hold a joint savings account, the applicant should only report his or her share of the interest
SeniorCare will budget net self-employment income, which is calculated by deducting estimated business expenses, losses, and depreciation from gross self-employment income.
If the net self-employment earnings are anticipated to be a loss, the amount should be reported as zero.
Negative amounts should not be reported and will not be used to offset other income (see Section 15.6.5.2 Worksheets).
If rental income is reported to the IRS as self-employment income and is subject to the federal self-employment tax for rental income (usually real estate agents or individuals in a business where extensive services are provided to the renters), depreciation should also be deducted from the gross rental income.
Refer to Section 33.6.8.3 Rental Income if rental income is not reported as self-employment income.
Note: See Section 15.5.3 Rental Income for more information about calculating net rental income for SeniorCare participants.
Examples of income that should be included in the gross pension amount include:
Retirement benefits are work-related plans for providing income when employment ends (e.g., pension, disability, or retirement plans administered by an employer or union). Other examples are funds held in an IRA and plans for self-employed individuals, sometimes referred to as Keogh plans.
Retirement accounts, including IRAs, Keogh plans, etc., are assets and are therefore not counted for SeniorCare.
Periodic payments received from a retirement account or annuity are counted as income. A periodic payment is any partial payment from a retirement account. Withdrawal of the full amount from any retirement account that has never had a withdrawal made from it is not considered a periodic payment and is not countable income.
Note: Rolling over an IRA (transferring the funds from one IRA to another) is the conversion of an asset from one form to another. Any potential income from an IRA rollover is countable income for SeniorCare.
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Example 2: Mike owns a $2,000 IRA and plans to withdraw all of it this year. Mike has not withdrawn any money from this IRA in the past.
If Mike withdraws the full $2,000 at one time, the $2,000 continues to be considered an asset. This is a conversion from one form of an asset to another.
If Mike were planning to make a one-time withdrawal of $1,000 from the $2,000 IRA in the next 12 months, the $1,000 would be considered income on his SeniorCare application.
If Mike were planning to withdraw $100 monthly from his IRA in the next 12 months, the $100 he plans to receive monthly from the IRA is counted as income on his SeniorCare application. |
Examples of other income are:
A SeniorCare applicant whose spouse is a Medicaid member living outside the home (e.g., in a nursing home) must report the spousal income allocation amount (see Section 18.6 Spousal Impoverishment Income Allocation) as income.
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Example 3: Betty is a Medicaid member and in a nursing home. She is allowed to allocate up to $1,000 to her spouse, Carl, according to the notice she receives. Betty only actually has $650 available, and of that, $45 is set aside as her personal needs allowance. The $605 per month that she allocates to Carl would be counted as unearned income for Carl. He would report $7,260 as “Other Income” on his SeniorCare application. |
A SeniorCare applicant whose spouse is a Medicaid member living in the home (e.g., a community waivers participant) should not report income that is allocated to him or her. The allocated amount must be included in the income estimate for the Medicaid member spouse because he or she is living in the home.
A SeniorCare applicant must report anticipated farm subsidy payments. A SeniorCare applicant must also report payments from CREP , a program where the landowner is paid to install conservation practices for a period of 10 – 15 years.
All expected rental income will be budgeted for SeniorCare. Annual operating expenses should be deducted from the annual amount of gross rental income. Operating expenses include ordinary and necessary expenses, such as insurance, utilities, taxes, advertising for tenants, and repairs. Repairs include expenses, such as repainting, fixing gutters or floors, plastering, and replacing broken windows.
Refer to Section 33.6.6.1 Rental Income if rental income is reported to the IRS as self-employment income.
Veterans disability payments should be reported as income.
Do not count as income the portion of a veterans disability payment that is for unusual medical expenses, aid and attendance, or a housebound allowance.
An applicant should check with the Veterans Administration at 1-800-827-1000 to determine if any portion of the payment is considered an allowance for unusual medical expenses, aid and attendance, or housebound allowance.
Reimbursement from the VA for medical costs does not count as income.
The applicant should not report income anticipated from any of the following:
Active Corps of Executives (see Section 15.3.22 Special Programs)
Adoption assistance payments (see Section 15.3.1 Adoption Assistance)
Agent Orange Settlement Fund payments (see Section 15.3.2 Agent Orange Settlement Fund)
Disaster and emergency assistance payments made by federal, state, county, and local agencies or other disaster assistance agencies (see Section 15.3.5 Disaster and Emergency Assistance)
Earned Income Tax Credit (see Section 16.7.8 Earned Income Tax Credit)
Earnings of a census enumerator (see Section 15.3.22 Special Programs)
Emergency Fuel Assistance payments (see Section 15.3.22 Special Programs)
Foster care payments (see Section 15.3.7 Foster Care)
Foster Grandparents Program (see Section 15.3.22 Special Programs)
Governmental rent or housing subsidies (see Section 15.3.22 Special Programs)
Homestead Tax Credit (see Section 15.3.22 Special Programs)
Income tax refunds (both state and federal) (see Section 16.7.7 Income Tax Refunds)
Individual Development Account payments (see Section 15.3.9 Individual Development Account Payments)
Kinship Care payments (see Section 15.3.11 Kinship Care)
Low-Income Energy Assistance Program (see Section 15.3.22 Special Programs)
Older American Community Service Program (except for wages or salaries that are counted) (see Section 15.3.22 Special Programs)
Payments made to individuals because of their status as victims of Nazi persecution (see Section 15.3.15 Payments to Nazi Victims)
Payments received from the class action settlement of Susan Walker vs. Bayer Corporation. These payments are to hemophiliacs who contracted the HIV virus from contaminated blood products (see Section 15.3.24 Susan Walker Payments).
Penalty payments made when the state does not correctly process child support refunds
Radiation Exposure Act program payments made to compensate injury or death due to radiation from nuclear testing and uranium mining (see Section 15.3.16 Radiation Exposure Compensation Act)
Reimbursement from private insurance company for medical, LTC , or dependent care expenses (see Section 15.3.19 Reimbursements)
Restitution payments to individual Japanese-Americans (or their survivors) and Aleuts who were interned or relocated during World War II (see Section 15.3.27 Wartime Relocation of Citizens).
Retired Senior Volunteer Program (see Section 15.3.22 Special Programs)
Reverse mortgage payments (see Section 16.7.2.1 Reverse Mortgage)
Service Corps of Retired Executives (see Section 15.3.22 Special Programs)
University Year for Action Program (see Section 15.3.22 Special Programs)
Volunteers in Service to America (see Section 15.3.22 Special Programs)
W-2 payments for transitional jobs and community service jobs (see Section 15.3.28 Wisconsin Works Payments)
Wisconsin’s Family Support Program (see Section 15.3.22 Special Programs)
Payments from Indian Health Services (Note: Payments to Native Americans listed in Section 15.3.14 Payments to Native Americans must be counted.)
This page last updated in Release Number: 15-03
Release Date: 11/24/2015
Effective Date: 11/24/2015
The information concerning the Medicaid program provided in this handbook release is published in accordance with: Titles XI and XIX of the Social Security Act; Parts 430 through 481 of Title 42 of the Code of Federal Regulations; Chapters 46 and 49 of the Wisconsin Statutes; and Chapters HA 3, DHS 2, 10 and 101 through 109 of the Wisconsin Administrative Code.
Notice: The content within this manual is the sole responsibility of the State of Wisconsin's Department of Health Services (DHS). This site will link to sites outside of DHS where appropriate. DHS is in no way responsible for the content of sites outside of DHS.
Publication Number: P-10030