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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 Recipient’s Spouse
Income information for SC 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 SC. 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, certificates of deposit, or money market accounts. However, special provisions apply to retirement benefits (See 33.6.7.1 Retirement Benefits). Income generated from any assets that the SC 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 SC FTG is included in the estimate of the annual budgetable income, even if he or she does not apply or is non-financially 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 SC (15.3 Disregarded Income), including Earned Income Tax Credit (EITC) and income tax refunds (15.5.8 Income and EITC Tax Refunds).
Budgetable income consists of projected gross annual income, except for self-employment income, which uses net income. (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 SC applicant is receiving Medicare premium assistance (32.1 Medicare Beneficiaries Introduction), his or her monthly payment already includes the Medicare Part B premium.
The applicant should contact the Social Security Administration 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 (33.6.6 Self-Employment Earnings). Gross earnings include the following:
1. AmeriCorps (15.5.10 AmeriCorps),
2. Contractual Income (15.5.2 Contractual Income),
3. Governor’s Central City Initiative (15.5.7 Governor's Central City Initiative),
4. Income In Kind (15.5.1 Income In Kind),
5. Income Received By Members of a Religious Order (15.4.16 Income Received by Members of a Religious Order, 15.5.13 Income Received by Members of a Religious Order),
6. Jury Duty Payments (15.5.4 Jury Duty Payments),
7. Salary,
8. Severance Pay (15.5.12 Severance Pay),
9. Wage Advances (15.5.5 Wage Advances),
10. Wages,
11. Wages and salaries received from a program funded under Title V – Older Americans Act of 1965 (15.5.14 Title V – Older Americans Act of 1965),
12. Worker’s Compensation (15.5.6 Worker's Compensation),
13. Respite Care Payment for Services
The SC 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:
1. Bonds,
2. Certificates of Deposit (CD),
3. Checking Accounts,
4. Money Market Accounts,
5. Savings Accounts
6. Stocks,
7. Capital Gains (33.6.5.1 Capital Gains)
8. Trusts (33.6.5.2 Trusts)
9. Individual Retirement Accounts (15.4.4 Retirement Benefits)
10. Annuities
11. Land Contracts (15.4.7 Land Contract)
12. Loans (15.4.8 Loans)
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 SC applicant receives for an irrevocable burial trust is not budgetable income.
Note: Unlike Medicaid, income that is received irregularly infrequently, and under $20 per month should be reported as budgetable income for SC 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 shall 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 SC applicant receives for an irrevocable burial trust is not budgetable income.
Note: Unlike Medicaid, withdrawals from principle are counted for SC 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/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
SC 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 shall not be used to offset other income. (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 33.6.8.3 Rental Income if rental income is not reported as self-employment income.
Note: See section 15.5.3 Rental Income, items #1 and 2, for more information about calculating net rental income for SC participants.
Examples of income that should be included in the gross pension amount include:
1. Railroad Retirement Benefits,
2. Retirement Benefits (33.6.7.1 Retirement Benefits),
3. Veterans Benefits. (15.3.26 VA Allowances)
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 individual retirement account (IRA) and plans for self-employed individuals, sometimes referred to as Keogh plans.
Retirement accounts, including individual retirement accounts (IRA), Keogh, etc., are assets, and are therefore not counted for SC.
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 SC.
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Example 2: Mike owns a $2000 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 of the $2,000 from his 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:
1. Allocated income from a Medicaid member spouse (33.6.8.1 Allocated Income from a Medicaid Recipient’s Spouse),
2. Child Support (15.4.14 Child Support),
3. Federal Farm Subsidy (33.6.8.2 Farm Subsidy),
4. Gifts (15.4.6 Gifts),
5. Profit sharing (15.4.15 Profit Sharing),
6. Sick/ Disability benefits (15.4.2 Sick Benefits),
7. Rental income (33.6.8.3 Rental Income),
8. Unemployment Compensation (15.4.3 Unemployment Compensation (UC )),
9. Veterans Disability Payments (33.6.8.4 Veterans Disability)
SC applicants with a Medicaid member spouse living outside of the home (e.g. in a nursing home) must report the spousal income allocation amount (18.6 Spousal Impoverishment Income Allocation) as income.
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Example 3: Betty is a Medicaid member and in the 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. $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 SC applicant with a Medicaid member spouse 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.
The SeniorCare applicant must report anticipated farm subsidy payments. The SeniorCare applicant must also report payments from the Conservation Reserve Enhancement Program (CREP), a program where the landowner is paid to install conservation practices for a period of 10 to 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 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.
The 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 Veterans Administration for medical costs does not count as income.
The applicant should not report income anticipated from any of the following:
Active Corp. of Executives (ACE) (15.3.22 Special Programs)
Adoption assistance payments (15.3.1 Adoption Assistance)
Agent Orange Settlement Fund payments (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 (15.3.5 Disaster and Emergency Assistance)
Earned Income Tax Credit (16.7.8 Earned Income Tax Credit (EITC))
Earnings of a census enumerator (15.3.22 Special Programs)
Emergency Fuel Assistance payments (15.3.22 Special Programs)
Foster Care payments (15.3.7 Foster Care)
Foster Grandparents Program (15.3.22 Special Programs)
Governmental rent or housing subsidies (15.3.22 Special Programs)
Homestead Tax Credit (15.3.22 Special Programs)
Income Tax Refunds (both state and federal) (16.7.7 Income Tax Refunds)
Individual Development Account payments (15.3.9 IDA Payments)
Kinship Care payments (15.3.11 Kinship Care)
Low-Income Energy Assistance Program (15.3.22 Special Programs)
Older American Community Service Program (except for wages or salaries which are counted) (15.3.22 Special Programs)
Payments made to individuals because of their status as victims of Nazi persecution (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 (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 (15.3.16 Radiation Exposure Compensation Act).
Reimbursement from private insurance company for medical, long-term care, or dependent care expenses (15.3.19 Reimbursements).
Restitution payments to individual Japanese-Americans (or their survivors) and Aleuts who were interned or relocated during WWII (15.3.27 Wartime Relocation of Citizens).
Retired Senior Volunteer Program (RSVP ) (15.3.22 Special Programs)
Reverse mortgage payments (16.7.2.1 Reverse Mortgage)
Service Corp. of Retired Executives (SCORE ) (15.3.22 Special Programs)
University Year for Action Program (15.3.22 Special Programs)
Volunteers in Service to America (VISTA) (15.3.22 Special Programs)
W-2 payments for transitional jobs and community service jobs (15.3.28 W2 Payments)
Wisconsin’s Family Support Program (15.3.22 Special Programs)
Do not count payments from Indian Health Services. Note: Payments to Native Americans listed in 15.3.14 Payments to Native Americans must be counted.
This page last updated in Release Number: 08-01
Release Date: 02/01/08
Effective Date: 02/01/08
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