While there are many sources of income, all income is separated into two types for MAGI Medicaid purposes: earned and unearned. Refer to sections 819 A and 819 B for explanations of earned and unearned income.
Refer to Addendum 3 for additional sources of countable and excluded income for MAGI Medicaid.
Earned income consists of money received, in cash or in-kind, from wages, salary or commissions, or by paycheck advance in exchange for the performance of services by the employee.
Earned income includes the following types of countable payments:
1. Wages
Earned income includes but is not limited to monetary compensation for services as an employee, including gross earned income, advances, tips (as reported by the employee) and commissions.
Virtual currency/cryptocurrency (ex: bitcoin) received as payment for goods or services is countable earned income.
Exception:
Bonuses are treated like lump sum payments.
2. Flexible Heath Benefits
If the employer pays flexible health benefits on behalf of the employee and the employee must use this money to purchase health insurance, only the amount that goes directly to the employee (benefit contribution excess) is counted when determining a household's gross income. Any amount that employer pays for mandatory health insurance benefits that the employee does not receive in addition to their regular pay is not counted as income to the employee.
3. Jury Duty Payments and Witness Fees
Jury duty payments and witness fees count as earned income in the month received or expected to be received. Any portion of a jury duty payment or witness fees that is designated as a reimbursement for items such as food, lodging, parking, or transportation is excluded income.
4. Employees Working on Contract
Individuals who are employed under a contract and are not paid for their contractual work on at least a monthly basis will have their earnings prorated over the number of months covered by the income. However, any draws or wages received in advance of the contractual earnings are treated as earned income in the month of receipt.
The months covered by the contractual income are the months in which the employee is actually working under the terms of the contract.
5. Census Income
Earned income from temporary census employment is countable.
6. Self- Employment Income
Self-employment income consists of money received, in cash or in-kind, for producing or selling goods or services, after all allowable deductions of earning the income are subtracted.
Self-employment includes occupations such as small business, crafts, and seasonal self-employment such as fishing.
Examples of allowable deductions:
Examples of deductions not allowed:
Exception:
Self-employment income from fishing is exempt income for Metlakatla Indian Community tribal members, living in Metlakatla, and fishing within the reservation boundaries (the water surrounding Annette Islands for a distance of 3,000 feet).
7. Mature Alaskans Seeking Skills Training (MASST) Payments
Allowances, earnings, and payments from an employer and funded by MAAST are countable income.
8. Workforce Innovation and Opportunity Act (WIOA) Payments
Wages paid to persons participating in on-the-job training under a WIOA programs such as the Summer Youth Employment and Training Program and Job Corps are
countable income.
Exception:
Living allowances are exempt.
9. Volunteer Payments
Payments made under any program of the Corporation for National and Community Service (CNCS) are countable income. This income may be identified under a number of program names, including but not limited to AmeriCorps, AmeriCorps-VISTA (Volunteers In Service To America), AmeriCorps-NCCP (National Civilian Community Corps), National Senior Volunteer Corporation, Retired & Senior Volunteer Corps, Foster Grandparents Program, and Senior Companion Program.
Exception:
The AmeriCorps award at end of service is not countable if it goes directly ot an educational institution.
10. Missionary Income
Missionary income is countable even if they are living (or lived) outside of the United States.
11. In-Kind Income
In-kind income received as compensation for services rendered, such as rent reduction in exchange for managing apartments, is countable earned income.
12. Military Pay
Members of the military receive their wages through the Leave and Earnings Statement (LES). This statement reflects a military person's monthly payments and allowances. tax deductions, and other allotments that are deducted from their gross pay.
Please see Addendum 5 for a detailed list of military entitlements and if they are countable income or not.
Unearned income is any income that is not earned. Unearned income includes the following types of countable payments:
1. Social Security Payments, Excluding SSI
Most social security payments are countable income. This includes disability, retirement, widower's, and survivor's payments.
For tax dependents, the amount is only countable if the tax dependent's income is above the tax filing threshold outlined in MAGI MS 818.
2. Veteran's Payments, Excluding Disability Payments
Non-disability related veteran's payments are countable income. This includes retirement paid by the Department of Defense Finance and Account Services (DFAS) and veteran's survivor benefits.
3. Alimony/Spousal Support
Alimony is countable income if the divorce or separation was finalized or modified prior to January 1, 2019. For judgements finalized or modified on or after January 1, 2019, alimony is exempt income.
4. Unemployment Insurance Benefits (UIB)
Unemployment insurance benefits, also known as unemployment compensation, means payments received under a state or federal unemployment law, as well as additional amounts paid by unions or employers as unemployment benefits. UIB payments are countable income.
5. Pension / Retirement
Pensions and retirement benefits are payments to a worker following their retirement from employment. These payments may be paid directly by a former employer, a trust fund, an insurance company, or other entity, and are countable income.
6. Annuity Payments
An annuity is a sum paid monthly, yearly, or at other specific times in return for the payment of a fixed sum. Annuities may be purchased by an individual or an employer and are countable income.
7. Child Care Stipends
These fixed regular payments for licensed and approved relative childcare providers from the CCPO are countable income
8. Non-recurring Lump Sum Payments
Non-recurring lump sum payments are counted as income in the month of receipt. Generally, lump sum payments are monies owed to the household such as rebates or credits.
9. Permanent Fund Dividend
Permanent Fund Dividend (PFD) payments are countable income. Please see MAGI MS 820-6 B for PFD income budgeting.
Note:
Remember that for tax dependents, the amount is only countable if the tax dependent's income is above the tax filing threshold outlined in MAGI MS 818.
10. Trust Income
Money withdrawn from a trust that is not a vendor payment count as income when the funds are received.
11. State Income Tax Returns
State income tax returns are countable income in the month of receipt.
12. Crowdfunding
If a client is receiving money from a crowdfunding sources, we first need to determine the purpose of the funding. If the funding is to start a business or if the recipient of the funding is offering services or a product, then the income received from this source may be taxable income for self-employment. DPA would need to determine if this income is considered self-employment income.
If the income from the crowdfunding source is considered a gift, then this income is exempt.
13. Lottery and Gambling Winnings
For cash winnings $80,000 or greater (received in a single payout), the total winnings are divided into equal installments over each month. The maximum period of which winnings may be counted is a maximum of 120 months. (see the chart below)
For non-cash prizes (such as winning a car) are considered a non-recurring lump sum payment. The value is countable unearned income in the month of receipt only.
| Amount of winnings: | $1 - $79,999 | $80,000 - $89,999 | $90,000 - $99,999 | Each additional $10,000 |
| Length of time counted: | Counted only in the month received | Counted over 2 months | Counted over 3 months | Counted over 1 additional month |
The requirement to count lottery and gambling winnings over multiple months applies only to the individual(s) receiving such winnings. All other household members will have the winnings counted in the month of receipt only.
Example:
A household that consists of a parent and her child. If the parent wins a $100,000 cash prize, this unearned income is counted over a period of 4 months for the parent but only 1 month for her child.
If Medicaid eligibility no longer exists due to lottery or gambling winnings, the notice provided to the household must include:
1. Rental Income
Rental income may be either earned or unearned income.
Rental income is treated as self-employment income when the owner of real or personal property performs the managerial responsibilities, earning the income by his or her own efforts. When rental income is treated as self-employment income, allowable costs of doing business are deducted from gross rent receipts to determine adjusted gross self-employment income.
Rental income is treated as unearned income when the individual who is renting the property does not perform the managerial responsibilities for the rental property. When rental income is treated as unearned income, the countable unearned income is the amount of rent paid by the renter less any property management fees incurred.
Note:
Income received from the lease of a limited entry fishing permit or fishing vessel is considered unearned rental income. If the income is received as a lump sum payment, budget the income over the months the fishing permit or vessel is being used.
2. Alien Sponsor Income
A sponsored alien is an alien admitted into the United States for permanent residence as defined in the immigration and Nationality Act and, as a condition of entry, was sponsored by a person who executed an Affidavit of support for the alien. A portion of the sponsor's income is countable. Please see MS 820-6(A).
1. Work-Study Earned Income
College or university students may be enrolled in a work-study program in which they attend school part-time and work part-time at a job. Any income an applicant or recipient earns from employment in a work-study program will not be counted as income.
The caseworker must verify that part-time employment of an applicant or recipient who claims to be in a work-study program is in fact a work-study job and not an individually acquired regular part-time job.
2. Loans
All bona fide loans, including educational, personal, and commercial loans, are disregarded as income. A bona fide loan is a debt that the borrower has an obligation to repay and expresses his or her intention to repay.
The bona fide nature of a loan must be verified and documented in the case file. Commercial and educational loans can normally be verified by seeing a copy of the written loan agreement or a document identifying the payment as a loan. In the case of personal loans, the verification must provide, at minimum, acknowledgment by the borrower and lender that an obligation to repay the loan exists, and acknowledgment by the borrower that they intend to repay the loan (with or without interest).
3. In-Kind Support
In-kind support and maintenance not in the form of money such as meals, clothing, or housing.
4. Recoupments
Monies withheld from an assistance payment, earned income, or other income source, or monies received from any income source which are voluntarily or involuntarily returned, to repay a prior overpayment from that income sources (provided that the overpayment is not otherwise excluded) are exempt.
5. Energy Employees Occupational Illness Compensation Payments
The Energy Employees Occupational Illness Compensation Act provides compensation to individuals who develop illnesses as a result of employment at certain federally owned facilities in which radioactive materials were used. These payments are exempt income.
6. Government Sponsored Training Program Payments
Income received from government sponsored training programs, including training allowances from vocational and rehabilitation programs such as from the Division of Vocational Rehabilitation and Compensated Work Therapy payments funded by the Veteran's Administration are exempt income.
7. Public Assistance
Public assistance payments are exempt income. Examples include TANF (Alaska Temporary Assistance Program and Native Family Assistance) and Adult Public Assistance
8. Supplemental Security Income (SSI) Payments
SSI payments are not countable for a child or the household member that claims the recipient as a tax dependent.
9. Veteran's Disability Payments
Veteran's disability payments to primary individual or survivor are exempt income. This includes VA dependency and indemnity payments.
10. Child Support Payments
Child support payments are exempt income.
11. Vendor Payments
Money paid by an outside source to a third party on behalf of the household is exempt income.
12. Title IV Higher Education Act and Bureau of Indian Affairs Assistance
The total amount of any grant, scholarship, or award issued under any program funded under the Title IV of the Higher Education Act or under a Bureau of Indian Affairs student assistance program is not counted as income in determining eligibility or benefit amount.
Payments that fit this category include:
Verify that the source of the education assistance is Title IV or BIA by viewing the individual's award letter. Contact the awarding institution if the award letter is not available or is unclear.
13. Educational Income not funded under the Title IV Higher Education Act and Bureau of Indian Affairs Assistance
Educational income is exempt except for the portion used for everyday living expenses such as housing and food. Educational expenses must be verified to determine if any portion is countable.
Examples of allowable educational expenses are tuition, books, equipment, student activity fees you are required to pay to enroll or attend school, tutorial services, or any other necessary education expense related to the education of the individual.
14. Workers' Compensation
Workers' Compensation payments awarded to an injured employee because of job-related injury are exempt income.
15. Long Term Disability Insurance Payments
Long term disability insurance coverage provides wage replacement when an individual has a non-work-related injury or illness that keeps them out of work for three months or longer. This includes permanent disabilities that leave them unable to return to work.
Whether or not the payments are countable income depends on how the premiums for the policy were paid. If premiums were paid by the individual using after-tax money, the payments are exempt.
Exception:
If the premiums were paid by the employer with pre-tax money, the disability payments are countable income.
The insurance company providing the benefits should know what portion of the benefit is taxable (and therefor included in MAGI) and what portion is not.
16. Foster Care Payments
Foster care payments, including therapeutic foster care and boarding home payments, are exempt income.
17. Alaska Native / American Indian Payments
The following payments made to Alaska Native / American Indians are exempt:
18. Reimbursements
Reimbursements for past or future expenses, to the extent they do not exceed actual expenses and do not represent a gain or benefit to the household, are exempt. Reimbursements will not be considered to exceed actual expenses unless the provider or the household indicates the amount is excessive. Excluded reimbursements include:
Exception:
Reimbursements for normal household living expenses such as rent, personal clothing, and food eaten at home are considered a gain or benefit and are not excluded.
19. Monies Received for the Care of Third Parties
When an individual is acting as formal or informal agent, trustee, payee, or financial guardian for another person such as:
Such arrangements may involve a joint bank account, signature authority, deposits of the non-client's funds into a singly held accounts, or simply a hand or mail transfer of cash. These funds do not count as income to the extent that the client can demonstrate that they merely pass through the monies, and that they are not used for support of the household.
20. Refugee Assistance Payments
Monthly or one time refugee cash assistance payments made through the Refugee Assistance & Immigration Services program administered by Catholic Social Services are exempt.
21. Subsidized Adoption Payments
Subsidized adoption payments are intended to cover expenses incurred due to the special needs of an adopted child and are exempt.
22. Cash Gifts
Cash gifts are exempt. A cash gift is cash that a person receives that is not a repayment for goods or services the person provided and is not given because of a legal obligation on the giver's part. To be a gift, the cash must be given irrevocably (the giver relinquishes all control).
23. Earned Income Tax Credits
Advance payments of earned income tax credit (EITC) received from an employer and a single tax credit payment received after the end of the tax year are exempt.
24. Victims of Crime Compensation Payments
Any payment received from a fund established by a State to aid victims of crime is exempt income.
25. Federal Income Tax Returns
Federal income tax returns received after December 31, 2009 are excluded as income in the month of receipt.
26. Territorial Cost of Living Allowance
The territorial cost-of-living allowance (TCOLA) is an amount that is payable to postal employees who are working outside of the continental United States and is exempt income. TCOLA applies to employees stationed in Alaska, Hawaii, Guam, the Commonwealth of Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.
Exception:
If TCOLA is added to basic pay, it is countable gross income.
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