603-1 ESTIMATING THE HOUSEHOLD'S MONTHLY INCOME
The caseworker makes a reasonable estimate of the household’s monthly income based on the information available from the household and the source of the income. The caseworker must confer with the individual to find out about income already received, as well as about income anticipated for the month of application and for subsequent months in the certification or review period.
Once the caseworker has information about the types of income, and when and how much will be received, the caseworker will confirm it by getting verification from the source of the income.
Income is included:
1. If the household has received it or anticipates receiving it in the month; and
2. The worker can estimate how much the household will receive in the month and/or in subsequent months.
To anticipate and estimate the household’s monthly income, the caseworker must know:
What is the source of the income?
What is the amount of each payment?
Which household members receive income?
When will the income be received, i.e., pay dates?
What is the period of time the payment covers, i.e., pay period start and end dates?
If the income is ending, when is the last payment expected?
When is the first payment expected?
Will payments continue?
How often will the household receive payments, i.e., monthly, twice a month, biweekly, weekly, irregularly?
The estimated income amount used in the benefit calculation will be considered correct if:
It is reasonable;
It is based on all available information;
The caseworker applied correct policy; and
How the estimated income amount was determined is documented in the Case Notes (CANO Case Notes). See MS 603-1G for more on documentation requirements.
603-1 A. CALCULATING A MONTHLY INCOME AMOUNT
The method used to calculate a monthly income amount depends on a number of factors, including:
When the payments started;
If it is a scheduled or irregular payment;
If it is a fixed, salaried, or hourly income;
Whether all the payments paid cover a full payment period;
Whether all the scheduled payments will be received in the month; and
Known and verified upcoming changes that might affect the amount of the payment or when the payment will be received.
Note:
This policy applies when determining
income amounts for all benefit months, including the application month.
Whenever possible, the caseworker uses payment history to determine a normal or average payment to use in estimating monthly income. This history may be in the form of paycheck stubs or a statement showing payments made.
When the payment history shows that the payment amounts vary, the worker calculates an average payment amount by adding together recent payments from the same source and dividing this total by the number of payments.
Example: Averaging
Payments
Ellie provides her last three pay stubs
showing gross earnings of $456, $398, and $430. The caseworker averages
these amounts by adding the three figures together ($456 + $398 + $430
= $1284) and dividing by three ($1284/3=$428).
Use recent payments that represent what is likely to be received through the months of the certification/review period. Past payments that do not represent what is anticipated to occur in the period for which income is estimated, such as unusual payments not expected to continue, may be excluded in the calculation, for example, one-time overtime or a one-time increase in hours.
Example: Excluding
an Unusual Payment
David works varying hours depending
on when his employer needs him. He provides his last three pay stubs,
showing gross earnings of $600, $900, and $660. David explained
that the $900 check was unusually high because he was covering for another
shift. The employer confirmed this was a one-time situation and
stated that the $600 and $660 checks were the norm. The caseworker
excludes the $900 check since it does not represent an amount that can
be anticipated in the months for which income is being estimated, and
calculates an average payment by adding the two other checks together
and dividing by two ($600 + $660 = $1260 divided by 2 payments = $630).
To estimate earnings when the person has new employment or a change in hours for which there is no payment history, the caseworker uses the number of hours that will be worked each pay period or each week, and multiplies this by the hourly rate to calculate a per payment or per week estimate. This amount is then multiplied by the appropriate conversion factor to determine the estimated monthly income. When the change is in the hourly rate, the payment history can be used to estimate the number of hours that will be worked under the new wage rate.
Example: Income
from a New Job
Maggie reports that she started a new
part-time job. She will be paid every two weeks earning $12 an hour.
Her schedule will vary but the employer estimates that she will
work an average of 20 hours each week. Multiply the number of hours
per week by the rate of pay to get an estimate of weekly pay (20 hours
x $12/hour = $240). Multiply this weekly estimate by 4.3 to get
a monthly estimate of income.
Example: Increase
in Hourly Wage
Terri reports she got a raise to $10 an hour starting July 1. She
gets paid twice a month, and provides her last three pay stubs that show
45 hours for pay period ending May 31, 36 hours for pay period ending
June 15, and 42 hours for pay period ending June 30. Average the
number of hours by adding them together and dividing by three. (45
+ 36 + 42 = 123 divided by 3 = 41). Multiply this average number
of hours by the new rate of pay to get an average payment per pay period
(41 hours x $10/hour = $410).
When the individual will receive all the scheduled payments in the month and all the payments cover a full payment period, estimate the monthly income by using the normal or average payment amount. Payments received once a month do not need to be converted. If payments are made more than once a month, multiply by a conversion factor to get a monthly amount:
By 2 if the payment is for a half month (i.e., paid twice a month)
By 2.15 if the payment is for a period of two weeks (i.e., paid every other week)
By 4.3 if the payment is for a period of one week (i.e., paid weekly)
Confirm pay period start and end dates and pay dates to ensure the correct conversion factor is used. The distinction between twice a month and every two weeks may be missed if the caseworker simply asks the payroll clerk how often an employee is paid.
If the payment amounts do not vary, multiply the normal payment received each pay day by the appropriate conversion number based on the frequency of payment.
Example: Payment
Amounts Do Not Vary
Rachel is paid twice a month, on the
4th and the 20th. Her salary is $1000 a pay period. To calculate
her monthly income, $1000 is multiplied by 2 ($1000 x 2 = $2000).
If the payment amounts vary, calculate an average payment first, and then multiply it by the appropriate conversion number based on the frequency of payments in the month.
Example: Payment
Amounts Vary
Val is paid every other Saturday. Her
average pay is $428. To calculate her monthly income based on payments
every two weeks, $428 is multiplied by 2.15 ($428 x 2.15 = $ 920.20).
Notes:
• Two pay days in the month that are
normally on the same dates, such as on the 5th and 20th, indicate the
individual is paid twice a month.
• Pay days that are 14 days apart and normally on the same day of the week,
such as every other Friday, indicate the individual is paid every other
week (biweekly).
• Pay days that are 7 days apart and normally on the same day of the week,
such as every Monday, indicate the individual is paid weekly.
• Pay dates may vary when the normal pay date falls on a holiday or weekend.
Some individuals have unusual work schedules, like working one week on and one week off. In these situations when there is no pay history, the caseworker will calculate a monthly estimate of income by determining the amount of income that will be received during a time period and converting this amount into a monthly amount.
Example #1: Unusual
Work Schedule
Erin works three weeks on and one week
off. She just started working and the employer statement indicates
she will work 10 hour shifts, seven days a week, and will be paid $12
an hour for the first 40 hours per week, and $18 an hour for the remaining
hours.
The worker calculates she will work 120 hours at $12 an hour ($1440) and
90 hours at $18 an hour ($1620) during this 21-day period, for a total
amount of $3060. She’ll earn no money during the seven days she
has off, so for the four-week period, she will earn $3060. The worker
divides this amount by 4 to get a weekly average ($3060 divided by 4 =
$765), and multiplies this amount by 4.3 to get a monthly estimate of
income ($765 times 4.3 = $3289.50).
Example #2: Unusual
Work Schedule
Pat’s work schedule is one week on and
one week off. He normally works 12-hour shifts for seven days, and
gets paid $10 an hour regular time (40 hours times $10 = $400) plus $15
an hour overtime (44 hours times $15 = $660), for a total of $1060 per
week. Since he works one week on and one week off, this $1060 represents
two weeks of employment. The worker multiplies this by 2.15 to get
a monthly estimate of income ($2279).
Six months later, Pat submits his review application and provides his pay
stubs for the pay periods ending May 9 ($1030), May 23 ($1280), and June
6 ($1090). Since these represent two-week pay periods (one week on and
one week off), and worker totals them ($3400), divides this amount by
3 to get an average payment ($1133.33 and multiplies this average two-week
payment by 2.15 to get a monthly estimate of income ($2436.65).
Full payment periods include pay periods when there is a temporary decrease in the payment amount due to unpaid leave or work schedule changes, or a one-week gap in unemployment insurance benefits. These situations result in a change in the amount of the scheduled payment, but the payment still covers a full payment period. In these situations, the caseworker calculates an average payment just for that month to estimate the month’s income. Another average payment is calculated to estimate income for subsequent months in which the payment amounts return to normal.
Example: Temporary
Decrease in Earnings
Carolyn works a 40-hour per week job,
but the amounts of her last three checks vary significantly due to leave
without pay she took for a family emergency. She does not expect
to miss any more work. She is paid every two weeks and received
$400 gross (40 hours) on August 3, $600 (60 hours) on August 17, and expects
a normal pay check of $800 (80 hours) on August 31. Since August
income is significantly lower than normal, the caseworker must do a separate
budget for this one month. For August the caseworker totals the
three payments received in August and divides the amount by three to get
an average payment amount ($400 + $600 + $800 = $1800/3 = $600). Carolyn
is paid biweekly (every other week). The caseworker multiplies this
average payment amount by 2.15 to get an estimated monthly income amount
for August ($600 x 2.15 = $1290). Since low paychecks are not expected
to continue, the caseworker anticipates $800 every two weeks and recalculates
an estimated monthly income of $1720 for September and beyond. ($800
x 2.15 = $1720).
Example: Temporary
Decrease in Unemployment Benefits
Bob is receiving unemployment insurance
benefits (
UIB ) of $210 a week, which is paid every two weeks in
the amount of $420. He will receive UIB payments on the 2nd,
16th, and 30th of November. However, he did not claim one week of
benefits so one of these payments is for $210. He expects to claim every
week of benefits in the future. Since November income is lower than
normal, the caseworker must do a separate budget for this one month. The
caseworker totals the three payments in November and divides the amount
by three to get an average payment amount ($420 + $210 + $420 = $1050/3
= $350). Since the payments are biweekly (every other week), the
caseworker multiplies this average payment amount by 2.15 to get an estimated
monthly income amount for November ($350 x 2.15 = $752.50). Since
the lower UIB
payment is not expected to continue, the caseworker anticipates $420 every
two weeks for December and beyond and recalculates an estimated monthly
income of $ 903 ($420 x 2.15 = $ 903 ).
Notes:
• If an individual is paid once a month
and the amount varies, such as child support payments, calculate an average
monthly amount to use in estimating total monthly income.
• If the caseworker and client anticipate that the lower payment is only
for one month, the caseworker recalculates the income using the amount
normally received to determine income for subsequent months.
• All anticipated changes in income reported and verified at the time of
application or recertification, or during the certification period, must
be considered when calculating the estimate of income. This may
require the worker to calculate multiple budgets for subsequent months
until the income stabilizes.
603-1 C. NOT A FULL MONTH'S INCOME
1. When the individual will receive all the scheduled payments in the month, but one or some of the payments do not cover a full payment period, total the income already received and any additional amount anticipated to be received during the month, and use this amount for the month. This situation often occurs when the individual begins employment after the pay period starts, or stops working before the pay period ends, resulting in the first or last paycheck covering less than a full pay period. It may also occur when individuals begin receiving or stop receiving unemployment insurance benefits.
When the person is not employed for the full pay period, anticipate the number of hours that will be worked in the pay period and multiply this number of hours by the hourly wage. Use this amount in the estimate of income for this month.
Example: Starting
Employment
Sue applies for benefits on June 6.
She recently started working on May 28. She gets paid $10
an hour and works 5 hours a day, Monday through Friday. She’ll be paid
twice a month on the 5th and 20th. Pay periods are the 1st through
the 15th and the 16th through the end of the month. Her June 5 check
was only $200 for the four days she worked in May (4 days x 5 hours/day
= 20 hours x $10 = $200). Her June 20 check is anticipated to be
$550 for the eleven work days she anticipates working during the June
1 through 15th pay period (11 days x 5 hours/day = 55 hours x $10 = $550).
Sue’s June income is determined by adding the payment she received
on June 5 to the payment she expects to receive on June 20. ($200
+ $550 = $750).
Income in future months will be estimated based on information from Sue
and the employer about the amount of pay that is expected.
Example: Starting
Unemployment Benefits
Elizabeth applies for benefits on April
16. She filed for unemployment benefits last month and received
her first unemployment payment on April 13. The caseworker verifies
the payments on the Department of Labor UIB interface, noting that
Elizabeth’s UIB
waiting week was March 25 and she received a $120 payment for only one
week on April 13. She will receive another payment on April 27 for
$240, representing two benefit weeks. Since the first payment was
for only one benefit week due to the waiting week required when benefits
begin, for April the caseworker will count $360 unemployment income. For
May and beyond, the caseworker anticipates she will get all of the scheduled
payments, and will multiply the regular $240 biweekly payment by 2.15
to convert it into a monthly income estimate of $516. This amount
will be used to determine benefits for subsequent months, unless a change
is reported.
Example: Ending
Unemployment Benefits
Elizabeth reports on June 15 that her
unemployment benefits are ending and that she will get her last payment
on July 20. It will be for only one week in the amount of $120.
She will also get a payment of $240 for two weeks of unemployment benefits
on July 6. Since the last payment will be for only one benefit
week, for July the caseworker will count $360 unemployment income ($240
+ $120 = $360).
Exception:
When an individual is paid weekly or
biweekly and receives a fifth or third payment that covers less than a
full payment period, estimate this month’s income by totaling the payments
received in the month, dividing this amount by the number of payments
to get an average amount, and then multiply the average amount by 4.3
weekly or 2.15 biweekly to get an estimated monthly amount.
Example: Exception
for Third or Fifth Payment
Peggy was laid off from work for the
summer. Her last day of work was May 16. She was paid every
other week and received $1000 on May 2 (80 hours at $12.50/hour for pay
period ending April 25) and $1000 May 16 (for pay period ending May 9).
She expects one more check on May 30 for $500 for the 40 hours
worked during the pay period ending May 23. The caseworker totals
the three checks and divides by three ($1000 + $1000 + $500 = $2500/3
= $833.33) to determine an average payment amount, then multiplies this
amount by 2.15 since she is paid every other week ($833.33 x 2.15 = $1791.65).
The worker counts $1791.65 earnings for May. No income from this
source would be counted in subsequent months. The caseworker must
recalculate benefits for June using the amount of anticipated income from
other sources, if any.
2. When the individual does not receive all the scheduled payments in the month, total the income already received and anticipated to be received during the month and use this estimated amount for that month. Situations when this may occur include:
The employee is on unpaid leave for an entire pay period due to sickness, temporary lay-off, or vacation;
School district employees have an unpaid holiday break that covers an entire pay period;
UIB stops because of excess earnings for two benefit weeks in a row, causing the UIB recipient to miss one or more two-week payments.
Example: All Scheduled
Pay Checks Not Received
Dan reports on December 16 that he will
be on unpaid leave for two weeks, December 20 through 31. He normally
gets paid every two weeks, but this unpaid leave will cause him to miss
one paycheck. For January, he will receive only one two-week paycheck
on January 21. The caseworker calculates the January income by counting
only the amount anticipated on the January 21 check. For February,
the caseworker will estimate a new earned income amount based on regularly
scheduled paychecks issued every two weeks.
Example #1: All
Unemployment Payments Not Received
Jenny is receiving unemployment benefits,
but recently got a temporary part-time job. She received her regularly
scheduled $200 UIB
check on May 7th for the two benefit weeks April 22 and April 29. She
was not eligible for unemployment benefits for the next two weeks because
of her earnings. She is no longer working and expects to get another
$200 UIB
check around June 5. Since she only got one unemployment payment
in May, the worker counts $200 unemployment income for May and her earnings
paid in May. The caseworker must recalculate June benefits based
on anticipated income for that month.
Example #2: All
Unemployment Payments Not Received
Marjie applies for assistance on August
20. She is receiving unemployment benefits of $130 a week, but payments
are expected to end next month. According to the DOL system,
she was issued $260 on August 10th for benefit weeks ending July 28 and
August 4. Her balance remaining is $390. $260 is expected to be
issued on August 24, and the remainder in September. The caseworker
calculates August income by multiplying the $260 biweekly payment by 2.15
($260 x 2.15 = $559) since both payments covered full payment periods.
For September, the caseworker counts only the remaining $130 unemployment
income she anticipates receiving ($390-$260=$130) since she will not receive
all of the scheduled payments in September. The caseworker must
do another estimate for October to remove the unemployment benefit that
ends in September.
The income is considered irregular when the payments are not made on a regular schedule. An individual may receive income on an irregular or sporadic basis. Examples of irregular income include day labor, on-call work (such as substitute teaching), craft sales, and receipt of child or spousal support. It may also include payments like cash awards or prizes, gifts, and winnings from bingo. Irregular income is counted if the household has already received it in the month or can anticipate receiving it in the month based on the known timing of a payment, or the past history of payments such as child support or craft sales.
The caseworker should thoroughly explore
irregular income situations. When the caseworker and the individual
can arrive at a reasonable estimate of how much income can be anticipated
for the month, that amount of income is included in the estimate. Irregular
income that cannot be reasonably anticipated is not included in the estimate
of income.
Example: Countable
Irregular Child Support Income
Terry received multiple child support
payments during four of the last six months, two $50 payments in February,
two $100 payments in April, one $50 payment in May, and two $100 payments
and one $50 payment in July. The caseworker must average the income
by totaling all the payments and dividing them over the six-month period
the payments were received ($600/6 months). The household received
an average payment of $100 a month. The caseworker discusses this
with Terry and both agree it would be reasonable to anticipate an average
$100 per month.
Example: Countable
Irregular Craft Income
Aina creates craft items and sells them
at a craft store that carries the items on consignment. She receives
this self-employment income only after an item is sold. Sales are
irregular most of the year; however, sales pick up during the summer tourist
season from June to September, and again in November and December. After
paying expenses, she normally receives an average of $400 for her craft
items during those months. If the period for which the caseworker
is determining eligibility includes the months in which sales normally
occur based on past sales history, the caseworker would explore anticipated
income from the sales and include that amount in the estimate of monthly
income to determine benefits. In other months of the year, no income from
craft sells would be anticipated.
Example: Irregular
Child Support Income That Cannot Be Anticipated:
JoLynn applies for assistance in December.
She received a child support check in November. Prior to that,
the last check she received was in May. She tells the caseworker
that she can never predict when the checks will arrive. In this
case, payments cannot be reasonably anticipated so no child support income
is counted.
Example: Irregular
Earned Income That Cannot Be Anticipated:
Dave applies for assistance on November
5th. He works on-call for the city shoveling snow during the winter,
but has not worked nor received any income in November. Since it
cannot be reasonably anticipated when snow will fall, when he will be
called into work, or when income from this source will be received, income
from this source cannot be included in his estimate of income.
603-1 E. SELF-EMPLOYMENT INCOME
For policy on determining self-employment income, see MS 605-2D.
603-1 F. VERIFICATION OF INCOME
All countable income available to the household must be verified. Verification obtained must be documented in the Case Notes (CANO). Income can be verified using check stubs, written or oral statements from the source of the income, or data interface information. For self-employment income verification, see MS 605-2D(4).
Pay stubs are the primary source of verification for earned income. Occasionally pay stubs are not available because the individual may have just started work and have no pay stubs, or may have lost some or all of the stubs. In these circumstances, verification of the individual’s income is obtained from the employer, either by phone or an employment statement completed by the employer.
603-1 G. DOCUMENTING HOW THE CASEWORKER DETERMINED MONTHLY INCOME
Good documentation is an essential part of establishing how the household's eligibility was determined. In every situation, the caseworker must document:
Any anticipated changes in the income and what effects, if any, the changes have on the estimate of income.
The source, amount, and frequency (when it is received and how often, i.e., pay period start and end dates and pay dates) of the household’s income, and how this information was verified.
The method used by the caseworker to estimate the monthly income. This must include the reasons certain payments were used or not used in calculating an average payment. This is a key part of documenting self-employment and irregular income where client statements often become part of the verification.
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