Income Verification and Budgeting

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Income Verification and Budgeting
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Income Verification and Budgeting
Introduction

• This training session will provide details about
  Income Verification and Income Budgeting Methods.
  
• Policies apply to both Family Medical and ED
  Medical programs. We will identify when there
  are differences between the program rules.

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Income Verification and Budgeting
Agenda

• Lesson 1 Introduction to MAGI
• Lesson 2 Tiered Verifications
• Lesson 3 Non-MAGI
• Lesson 4 Income Budgeting Policy Updates
• Lesson 5 Reasonable Compatibility
• Lesson 6 Earned Income
• Lesson 7 Unearned Income
• Lesson 8 Self-Employment
• Lesson 9 Prior Medical

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Income Verification and Budgeting
Lesson 1 Introduction to MAGI

• Forget everything you know about determining
  family medical households and income. The
  introduction of MAGI medical determinations
  changes every aspect of how eligibility is
  determined.
•  
• For example, with MAGI
• Individual Budgeting Unit
• Who Can Apply
• Income
• Expenses

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Income Verification and Budgeting
Lesson 1 Introduction to MAGI
What medical determinations use MAGI?
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Income Verification and Budgeting
Lesson 1 Introduction to MAGI
With the MAGI rules, who can apply is based on
tax dependency instead of relationships.   With
MAGI, an individual may apply on behalf of his or
her tax dependents regardless of relationships.
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Income Verification and Budgeting
Lesson 1 Introduction to MAGI
Under MAGI, determinations are no longer based on
a single household assistance plan. Each
applicant receives an individual determination
using an individually determined household and
income amount.
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Income Verification and Budgeting
Lesson 1 Introduction to MAGI
Countable income for MAGI is based on tax rules.
In most situations, if income is taxable it is
counted in the eligibility determination if the
income is not taxable it is exempt (with a few
exceptions).   There is also new policy on what
information must be verified for income and what
information can be accepted from interfaces.
  In a MAGI determination there are no expense
deductions for earned income or for dependent
care costs. These expenses are built into the FPL
for Kansas.
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Income Verification and Budgeting
Lesson 1 Introduction to MAGI gt Summary

• That completes Lesson 1. In this lesson, we
  reviewed
• MAGI
• Non-MAGI
• Next, we will discuss Tiered Verifications.

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Income Verification and Budgeting
Agenda

• Lesson 1 Introduction to MAGI
• Lesson 2 Tiered Verifications
• Lesson 3 Non-MAGI
• Lesson 4 Income Budgeting Policy Updates
• Lesson 5 Reasonable Compatibility
• Lesson 6 Earned Income
• Lesson 7 Unearned Income
• Lesson 8 Self-Employment
• Lesson 9 Prior Medical

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Income Verification and Budgeting
Lesson 2 Tiered Verifications

• Verification of information needed to determine
  eligibility is based on a tiered verification
  approach. There are four tiers of verification.
  There is a hierarchy among the tiers meaning that
  Tier 1 should always be used when available Tier
  2 should be used when Tier 1 is not available and
  so on.

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Income Verification and Budgeting
Lesson 2 Tiered Verifications
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Income Verification and Budgeting
Lesson 2 Tiered Verifications
All verifications must be used and/or requested
based on the tiered structure outlined in this
training session.
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Income Verification and Budgeting
Lesson 2 Tiered Verifications
Tiers provide a formal policy and hierarchy to be
used when verification is needed. Federal Law
requires that we use information available to us
through interfaces or other means prior to
contacting the applicant. For example, if wage
verification can be obtained through an
interface, such as The Work Number, it is not
permissible to request verification from the
applicant.
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Income Verification and Budgeting
Lesson 2 Tiered Verifications
Each tier is defined
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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 1

• Tier 1 - Payer Interfaces They are automated and
  are not verified manually by a user. Tier 1
  verifications come directly from the source.
  Examples of Tier 1 verifications include
• Citizenship and/or Identity verification through
  the Federal Hub
• Unemployment Compensation that is verified
  through an unemployment interface
• Social Security income that is verified through
  interfaces from the Social Security
  Administration
• KPERS payments verified through a state
  interface.

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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 1
If Tier 1 Verification is available, DO NOT
proceed to Tier 2, 3, or 4.
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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 2

• Tier 2 verifications are automated and are not
  verified manually by a user. Tier 2
  verifications come from interfaces, but do not
  come directly from the payer. Examples of Tier 2
  verifications include
• Wages verified through the Kansas Department of
  Labor (KDOL). KDOL wages were formerly known as
  BASI wages
• Wages verified through the Work Number.
• Electronic Verification of Vital Events (EVVE)
• KSWebIZ

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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 2
If Tier 2 Verification is available, DO NOT
proceed to Tier 3 or 4.
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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 2
Tiers 1 and 2 are automated. They seem similar,
but the key difference is the Source. UC can
be verified in Tier 1 because the source that is
paying provides verification. Tier 2
verifications are like a third party that gathers
information from the Source. For example, The
Work Number is not the Source that pays the
applicants wages but it can provide wage
verification.
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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 3
Tier 3 verifications are not automated. Tier 3
verification occurs when a worker reviews case
information, completes research, and makes
collateral contacts to verify the required
information.
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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 3
For example, if an applicant reports two jobs the
system may not be able to verify the income from
both jobs. It is possible that the Work Number
shows only one job, but KDOL shows two jobs.
This may prevent the system from automatically
using Tier 2 verifications and require the worker
to review the KDOL wages and confirm that they
verify the income reported by the applicant.
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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 3 gt Examples

• Examples of Tier 3 verifications include
• Reviewing the images for verification submitted
  with the application
• Interface data from Tier 1 or Tier 2 that
  requires a worker to resolve a discrepancy prior
  to using as verification
• Collateral contact or information from another
  agency
• Collateral contact from the employer or source of
  income. Contacting an employer is acceptable but
  we are not always able to contact employers. We
  have the option to contact the employer, but it
  is not a requirement.

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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 3
If Tier 3 Verification is available, DO NOT
proceed to Tier 4.
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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 4
Tier 4 verifications are not automated and are
used as a last resort when Tiers 1 3 are not
sufficient. Tier 4 verification occurs when
information cannot be verified through an
interface or through contacts other than the
applicant. On occasion, the applicant may be
contacted by phone but more commonly a letter
will be sent when Tier 4 verification is required
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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Tier 4 gt Examples

• Tier 4 verification examples include
• Tax Returns
• Pay Stubs
• Birth Certificates
• Immunizations
• Hard copy verifications

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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Federal Law

• It is FEDERAL LAW that we request consumer
  information only as a last resort.

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Income Verification and Budgeting
Lesson 2 Tiered Verifications gt Summary

• That completes Lesson 2 We have now
• Defined Tier 1Tier 4 Verifications
• Learned that Federal Law mandates us to request
  information from a consumer as a last resort.
• Next, we will discuss Non-MAGI.

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Income Verification and Budgeting
Agenda

• Lesson 1 Introduction to MAGI
• Lesson 2 Tiered Verifications
• Lesson 3 Non-MAGI
• Lesson 4 Income Budgeting Policy Updates
• Lesson 5 Reasonable Compatibility
• Lesson 6 Earned Income
• Lesson 7 Unearned Income
• Lesson 8 Self-Employment
• Lesson 9 Prior Medical

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Income Verification and Budgeting
Lesson 3 Non-MAGI
The Tiered Verifications discussed in Lesson 1
apply to both the MAGI and Non-MAGI populations.
There are also additional rules that apply to
the Non-MAGI, or Elderly and Disabled, groups.
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Income Verification and Budgeting
Lesson 3 Non-MAGI gt 2 groups
Reminder These are the Non-MAGI groups
The Non-MAGI group breaks down into 2 more groups
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Income Verification and Budgeting
Lesson 3 Non-MAGI gt LTC and Working Healthy

• Long Term Care, which includes institutional,
  HCBS, and PACE as well as Working Healthy
  programs will continue to follow the existing
  income/resource verification budgeting
  methodologies. 
• Income will be verified via one of the payer
  interfaces (SSA, KDOL Unemployment, KPERS). 
• All other reported income and resources will
  require verification from the applicant/recipient
  just as we do now.

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Income Verification and Budgeting
Lesson 3 Non-MAGI gt Medically Needy and MSP
The Medically Needy and Medicare Savings Program
(MSP), while still considered as non-MAGI
programs, will follow the new MAGI
verification/budgeting methodology.  Income
will be verified using the above-mentioned Tiered
approach, but continue to have their own
requirements for which income types are
countable/exempt, and what income is verified
with hard copy documents or other sources.
Resources will be verified by the
applicant/recipient just are they are now, except
for prior medical months.
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Income Verification and Budgeting
Lesson 3 Non-MAGI gt Combination Cases

• In a combination situation, where there are both
  MSP and LTC or WH, the more restrictive LTC/WH
  rules will be applied to all programs.

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Income Verification and Budgeting
Lesson 3 Summary

• That completes Lesson 3. In this lesson we
  reviewed
• Non-MAGI has two groups
• LTC and Working Healthy
• Medially Needy and MSP
• LTC and Working Healthy still require the same
  hard copy verifications as they have in the past.
  
• Medically Needy and MSP follow the MAGI
  verification rules.
• Income Budgeting Policies will be covered next.

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Income Verification and Budgeting
Agenda

• Lesson 1 Introduction to MAGI
• Lesson 2 Tiered Verifications
• Lesson 3 MAGI vs. Non-MAGI
• Lesson 4 Income Budgeting Policy Updates
• Lesson 5 Reasonable Compatibility
• Lesson 6 Earned Income
• Lesson 7 Unearned Income
• Lesson 8 Self-Employment
• Lesson 9 Prior Medical

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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates
Understanding Income Budgeting policy is
essential to correctly determining medical
eligibility. This training provides the detailed
information necessary to correctly budget earned,
unearned and self employment income. Income
changes, the budgeting method and Reasonable
Compatibility will also be covered in this
module.
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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates gt
Prospective Budgeting

• Income is prospectively budgeted based on what
  the household expects to receive beginning in the
  month of application. Prospective income is that
  which the household reasonably expects to receive
  going forward from the month of application.

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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates gt
Irregular Budgeting
When income is irregular (Example change in
employment, loss of job or unemployment stops)
the income is budgeted based on the situation
that exists at the end of the month. Then the
income that will be continuing into the future is
projected. When there has been a loss of income,
the lost income will not be included in budgeting
for a current determination.
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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates gt What
Happened Last
A key principle to use when budgeting income is
asking the question what happened last in the
month? What is current at this Point in
Time is considered what happened last. Lets
review some examples.
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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates gt
Example 1

• Applicant reports a job loss and unemployment
  started in the month of application.
• What happened last in the month?
• The Unemployment a monthly amount will be
  budgeted and used for the determination.
• Since the job is not going to continue in the
  future, it is not budgeted.

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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates gt
Example 2

• Applicant reports being hired for a new job.
  Current income is 0 and they are expected to
  start the new job in 6 weeks.
• What happened last in the month?
• At this point in time the income is 0. The
  job has not actually started, therefore, it
  cannot be used in the determination.

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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates gt
Example 3

• Applicant applies on the 5th and calls on the
  15th to report they started working.
• What happened last in the month?
• At this point in time the applicant has begun
  working, so their wages are prospectively
  budgeted.

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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates gt
Example 4

• Applicant applies on the 25th and reports just
  losing their job. Theyve received paychecks all
  month and will get their last check in the first
  week of the following month.
• What happened last in the month?
• At this point in time they are not employed.
  The income is 0.

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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates gt What
Happened Last
Always ask What Happened Last in the month when
budgeting income.
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Income Verification and Budgeting
Lesson 4 Income Budgeting Policy Updates gt
Summary

• In Lesson 4 we learned
• Income is budgeted Prospectively based on what
  the household expects to receive.
• When income is irregular, the income is budgeted
  based on what happened last in the month that is
  being determined.
• We will cover Reasonable Compatibility in our
  next lesson.

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Income Verification and Budgeting
Agenda

• Lesson 1 Introduction to MAGI
• Lesson 2 Tiered Verifications
• Lesson 3 MAGI vs. Non-MAGI
• Lesson 4 Income Budgeting Policy Updates
• Lesson 5 Reasonable Compatibility
• Lesson 6 Earned Income
• Lesson 7 Unearned Income
• Lesson 8 Self-Employment
• Lesson 9 Prior Medical

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Income Verification and Budgeting
Lesson 5 Reasonable Compatibility
If the applicants statement of income is deemed
reasonably compatible further verification cannot
be requested. Income amounts from both the
consumer and the sources are converted into
monthly amounts and then compared with the
reasonable compatibility test.
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Income Verification and Budgeting
Lesson 5 Reasonable Compatibility

• The Reasonable Compatibility income test is used
  for all medical programs with the exception of
  Long Term Care and Working Healthy.

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Income Verification and Budgeting
Lesson 5 Reasonable Compatibility gt Defined

• Income is considered reasonably compatible if
• The amount reported by the consumer is greater
  than the amount received from the data source,
• OR
• The amount reported by the customer is within 20
  of the amount received from the data source.

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Income Verification and Budgeting
Lesson 5 Reasonable Compatibility gt Example 1

• The amount reported by the consumer is greater
  than the amount received from the data source.
• Example If the applicant reports 1,000.00 in
  wages but no jobs are found through interfaces,
  1,000.00 will be counted.

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Income Verification and Budgeting
Lesson 5 Reasonable Compatibility gt Example 2

• The amount reported by the customer is within 20
  of the amount received from the data source.
• Example If the applicant reports making 800.00
  per month but the interfaces report 1,000.00 per
  month, 800.00 will be counted because it is
  within 20 of what was found in the interfaces.

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Income Verification and Budgeting
Lesson 5 Reasonable Compatibility gt Example 3

• The amount reported by the customer is within 20
  of the amount received from the data source.
• Example If the applicant reports making 600.00
  per month but the interfaces report 1,000.00 per
  month, the amounts are not reasonably compatible
  because there is a variance of 40 between the
  applicants statement and the interface findings.
  Further research will be required in this
  example.

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Income Verification and Budgeting
Lesson 5 Reasonable Compatibility

• Reasonable Compatibility is also applicable for
  other sources like pay checks or employer
  letters.
• When using interface data, the system will
  determine if the income is reasonably compatible
  with what the client has reported.
• When using other sources like paychecks, staff
  will use a special Excel worksheet to determine
  the reasonable compatibility.

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Income Verification and Budgeting
Lesson 5 Reasonable Compatibility gt RC
Calculator
Up to 4 different income types can be entered on
the Calculator at one time. Staff enter the
amount reported by the applicant and then the
amount verified. The Calculator will provide an
answer on whether or not the income is reasonably
compatible by displaying a Red No or Green Yes.
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Income Verification and Budgeting
Lesson 5 Reasonable Compatibility gt Summary

• In this lesson, we discussed
• Income is reasonably compatible when the reported
  amount is greater than the verified amount, or
  the reported amount is within 20 of the verified
  amount.
• When using interface data, the system will
  calculate whether or not the income is reasonably
  compatible.
• When using another source of data, such as pay
  stubs staff enter the information into the Excel
  tool Reasonable Compatibility Calculator.
• Now, well review Earned Income.

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Income Verification and Budgeting
Agenda

• Lesson 1 Introduction to MAGI
• Lesson 2 Tier Verifications
• Lesson 3 MAGI vs. Non-MAGI
• Lesson 4 Income Budgeting Policy Updates
• Lesson 5 Reasonable Compatibility
• Lesson 6 Earned Income
• Lesson 7 Unearned Income
• Lesson 8 Self-Employment
• Lesson 9 Prior Medical

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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification
Unless otherwise stated, all income MUST be
verified for MAGI and Non-MAGI determinations.
The Tier Verification policy discussed in Lesson
1 is used to verify income.
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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 2
Earned income does not have a Tier 1, payer
source level of verification. Therefore,
verification of earned income begins at Tier 2.
Use the following steps to verify earned income
when determining current eligibility.
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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 2

• This type of verification requires no action on
  the part of the worker as checking these external
  sources has already been completed automatically
  by the system. This automatic verification can
  occur with the following interfaces
• The WORK
• KDOL wage records (BASI)

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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 2
The WORK - Income details from the past 4
months will be returned if it is available. The
average of this income will then be evaluated
against reported income to identify if the income
is reasonably compatible. KDOL wage records
(BASI) - The most recent quarter of wages will be
identified and then divided by 3 to get to an
average monthly amount. This will then be
evaluated against reported income to identify if
the income is reasonably compatible.
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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 2

• If the reported income amount is reasonably
  compatible with either the income found in The
  Work or KDOL wages, the reported amount is
  automatically verified and will be used in the
  determination.
• Reasonable compatibility isnt required for both
  interfaces. Income is found to be reasonably
  compatible if found in only one interface.
• If the reported amount is NOT reasonably
  compatible, proceed to Tier 3 verification.

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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 3

• If income is not reasonably compatible with Tier
  2, staff will conduct research in the following
  order. Research includes
• Hard-copy Wage Verification
• The Work Number and/or BASI
• DCF Income Records
• Employer Contact

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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 3

• Existing Hard-copy Wage Verification The case
  file should be reviewed to determine if hard copy
  verification of income has been submitted.
  Examples of hard copy wage verification include
  paystubs or a statement from an employer.
• If at least 30 days of wages verification is
  provided, a prospective amount shall be
  determined and used in place of reported income.
  
• If partial verification is provided, a
  prospective amount shall be determined. Use
  whichever is greater converted monthly amount
  of paystubs, or monthly amount reported by the
  applicant.

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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 3

• The Work Number/BASI While The Work Number
  and/or BASI were not able to establish reasonable
  compatibility in Tier 2, the income details may
  be able to verify reported income. Staff shall
  access these interfaces and compare the results
  with what was reported.

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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 3

• Work Number Example If a consumer has more than
  one job, the Work Number may not be able to
  verify the wages for only one of the reported
  jobs making the income fail the initial
  reasonable compatibility test. The wage
  information found for the one job could still be
  used as Tier 3 verification.
• If partial verification is provided, a
  prospective amount shall be determined. Use the
  greater of the reported amount and the
  prospective amount.

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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 3
DCF Income Records if the most recent DCF
application was received within 3 months prior to
the month the medical application was received,
the DCF records can be used as verification. Use
the monthly income amount that is being budgeted
on the DCF case for the income type.
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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 3
Employer Contact staff may contact the
applicants employer in rare cases. If
verification is obtained, a prospective amount
will be used in replacement of the self
attestation. NOTE This is not required. A
worker may proceed to Tier 4 without contacting
the employer but should use this method of
verification when available.
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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 4

• The applicant shall be contacted only as a last
  resort when all other Tiers have failed to verify
  income. Applicants shall be directed to provide
  verification of the last 30 days of earnings and
  given at least 10 days to provide the
  information.
• Remember, it is FEDERAL LAW that we request
  consumer information as a last resort.

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Income Verification and Budgeting
Lesson 6 Earned Income gt Verification gt Tier 4

• If full verification is provided (30 days worth
  of income or more), a prospective amount shall be
  used to determine coverage.
• If partial verification is provided (Less than 30
  days worth of income), a prospective amount shall
  be determined. Used the greater amount between
  reported amount and prospective amount.
• If no income verification is provided, the
  consumer shall be denied for failure to provide.

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Income Verification and Budgeting
Lesson 6 Earned Income gt Summary

• In this lesson, we discussed
• Using the Tiers to verify earned income.
• Tier 2 verifications - The Work Number and BASI
• Hard copy verification, reviewing interfaces, and
  DCF income records as alternatives to verify
  income.
• Now, well review Unearned Income.

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Income Verification and Budgeting
Agenda

• Lesson 1 Introduction to MAGI
• Lesson 2 Tiered Verifications
• Lesson 3 MAGI vs. Non-MAGI
• Lesson 4 Income Budgeting Policy Updates
• Lesson 5 Reasonable Compatibility
• Lesson 6 Earned Income
• Lesson 7 Unearned Income
• Lesson 8 Self-Employment
• Lesson 9 Prior Medical

73
Income Verification and Budgeting
Lesson 7 Unearned Income gt
Unearned income types vary greatly. Depending on
the type of unearned income reported it is
possible to verify unearned income in any of the
four verification Tiers. The guidelines on the
following slide will help you identify how to
verify these varying types of income.
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Income Verification and Budgeting
Lesson 7 Unearned Income gt Tier 1 Payer
Interfaces

• The following payer interfaces are accessed
  automatically by KEES to obtain information about
  unearned income
• SSA
• KPERS
• KDOL Unemployment Compensation
• The amount verified from the payer interface will
  be used, regardless of the amount reported by the
  applicant.

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Income Verification and Budgeting
Lesson 7 Unearned Income gt Tier 3 Verification
There are no Tier 2 sources of verification for
unearned income. Therefore, if the income is not
available in Tier 1, the worker will conduct
research on the case file to determine if hard
copy documentation has been submitted by the
applicant.
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Income Verification and Budgeting
Lesson 7 Unearned Income gt Tier 4 Verification gt
MAGI Contact

• For MAGI, self attestation is used to verify
  unearned income not verifiable in Tiers 1-3 with
  the following exceptions
• SSA
• KPERS
• Unemployment
• Annuity Income
• Trust Income
• Contract sales
• Insurance Payments
• Oil Royalties Mineral Rights
• Railroad retirement
• These types of unearned income MUST be verified.

77
Income Verification and Budgeting
Lesson 7 Unearned Income gt MAGI vs. Non-MAGI
78
Income Verification and Budgeting
Lesson 7 Unearned Income gt Summary

• In this lesson, we discussed
• Unearned income could be verified with any of the
  four Tiers
• For MAGI self attestation is accepted for all
  but 6 types of unearned income.
• For non-MAGI, self-attestation is not accepted.
• In the next lesson, well discuss Self-employment
  Income.

79
Income Verification and Budgeting
Agenda

• Lesson 1 Introduction to MAGI
• Lesson 2 Tiered Verifications
• Lesson 3 MAGI vs. Non-MAGI
• Lesson 4 Income Budgeting Policy Updates
• Lesson 5 Reasonable Compatibility
• Lesson 6 Earned Income
• Lesson 7 Unearned Income
• Lesson 8 Self-Employment
• Lesson 9 Prior Medical

80
Income Verification and Budgeting
Lesson 8 Self-Employment gt IRS tax rules

• IRS tax rules are used to budget self-employment
  income.
• When a tax return has been filed - the countable
  amount of self-employment income is taken
  directly from the form.
• When a tax return has not been filed, or isnt
  representative the countable amount of
  self-employment income is obtained from the
  applicant through the use of a Self-employment
  Worksheet.

81
Income Verification and Budgeting
Lesson 8 Self-Employment gt Tax Return

• Use the following guidelines to verify Self
  Employment income
• The most current tax return that has been filed
  should be used.
• Tax Returns must include all personal schedules
  and attachments to be considered complete.
• If it is after April 15th and the applicant has
  not filed a tax return, the previous years
  return may be used if they have filed an
  extension with the IRS.
• NOTE We do not need a copy of the extension.

82
Income Verification and Budgeting
Lesson 8 Self-Employment gt Tax Return
Use the line identified below as the amount of
self-employment income that is budgeted.
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Income Verification and Budgeting
Lesson 8 Self-Employment gt Tax Return
When a loss is reported on the tax form, it is to
be treated as 0.00 income for the eligibility
determination. A loss from a business cannot be
deducted from another source of income, even if
the other source is another form of self
employment.
84
Income Verification and Budgeting
Lesson 8 Self-Employment gt Schedule C
85
Income Verification and Budgeting
Lesson 8 Self-Employment gt Schedule F
86
Income Verification and Budgeting
Lesson 8 Self-Employment gt Schedule E
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Income Verification and Budgeting
Lesson 8 Self-Employment gt SE Worksheet
When a tax return is not available or not
representative of the existing self-employment
income, rather than ask the applicant for copies
of their ledgers, a standard worksheet will be
used. Staff will send the applicant a
self-employment worksheet. The worksheet asks
the specific questions necessary to be able to
comply with IRS tax policies.
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Income Verification and Budgeting
Lesson 8 Self-Employment gt SE Worksheet
This form is mailed by the worker. The first
page is always mailed. Staff then choose the
remaining pages to include depending on the type
of self-employment income.
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Income Verification and Budgeting
Lesson 8 Self-Employment gt SE Worksheet
90
Income Verification and Budgeting
Lesson 8 Self-Employment gt SE Worksheet
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Income Verification and Budgeting
Lesson 8 Self-Employment gt SE Worksheet
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Income Verification and Budgeting
Lesson 8 Self-Employment gt SE Worksheet
The Self-employment worksheet will be required
to be completed and returned by the consumer.
Failing to provide the completed worksheet will
result in a denial.
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Income Verification and Budgeting
Lesson 8 Self-Employment gt SE Worksheet

• The Self-employment worksheet can be used in the
  following circumstances
• The tax return is no longer representative of the
  self-employment income. The reason for the
  discrepancy must also be clearly documented by
  the applicant and is only allowed when there is a
  definitive change in the amount of business. In
  this case, the tax return AND the self-employment
  worksheet are required to verify the applicant
  statement.
• It is a new business and a tax return has not
  been filed.
• It is an existing business, but the applicant has
  not (or will not) file a tax return.

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Income Verification and Budgeting
Lesson 8 Self-Employment gt Summary

• In this lesson, we discussed
• Self-employment income is budgeted using IRS
  rules.
• A tax return is the primary source of
  verification.
• If a tax return has not been filed or isnt
  representative of current income, the applicant
  is expected to complete a self-employment
  worksheet that lists the income and expenses.
• Our last lesson will address Prior Medical.

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Income Verification and Budgeting
Agenda

• Lesson 1 Introduction to MAGI
• Lesson 2 Tier Verifications
• Lesson 3 MAGI vs. Non-MAGI
• Lesson 4 Income Budgeting Policy Updates
• Lesson 5 Reasonable Compatibility
• Lesson 6 Earned Income
• Lesson 7 Unearned Income
• Lesson 8 Self-Employment
• Lesson 9 Prior Medical

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Income Verification and Budgeting
Lesson 9 Prior Medical
Income budgeting for prior medical determinations
is changing. Before deciding if actual income is
required, the applicant is asked to identify if
they had different circumstances in the prior
months. Note This policy applies to all of
the family medical programs and to the Working
Healthy (WH), Medically Needy (MN) and Medicare
Savings Programs (MSP QMB, LMB, ELMB). It
does not apply to the long term care programs
Institutional (nursing homes, hospitals,
psychiatric facilities, etc.), Home and Community
Based Services (HCBS), Money Follows the Person
(MFP), and Program of All-Inclusive Care for the
Elderly (PACE).
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Income Verification and Budgeting
Lesson 9 Prior Medical gt Reporting Changes

• The application asks the consumer to answer a
  series of questions if they want prior medical
  assistance. They are asked to identify if there
  have been any changes in
• Income
• Household
• Assets
• If the questions have been left blank staff must
  contact the applicant to obtain the answers.

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Income Verification and Budgeting
Lesson 9 Prior Medical
There are two separate paths for determining
prior medical income
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Income Verification and Budgeting
Lesson 9 Prior Medical gt Changes in the Household

• Use the following guidelines when budgeting prior
  medical income to identify if a change has
  occurred
• Have there been any changes in the household
  during the last three months? (People moving in
  or out) Examples include but are not limited to
• A financially responsible case person has moved
  in our out it is necessary to request actual
  income
• Any applicant moves in or out of the household

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Income Verification and Budgeting
Lesson Prior Medical gt Changes in Income

• Have there been any changes in the household
  income during the last three months? Examples
  include but are not limited to
• A job change has been reported in the last 3
  months
• A loss of income has occurred in the last 3
  months
• A new source of income has begun in the last 3
  months

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Income Verification and Budgeting
Lesson 9 Prior Medical gt Changes in Assets

• Have there been any changes in the household
  assets during the last three months? Examples
  include but are not limited to
• An asset is sold
• Applicant bought a car
• Reduction in bank account balance
• Closed a bank account

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Income Verification and Budgeting
Lesson 9 Prior Medical

• Consumers are asked to explain the changes that
  have occurred. Staff will evaluate the
  explanation provided by the consumer. Some
  changes reported by the consumer may not be
  changes at all. In these situations, the
  eligibility will be treated as if no change has
  been reported.

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Income Verification and Budgeting
Lesson 9 Prior Medical gt Types of Changes
Simply reporting a change in the prior period
does not mean verification and budgeting of
actual income will always be required. The
reported change must be in the rate of pay (ie
received a raise or pay cut) or the regularly
scheduled hours of work (ie weekly hours were
increased or decreased). Missing a few days of
work due to sickness or working some occasional
extra hours or overtime does not trigger this
change policy. The change must fundamentally
alter the expected income to be received.
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Income Verification and Budgeting
Lesson 10 Prior Medical gt Example 1
A 32 year old mother with 4 minor children
applies on 10/22/2013 for family medical
assistance, including prior medical. She reports
her only income is from her job at WalMart (30
hours/week at 10/hour, paid every Friday.) She
also reports that there has been no change in
income in the prior 3 months. Her current
reported income is verified through The Work
Number. Her converted monthly income of 1,290
(10/hr x 30 hrs/wk x 4.3 1,290) is budgeted
prospectively for 10/2013 on forward, and for
each month of the 3 month prior period (7/2013
thru 9/2013).
01/13 02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13
1,290 1,290 1,290 1,290 1,290 1,290
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Income Verification and Budgeting
Lesson 10 Prior Medical gt Example 2
A 73 year old single woman applies on 11/15/2013
for Medically Needy (MN) and Medicare Savings
Program (MSP) coverage, including prior medical.
Her reported income is Social Security of
1,083/month and 50/week she earns by cleaning
the church she attends. She also reports that
there has been no change in income in the prior 3
months.Her reported SSA income is verified
through the SSA interface and her current earned
income is verified through the Work Number. Her
monthly SSA income of 1,083 and converted
monthly earned income of 215 (50/wk X 4.3
215) is budgeted prospectively for 11/2013
on forward, and for each month of the 3 month
prior period.
01/13 02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13
1,083215 1,083215 1,083215 1,083215 1,083215
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Income Verification and Budgeting
Lesson 10 Prior Medical gt Example 3
A single mother with 2 minor children applies on
11/19/2013 for family medical assistance,
including prior medical. Her only reported
income is from a full-time job at Target (40
hours/week at 10.00/hour, paid twice a month).
She reports that there has been a change in
income in the prior 3 months she received a .25
cent/hour pay raise sometime in 08/2013.Her
current reported income is verified through the
Work Number. Her converted monthly income of
1,720 (10.00/hr X 40 hrs/wk X 2.15 X 2
1,720) is budgeted prospectively for 10/2013 on
forward. Since a change in income has been
reported in the prior 3 months, actual income
must be verified and budgeted for each of those
months. Paystubs were provided verifying
actual earnings for the prior period08/03/2013
936 09/03/2013 880
10/03/2013 88008/18/2013 780
09/18/2013 800
10/18/2013 960-------------------------
-------------------------
-------------------------
1,716
1,680
1,840
01/13 02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13
1,716 1,680 1,840 1,720 1,720
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Income Verification and Budgeting
Lesson 10 Prior Medical gt Example 4
A single father with 3 minor children applies on
10/1/2013 for family medical assistance,
including prior medical. His only reported
income is a full-time job as a mechanic at the
local garage (40 hours/week at 18/hour, paid
every other Tuesday). He reports that there has
been a change in income in the prior 3 months
he changed jobs (including missing 2 weeks of
work), but his scheduled hours per week and rate
of pay were the same in his old job. His
current reported income is verified through the
Department of Labor interface (reasonably
compatible). His converted monthly income of
3,096 (18/hr x 40 hrs/wk x 2 x 2.15 3,096)
is budgeted prospectively for 10/2013 on forward.
Even though he reports a change in income in the
prior 3 months, since it is not a change in
either rate of pay or scheduled hours of work, it
is not considered a change for budgeting
purposes. Since there is no change, the amount
of his verified current reported income will also
be budgeted for each of the prior 3 months.
01/13 02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13
3,096 3,096 3,096 3,096 3,096 3,096
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Income Verification and Budgeting
Lesson 10 Prior Medical gt Summary

• In this lesson, we discussed
• The method of budgeting prior medical is
  dependent upon whether the applicant has had
  changes in the prior three months.
• If no changes are reported, use the information
  budgeted for the current month and apply it to
  the prior months.
• If there are changes, request actual income for
  all three prior months.

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Income Verification and Budgeting
Wrap up

• That concludes the Income Verification and
  Budgeting Webinar.
• In this course, you learned about
• MAGI
• Tier Verifications
• MAGI vs. Non-MAGI
• Income Budgeting Policy Updates
• Reasonable Opportunity
• Earned Income
• Unearned Income
• Self-Employment
• Prior Medical

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Income Verification and Budgeting
Questions
111
Webinar is being Recorded

• A recording of this webinar will be available for
  those who could not attend the webinar.
• A link to the recording will be distributed to
  the RRAs and Regional Trainers to share with
  staff.