IM-14, March 08, 2021; IM-148, October 30, 2020; IM-92, June 18, 2020; IM-146, September 27, 2019; IM-101, July 3, 2019; IM-91, June 07, 2019; IM-124; September 12, 2017; IM-73, November 4, 2016; IM-45, July 18, 2016; IM-32, June 07. 2016, IM-97, November 9, 2015
Enter all income types into the eligibility system. Enter gross amounts of most income types into the eligibility system. Some exceptions* are listed below.
Types of included or countable income under MAGI methodology include but are not limited to:
- Wages, salaries and tips (use eligibility system functionality to consider pre-tax deductions. Refer to 1805.030.20.15 Allowable Deductions and MEDES guides, Verifying Income Deductions and Income and Deductions Evidence Frequency Updates.)
NOTE: Crypto-currencies and digital currencies such as Bitcoin received as payment are treated in the same manner as wages
- Severance pay
- Foreign earned income
- Interest, including tax-exempt interest
- *Self-employment income (minus allowable expenses, including depreciation)
- *Farm income (minus allowable expenses, including depreciation)
- *Fishing Income (minus allowable deductions, including depreciation)
- Fishing income is income from commercial fishing or from farming fish and/or other aquatic life.
- Fishing income is reported on a Schedule C, Profit or Loss from Business.
- *Net capital gains (profit after subtracting capital losses)
- Interest and dividends
- *Some investment income, such as trusts and annuities.
NOTE: These will be reviewed by MHN Program and Policy and/or Division of Legal Services staff and the response will include a decision on whether or not the income is countable for MAGI programs. Prior to processing the eligibility determination, the following must be sent with a Request for Interpretation of Policy (IM-14) through the normal supervisory channels:
- All trusts, including the “Schedule A” and an itemization of the assets used to fund the trust.
- All annuity contracts, including the annuity contract application.
- Unemployment compensation
- Rental or royalty income
- Other taxable income such as canceled debts, court awards, jury duty pay not given to an employer, and cash support
- Lottery and Gambling Winnings
- Winnings paid in installments are treated as any other recurring income
- “Qualified lottery winnings” which are paid out in a single payout are counted in the month received for any possible spouse and/or child of the individual who received the winnings. See Appendix J for how this is counted for the individual who received the winnings.
NOTE: Self-attestation is an acceptable verification for lottery and gambling winnings.
EXAMPLE: DeAnn, her husband Larry, and son Daniel are all receiving MO HealthNet for Families when DeAnn receives a qualified lottery winning in the amount of $125,000 paid out all at once in June. This amount will be countable for Larry and Daniel in June. Per Appendix J, this amount will be countable for DeAnn for 6 months.
NOTE: Individuals may qualify for an exemption for lottery or gambling winnings due to “undue medical or financial hardship” – send these cases on an IM-14 for MHN Program and Policy to determine whether an exemption exists.
- Alimony (including arrears) from divorces and separations finalized before January 1, 2019.
- Most retirement benefits, including Railroad Retirement and other pensions; also see Domestic Relations Orders below.
- Grants and Scholarships for living expenses
- Disability Benefits from short or long-term disability plans
- If plan premiums are paid by the covered individual, payments from the plan to the covered individual are not countable/excluded income.
- If plan premiums are paid by the covered individual’s employer, payments from the plan are countable/included income.
- Income from boarders or lodgers
- Income from a child when the child is the only person in his/her MAGI-based household regardless of whether or not the child’s income exceeds the filing threshold.
EXAMPLE: Sally, who works a part time job and has income under the tax filing threshold, lives with her grandmother, Judith. Her parents are not living in the home, nor do they claim her as a tax dependent. Sally’s income is countable for her MAGI household.
EXAMPLE: Riley receives $1,405 in SSA a month and lives with her grandfather, Bill. Her parents are not living in the home, nor do they claim her as a tax dependent. Riley’s SSA is countable for her MAGI household.
- Social Security benefits, regardless of whether they are considered taxable or non-taxable income for federal tax purposes.
- Do not include any amount that is recouped by Social Security Administration due to an overpayment of Social Security benefits.
NOTE: Supplemental Security Income (SSI) is not the same as Social Security Administration benefits (SSA). SSI is not included as income.
The Internal Revenue Service (IRS) excludes SSA income for children until it reaches a formulaic threshold in combination with the child’s other income sources. The threshold is currently $25,000.
- The current formula for calculating taxable SSA income of a child is:
- Start with the amount from box 5 of a child’s Form(s) SSA-1099 and RRB-1099 (if more than one form is received, combine the amounts from box 5). This amount can also be calculated by multiplying the monthly SSA amount by the number of months SSA was received in that tax year.
- Include the full amount of any lump-sum SSA benefit payments received in current tax year.
- Total 1 and 2 above, then divide in half.
- Add any taxable pensions, wages, interest, dividends, and other taxable income.
- Compare this total to $25,000.
- If total is under $25,000, the child’s SSA income is considered non-taxable and is EXCLUDED in the MAGI household income.
- If total is over $25,000, the child’s SSA income is considered taxable and is INCLUDED in the MAGI household income.
EXAMPLE: Child receives SSA of $1405 per month. The child started receiving SSA two years ago, and did not receive a lump sum during the tax year. The family was not able to provide the SSA-1099. The child has no other income.
|Determine annual SSA income||$1,405 x12 = $16,860|
|Include the full amount of any lump-sum SSA benefit payments received in current tax year.||+ $0 zero (No lump sum received in tax year.)|
|Divide in half.||($16,860 + 0)/2=$8,430|
|Add any taxable pensions, wages, interest, dividends, and other taxable income.||+ $0 zero (No additional pensions, wages, interest, etc. received in tax year.)|
|Compare to $25,000||$8,430 is under $25,000 so the child’s SSA income is EXCLUDED in MEDES.|
- Compensation in lieu of wages/bartering defined as an exchange of property or services.
- Include as income the fair market value of property or services received in bartering at the time received.
- The value of the services must be agreed on ahead of time.
- The value will be accepted as fair market value unless the value can be shown to be otherwise.
- Generally, this income is reported on a Schedule C or Schedule C-EZ (Form 1040).
EXAMPLE: Applicant works at the front desk of a hotel in exchange for a room to stay in at the hotel. The applicant and the manager of the hotel agreed that the weekly rate for the hotel room was $380.00 and that the applicant was to work 40 hours per week in exchange for the room. The $380.00 is considered compensation in lieu of wages/bartering and is included as the weekly income source for the applicant.
- Domestic Relations Orders (DRO)-A DRO is not a type of income, but a court ordered division of property granting an alternate payee ownership of certain property or portions of property, such as a pension or retirement plan. See 0805.015.30 Unearned Income for more information.
- Net Operating Loss (NOL) and carryover as a negative income:
- The NOL is a loss from operating a business that can be carried over to future years. This is considered a negative income and it can be applied to future years indefinitely (as allowed by the IRS, see IRS Publication 536).
- This is shown as a negative figure on the “Other income” line on IRS Form 1040, Schedule 1 and must include an attached statement regarding how the NOL was determined.
- The NOL can be claimed as negative income for multiple years until the loss amount is exhausted. This can carryover to future years, even if the self-employment income has ended, and should be verified annually with IRS Schedule 1 and a statement regarding the year of the NOL, how the NOL was computed for the current tax year, the amounts that have been claimed for previous tax years, and the amount that will be remaining. If multiple NOL negative incomes are being claimed, statements must be included for each one.
EXAMPLE: Mr. Spears owns a farming business and has a $5,000 NOL for 2016. Mr. Spears claims negative income on his tax return: $1,300 NOL for 2017, $980 NOL for 2018, and $1,125 NOL for 2019. Mr. Spears has $1,595 NOL that he can apply as a deduction for future years. Mr. Spears closed his farming business in 2018, but he continues to claim this NOL as a carryover negative income for future tax years until the NOL is exhausted. Mr. Spear must provide verification of the NOL negative income.
If evidence exists to indicate an income should not be taxable, submit a Request for Interpretation of Policy (IM-14) with supporting documents through normal supervisory channels.
Refer to the Electronic Verification System manual for information on electronic data sources.