Projection is defined as anticipation of the income and circumstances that will exist during the certification period.
To project income:
- Consider all factors to most accurately reflect the amount of income to be received in present and future months.
- Discuss with the household any expected or predictable changes in income and expenses, such as:
- how long with the present employer
- hours worked (whether regular or irregular hours, overtime, etc.)
- wages received (whether a steady rate, piece work, commission, etc.)
- recent raises or promotions
- anticipated raises or promotions
- recent or anticipated layoffs
- Use income received in the past 30 days as an indicator of the income that is and will be available to the household during the certification period.
- Do not use past income as an indicator of projected income for the certification period if changes in income have occurred or can be anticipated.
- Arrive at a mutually agreed upon projection of the current income and expenses.
- Do not vary monthly income for household receiving state or federal assistance payments (such as Temporary Assistance or SSI) on a recurring basis because mailing cycles may cause two payments to be received in one month and none the next.
- Budget the projected monthly income and expenses.
- Record the basis and method used for determining the amount of monthly income budgeted.
As a result of anticipating income, the household’s allotment for the month of application may differ from its allotment in subsequent months.
Use guidelines to project monthly income as stated for each of the following situations:
- Contract or Self-Employment
Mutually agree upon a period of past time that provides the most accurate indication of future income if income changes noticeably from month to month. Under these circumstances, a two month time period is recommended although a shorter or longer time period may be used to provide a better projection of income.
Note: If income fluctuates seasonally, it may be appropriate to use the most recent season comparable to the certification period, rather than the 30 days as one indicator of anticipated income. Exercise caution in using income from a past season as the income may fluctuate from one season to the next.
For income that varies with no set pattern and is expected to continue in this manner, review the participant’s income for at least the past 30 days and discuss anticipated changes to hours worked or rate of pay to project the monthly amount of income to be budgeted. If no change in rate of pay has occurred or is expected and all pay periods being used are indicative of the applicant’s income pattern, average wages for several pay periods to project income. When a change in rate of pay has occurred or is anticipated, use the average number of hours worked times the new rate of pay to provide the best projection of income.
If the participant works the same number of regular hours each pay period but began working various amounts of overtime prior to the application, determine with the participant if overtime is expected to continue. If the overtime is expected to continue, count it in the income projection. If the participant does not expect the overtime to continue, discuss with the applicant why the change is expected.
When a reasonable explanation is provided and the overtime is now stopping, budget the overtime as irregular income; and the eligibility system will not count the overtime in the income calculation. When contacting an employer to verify overtime, ask if there is an anticipated change in overtime being offered. As a rule, employers cannot anticipate how much overtime an individual will work, however, they will know if there is some change in business and whether or not they will be offering more or less overtime to their employees or certain groups of employees.
When a household reports income from a new source, determine the following information per pay period:
- Number of hours the individual will be working
- Rate of pay
- Frequency of pay
If a participant has just started employment, staff must carefully evaluate the information available from the employee; and if possible, obtain information from the employer. Staff must compare the employment information with the participant’s statements during the interview, taking into account any differences between a possible training period and regular working conditions, to determine the projected income amount.
Contract or Self Employment Income
For households that earn income by contract or self-employment in a period of time shorter than one year, average income over the appropriate time period, provided the income is not received on an hourly or piece-work basis. Staff should select the appropriate pro-ration method corresponding with the time period in which the income is received. These households may include school employees, sharecroppers, farmers, and some self-employed households.
Note: These provisions do not apply to migrant or seasonal farm workers. Refer to 1115.040.15 Computing Averaged Self-Employment Income and 1115.050.00 Farm Worker Employment Income for procedures for averaging self-employed income and income for migrant or seasonal farm workers.
As determined by reviewing verification of past income and discussion with the participant, income is stable when a household has:
- A regular weekly or monthly salary
- Infrequent and unpredictable overtime; or conversely
- Infrequent and unpredictable work days missed do no alter the certainty of the employment situation
Examples of projecting income:
Example 1: Mrs. Green is employed temporarily for AAA Employment Agency. Mrs. Green usually works every week, but her days and hours worked vary weekly. After a discussion, Ms. Green agreed that her past 5 pay periods are a good indication of her regular income as her hours vary week to week. Mrs. Green states she receives a wage stub weekly, but she has not saved them. After unsuccessfully attempting to contact the employer with Mrs. Green, staff generates a Request for Information allowing 10 days for her to provide the agreed upon 5 wage stubs. Mrs. Green provides the wage stubs prior to the 30th day, and staff use the wage stubs provided and project income based on discussion with Mrs. Green.
Note: In this example, Mrs. Green has the ability to provide wage verification. If due to circumstances beyond her control she is unable to provide wage verification, project income based on the discussion with Mrs. Green.
Example 2: Mr. Cook works as “casual labor” for a trucking company and is paid in cash. Mr. Cook’s work pattern varies each week, and he is paid by the job rather than by the hour or day. Mr. Cook has no record of his past income and the employer is not willing to provide wage verification for “casual labor”. Discuss patterns of income for at least the past 30 days and anticipated changes (e.g. busy season) to arrive at a mutually agreed upon projection of earned income. Advise Mr. Cook to keep his own record of earnings and report when his earnings exceed 130% of poverty.
Example 3: Ms. Smith works a regular 40 hours per week at the local factory for the past three years doing piece work. Her income varies from pay period to pay period depending on her production. No changes are expected in the piece work rate of pay or in the hours worked. After a discussion with Ms. Smith regarding variations in her earnings over the past several months, it is determined that eight pay stubs would prove the best projection of anticipated income. Document the use of eight wage stubs to adequately evaluate the income fluctuations.
Example 4: Mrs. Barry has worked at a department store for the past two years. Her income varies from pay period to pay period due to hours worked. A discussion regarding anticipated changes in income reveals that Mrs. Barry’s rate of pay will change from $17.25 to $18.25 per hour for the next pay period, which was later verified by her supervisor. In discussing what would best represent her income, Mrs. Barry indicates that five pay periods would be the best representation of her hours worked and information from the past 30 days supports this. When the last five wage stubs are provided, multiply the hours on each check by the new rate of pay $18.25 per hour. Record why five wage stubs were used to project income, and that the projection includes the participant’s new rate of pay.
Example 5: Ms. Johnson works as a clerk in an insurance firm. Her regular rate of pay is $18.00 per hour. However, for the past four months she has been working overtime during each weekly pay period. Ms. Johnson states she expects the overtime to continue. Staff determines, through discussion with Ms. Johnson, that the past two months’ pay periods best represent wages she anticipates receiving. Two months after approval, Ms. Johnson, calls to report that she is no longer working overtime. The employer verifies this, and the case is updated.