IM-181 December 16, 2019; IM-162 October 10, 2019; IM-146 September 27, 2019; IM-33 March 29, 2012; IM-88 December 23, 2009; IM-76 January 4, 1996 (1995 memo)
Gross unearned income is the total amount of all non-excluded, unearned income, including gross unearned income from income producing property minus any overhead expenses such as taxes and insurance. Evaluate the unearned income of the participant and spouse. Enter all types of income into the electronic record, including excluded income types.
Possible sources of unearned income include but are not limited to:
- Child Support payments received for a child not in the home- the portion not given to or used on behalf of the child is to be considered as unearned income to the applicant/participant.
- Child support
- Child support arrearages
NOTE: If a child in the home is receiving child support, budget the income to the child.
- Alimony payments including the following:
- alimony and
- alimony arrearages
- Interest income
- Property rental
- Income from stocks, bonds, investments, trusts
- Royalties, residual income
- Benefits received under Social Security Programs, such as Social Security Disability or Social Security Retirement or SSI
- NOTE: Payments from Social Security, SSI, Veterans Administration (VA), or Railroad Retirement Benefits (RRB) are sometimes reduced in order to recoup an overpayment. If funds are withheld from one of these sources to repay an overpayment of funds from the same source or from any current benefits received from Social Security, SSI, VA, or RRB, budget the amount of income that remains after the ongoing recoupment is deducted. Fully record details in the electronic record to explain the reduced amount of gross income.
EXAMPLE: Mr. Ross received an over payment of $300 on his SSI benefits. Mr. Ross is now eligible for SS of $830 per month. His current Social Security benefit is being reduced by $30 per month to repay the SSI overpayment. $800 is his countable Social Security amount.
Do not deduct from gross income funds withheld for federal intercepts such as Treasury Offset Program for unpaid taxes, or past due student loans, or other state or federal unpaid debts.
Social Security and/or SSI recipients with drug addiction or alcoholism (DA&A) as a factor contributing to their disability must have payments made through a representative payee. The representative payee is allowed to charge the individual a service fee when disability is based on DA&A. This fee is not an allowable expense for MHABD.
Fees charged by Public Administrators are not an allowable expense for MHABD.
- Veteran’s benefits compensation, and allowances; See 0815.030.05 Determining Adjusted Gross Income participants in vendor placements receiving a reduced VA pension.
- Worker’s Compensation awards
- Retirement pensions; also see number 39-Domestic Relations Orders
- Unemployment Compensation payments
- Railroad retirement benefits
- Contributions from relatives, friends, churches, clubs, etc., paid directly to the EU
- NOTE: Contributions paid on behalf of the participant or spouse to a third party are not considered unearned income.
- Real or personal property when sold on a time payment plan, if the unpaid balance does not cause ineligibility on resources. Consider the down payment (if any) as income in the month received. Include ongoing time payments as notes receivable.
- Aliens with sponsors. Income received from sponsors is to be counted in its entirety;
- Grants and scholarships for graduate students available for living expenses (grants and scholarships minus school expenses). This does not apply to undergraduate students.
- Allotments including:
- Allowances and allotments from members of the armed forces
- Military allotments
- Community spouse allotments
- Blind Pension
- Supplemental Aid to the Blind
- Refugee Cash Assistance
- PTD State Supplemental Payment
- Welfare payments from another state
- Agent Orange Veterans benefits
- Black Lung benefits
- Payments held in trust by Secretary of Interior for Indian Tribes
- Military retirement
- Disability benefit
- Strike benefits
- Severance payments received from an employer when an employee’s job is terminated
- Subsidized employment
- Cash gifts, gift cards that are not store specific, received on a regular basis and can be anticipated
- Lottery/gambling income
- Incentive payments to encourage activity
- Representative payee payments not given to the beneficiary
- Notes receivable
- Non bona fide loans
- Nursing home insurance income – Consider payments from long term care insurance policies as income.
- Domestic Relations Orders-26 USC 414(p)-A domestic relations order (DRO) is not a type of income; it is a court ordered division of property granting a spouse or dependent (alternate payee) ownership of certain property or portions of property owned by married individuals in the event of a divorce. Property becomes a resource to whomever is awarded the property or portion of property as a result of a DRO. Any income generated by the property belongs to the individual who owns the property after the divorce.
DROs can require pensions and other retirement plans to be treated as property during divorce proceedings; the right to receive all or part of the benefits of a plan participant’s retirement plan can be awarded to an alternate payee. Generally, DROs specify the amount or percentage of the plan participant’s retirement benefits to be paid to the alternate payee.
Note: A qualified domestic relations order (QDRO) is a common type of DRO utilized by non-government employers.
DROs may be subject to certain state laws and specific provisions that govern how they are administered. In addition, the terms of the retirement plan may affect the administration of the DRO. Below are some examples of details that may differ among DROs.
- Plans may state that payments to the alternate payee will cease upon the death of the plan participant unless certain conditions are met.
- Cost of living increases may not be included for an alternate payee.
- The percentage of benefits to which the alternate payee is entitled may be limited.
Example: Plans for Missouri State employees limit an alternate payee to 50% of the plan retirement benefit.
Note: Missouri State employees are subject to a DRO known as a Division of Benefits Order. RSMo 104.312.
- Plans may or may not allow an alternate payee to receive a benefit prior to when the plan participant begins to receive a benefit from the plan.
Funds divided as a result of a DRO are paid by the retirement plan directly to the plan participant and alternate payee as if both were plan participants.
For the retired plan participant, count the gross amount of the retirement benefit that remains after the portion payable to the alternate payee is deducted.
For the alternate payee, count the gross amount of his/her portion received from the retirement plan.
Example: Jack and Diane divorced in 2008. Jack is a State of Missouri employee and a Division of Benefits Order awarded Diane 50% of Jack’s future pension as part of the divorce. Jack retired from the State in December of 2018. His full pension amount is $2000 per month; he begins to receive $1000 countable monthly pension in January 2019. Although Diane retired 2 years ago, she becomes eligible for $1000 in countable monthly pension in January 2019.
Example: Miranda’s years of service entitle her to a $2400 monthly pension from the Sunflower Farms Retirement Plan. As a result of a divorce, her pension is subject to a QDRO that stipulates her ex-spouse (alternate payee), Jeff, is entitled to 25% of her pension, or $600 per month. Miranda’s countable monthly pension income is $1800. Jeff’s countable monthly pension income is $600.
Benefits paid to a child or other dependent (not an ex-spouse) as a result of a DRO are budgeted to the child or other dependent, although those benefits are taxed to the plan participant.
Note: Do not consider DROs in the same manner as alimony, also known as maintenance or spousal support. An alternate payee receiving income as a result of a DRO receives the income as if s/he was the retirement plan participant. Under a DRO, there is no obligation on the part of one spouse to pay another spouse on a regular basis, as is normally the case with a maintenance order.
Example: Howard receives a $2400 monthly pension Sunflower Farms Retirement plan. He is divorced and in the terms of his divorce, he is ordered to pay his ex-spouse, Jamie, $600 per month in alimony. Howard’s countable monthly pension is $2400. Jamie’s countable monthly alimony is $600.
- Foster Care income-countable only to the participant for whom it is received.