MEMORANDUM

DISCUSSION:

The purpose of this memorandum is to clarify when Social Security (SSA) income of children under age 19 is included or excluded to determine eligibility for MAGI programs in the Missouri Eligibility Determination and Enrollment System (MEDES).

Count a child’s income only when that child must file taxes on the 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. In 2014 the threshold is $25,000 (the threshold may change annually).

The current formula for calculating taxable SSA income of a child is:

1. 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.
2. Include the full amount of any lump-sum SSA benefit payments received in current tax year.
3. Total 1. and 2. above, then divide in half.
4. Add any taxable pensions, wages, interest, dividends, and other taxable income.
5. Compare this total to $25,000.
   1. If total is under $25,000, the child’s SSA income is considered non-taxable and is EXCLUDED in the MAGI household income.
   2. 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.	+ 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.	+ 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.

If MEDES counts a child’s SSA income when it should be excluded:

1. Enter zero (0.00) as income amount;
2. Add a comment to the primary person page and on the income evidence;
3. Authorize the case;
4. Send an incident report to https://support.engagepoint.com/Missouri/.

If MEDES does not count a child’s SSA income when it should be included:

1. Run the MAGI calculator to determine household eligibility;
2. Add a comment to the primary person page and on the income evidence;
3. Do not authorize the case;
4. Enter coverage request on emergency spreadsheet and send to FSD.MEDES@dss.mo.gov with a subject line of “Eligibility”;
5. Send an incident report to https://support.engagepoint.com/Missouri/.

NECESSARY ACTIONS:

• Review this memorandum with all appropriate staff.

AC/tb