ACA Income Methodologies 510-03-85-13

(Revised 10/1/2024 ML #3861)

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The following income methodologies will be used in determining income eligibility for individuals eligible under ACA Medicaid:

  1. Income is based on household composition, tax filer rules, and who resides with the individual.
  1. Monthly income is used prospectively.
  1. Current, point in time income is used—prospecting reasonable expected changes.

 

Married couples, who file their taxes jointly, must be included in each other’s households, even if they are not residing together. This includes situations where one of spouses is incarcerated.

Note: The incarcerated spouse is not eligible for Medicaid.

 

Income of most children NOT expected to be required to file a federal income tax return is considered as follows:

  1. A tax dependent CHILD’s income does not count in a tax filer’s parents or caretaker’s household if the child is not required to file a tax return.
  1. A tax dependent CHILD’s income does not count in the child’s household, IF the tax filer parent or tax filer caretaker is in the child’s ACA Medicaid household.
  1. If the tax filer parent or tax filer caretaker is NOT in the child’s ACA Medicaid household, the child’s income DOES count in the child’s household. (e.g. the child is in (non-IV-E) foster care).
  1. If the child is not required to file a tax return, however, files a return in order to get a refund of taxes withheld, that child’s income is NOT counted in either the tax-filer’s or the child’s household.

 

If the child IS required to file a tax return, the child’s income is counted in all the households in which the child is included.

Filing requirements change every year and this information may be found in the instructions for Form 1040 at http://www.irs.gov.

 

In determining whether a child has to file income tax:

  1. If a child has income other than SSA benefits, the child must file if their unearned income (excluding child support) exceeds $1250 annually.
  1. The TAXABLE portion of the child’s Social Security (SSA) benefits must be considered. Normally, only 50% of the SSA benefit is subject to taxation.

SSA benefits are only taxable to the extent that 50% of the SSA benefit PLUS the individual’s other income exceeds $25,000. The child’s TOTAL yearly income minus half of the SSA income would have to be more than $25,000 to be taxable; and then only the excess over $25,000 would be taxable.

If the child’s only income were SSA income, the monthly benefit would have to be over $4,166.67 per month to be countable, and over $4,333.33 to require filing a tax return.

Example: A child, age 17, receives $480 per month in Social Security survivor benefits. In addition, the 17 year old is employed and earns approximately $1000 per month. The child is claimed as a dependent on his parent’s tax return.

Based on the child’s earned income, he is required to file a tax return. However, his SSA benefits are not taxable as his earnings of $12,000 for the year plus 50% of the SSA benefits ($2,880) do not exceed $25,000.

 

Non-recurring and recurring lump sum payments of income not identified as Disregarded Income in section 510-03-85-30, count only in the month received.

 

Qualified Lottery and Gambling Winnings

Winnings received from a sweepstakes, lottery, or pool from gambling.

  1. Winnings equal or greater than $80,000 are counted as income over multiple months for the individual receiving the winnings.

    • The lottery and gambling winnings are only counted in the month received in determining eligibility for the other household members.

  1. Self-Attestation may be accepted before requesting documentation from the individual.

Note: Non-cash prizes are not included and continue to be counted as a lump sum income in the month received.

  1. Undue Hardship

    The individual who has lost or is denied eligibility due to qualified lottery and gambling winnings may request an exemption for undue hardship.

    • The department will apply a hardship exemption if the individual can demonstrate that counting the lottery or gambling winnings may deprive the individual of medical care to the extent that the individual's health or life would be endangered.

    • The undue hardship request must be made within 90 days from the loss or denial of coverage.

    • The request must be submitted to the Medicaid Eligibility Policy Unit who will review and determine if the undue hardship exists.

    • If the request is denied, the individual may request an appeal to North Dakota Health and Human Services.

     

Calculating "self-employment" Income

The most recent income tax forms must be requested from individuals who are self-employed. If the individual provides their most recent income tax forms, the information will be used to determine their countable self-employment income IF it is indicative of what the income will be for the current year.

 

When a self-employed individual has not filed their taxes or the business is newly established, there are no federal income tax forms to use. In this situation, the household needs to submit copies of their ledgers, receipt books, etc. The county agency and self-employed individual will use the best information available to determine the countable income as defined in #1 through #8 below, minus allowable expenses identified in section 510-03-85-35, Income Deductions.

 

Net earnings or losses from self-employment as considered for income tax purposes are counted for ACA Medicaid households.

NOTE: Losses from self-employment can be used to offset other countable income.

  1. Using the amount from the line on the income tax forms titled ' Adjusted Gross Income (AGI)’;
  1. Subtract any amount in the line titled ‘Wages, salaries, tips, etc.’, as current, point in time income is used.
  1. Subtract the amount in the Capital Gain line, if Capital Gains are not expected to recur. (If they are expected to recur, do not subtract them).
  1. Subtract the amount in the ‘Taxable refunds, credits, or offsets of state and local income taxes’ line as these are ONLY countable in the month received.
  1. Subtract any scholarships, awards, or fellowship grants used for education purposes and not for living expenses, IF they are included in the ’Adjusted Gross Income’.
  1. Add tax-exempt interest;
  1. Add tax-exempt Social Security income (determined by subtracting the taxable amount of Social Security Benefits from the total amount.)