Verification of Income

All Minnesota Health Care Programs require verification of income.

Generally, the client is responsible for providing income verification. However, county agencies and MinnesotaCare Operations have limited access to different electronic income verification sources. Where appropriate, obtain verification from electronic data sources. If verification is not provided by the client and electronic data sources are not available, obtain the client’s written consent to request verification from a third party.

See Obtaining Verifications for more information.

MinnesotaCare.

Verification Requirements

Wage Income.

Self-Employment Income.

Seasonal Income.

Unearned Income.

Medical Assistance (MA) Method A, MA Method B, Medicare Savings Programs.

General Provisions.

Tax Forms Submitted.

Self-Employment Income.

Seasonal Income.

Retroactive Coverage and Spenddowns.

MA for Employed Persons with Disabilities (MA-EPD)

Wage Income.

Self-Employment Income.

Royalties, Honoraria and Stipends.

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MinnesotaCare

Verify earned and unearned income at application and renewal.  

Exceptions:  Do not verify earnings of children under age 19 who are students.

Do not verify earned or unearned income of children applying for or enrolled in MinnesotaCare for Certain Children Exiting Foster Care or a Juvenile Residential Correctional Facility.

See Child Income.

Do not require verification that employment has stopped unless the information provided by the client is inconsistent with information the agency has on file. See Inconsistent Information.

Verification Requirements

Income verification must be reasonably compatible with the income information the client reports. Reasonably compatible means that the information provided by the verification source is generally consistent with the income reported by the client. Reasonably compatible does not mean the verification must identically match the reported income. Information that is reasonably compatible may vary depending on the circumstances.

Compare the income verification to the information the client reports to determine if it is reasonably compatible. Compare the employer(s), the reported income amounts, and any other relevant factors.

Do not consider a verification source to be reasonably compatible with the income reported by the client if the client disputes the accuracy of the income verification used or indicates the income verification does not reflect current income.     

Wage Income

Wage income can be verified with paper verification provided by a client or through an available electronic data source. Regardless of the source, wage income verification must be reasonably compatible with wage income reported by a client.

Verify wage income for MinnesotaCare in the following order:

1. Paper Verification.

Use any paper verification submitted with an application or renewal if the paper verification covers at least one full pay period and is reasonably compatible with wage income the client reports.     

Example:

Tim, a single adult, applies for MinnesotaCare and reports on the application he works at the Lakewood Hotel earning $2,100 every month. He states he has worked there for three years. Tim submitted one biweekly pay stub with his application.

Action:

Use the pay stub Tim provided. The pay stub indicates Tim earned $1,036 from Northwest Hospitality for the biweekly period. Even though the employer name does not match, Northwest Hospitality is likely the parent company of Lakewood Hotel. Both the name and the amount reported on the pay stub are consistent with what Tim reported on the application. consider the pay stub reasonably compatible with the wages Tim reported on the application and annualize the wage income reported on the pay stub. Do not request additional verification or use electronic verification sources to verify Tim's income. Tim's annual household income is $26,936 ($1,36 X 26).

Example:

Hubie and his wife, Ann, submit their renewal on July 6. They report Hubie works at the power plant and earns $900 per month. They also report Ann started a new job at the local flower shop on May 10 earning $475 per month. Hubie submits two nonconsecutive biweekly pay stubs to verify his wages. Ann submits two semi-monthly pay stubs to verify her wages.

Action:

Use the two nonconsecutive pay stubs to calculate Hubie's annual income. Hubie's two pay stubs are dated May 25 and June 22 and verify gross earnings of $410 and $425. The employer name listed on the pay stubs matches the name of the employer reported on the renewal. Though the two pay stubs are not consecutive, they are reasonably compatible with the income Hubie reports.

Ann's two pay stubs list the local flower shop as her employer. The pay stubs are consecutive but only one of the pay stubs reflects a full pay period. The pay stub received on May 31 reports a gross income of $108 for hours worked during the pay period of May 1 to May 15. Ann's second pay stub was received on June 15 and verifies a gross income of $242 for hours worked during the pay period of May 16 to May 31. Use Ann's second pay stub to calculate her earned wages because it is the only pay stub that reflects a full pay period and is reasonably compatible with income she reported on the renewal.

2. Electronic Verification.

Use available electronic sources to verify wage income if the submitted paper verification is not reasonably compatible with income reported by the client, or if no paper verification was submitted. The wage income reported by the electronic verification source must cover at least one full reporting period and be reasonably compatible with the wages reported by the client. If the client report wage income on the application or renewal but does not list an employer, contact the client to identify his or her employer.

Example:

Kim and her three children apply for MinnesotaCare on April 3. She reports two employers on her application. Kim's job at Foodstore Inc. ended in the last 30 days, but she remains employed at Tina's Salon where she has worked for two years earning $2,000 monthly. She provides only a pay stub for her job with Foodstore Inc.

Action:

Attempt to verify Kim's income using available electronic sources. The pay stub submitted to verify Kim's wage income is from her former employer. Therefore, it is not reasonably compatible with the income reported on the application and cannot be used.

The agency where Kim applied has access to the DEED quarterly wage reporting system. For the most recent quarter, DEED reports that Kim earned $6,300 working at Tina's Salon and $2,000 working at Foodstore Inc. Disregard the income reported for Foodstore Inc. because Kim no longer works there.

The DEED wage information reported for Kim's employment with Tina's Salon confirms that the employer name matches the employer Kim reported. Because Kim reports she has worked at Tina's Salon for two years, She was fully employed during the most recent quarter. Annualize Kim's income using the DEED quarterly income.

3. Verification Request.

Request verification of current wage income using the Request for Information (DHS-3271) if the client did not submit paper verification or the submitted verification is not reasonably compatible with the wages reported on the application or renewal, and electronic sources cannot be used to verify wage income. Request, but do not require, verification of wages from the past 30 days. Request an Employer Statement (DHS-4279) if pay stubs are not available or do not cover a full pay period.

Use the verification returned by the client to calculate wage income as long as the verification is reasonably compatible with the wages reported by the client. If the wage verification returned by the client is not reasonably compatible with the wages reported by the client, contact the client to clarify his or her current income.

Determine if additional verification is needed based on the client contact.

Example:
Linda submits her renewal application. She reports she started a new job last month at Peter's Fashions. she reports she earns $1,700 monthly. She is paid weekly. she did not include any pay stubs with her renewal.

Action:

Attempt to use electronic sources to verify Linda's income because she did not submit paper income verification with her renewal. Since Linda recently started a new job, there are no electronic sources available to verify the income. Request verification of income from the past 30 days from Linda.

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Self-Employment Income

Request verification of self-employment income in the order listed:

1. Tax forms.

Request all required federal tax forms from the most recent tax year from the applicant or enrollee as the preferred verification of self-employment income. Do not require an applicant or enrollee to provide W-2 forms if the W-2 forms will not be used to verify wage income.

Example:
Jack applies for MinnesotaCare. He reports he has a job at a local gas station and he is a self-employed farmer. Jack includes with his application two pay stubs from his job and a copy of his prior year's 1040 tax form. He does not submit any W-2 forms.

Action:

Determine if the pay stubs and 1040 form are reasonably compatible with the information Jack reported about his wage job and self-employment. If they are reasonably compatible, calculate Jack's household income based on the verification he provided.

Use tax forms from the previous year to verify self-employment income if the new business was included on the prior year tax forms, even if the business began after January 1 of the prior year.

Do not require clients who are farm self-employed to verify depreciation information. Clients whose only self-employment is farming are only required to provide the 1040 federal tax form from the most recent tax year. Continue to require clients with non-farm self-employment to provide all required tax forms related to their non-farm self-employment. See MinnesotaCare Self-Employment Income for a list of required tax forms for each type of self-employment.

Note:  Clients may use tax forms from two years prior if they are applying before they have completed their taxes for the most recent tax year or for renewals with a determination date of April 30. The most recent year's taxes are required for renewals with a redetermination date of May 31 or later. Business records may be used if the past year's taxes are not available.

2. Business records.

Accept a business financial statement, detailed records of gross receipts and expenses, a business quarterly report, or a signed statement of business income and expenses from the business’ accountant only if the applicant or enrollee asserts that the previous year’s tax forms are not available, or that they do not reflect current self-employment income.

n  Enter a case note explaining why alternative verification was accepted when using documents other than tax forms to calculate self-employment income.

n  For new self-employment, request business records for the previous 12 months or since the business began, whichever is less, from applicants and enrollees whose prior year tax forms do not include the new business.

See MinnesotaCare Income Calculation for information on calculating self-employment income for MinnesotaCare.

Seasonal Income

See Seasonal Income for information on verifying and calculating seasonal income.

Unearned Income

Unearned income can be verified with either paper verification or an available electronic data source. Verification of unearned income must be reasonably compatible with unearned income reported by the client.

Verify unearned income for MinnesotaCare in the following order:

1. Paper Verification.

Use any paper verification submitted with the application or renewal if the paper verification is reasonably compatible with the unearned income reported by the client. Do not require that the paper verification include unearned income for a specific period of time or reflect consecutive payments. Do not require that the paper verification be limited to unearned income received in the past 30 days. If the client submits more than 30 days verification and it is reasonably compatible with the income reported by the client, use all the verification submitted to calculate unearned income.     

Example:

Jennifer, a pregnant woman, applies for MinnesotaCare. On her application she reports her only income is $698 per month in Supplemental Security Income (SSI). She submits a bank statement from three months ago showing a direct deposit of $698.

Action:

Review the verification to determine if it is reasonably compatible with the unearned income reported on the application. Even thought he source of the deposit is not listed, the amount and frequency of the deposit correspond with the information reported on the application. Use the submitted verification to determine Jennifer's annual income.

2. Electronic Verification.

Use available electronic sources to verify unearned income if the submitted paper verification is not reasonably compatible with unearned income reported by the client and clarification with the client does not resolve this issue, or if no paper verification was submitted. The unearned income reported by the electronic verification source must be reasonably compatible with the unearned income reported by the client on the application or renewal.

3. Verification Request.

Request verification of unearned income using the Request for Information (DHS-3271) if the client does not submit paper verification with the application or renewal, or the submitted verification is not reasonably compatible with the unearned income reported on the application or renewal and was not resolved by clarification with the client, and electronic sources cannot be used to verify income.

Request, but do not require, verification of unearned income from the past 30 days or other relevant time period. If the client reports receiving unearned income at least monthly, request verification of payments received in the past 30 days. If the client reports receiving unearned income at least once annually, but less frequently than monthly, request verification of payments received in the past twelve months.

Use the verification returned by the client to calculate unearned income as long as the verification is reasonably compatible with the unearned income reported by the client. If the unearned income verification returned by the client is not reasonably compatible with the unearned reported by the client, contact the client to clarify his or her unearned income. Determine if additional verification is needed based on the client contact.

Example:
Sheldon applies for MinnesotaCare. On his application he reports his income is a quarterly annuity payment of $3,000. No verification was submitted.

Action:

Request verification of Sheldon's income because he did not submit verification of his income and there are no available electronic verification sources for this type of unearned income. Because Sheldon receives his annuity payment less often that monthly, request verification of all payments received in the twelve months.

Sheldon submits a bank statement from four months ago showing the deposit.

Action:

Use the bank statement to calculate Sheldon's annual income without requiring additional verification. The bank statement indicates $3,036 was deposited into Sheldon's account. The bank statement is reasonably compatible with both the amount and frequency of unearned income Sheldon reported on his application. Sheldon's annual income is $12,144 ($3,036 X 4). Approve MinnesotaCare for Sheldon as long as he meets all other eligibility criteria.

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MA Method A, MA Method B, MSP

This section provides information regarding MA Method A, MA Method B, MA-EPD, and MSP.

General Provisions

Require verification of earned and unearned income received by all household members in the 30 days before:

l  Application.

l  Renewal.

Examples of income verification are:

l  Pay stubs.

l  Employer’s statement.

l  Tax forms.

l  Copies of checks for unearned income.

l  Award letters.

l  Court orders.

l  SVES Interface.

Note:  The State Verification and Exchange System (SVES) is an interface for online query to the Social Security Administration. This interface is available in MAXIS. SVES provides the following:

n  Verifies Social Security Numbers in a monthly batch job.

n  Serves as an input to initiate SDX, BENDEX, and BEER data exchanges.

n  Inputs Interim Assistance Reimbursement (IAR) information.

n  Serves as the vehicle for the current TPQY system used to verify Title II (RSDI) and Title XVI (SSI) benefit information.

Do not require the following:

l  Additional verification if the client submits documentation which reflects reported earnings within the past 30 days.

Note:  If the verification provided does not reflect current reported earnings, or no verification is provided, request verification of the past 30 days of earnings.

Example:

Mae submits her annual renewal. She includes her previous year's tax forms and W-2s. The W-2 for her current employer reflects five months of earnings consistent with her reported income.

Action:

Use the W-2 to determine Mae's earnings for the coming year. Do not require additional verification. Request verification of the past 30 days of earnings only if Mae does not have a W-2 from her current employer.

l  Separate verification of interest and dividend income that is identified on the household's tax forms, on bank statements, and other documents from the payment source.

l  Verification of income at the time of a reported change during the certification period. See Income Changes.

l  Verification of income the SSI program excludes for SSI recipients who are not requesting MA payment of long-term care (LTC) services.

l  Verification of other income that SSA considers when determining SSI eligibility and benefit amount for SSI recipients who are not requesting MA payment of long-term care (LTC) services.

Tax Forms Submitted

Compare the information on tax returns a household submits as verification of income to the information reported on the application or renewal.

l  If the tax forms do not accurately reflect the household's current situation:

n  Contact the household to resolve the discrepancy.

n  Request verification of the current income if it is from a different employer than shown on the tax forms or the amount on the tax forms is not reflective of current earnings or unearned income.

l  Examples of circumstances that may or may not result in a significant difference between tax forms and the household's current situation include, but are not limited to:

n  A wage earner has changed jobs.

n  A wage earner has increased or decreased hours of employment.

n  A self-employment enterprise has changed in size, nature, or scope.

n  A wage earner who was previously employed seasonally has begun year-round employment.

n  A source of unearned income has started, stopped or changed in amount.

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Self-Employment Income

For all programs, except MA-EPD, there are several ways to verify self-employment income:

l  Income tax forms.

l  Business financial statement or detailed records of gross receipts and expenses.

l  Business quarterly report (may be filed for tax purposes).

l  Computer printout showing gross receipts and expenses.

l  Signed statement from the business's accountant verifying projected business income or expenses.

See Self-Employment Income for more details on how to treat self-employment income and MA-EPD Self-Employment Income within this section.

Seasonal Income

Accept the following verification of seasonal income from seasonally employed people:

l  Earnings for the most recent 30-day period in which the person was seasonally employed.

l  The most recent year’s tax forms and W-2s.

l  Other documentation reflecting the current seasonal earnings.

Retroactive Coverage and Spenddowns

l  Require verification of income received in each retroactive month for people requesting MA or MA-EPD retroactive eligibility Eligibility that is requested and determined for months prior to the month of application..

Exception:  Self-employed clients requesting retroactive eligibility are not required to produce business documents showing actual income received in the retroactive months. Tax forms are acceptable unless they do not reflect accurate information for those months.

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MA-EPD

Follow MA General Provisions and the following policies for MA-EPD:

Wage Income

Accept only the following forms of verification, in order of preference, for MA-EPD:

l  Pay stubs. Be sure the pay stub includes:

n  The employee's name or SSN.

n  Hours worked.

n  Gross pay.

n  Social Security and Medicare taxes withheld.

n  Net pay.

n  Period covered by earnings.

n  Employer's name.

l  A completed Authorization for Release of Employment Information (DHS-2146).

Note:  Require this form only if the employee does not provide pay stubs containing the required information.

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Self-Employment Income

One of the following must be provided as verification of earnings from self-employment:

l  Federal tax forms if the client has been in business long enough to file taxes and was required to file federal income tax for the previous year.

Tax forms must include any of the following:

n  Quarterly Schedule ES (Form 1040) Estimated Tax for Individuals, if they were required to pay quarterly self-employment taxes.

n  Form 1040 U.S. Individual Income Tax Return with the "Self-Employment Tax" line completed.

n  Schedule SE (Form 1040) Self-Employment Tax.

l  Business records if the client has not been in business long enough to file a federal income tax return or quarterly estimated taxes.

Note:  Advise the client to submit a copy of the federal tax return when it becomes available at the next renewal. Refer people to IRS Publication "Self-employment Tax" for detailed requirements on paying estimated taxes.

Business records may include:

n  Business financial statement.

n  Detailed records of gross receipts and expenses.

n  Business quarterly report.

n  Computer printout showing gross receipts and expenses.

n  Signed statement from the business’s accountant verifying projected business income or expenses.

Royalties, Honoraria, and Stipends

Documentation of royalty, honoraria or stipend income must show:

l  The nature and amount of payments.

l  Dates of payments.

l  Frequency of payments.

l  Social Security and Medicare tax withholding.

They can be verified with:

l  Tax forms for the previous year identifying royalties, honoraria, or stipends with Medicare and Social Security taxes paid via entries on:

n  Federal Tax Form 1040.

n  Schedule C.

n  Schedule SE.

n  Form 1099-Misc.

l  Pay stubs or written statement from the source of payment showing:

n  Social Security and Medicare taxes withheld.

n  Client’s name or Social Security Number.

n  Amount of payment.

n  Dates of payment.

n  Name of the issuer.

l  Quarterly Schedule ES (Form 1040) Estimated Tax for Individuals.

l  Schedule SE (Form 1040) Self-Employment Tax.

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