Effective: May 1, 2012
20.25.25 - Seasonal Income
Seasonal income is income that is regularly received for only part of the year. How to count seasonal income varies by program.
Verifying and Calculating Repeated Seasonal Income.
Verifying New Seasonal Income.
Calculating New Seasonal Income.
End of Seasonal Employment.
MA Method A, MA Method B, MA-EPD, Medicare Savings Programs, and Long-Term Care.
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The type of verification for seasonal income varies depending on whether the applicant or enrollee has been employed repeatedly at the same seasonal job, or it is new employment that is expected to be seasonal. Seasonal income is annualized.
Verifying and Calculating Repeated Seasonal Income
1. Request the prior year’s U.S. Individual Tax Return (1040, 1040A or 1040EZ) and W-2 form to verify wages and unemployment compensation (if received) if the person was seasonally employed the previous year and expects to be seasonally employed to the same extent in the current year.
n Use the annual wage amount and annual unemployment compensation amount found on the tax return in the income calculation.
Exception: The first $2,400 in unemployment compensation received in 2009 is not taxed and must be added to the MinnesotaCare income total. People are not required to report the first $2,400 of unemployment compensation on their 2009 U.S. Individual Tax Return (1040, 1040A or 1040EZ). The first $2,400 of unemployment compensation is included in form 1099-G, box 1. Therefore, to calculate unemployment compensation using tax forms, subtract the amount of the unemployment compensation listed on the individual tax return (1040, 1040A or 1040EZ), if any, from the adjusted gross income and add the amount listed on form 1099-G, box 1. The form 1099-G is required to calculate unemployment compensation using 2009 federal tax forms.
Joe applies for MinnesotaCare on January 15, 2010. On the application, Joe reports he is seasonally employed during the summer and receives unemployment compensation during the winter. He has been with the same employer for the past five years. He submits his 2009 1040, W-2, and 1099-G as verification of his seasonal income and unemployment compensation. His 1040 does not list any unemployment compensation. However, the 1099-G form, box 1 lists $1,800 in unemployment compensation.
Count the entire $1,800 of unemployment compensation listed on form 1099-G, box 1 in the MinnesotaCare income total.
Note: If a client has both seasonal income and self-employment income, subtract the amount of the unemployment compensation reported on the income tax return from the adjusted gross income and use the full amount of unemployment compensation reported on the 1099-G.
n Consider it new seasonal employment if the tax form does not reflect a full season and off-season cycle.
2. Follow the instructions for new seasonal employment below and annualize the income based on whether they are currently working or in the off-season for applicants and enrollees who have been repeatedly seasonally employed but assert that the prior year tax forms do not accurately reflect the seasonal employment they expect to have this year.
Verifying New Seasonal Employment
Verify new seasonal employment income for MinnesotaCare in the following order;
1. 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 reported by the client.
2. 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.
3. 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) completed by the employer if:
n Pay stubs are not available, or
n Available pay stubs do not cover a full pay period.
Calculating New Seasonal Income
1. Annualize the client's income based on income reported on the client's pay stubs, or an electronic data source as you would for year-round employment. Project a full year of employment.
2. Use the hourly wage and average number of hours worked per pay period from the Employer Statement to annualize income. Project a full year of employment.
3. Calculate annual income based on any unemployment compensation the applicant or enrollee is receiving when he or she does not have a prior year tax record of their seasonal employment and is in the off-season of their work cycle. Project a full year of unemployment compensation.
End of Seasonal Employment
Send a note or worker memo to remind an enrollee to contact the agency when the employment ends or if he or she begins receiving unemployment compensation in the off-season when MinnesotaCare is approved pending-awaiting-payment for a person with new employment known to be seasonal.
1. Recalculate annual income based on the new situation (zero income or unemployment compensation) when this change occurs.
2. Use the prior year 1040 tax form and W-2s to calculate seasonal employment income once the enrollee has been seasonally employed long enough to include a full year of employment and off-season on a tax return.
Note: Treat applicants and enrollees who are employed year-round, but who actually work and are paid for only part of a year, as seasonally employed for purposes of calculating their annual wage income.
Judith is a teacher who applies for MinnesotaCare. She is employed year-round for a local school district, but she does not work or receive wages during the summer months. She does not qualify for unemployment compensation.
n Verify Judith’s wages using her prior year 1040 Individual Tax Form and W-2 form if she was employed the entire previous year for the school district.
n Calculate income based on her current work status if the tax form does not reflect a full year of employment.
m Use available electronic sources to verify wage income. Request verification of current wage income if electronic sources cannot be used. Request, but do not require, the past 30-day’s pay stubs or an Employer Statement, if pay stubs are not available and annualize this income.
m Consider her annual income to be zero if she is not currently working and has no current income. Remind Judith to report when her work status changes. Once Judith has worked for the school district for a calendar year, use the prior year 1040-tax form and W-2s to calculate her annual
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MA Method A, MA Method B, MA-EPD, Medicare Savings Programs, and Long-Term Care
Clients who are seasonally employed may be self-employed or may work for others.
Treat income from seasonal self-employment in the same way as year round self-employment.
Exception: For MA-EPD count seasonal self-employment only in the months in which the person is engaged in work activity.
l Employed by Others.
When clients are seasonally employed by others, estimate income anticipated to be received during the certification period including earnings and any Unemployment Insurance anticipated to be received.
Note: Document specific income verifications used, and explain the calculations that were done to anticipate countable gross income.
Tom applies for MA in January. He was laid off from his job as a roofer in November and is receiving Unemployment Insurance. Based on previous years' experience, he expects to resume work in April. He is requesting MA to begin in January.
n January - April: Use Unemployment Insurance payments received or expected to be received in January through the date Tom expects to return to work in April.
n April - June: Use earnings from the same period for the previous year as a guide.
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