03.30.20.05 MA-EPD Employment Definition

*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***

MA-EPD Employment Definition

Consider the following types of payments as earned income from employment for MA-EPD:

l Wages, including salaries, commissions, tips, bonuses, vacation pay, sick pay, and severance pay (if based on accrued leave time), if all of the following conditions are met:

n Average gross monthly earnings for the six-month certification period or earnings for an individual month, whichever is more beneficial to the client, are over $65 (at least $65.01).

n Social Security and Medicare taxes are withheld. State and federal income taxes need only be paid or withheld if the person earns enough to be required to pay those taxes.

n Average countable (gross receipts minus business expenses) monthly earnings for the six-month certification period or for an individual month, whichever is more beneficial to the client, are over $65 (at least $65.01).

n The person pays Medicare and Social Security taxes from self-employment income at least annually. Quarterly estimated tax payments and state and federal income taxes need only be paid if the person earns enough to be required to pay those taxes.

Note: A person cannot retain MA-EPD eligibility or become eligible for MA-EPD simply by filing self-employment taxes. Self-employed clients generally meet the following conditions; they:

m are not covered under an employer's liability insurance or Workers' Compensation.

l Earnings from federal or state work study, if all of the following conditions are met:

n Average gross monthly earnings for the six-month certification period or for an individual month, whichever is more beneficial to the client, are over $65 (at least $65.01).

n Social Security and Medicare taxes are withheld. State and federal income taxes need only be paid or withheld if the person earns enough to be required to pay those taxes.

l Royalties earned in connection with publication of a person’s work if all of the following conditions are met:

n Average gross monthly earnings for the six-month certification period or earnings for an individual month, whichever is more beneficial to the client, are over $65 (at least $65.01).

n Social Security and Medicare taxes are withheld or paid if the person is filing self-employment taxes. State and federal income taxes need only be paid or withheld if the person earns enough to be required to pay those taxes.

l Honoraria or stipends received for services rendered if all of the following conditions are met:

n Average gross monthly earnings for the six-month certification period or earnings for an individual month, whichever is more beneficial to the client, are over $65 (at least $65.01).

See TE04.01, TE04.02 and MA-EPD Income Calculation for more information on MA-EPD income calculation.

l Honoraria or stipends to the extent that these payments only reimburse expenses or do not have Medicare and Social Security taxes withheld.

Individuals with two sources of earned income, one source that has taxes withheld and one source that does not, may remain eligible for MA-EPD. To remain eligible, the gross earnings from which taxes are withheld must exceed $65 per month. Only the income from which taxes are withheld or paid may be considered employment for purposes of MA-EPD.

Example:
Roman works two hours per week at Home Depot earning $60 per month. Home Depot withholds Medicare and Social Security taxes. He also receives earnings of $90 per month from a work activities center that is not required to withhold taxes. He has no other earned income.

Action:
Do not approve MA-EPD eligibility for Roman because his gross monthly taxed earnings are not more than $65 per month.

All earned income (whether taxed or not) is counted for the premium determination.

Require verification of earnings (with Medicare and Social Security taxes withheld) and employment status at application and six-month and annual renewals. Accept only the following forms of verification, in order of preference, for MA-EPD:

l Pay stubs showing the employee’s name or SSN, hours worked, gross pay, Social Security and Medicare taxes withheld, applicable state and federal income taxes withheld, net pay, period covered by earnings, and employer’s name.

Note: Social Security and Medicare taxes must be withheld from wages. If these taxes are not withheld, do not consider the payment as a wage for MA-EPD. These taxes must also be withheld from payment for services performed in a day training and habilitation (DT&H) facility, sometimes referred to as a sheltered workshop or work activities center.

l A completed Authorization for Release of Employment Information (DHS-2146). Require this form only if the employee does not provide pay stubs containing the required information.

1. Federal tax forms from the most recent tax year. 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. For information about who must file, see www.irs.gov/individuals/article/0,,id=96623,00.html.

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 redetermination 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.

To be acceptable as verification of self-employment status for MA-EPD, tax forms must include one of the following:

n Form 1040 U.S. Individual Income Tax Return with the self-employment tax line completed (line 57 in 2008), and

n Schedule SE (Form 1040), Self-Employment Tax, with the self-employment tax line completed (Section A, line 5, or Section B, line 12 in 2008),

Note: In most case, estimated tax payments are only required if the client expects to owe at least $1,000 in taxes.

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. Advise the person to maintain records and to submit a copy of the federal tax return when it becomes available.

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.

Count seasonal self-employment income only in the months in which it is received. This is an exception to the policy of annualizing seasonal self-employment for MA.

Note: An individual cannot retain MA-EPD eligibility or become eligible for MA-EPD simply by filing self-employment taxes. The individual must also be engaged in a trade or business, and have average gross self-employment earnings minus business expenses (countable self-employment income) of more than $65.

An MA-EPD enrollee must receive payments from royalties, honoraria or stipends each month to qualify for MA-EPD when such payments are the person’s only source of earned income. Accept the following forms of documentation which show the nature and amount of payments, the date received, the frequency of payments, and Medicare and Social Security taxes:

l Tax forms for the previous year showing evidence of royalties, honoraria or stipends with Medicare and Social Security taxes paid, such as entries on Form 1040, Schedule C, Schedule SE or Form 1099-Misc.

l Pay stubs or written statement from the source of payment showing Social Security and Medicare taxes withheld, the person’s name and SSN, amount of the payment, period covered, and name of the issuer.

l Quarterly Schedule ES (Form 1040) Estimated Tax for Individuals or Schedule SE (Form 1040) Self-Employment Tax.

Note: Royalties from oil, gas or mineral properties are not considered earned income for MA-EPD.

MA-EPD enrollees must receive wages, royalties, honoraria or stipends, or must engage in self-employment activities each month unless they meet specific medical leave or job loss criteria. However, these medical leave and job loss provisions do not pertain to MA-EPD applicants in the month of application or in any retro month. An applicant must be employed to be eligible for MA-EPD.

Exception: MA-EPD enrollees are still considered to be employed if they change jobs and receive no pay checks for one month because of different pay periods in each job.

An MA-EPD enrollee may be eligible without earnings for up to four calendar months due to a verified medical condition.

n Require a physician’s statement to verify the need for medical leave before continuing coverage under MA-EPD.

n A four-month medical leave begins the month after the enrollee is unable to work.

n Send ten-day notice to close MA-EPD eligibility effective the first day of the month following the first four full calendar months the enrollee was unable to work if the physician’s statement indicates the enrollee is expected to be unable to work for more than four calendar months.

n Determine eligibility for MA under another basis before closing MA-EPD. Continue to apply the MA-EPD asset rules for the first 12 months when determining eligibility under another basis.

Example:
Maria, an MA-EPD enrollee, works 20 hours per week at a discount store. Her employer withholds Medicare and Social Security taxes. On July 17, her physician advises her to take 15 weeks off work due to a worsening medical condition. She anticipates returning to work November 15.

On November 5, Maria submits a new physician’s statement extending her recommended medical leave through December 16.

Action:
Close eligibility for MA-EPD effective December 1 since Maria’s medical leave will exceed four calendar months. Determine eligibility for MA under another basis for December. Advise Maria that she may again qualify for MA-EPD when she returns to work if she continues to meet all other eligibility criteria.

An MA-EPD enrollee may be eligible without earnings for up to four months due to job loss that was not caused by or attributed to the enrollee. Situations which would allow a four-month extension include, but are not limited to, layoffs due to lack of work, business closing or plant shutdown.

n Require verification of the reason the enrollee became unemployed before continuing coverage under MA-EPD.

n Begin the four-month job loss leave after the enrollee stops working or receives the last paycheck, whichever is later.

n Determine eligibility for MA under another basis before closing MA-EPD if the client does not provide verification of the reason for the job ending or if the enrollee is not employed at the end of the four months. Continue to apply the MA-EPD asset rules for the first 12 months when determining eligibility under another basis.

n Allow 10-day notice and close MA-EPD eligibility effective the first day of the month following the month the client stopped working or received the last paycheck, whichever is later, if the client is not eligible under another basis.

Note: MA-EPD enrollees who become unemployed for reasons attributable to them, such as poor work performance, discharge for misconduct, or resignation for reasons other than medical leave, are not eligible for the four-month extension.

Example:
Colleen is enrolled in MA-EPD and is employed part time at a local business. Her employer withholds Medicare and Social Security taxes. She is laid off in January due to staffing cuts. She receives her last paycheck on January 9.

Action:
Consider January to be her last month of employment. She may remain enrolled in MA-EPD without earnings through May.

Employees who become unemployed while on medical leave from their jobs may remain enrolled for four additional months following the month in which they are terminated or laid off.

Example:
Yanni has been on medical leave from his job since mid-August. His MA-EPD enrollment continues through December under the medical leave provision. In November, he is laid off.

Action:
Yanni may remain enrolled in MA-EPD for four additional months, December through March, without earnings.

Enrollees who remain eligible for MA-EPD due to the four-month job loss extension may not further extend eligibility with a medical leave.

Example:
Joanna is enrolled in MA-EPD. She loses her job and receives her last paycheck in January because the company goes out of business.

Action:
Continue her MA-EPD enrollment through May under the job-loss provision.

In March, Joanna is injured and is not recovered sufficiently to find a new job by the end of May.

Action:
Joanna is not eligible for any further extension. End MA-EPD and determine eligibility for MA under another basis beginning June 1.

Enrollees who are employed in seasonal or temporary jobs are not eligible for the extension when laid off at the end of the work season. Allow the extension only if the job ends before the expected date due to reasons not caused by the employee. Extend MA-EPD eligibility only through the month in which the job was expected to end.

Example:
Joe works for a landscaping company which withholds Medicare and Social Security taxes from his wages. He is normally employed from May through November and is eligible for MA-EPD during those months. The business closes early in October due to unseasonable weather.

Action:
Extend Joe’s MA-EPD eligibility through November. However, he is not eligible for a four-month job loss or medical leave beyond the month of November since he is not normally employed during those months.

There is no annual limit on the number of times the MA-EPD medical leave or job loss extensions can be utilized. As long as the enrollee returns to work between leaves and meets all requirements, they may be used as often as necessary.

Enrollees must continue to pay MA-EPD premiums during the four-month medical leave or job loss extension.

Chapter 03 - Eligibility Groups and Bases of Eligibility	Effective: June 1, 2010
03.30.20.05 - MA-EPD Employment Definition	Archived: June 1, 2016 (Previous Versions)