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Effective: December 1, 2006 |
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20.25.45ar1 - Interest and Dividends (Archive) |
Archived: October 1, 2007 |
Interest income is:
l Money paid to the holder of a bank account, loan, or other investment. Interest may be credited to the account or paid directly to the owner, or
l Money charged as a borrower's fee on a loan.
Dividend income is:
l The amount of the profit distribution a shareholder receives, or
l The amount of the surplus distribution a policyholder of an insurance policy receives.
Count the following for MinnesotaCare:
l If the interest and dividends are paid or credited directly to the household at least annually count as unearned income. These payments are shown on the tax forms.
Example:
The Jones family has a savings account with a balance of $5,000. Interest of $60 is credited to the account each quarter. It is not paid directly to the family. The bank reports the interest annually to the Internal Revenue Service and it is included on the family's tax forms.
Action:
Count the interest as unearned income.
Example:
John owns stock in ABC Corporation. He is not an employee of the corporation. He receives a dividend check every three months that is reported on his tax return.
Action:
Count the dividend payment as unearned income.
Example:
Susie is a minor child. A trust fund of $50,000 was set up on her behalf as a result of an auto accident. She and her parents cannot gain access to the trust principal without court approval. However, her parents receive a monthly check representing interest earned by the trust.
Action:
Count the monthly payment as unearned income.
l Dividends earned as part of a self-employment operation, such as dividends from ownership interest in a C-Corporation, as part of the earned self-employment income.
Example:
George has ownership interest in a C-corporation. He is also an officer of the corporation and receives wages. His share of corporate dividends is reported yearly and included on his tax return.
Action:
Count the dividends as part of his annual self-employment income.
Exclude as income any interest or dividends from assets, including amounts accrued on the asset, which when combined with other assets are within and counted toward the asset limit.
Example:
Al receives MA. He has a savings account with $2,500, which is within the $3,000 asset limit. At the time of his annual recertification, he reports that $75 in interest has been credited to the account in the past year.
Action:
Exclude the interest as income because the total account balance remains within the asset limit.
Count other interest or dividends as unearned income.
Note: This includes the interest portion of payments on contracts for deed and promissory notes.
Count interest or dividends as unearned income, except as noted later in this subsection, for clients using either:
l Elderly Waiver (EW) that requires spousal allocation.
Count interest or dividends earned on the following as unearned income:
Reminder: For interest or dividends counted be sure to check if the income meets the exclusion for infrequent income. See Excluded Income.
l Unspent tax refunds related to an Earned Income Tax Credit (EITC) or Child Tax Credit (CTC).
l Unspent federal relocation assistance payments.
l Payments to replace lost, damaged or destroyed assets which are no longer excluded assets.
l Gifts to children with life-threatening conditions under section 1613 (a) (13) of the Social Security Act.
l Payments to replace lost, damaged, or destroyed assets if the payment is no longer an excluded asset.
l Victim’s compensation payments.
l Financial aid which is neither Title IV nor issued by the Bureau of Indian Affairs (BIA) program. Such aid includes any of the following:
n Grants.
n Scholarships.
n Fellowships.
n Gifts used or intended to pay tuition, fees, or other necessary educational expenses at an educational institution, including vocational or technical education.
l Life insurance policies which pay interest on dividend accumulations.
l Proceeds from the sale of a home which are excluded as an asset.
Exclude as income other interest or dividends received from counted or excluded assets. This includes:
l The interest portion of payments on contracts for deed or promissory notes.
l Interest that accrues on the value of excluded burial funds.
Note: This exclusion also applies to LTC budgeting and EW with spousal allocation.