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Effective: June 1, 2011 |
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20.10ar7 - Verification of Income (Archive) |
Archived: January 1, 2012 |
All Minnesota Health Care Programs require verification of income.
The client is responsible for providing income verification. However, help clients to get the needed information if they are having difficulty obtaining it. Obtain the client’s written consent to request verification from a third party.
See Obtaining Verifications for more information.
Wage Income after Denial or Cancellation of Coverage.
Medical Assistance (MA) Method A, MA Method B, Medicare Savings Programs.
Retroactive Coverage and Spenddowns.
MA for Employed Persons with Disabilities (MA-EPD)
Royalties, Honoraria and Stipends.
Verify earned and unearned income at application and renewal.
Exception: Do not verify earnings of children under age 19 who are students. See Child Income.
Do not require verification that employment has stopped.
Note: Refer to Inconsistent Information for instructions about information or verification that appears to be inconsistent.
Verify income received in the past 30 days. The past 30 days is defined as a 30-day period no earlier than one calendar month prior to the date of application or renewal. See Date of Application.
Example:
Doug submits an application for MinnesotaCare on September 8. He works and receives a regular paycheck.
Action:
Request verification of Doug’s wages for the past 30 days. The verification must reflect income he received no earlier than August 1.
Require wage verification from the past 30 days. The past 30 days is defined as the continuous period of 30 days that begins no earlier than one calendar month prior to the date of application or renewal. Request verification in the order listed.
1. Pay Stubs.
Pay stubs from the applicant or enrollee are the preferred form of verification for wage income. Require the following number of pay stubs to verify wages for the past 30 days:
n If paid weekly, require four pay stubs;
n If paid bi-weekly (every other week), require two pay stubs;
n If paid semi-monthly (twice a month, such as the 15th and the 30th of every month), require two pay stubs; and
n If paid monthly, require one pay stub.
Do not:
n Require more than 30 days of pay stubs.
n Use more than 30 days of pay stubs to calculate income.
m Use the most recent pay stubs that reflect a 30-day period if an applicant or enrollee submits more than 30 days of pay stubs.
n Accept non-consecutive pay stubs or calculate missing pay stub amounts using the year-to-date amount.
n Accept hand-written pay stubs.
2. Employer Statement.
Use the Employer Statement (DHS-4279) to verify pay received in the past 30 days if:
n Pay stubs for income from the past 30 days are not available.
n Applicants and enrollees are paid daily or on a varying schedule.
n Handwritten pay stubs are submitted.
n The applicant or enrollee has new employment and has not yet accumulated enough pay stubs.
When sending the employer statement:
a. Check the ”Gross Pay received in the past 30 days” box.
b. Use the client’s actual gross pay received as listed by the employer if the client has received wages for a full 30 days. Disregard the ”Hourly Wage” and ”Average Number of Hours Worked per Pay period” information if the employer erroneously provides this for a client who has received wages for a full 30 days.
c. For applicants or enrollees with new employment (that is, those who have not received a full 30 days of wages), use the ”Hourly Wage” and ”Average Number of Hours Worked per Pay period” entries on the Employer Statement to calculate annual wages. Do not use gross pay amounts if the employer erroneously provides this for a client who has not received wages for a full 30 days.
Note: Forms other than the DHS-4279 may be used to obtain pay information from the employer as long all the needed information is provided.
3. Tax Forms.
Do not use tax forms or W-2 forms to verify wages for MinnesotaCare, unless the income is from seasonal employment or self-employment.
Note: If the self-employed member of the household pays wages to another member of the household, treat that income as wage income and require wage verification from the past 30 days. If the wages are paid as part of a seasonal employment, see Seasonal Income for information on verifying and calculating seasonal income.
Wage Verification after Denial or Cancellation of Coverage
Request new wage verification for MinnesotaCare applications or renewals following a denial of health care programs if:
l Verification on file is not from a 30-day period within one calendar month prior to the date of application; or
l The applicant or enrollee has had a change in hourly rate, number of hours scheduled or has changed jobs.
Request new wage verification for MinnesotaCare applications or renewals following cancellation from health care programs if:
l Verification on file is not from a 30-day period within one calendar month prior to the effective date of cancellation or the date a case is transferred to MCRE Operations, whichever is earlier.
l An existing application that is less than 11 months old is being used to reapply for MinnesotaCare. Update the application along with requesting new wage verification.
Request verification of self-employment income in the order listed:
1. Tax forms.
Request federal tax forms, including all W-2s, from the most recent tax year from the applicant or enrollee as the preferred form of verification for self-employment income.
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. Use the included W-2s to verify the source of reported wage income. Also use W-2s to verify seasonal and self-employment wage income amounts.
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.
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 Self-Employment Income for information on calculating self-employment income for MinnesotaCare.
See Seasonal Income for information on verifying and calculating seasonal income.
Require verification of unearned income received in the past 30 days by all household members. The past 30 days is defined as a 30-day period no earlier than one calendar month prior to the date of application or renewal.
Documents to verify unearned income include, but are not limited to, award letters and copies of checks.
l Income received in the past 30 days.
Require verification of unearned income received by all household members in the past 30 days. Do not use more than 30 day’s verification of unearned income to calculate the annual unearned income amount. If an applicant or enrollee submits more than 30 days verification, use the most recent of the verifications submitted that reflect a 30-day period.
l Income received less frequently than monthly.
For unearned income that is received at least once annually, but less frequently than monthly, calculate and verify the annual unearned income based on the payments received in the past 12 months. The past 12 months is defined as a period of 12 months no earlier than one year prior to the month of application or renewal.
For people receiving Unemployment Insurance (UI), who do not yet have a new job, annualize the UI amount to determine eligibility and premium amount, regardless of when the UI is scheduled to end. Advise the client to report any changes, such as beginning employment or when these benefits end or amounts change.
Some people may work and receive a partial UI payment. In these situations, the UI payment will be reduced by a percentage of income based on the amount the client earns at the job. Count the amount of UI received after the reduction as the client’s gross UI payment.
Example:
Tom reports on his application that he receives UI of $125 per week. He also reports a job working 20 hours per week at $6 per hour. Tom’s UI statement shows that his gross UI payment is actually $200, but that the weekly payment is reduced by $75 due to other income.
Action:
Count $125 as Tom’s gross UI. Also count Tom’s verified gross wage income.
Example:
Lisa reports on her application she has been receiving UI of $150 per week. She also reports she began a job working 30 hours per week at $6 per hour.
Action:
Do not include the UI payment in computing Lisa’s annual income if the UI ended due to her employment.
Example:
Arthur applies for MinnesotaCare in July. He receives UI of $150 per week. He has 16 weeks remaining on his claim. He has no other income and has not yet found a job.
Action:
Annualize Arthur’s UI and count it as unearned income when determining his gross annual counted income. Advise Arthur to contact the agency when the UI is actually ending.
This section provides information regarding MA Method A, MA Method B, MA-EPD, and MSP.
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.
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.
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.
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.
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.
Follow MA General Provisions and the following policies for MA-EPD:
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.
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.