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Effective: December 1, 2006 |
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20.20ar1 - Categories of Income (Archive) |
Archived: March 1, 2009 |
All income fits into one of two categories; earned and unearned. Certain income types are either one category or the other, whereas some income types have the category based on other criteria besides the type of income.
Example:
Rental Income can be either earned or unearned income.
Action:
The category this type of income falls into depends on the number of hours spent weekly doing routine maintenance and upkeep on the property.
The category the income fits into affects:
l Income exclusions for dependent children. See Dependent Child Income for more details.
l Deductions and disregards for MA and GAMC used in the income calculation.
l Verification requirements.
This chapter gives you the tools to identify what category a type of income is.
Costs to Secure Unearned Income.
Earned income is money people receive in exchange for work or service, including some training stipends.
Unearned Income is money people receive without being required to perform work.
Consider the following types of income as earned income for all health care programs:
l Wages.
l Commissions.
l Tips.
l Self-Employment Income.
l Jury duty pay.
l Picket duty pay.
l Severance pay, if based on accrued leave time.
l Vacation pay.
l Sick pay, if based on accrued or earned time. (This is not the same as disability benefits).
Note: Use the gross income before any deductions in the income calculation.
l Compensation from the employer's vacation donation program, if paid and taxed in the same manner as the employee's usual pay.
l Blood and blood plasma sales.
l Royalties and honoraria which result from the client's work or service.
l Wages paid to participants in programs carried out under the Community Service Employment Program (Title V of the Older Americans Act), which includes the:
n Experience Works (formerly Green Thumb) program.
n The Senior Aides Program.
l Wages paid through the National and Community Service Act of 1990 under Title I, which
n Count benefits other than wages paid through the programs listed above as unearned income.
n Exclude reimbursements for expenses.
n This type of income includes the following programs:
m Serve America.
m Higher Education Innovative Projects.
m Conservation and Youth Service Corps.
m National and Community Service Models.
l AmeriCorps living allowances.
l Housing allowances paid in cash to members of the clergy, regardless of whether the cash payment is a reimbursement for housing costs already paid.
Consider the following types of income as unearned income for all health care programs:
l Spousal Maintenance.
l Annuity payments.
l Pension or retirement benefits from public or private sources, such as Railroad Retirement.
l Disability payments that are part of the employer’s benefit package are unearned income. Medicare, Social Security, and other tax withholding from such payments do not change this designation as unearned income.
l Retirement, Survivor's, and Disability Insurance (RSDI).
l Supplemental Security Income (SSI).
l Extended income support payments through the Trade Adjustment Reform Act of 2002 (TAA).
n These payments are available to certain workers participating in training when the job loss was related to foreign trade.
n Workers must exhaust regular Unemployment Insurance benefits before becoming eligible for TAA payments.
l Veteran's Administration (VA) benefits.
l Trust disbursements.
l Severance pay that is not based on accrued leave time.
l Tribal per capita payments from casinos. See Tribal Land Settlements and Trusts Income.
l Regularly received gifts. See Excluded Income.
l Interest and dividends, if not earned as part of a self-employment operation.
l For more information on this topic see:
n Self-Employment Income.
n Excluded Income.
l Public Assistance Payments Income.
Costs to Secure Unearned Income
Allow a deduction from unearned income before entering the income in the income calculation for costs necessary to secure the payments, such as attorney's fees, if these costs are withheld from the ongoing payment under a legal agreement.
Example:
William receives Workers Compensation (WC) benefits. The gross biweekly payment is $720. $140 is withheld for attorney's fees incurred when obtaining the WC benefits. William signed an agreement to allow repayment of the fees from his benefits, as a condition of the attorney accepting the case. William also has $20 deducted for payment of an old credit card debt.
Action:
Allow the $140 withholding for the attorney fees as a deduction. Do not allow the $20 deduction for the credit card debt.