*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016.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. ***
Effective: May 1, 2012 |
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21.10.05 - MinnesotaCare Income Calculation |
Archived: June 1, 2016 (Previous Versions) |
Use the MinnesotaCare Income Worksheet (DHS-3352) to calculate the annual gross income for the MinnesotaCare household. Follow the step-by-step instructions below.
Pay stubs and Electronic Verification Sources.
1040 Individual Tax Form and W-2s.
Section C. Income from Self-Employment.
Section D. New/Changed Self-Employment Income.
New self-employment income from business records.
New self-employment income from the prior year tax forms.
Self-employment income that has ended.
Enter the current date, worker number, case name, and case number at the top of the MinnesotaCare Income Worksheet (DHS-3352). Enter the tax year used if using tax forms to calculate self-employment or seasonal income.
Note: Use the version of the DHS-3352 that corresponds to the tax year for which you are calculating income. The line numbers cited on the worksheet for tax year 2007 may be incorrect if using tax forms from a year prior to 2007. Send a HealthQuest if you are unsure of the line numbers to use for prior year tax forms.
When entering income amounts in the worksheet, do not put a period at the end of the dollar amount if there is no cent amount added. For example, enter wages as $924 or $924.00 only.
Skip this section of the worksheet if the household reports no wage income.
Type in the name of the source if using documentation other than the three sources listed in the Source drop-down menu to verify wages.
Pay stubs and Electronic Verification Sources
Enter the following in Section A of the MinnesotaCare Income Worksheet if using pay stubs or electronic verification sources to calculate annual income from current employment:
1. Name of adult/child.
Enter the names of household members who have wages. Do not list children under age 19 who are full-time or part-time students because their earned income is excluded for MinnesotaCare.
2. Source.
Choose the source of the information from the drop-down menu or type in the source if it is not an available option in the drop-down menu.
3. Number of times paid per year.
Enter the number of times the person is paid per year, such as:
a. If paid daily, enter the number of workdays in a year.
b. If paid weekly, enter 52
c. If paid bi-weekly (every other week), enter 26
d. If paid semi-monthly (twice a month such as the 15th and the 30th every month), enter 24
e. If paid monthly, enter 12
f. If paid quarterly, enter 4
g. If paid once a year, enter 1
h. If paid on a different schedule, use a calendar to determine the correct number of times paid per year.
4. Income amounts.
Enter the gross wage amounts from the pay stubs or electronic verification source. Include any tips, commission or other miscellaneous income that is not included in the gross wage amount. The worksheet will automatically calculate the average income and the annual amount based on the above entries.
Note: The MinnesotaCare Income Worksheet can accommodate up to five income amounts for a single source of wages. Average the gross pay amounts received each week for applicants and enrollees who provide more than five pay stubs.
Example:
Sal works as a day laborer for a temporary placement agency. He is paid each day he works. He submits an Employer Statement to verify his income that shows he works three days per week and has been paid 12 times in the past 30 days. At this rate, he will be paid 156 times in a year (52 weeks x 3 days per week).
Action:
The MinnesotaCare Income Worksheet does not have enough space on one line to record all of Sal's income amounts for the past 30 days. Average the daily pay amounts he received each week. List the average amounts in the Income amount boxes. Sal's pay stubs:
Week 1 $56 + $63 + $56 = $175 divided by 3 = $58.33 average.
Week 2 $49 + $56 + $56 = $161 divided by 3 = $53.67 average.
Week 3 $56 + $56 + $35 = $147 divided by 3 = $49 average.
Week 4 $63 + $56 + $49 = $168 divided by 3 = $56 average.
Complete Section A of the MinnesotaCare Income Worksheet as follows:
1. Name of adult/child: Enter "Sal."
2. Source: Choose "Pay stubs" from the drop-down menu.
3. Number of times paid per year: Enter 156.
4. Income amounts: Enter "58.33, 53.67, 49," and "56."
The Income Worksheet will calculate Sal's average income ($54.25) and an annual amount ($8,463) according to the amounts entered.
Use the information on the client’s employer statement to calculate income. Enter the following in Section A of the MinnesotaCare Income Worksheet to calculate income from an Employer Statement (DHS-4279):
1. Name of adult/child.
Enter the names of household members who have wages. Do not list children under age 19 who are full-time or part-time students because their earned income is excluded for MinnesotaCare.
2. Source.
Choose Employer Statements from the drop-down menu.
3. Number of times paid per year.
Enter the number of times the person is paid per year, such as:
a. If paid daily, enter the number of workdays in a year.
b. If paid weekly, enter 52.
c. If paid bi-weekly (every other week), enter 26.
d. If paid semi-monthly (twice a month such as the 15th and the 30th every month), enter 24.
e. If paid monthly, enter 12.
f. If paid quarterly, enter 4.
g. If paid once a year, enter 1.
h. If paid on a different schedule, use a calendar to determine the correct number of times paid per year.
4. Income amounts.
Enter the gross earnings or hourly wage information as shown on the Employer Statement.
5. The worksheet will calculate the average income and annual amount.
Example:
Kerry reports on her renewal that she started a new job in the past week. She expects to work 40 hours per week and to be paid $8.75 per hour.
Action:
Send an Employer Statement (DHS-4279) to Kerry for her employer to complete. Kerry has not received wages from one full pay period. Kerry returns the Employer Statement which states she is paid twice a month, has an hourly wage of $8.75 and works an average of 88 hours per pay period. Complete Section A of the Income Worksheet as follows:
1. Name of adult/child: Enter Kerry.
2. Source: Choose Employer Statements from the drop-down menu.
3. Number of times paid per year: Enter 24.
4. Income amounts: Enter 770 ($8.75 hourly wage x 88 hours per pay period) in the first box.
The worksheet calculates Kerry's average income of $770 and annual amount of $18,480.
Example:
David, age 20, applies for MinnesotaCare and indicates he started a new job with a construction company that is expected to be seasonal. He has not received wages from one full pay period. The application does not indicate if he did this type of work last year. He does not include any verification of income with the application. A search of electronic data sources turns up no matches for David.
Action:
Send a Minnesota Health Care Programs Request for Information (DHS-3271) and an Employer Statement (DHS-4279). Enter text at the bottom of the Request form stating his 1040 tax form and W-2s are needed if he worked in seasonal construction last year. If he did not work in seasonal construction last year, he must sign the Employer Statement form and have his current employer complete the back of the form.
David returns the Employer Statement. It shows he is paid $14 per hour and works 60 hours per pay period. He is paid bi-weekly.
Complete Section A of the MinnesotaCare Income Worksheet as follows:
1. Name of adult/child: Enter David.
2. Source: Choose Employer Statements from the drop-down menu.
3. Number of times paid per year: Enter 26.
4. Amounts: Enter $840. ($14 hourly wage x 60 hours per pay period).
The worksheet calculates David's average income of $840 and annual income of $21,840. If David is eligible for MinnesotaCare, send him a memo reminding him to contact the agency when his seasonal employment ends.
1040 Individual Tax Form and W-2s
To calculate annual income from seasonal employment using a 1040 tax form and W-2s enter the following in Section A of the MinnesotaCare Income Worksheet:
1. Name of adult/child.
Enter the name of seasonally employed household member. Do not list children under age 19 who are full-time or part-time students because their earned income is excluded for MinnesotaCare.
2. Source.
Choose W-2 from the drop-down menu.
3. Number of times paid per year.
Enter 1 the W-2 reflects all of the income the person is expected to receive from the seasonal job in one amount.
4. Income amounts.
Enter the amount from Box 5 of the W-2 in the first Income amount box. The worksheet will calculate the annual seasonal income based on the above entries. Since the multiplier is 1 the result will be the same as the W-2 amount.
Note: Enter any Unemployment Compensation found on the Form-1040, Line 19, in Section B of the Income Worksheet.
Example: Seasonal Employment with 1040 Tax Form and W-2s.
Leona applies for MinnesotaCare. She is employed seasonally at a garden center. She generally works eight months of the year and collects unemployment compensation the remaining four months. She has worked this seasonal job for several years.
Action:
Request Leona's prior year 1040 tax form and W-2s to verify her income. Complete the MinnesotaCare Income Worksheet as follows:
Section A:
1. Name of adult/child: Enter Leona.
2. Source: Choose W-2 from the drop-down menu.
3. Number of times paid per year: Enter 1.
4. Income amounts: Enter the amount in Box 5 of the W-2.
The worksheet will calculate the annual seasonal employment income based on the above entries.
Section B:
1. Name of adult/child: Enter Leona.
2. Type: Choose Unemployment from the drop-down menu.
3. Source: Enter 1040 tax form.
4. Number of times paid per year: Enter 1 (The 1040 tax form shows one amount that reflects all of the unemployment compensation Leona expects to receive this year.)
5. Income amounts: Enter the amount of unemployment compensation found on Leona's 1040 tax form.
The worksheet will calculate the annual unemployment compensation amount based on the above entries.
Skip this section of the worksheet if the household reports no unearned income.
Enter unearned income in Section B of the MinnesotaCare Income Worksheet as follows:
1. Name of adult/child.
Enter the name of the household member who receives the unearned income.
2. Type.
Choose an income type from the drop-down menu. Enter the type of unearned income if it is not one of the types on the drop-down list.
3. Source.
Enter the name of the document or electronic verification source used to verify this income.
4. Number of times paid per year.
Enter the number of times the person is paid per year, such as:
a. If paid daily, enter the number of days paid in a year.
b. If paid weekly, enter 52.
c. If paid bi-weekly (every other week), enter 26.
d. If paid semi-monthly (twice a month such as the 15th and the 30th every month), enter 24.
e. If paid monthly, enter 12.
f. If paid quarterly, enter 4.
g. If paid once annually, enter 1.
h. If paid on a different schedule, use a calendar to determine the correct number of times paid per year.
5. Income amounts.
Enter the amounts of unearned income as reported on the verification. The worksheet will calculate the average income amount and the annual amount based on the above entries.
Example:
Josh applies for MinnesotaCare. He reports that he received a $2,000 payment from a trust this month and that he receives this income four times each year. This is his only source of income. Josh does not provide any verification of the income with the application, and there is no electronic data source that can verify trust income.
Action:
Request verification of the trust income for the past 12 months. Josh submits two bank statements from the past year that show the dates he received payments from the trust. Complete Section B of the MinnesotaCare Income Worksheet as follows:
1. Name of adult/child: Enter Josh.
2. Type: Enter Trust.
3. Source: Enter Bank Statement.
4. Number of times paid per year: Enter 4.
5. Income amounts: Enter the two payments of $2,000.
The worksheet calculates Josh's average unearned income amount of $2,000 and the annual unearned income of $8,000 based on the above entries.
The MinnesotaCare Income Worksheet can accommodate up to four Income amounts for a single source of unearned income. For applicants and enrollees who receive unearned income less frequently than monthly, but more than four times per year, average the unearned income amounts and enter the average amount in the Income amounts boxes.
Example: Unearned Income Received Sporadically.
Trisha applies for MinnesotaCare for herself and her son, Eddie, in October 2008. Trisha reports that Eddie is supposed to receive child support of $300 monthly. However, the payments are irregular and in some months he has not received a payment. He has not received any child support in the past 30 days.
Action:
Treat this as unearned income received at least once annually, but less frequently than monthly. Determine how often Eddie can expect to get this income based on how often he has received it in the past 12 months. Request verification of the past 12 months of child support payments.
Trisha submits proof that Eddie has received child support seven times in the past year:
October 2008 $0 |
April 2008 $300 |
September 2008 $300 |
March 2008 $0 |
August 2008 $0 |
February 2008 $300 |
July 2008 $300 |
January 2008 $525 |
June 2008 $500 |
December 2007 $0 |
May 2008 $0 |
November 2007 $300 |
The average of the payments is $360.71 ($300 + $300 + $500 + $300 + $300 + $525 + $300 = $2,525 / 7 = $360.71).
Enter Eddie's unearned income in Section B of the MinnesotaCare Income Worksheet as follows:
1. Name of adult/child: Enter Eddie.
2. Type: Choose Child Support from the drop-down menu.
3. Source: Manually enter the name of the document used to verify this income, such as bank statement.
4. Number of times paid per year: Enter 7.
5. Income amounts: Enter $360.71.
The worksheet calculates Eddie's Average income of $360.71 and the Annual amount of $2,524.97 based on the above entries.
Section C. Income from Self-Employment
Skip this section of the worksheet if the household reports no self-employment activity.
Enter self-employment income in Section C as follows:
1. Box 1 Total Adjusted Gross Income.
Enter the adjusted gross income found on the Form 1040, Form 1040A, or Form 1040EZ.
2. Box 2 Subtract 1040 wages not associated with self-employment.
Enter an amount in this box if there are wages found on the Form 1040, Form 1040A, or Form 1040EZ that are not associated with the self-employment activity.
If the self-employed household member is drawing wages from the self-employment activity, and those wages are listed on the Form 1040, Form 1040A or Form 1040EZ, do not enter those wages in Section C. Do not subtract these wages because they are part of the self-employment income.
3. Box 3 Subtract duplicate unearned income.
Enter an amount in this box if there is unearned income included on Form 1040, Form 1040A, or Form 1040EZ that is already listed in Section B.
4. Box 4 Depreciation.
Choose a type of self-employment from the drop-down menu. The corresponding depreciation calculation will appear. Enter the name of the business and the % Ownership if applicable. Use the tax forms to determine the appropriate depreciation amount. Enter the depreciation amount to be added back to income in the Annual amount box.
Exception: Do not add back depreciation that has been deducted from farm self-employment. Box 4 applies only to non-farm self-employments. The drop-down menu will not include an option to choose a farm self-employment type.
Note: Depreciation expenses for a business may appear purposely or in error on more than one tax schedule or form. Submit a HealthQuest if there are multiple or conflicting depreciation amounts and you are unsure of which depreciation amount to add back to self-employment income.
5. Box 5 Carry Forward Net Operating Loss.
Enter an amount in this box for non-farm self-employment income that includes a net operating loss carry forward (also called an NOL carry over) on line 21 of the 1040 tax form. Enter the net operating loss carry forward amount to be added back to self-employment income in the Annual Amount box.
6. Box 6 Other.
Use this box to add self-employment wages paid to a member of the MinnesotaCare household that are not included as wages on line 7 of the 1040 tax form. Add self-employment wages paid to:
n adult household members,
n children who are over age 19, or
n children under age 19 who are not students.
Do not add wages paid to children who are under age 19 and are full-time or part-time students because their earned income is excluded for MinnesotaCare.
Section D. New/Changed Self-Employment Income
Use this section to calculate self-employment income for applicants and enrollees who report:
l New self-employment income from a business that is less than one year old and has not yet been included on a tax return; or
l Self-employment income from a business that was included on the prior years tax forms for part of the year; or
l Self-employment income (or loss) that has ended and should be removed from the income calculation.
For new self-employment, enter a case note to indicate the start date of the business, whether tax forms are available, and what verifications were submitted if prior year tax forms do not include the new self-employment income.
New self-employment income from business records
Enter new self-employment income from business records in Section D of the MinnesotaCare Income Worksheet as follows:
1. Box 1 Gross Income.
Enter the calculation used to annualize the gross income and the Annual amount.
2. Box 4 Expenses.
Enter the calculation to annualize the business expenses and the Annual amount.
3. Box 5 Depreciation.
Enter the calculation to annualize the depreciation and the Annual amount.
Exception: Do not add back depreciation deducted from farm self-employment.
New self-employment income from the prior year tax forms
Use Sections C and D of the DHS-3352 to calculate self-employment income for applicants and enrollees who report new self-employment income from a business that was included on the prior year tax return, but was not in business the full calendar year.
Enter new self-employment income from tax forms that reflect a partial year of the new business as follows:
Section C:
1. Box 1 Total Adjusted Gross Income.
Enter the adjusted gross income found on the Form 1040, Form 1040A or Form 1040EZ.
2. Box 2 Subtract 1040 wages not associated with self-employment.
m Enter an amount in this box if there are wages found on the Form 1040, Form 1040A or Form 1040EZ that are not associated with self-employment activity.
m If a household member is drawing wages from the new self-employment activity, and those wages are listed on the Form 1040, Form 1040A or Form 1040EZ, do not enter those wages in Section C. Section D addresses partial year self-employment wages.
3. Box 3 Subtract duplicate unearned income.
Enter an amount in this box if there is unearned income included on Form 1040, Form 1040A or Form 1040EZ that is already listed in Section B.
4. Boxes 4, 5, and 6. Skip these boxes. All information about the new self-employment income will be entered in Section D.
Section D:
1. Box 2 Subtract old 1040 self-employment income.
Subtract the partial year of business income found on the 1040 tax form. If the partial year business income amount is a loss, enter that amount as a negative number by putting a minus sign before the Annual amount. The partial year business income or loss may include any or all of the following:
m Self-employment wages found on the 1040 tax form, Line 7;
m Business income or loss from a Schedule C or C-EZ found on the 1040, Line 12;
m Other gains or losses from the sale of business property from Form 4797, found on the 1040, Line 14;
m Rental real estate, partnership or S Corp income found on the 1040 tax form, Line 17;
m Farm income or loss from Schedule F, found on the 1040, Line 18.
m Other business income found on the 1040, Line 21.
Do not add back deductions found on the 1040 tax form on Lines 23 through 35.
If the household has one or more other businesses and it is unclear which income or loss amounts were derived from the new business, contact the applicant or enrollee to determine the amounts that are attributable to the new business.
2. Box 3 Add new/changed self-employment income.
Annualize the self-employment income or loss for the new business:
m Under Calculation enter the Annual amount from Box 2.
m Divide this amount by the number of months reflected in the partial year of business income to establish a monthly amount. (Count any part of a month the business was in existence as a full month in this calculation.)
m Multiply this amount by twelve and enter the result in Box 3 under Annual amount. Show your work in the Calculation box.
3. Box 5 Depreciation.
Annualize depreciation for the new business. Use the drop-down information in Section C to locate the correct depreciation amounts on the tax forms.
m Enter the partial year depreciation for the new business in Box 5 under Calculation.
m Divide this amount by the number of months reflected in the partial year of business income to establish a monthly depreciation amount.
m Multiply this amount by twelve and enter the result in Box 5 under Annual amount. Show the calculations in the Calculation box.
Exception: Do not add back depreciation deducted from farm self-employment.
Example: New self-employment derived from tax forms
Harry is a self-employed MinnesotaCare applicant. He is the sole proprietor of a bait shop he started on July 12 of last year. He submits his prior year tax return, including business schedules, as verification of his self-employment income. He had a net profit of $6,000 on a Schedule C for his new business with a deduction of $300 for depreciation. He worked a wage job prior to starting the new business, but receives no wages currently. He reports no unearned income.
Action:
Complete the following sections of the MinnesotaCare Income Worksheet:
1. Skip Sections A and B since Harry has no wages or unearned income.
2. Section C:
a. Total Adjusted Gross Income: Enter the adjusted gross income found on the 1040/1040A/1040EZ form.
b. Subtract 1040 wages not associated with self-employment: Subtract all wage income found on the 1040 tax form line 7.
c. Skip boxes 3, 4, 5, and 6. Harry has no unearned income and all information for his new self-employment will be entered in Section D.
3. Section D:
a. Box 2, Subtract old 1040 self-employment income: Subtract the partial year self-employment income for the new business. (This could include 1040 lines 7, 12, 14, 17, 18 and/or 21 depending on the nature of the new business.) For Harry, this is Schedule C income of $6,000 on 1040 line 12.
b. Box 3, Add new/changed self-employment income: Annualize the income found on the 1040 tax form for the new business. Since Harry started his new business in July, the $6,000 net profit reflects six months of income.
$6,000 / 6 = $1,000 per month.
$1,000 X 12 = $12,000 annual income.
Enter 12,000 as the Annual amount. Show the calculation in the Calculation box.
c. Box 5, Depreciation: Harry had a deduction of $300 for depreciation on his Schedule C. Since Harry started his new business in July, $300 reflects six months of depreciation. $300 / 6 = $50; $50 X 12 = $600 annual amount.
Enter 600 as the Annual amount. Show your work in the Calculation box.
4. The worksheet calculates Harry's Total Household Income of $12,600. Review the worksheet to ensure all amounts and calculations are correct.
5. Enter $12,600 on the RINC screen in MMIS.
6. Record the monthly premium on the MinnesotaCare Income Worksheet.
Self-employment income that has ended
Use Sections C and D of the MinnesotaCare Income Worksheet to calculate self-employment income for applicants and enrollees with more than one source of self-employment income who report that one of their sources of self-employment income has ended. (If all self-employment income has ended, recalculate the total household income based solely on wages and unearned income using Sections A and B of the worksheet.)
Enter the following in Sections C and D to subtract self-employment income that has ended, while other self-employment income continues:
Section C:
1. Box 1 Total Adjusted Gross Income.
Enter the adjusted gross income found on the Form 1040, Form 1040A or Form 1040EZ.
2. Box 2 Subtract 1040 wages not associated with self-employment.
Enter an amount in this box if there are wages found on the Form 1040, Form 1040A or Form 1040EZ that are not associated with self-employment activity. If a household member was drawing wages from the defunct self-employment activity, and those wages are listed on the Form 1040, Form 1040A or Form 1040EZ, do not enter those wages in Section C. Section D addresses the self-employment wages.
3. Box 3 Subtract duplicate unearned income.
Enter an amount in this box if there is unearned income included on the 1040/1040A/1040EZ that is already listed in Section B.
4. Box 4 Complete the remainder of Section C for the businesses that are still operating.
Section D:
1. Box 2 Subtract old 1040 self-employment income.
Subtract all 1040 income attributed to the defunct business. This may include any or all of the following:
a. Self-employment wages (1040 Line 7).
b. Business income or loss from a Schedule C or C-EZ, (1040 Line 12).
c. Other gains or losses from the sale of business property (1040 Line 14).
d. Rental real estate, partnership or S-Corp income (1040 Line 17).
e. Farm income or loss (1040 Line 18).
f. Other business income (1040 Line 21).
Add all of the amounts attributed to the defunct business. Loss amounts and any Carry Forward Net Operating Loss attributed to the business will offset income amounts. Enter the total in Box 2 under Annual amount. If the total is a loss, enter it as a negative number by putting a minus sign before the amount. Do not add back deductions found on the 1040 tax form on Lines 23 through 35.
Example: Change in Self-Employment Income Derived from Tax Forms.
Keith and Maya are enrolled in MinnesotaCare with their two children. They are both self-employed, and together they participate in a sole proprietor home decorating business, an S-Corp machine shop and they farm. At renewal, they report that Maya has closed her home decorating business. They are still participating in the S-Corp and the farm. Keith is paid wages from the S-Corp. They have no non-self-employment wage income and no unearned income. They submit their prior year 1040 tax return and all related schedules as verification of their income.
Action:
Complete the following sections of the MinnesotaCare Income Worksheet:
1. Skip Sections A and B since the family reports no wage income or unearned income.
2. Section C:
a. Enter the Adjusted Gross Income from line 37 of the 1040 form in Section C, Box 1.
b. Leave Box 2 blank, since the only wages shown on the couples 1040 tax form are Keith's wages from the S-Corp.
c. Complete the remainder of Section C for the two businesses that are still operating. Enter S-Corp depreciation found on using Schedule K-1 and Form 1120S.
d. Enter any Carry Forward Net Operating Loss from the S-Corp in Box 5.
3. In Section D, Box 2, subtract all 1040 income attributed to the home decorating business. This may include any or all of the following:
a. Self-employment wages (1040 Line 7).
b. Business income or loss from a Schedule C or C-EZ, (1040 Line 12).
c. Other gains or losses from a sale of business property (1040 Line 14).
d. Rental real estate, partnership or S Corp income (1040 Line 17).
e. Farm income or loss (1040 Line 18).
f. Other income (1040 Line 21).
Add all of the amounts attributed to the defunct business. Loss amounts and any Net Operating Loss Carry forward attributed to the home decorating business will offset income amounts. Enter the total in Box 2 under Annual amount. If the total is a loss, enter it as a negative number by putting a sign before the amount. Do not add back deductions found on the 1040 tax form on lines 23 through 35.
4. Review the worksheet to ensure all amounts and calculations are recorded correctly. Enter the Total Household Income amount summed by the worksheet on the RINC screen in MMIS.
5. Enter the monthly premium on the MinnesotaCare Income Worksheet.
The worksheet will automatically compute the total household income and will divide the total by twelve for a monthly income amount.
l Enter the Total Household Income on the RINC screen in MMIS.
l Compare the monthly figure to the total monthly income amount on the RSLT screen.