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Income (part 2)
WAC 182-509-0340 MAGI income -- American Indian/Alaska Native excluded income.
Effective January 18, 2014.
For the purposes of determining eligibility of American Indians/Alaska Natives for modified adjusted gross income (MAGI)-based Washington apple health (WAH) (see WAC 182-509-0300), the agency excludes from MAGI the following:
- Distributions from Alaska Native corporations and settlement trusts;
- Distributions from any property held in trust, subject to federal restrictions, located within the most recent boundaries of a prior federal reservation, or otherwise under the supervision of the Secretary of the Interior;
- Distributions and payments from rents, leases, rights of way, royalties, usage rights, or natural resource extraction and harvest from:
- Rights of ownership or possession in any lands described in (b) of this subsection; or
- Federally protected rights regarding off-reservation hunting, fishing, gathering, or usage of natural resources.
- Distributions resulting from real property ownership interests related to natural resources and improvements that are:
- Located on or near a reservation or within the most recent boundaries of a prior federal reservation; or
- Resulting from the exercise of federally protected rights relating to such real property ownership interests.
- Payments resulting from ownership interests in or usage rights to items that have unique religious, spiritual, traditional, or cultural significance or rights that support subsistence or a traditional lifestyle according to applicable tribal law or custom;
- Student financial assistance provided under the Bureau of Indian Affairs education programs; and
- Any other applicable income exclusion as provided by federal law, regulation, or rule, including the Internal Revenue Code, treasury regulations, and Internal Revenue Service revenue rulings, revenue procedures, notices, and other official tax guidance.
WAC 182-509-0360 MAGI income -- How the income of a child age eighteen or younger or a tax dependent is counted.
Effective January 21, 2017
The medicaid agency determines what income is counted when determining eligibility for modified adjusted gross income (MAGI)-based Washington apple health under WAC 182-509-0300
- When determining countable income for persons described in subsections (2) through (4) of this section, the countable income of a child age eighteen or younger or of a tax dependent is included only when it meets the threshold required for tax filing under 26 U.S.C. Sec. 6012 (a) (1). For purposes of this section, countable income of a child or tax dependent does not include Social Security dependent benefits.
- Determining countable income of a tax filer. The countable income of a tax filer includes the countable income of each member in the tax filer's medical assistance unit (MAU) under WAC 182-506-0012 (1).
- Determining countable income of a tax dependent. The countable income of a tax dependent includes the countable income of each member in the tax dependent's MAU under WAC 182-506-0012 (2).
- Determining countable income of a nonfiler. The countable income of a nonfiler, including a person considered a nonfiler under WAC 182-506-0012 (2) (b) (ii), includes the countable income of each member in the nonfiler's MAU under WAC 182-506-0012 (3).
Income of a tax dependent or child age 18 or younger is only countable for the assistance unit if it meets or exceeds the tax filing threshold, regardless of their intent to file taxes.
Social Security income of a tax dependent or child age 18 or younger is never countable as the tax filing threshold is never reachable when determining their eligibility.
WAC 182-509-0365 MAGI income -- Self-employment income.
Effective September 13, 2021.
For purposes of determining eligibility for modified adjusted gross income (MAGI)–based Washington apple health (WAH) (see WAC 182-509-0300):
- Self-employment income is income earned by a person from running a business, performing a service, selling items that are made, or reselling items with the intent to make a profit, after deducting allowable IRS self-employment expenses. This income can be earned if the person is carrying on a trade or business as a sole proprietor or an independent contractor; a member of a partnership that carries on a trade or business; or otherwise in business for themselves (including a part-time business). Examples of self-employment business structures include, but are not limited to:
- Sole proprietorship - An unincorporated business owned by one person.
- Partnership - A relationship between two or more people who conduct a trade or business.
- Corporation - An entity that conducts business, realizes net income or loss, pays taxes, and distributes profits to shareholders.
- S corporation - Similar to a corporation, but this structure passes corporate income, losses, deductions, and credits through to the shareholders for federal tax purposes.
- Limited liability company (LLC) - An entity formed by one or more people or entities through a special written agreement that details the organization of the LLC.
- Self-employment income is counted as earned income as described in WAC 182-509-0330, except when it is earned by a child or tax dependent and the income is below the filing threshold, as described in WAC 182-509-0360(1).
- A person is considered to be self-employed if they earn income without having an employer/employee relationship with the individual who pays the income. Self-employed people do not work for a specific employer who pays them a consistent salary or wage. Factors to consider are whether:
- The person has primary control or has the right to control what they do and how they do their job;
- The business aspects of the person's job are controlled by the person and not the payer (this includes things like how the person is paid, whether expenses are reimbursed, or who provides tools/supplies);
- The person has a contract stating that they are an independent contractor; or
- The person reports their income using one or more IRS schedules or forms that include, but are not limited to:
- Schedule C;
- Schedule C-EZ;
- Schedule E;
- Schedule F;
- Schedule K-1;
- Schedule SE;
- Form 940;
- Form 941;
- Form 942;
- Form 943;
- Form 1065; or
- Form 1120.
- A person is considered to have an employer/employee relationship when:
- The individual the person provides services for has primary control of how the work is done; or
- The person receives an IRS Form W-2 to report the income that is earned.
- Self-employment does not have to be a licensed business for a person's business or activity to qualify as self-employment.
- A person must keep records of his or her self-employment income and deductions and provide this information to the agency upon request.
WAC 182-509-0370 MAGI income -- How self-employment income is counted.
Effective September 13, 2021.
For purposes of determining eligibility for modified adjusted gross income (MAGI)–based Washington apple health, the medicaid agency counts self-employment income by:
- Adding together gross self-employment income and any profit made from selling business property or equipment over a period of time; and
- Subtracting business expenses and income deductions allowed by the Internal Revenue Service that the person would be entitled to if they were filing a federal tax return and either:
- Averaging the income to come up with a monthly amount based on the period of time the business has been in operation within the last year; or
- Averaging the income over a representative period of time if the current income does not represent the person's projected income as shown by clear indications of future changes in income; or
- By averaging the self-employed income and deductions claimed on the previous year's tax return over a representative period of time.
Individuals are self-employed who are in business for themselves. Countable self-employment income is gross income minus any allowable Internal Revenue Service business expenses. Types of businesses can include sole proprietorships, rentals, farming, partnerships, and corporations.
Most self-employed individuals can verify their income with their tax return unless they don’t file one or their most recent tax return is not a good reflection of their current income. These individuals can provide profit and loss for their business for the past three months.
Individuals who are shareholders in an S-corporation must provide proof of the wages the corporation pays them plus any ordinary business income received from the corporation.
WAC 182-509-0375 MAGI income -- Lump sums.
Effective September 13, 2021.
For purposes of determining eligibility for modified adjusted gross income (MAGI)–based Washington apple health (see WAC 182-509-0300):
- A lump sum payment is money that a person receives but does not expect to receive on a continuing basis, such as an insurance settlement.
- A lump sum payment is only counted as income if it is received in the month of application, and it otherwise qualifies as countable income under another rule.
To be considered a lump sum, it has to be:
- Anticipated to be received one-time; and
- A countable source of income
Example 1: Betty receives an inheritance from her mother who passed away during the month she applied for Washington Apple Health. She does not report this income because it is not a countable source of income.
Example 2: Johnny receives a distribution from stocks he holds in investments during the month of application. He reports this income, but this is not a lump sum because it is not received one time. This is anticipated to be ongoing income. Johnny averages this income over a period of time.
Example 3: Jesse wins the lottery and receives a lump sum during his certification period. He reports this change, however, because the lump sum was not received during the month of application, it is not countable income. Only the interest income from the lottery winnings is countable income.