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:

1. Adding together gross self-employment income and any profit made from selling business property or equipment over a period of time; and 
2. 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:
   1. 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
   2. 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
   3. By averaging the self-employed income and deductions claimed on the previous year's tax return over a representative period of time.

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):

1. 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:
   1. Sole proprietorship - An unincorporated business owned by one person.
   2. Partnership - A relationship between two or more people who conduct a trade or business.
   3. Corporation - An entity that conducts business, realizes net income or loss, pays taxes, and distributes profits to shareholders.
   4. S corporation - Similar to a corporation, but this structure passes corporate income, losses, deductions, and credits through to the shareholders for federal tax purposes.
   5. 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.
2. 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). 
3. 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:
   1. The person has primary control or has the right to control what they do and how they do their job;
   2. 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);
   3. The person has a contract stating that they are an independent contractor; or
   4. The person reports their income using one or more IRS schedules or forms that include, but are not limited to:
      1. Schedule C;
      2. Schedule C-EZ;
      3. Schedule E;
      4. Schedule F;
      5. Schedule K-1;
      6. Schedule SE;
      7. Form 940;
      8. Form 941;
      9. Form 942;
      10. Form 943;
      11. Form 1065; or 
      12. Form 1120.
4. A person is considered to have an employer/employee relationship when:
   1. The individual the person provides services for has primary control of how the work is done; or
   2. The person receives an IRS Form W-2 to report the income that is earned.
5. Self-employment does not have to be a licensed business for a person's business or activity to qualify as self-employment. 
6. A person must keep records of his or her self-employment income and deductions and provide this information to the agency upon request.

WAC 182-509-0360 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

1. 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.
2. 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).
3. 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).
4. 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).

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:

1. Distributions from Alaska Native corporations and settlement trusts;
2. 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;
3. Distributions and payments from rents, leases, rights of way, royalties, usage rights, or natural resource extraction and harvest from:
   1. Rights of ownership or possession in any lands described in (b) of this subsection; or
   2. Federally protected rights regarding off-reservation hunting, fishing, gathering, or usage of natural resources.
4. Distributions resulting from real property ownership interests related to natural resources and improvements that are:
   1. Located on or near a reservation or within the most recent boundaries of a prior federal reservation; or
   2. Resulting from the exercise of federally protected rights relating to such real property ownership interests.
5. 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;
6. Student financial assistance provided under the Bureau of Indian Affairs education programs; and
7. 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 182-509-0335 MAGI income -- Educational benefits.

Effective September 18, 2020.

For purposes of determining eligibility for modified adjusted gross income (MAGI)–based Washington apple health (see WAC 182-509-0300), the agency or its designee does not count educational benefits as income when they are used for education expenses, unless the educational benefits are used for living expenses. Examples include, but are not limited to:

1. Educational assistance in the form of grants or loans issued under Title IV of the Higher Education Amendments (Title IV - HEA) or through a program administered by the Department of Education (DOE), such as:
   1. Pell grants (Title IV);
   2. Stafford loans (Title IV);
   3. Perkins loan program (Title IV);
   4. State need grant program (Title IV); and
   5. Training programs administered by the Department of Education (DOE).
2. Payments received for education, training, or subsistence under any law administered by the department of Veteran's Affairs (VA).
3. Student financial assistance provided under the Bureau of Indian Affairs education programs.
4. Educational assistance in the form of grants or loans under the Carl D. Perkins Vocational and Applied Technology Education Act, P.L. 101-392.
5. Work study income including:
   1. Federal or state work study income; and
   2. WorkFirst work study income.
6. Payments to service academy cadets at a military academy.
7. Payments for the purposes of tuition made on behalf of the individual to an educational organization for the education or training of such individual.

WAC 182-509-0330 MAGI income -- Earned income.

Effective January 9, 2014.

For purposes of determining eligibility for modified adjusted gross income (MAGI)–based Washington apple health (WAH) (see WAC 182-509-0300):

1. Earned income is income received from working. This includes, but is not limited to:
   1. Wages;
   2. Salaries;
   3. Tips;
   4. Commissions;
   5. Profits from self-employment activities as described in WAC 182-509-0365; and
   6. One-time payments for work done over a period of time, if the income is received in the month of application.
2. When earned income must be counted, the agency computes the countable amount based on deductions from income allowed by the Internal Revenue Service when determining a person's tax liability.
3. See WAC 182-509-0370 for information on how self-employment income is counted.

WAC 182-509-0325 MAGI income -- Unearned income.

Effective January 9, 2014.

For purposes of determining eligibility for modified adjusted gross income (MAGI)–based Washington apple health (WAH) (see WAC 182-509-0300):

1. Unearned income is income received from a source other than employment or self-employment. Examples of unearned income include, but are not limited to:
   1. Tier 1 Railroad Retirement;
   2. Unemployment compensation, except as described in WAC 182-509-0320;
   3. Title II Social Security benefits (including retirement benefits, disability benefits, and benefits for survivors);
   4. Rental income;
   5. Pensions, IRAs, military retirement and annuity payments, except as described in WAC 182-509-0320;
   6. Dividend payments from stocks or shares held in companies; and
   7. Per capita distributions from gaming made by a tribe (see WAC 182-509-0340).
2. When the unearned income must be counted, the agency counts the gross amount before any taxes or premiums are taken out.
3. See WAC 182-509-0320 for examples of unearned income that are not counted.

WAC 182-509-0320 MAGI income -- Noncountable income.

Effective September 18, 2020.

For purposes of determining eligibility for modified adjusted gross income (MAGI)–based Washington apple health (see WAC 182-509-0300):

1. Some types of income are not counted when determining eligibility for MAGI-based apple health. Under the MAGI income methodology described in WAC 182-509-0300, income is not counted if the Internal Revenue Service (IRS) permits it to be excluded or deducted for purposes of determining the tax liability of a person. (See 26 U.S.C. Sections 62(a) and 101-140.)
2. Examples of income that are not counted include, but are not limited to:
   1. Bona fide loans, except certain student loans as specified under WAC 182-509-0335;
   2. Federal income tax refunds and earned income tax credit payments for up to 12 months from the date received;
   3. Child support payments received by any person included in household size under WAC 182-506-0010;
   4. Nontaxable time loss benefits or other compensation received for sickness or injury, such as benefits from the department of labor and industries (L&I) or a private insurance company;
   5. Title IV-E and state foster care and adoption support maintenance payments;
   6. Veteran's benefits including, but not limited to, disability compensation and pension payments for disabilities paid to the veteran or family members; education, training and subsistence; benefits under a dependent-care assistance program for veterans, housebound allowance and aid and attendance benefits;
   7. Money withheld from a benefit to repay an overpayment from the same income source;
   8. One-time payments issued under the Department of State or Department of Justice reception and replacement programs, such as Voluntary Agency (VOLAG) payments;
   9. Nontaxable income from employment and training programs;
   10. Any portion of income used to repay the cost of obtaining that income source;
   11. Insurance proceeds or other income received as a result of being a Holocaust survivor;
   12. Federal economic stimulus payments that are excluded for federal and federally assisted state programs;
   13. Income from a sponsor given to a sponsored immigrant;
   14. Fringe benefits provided on a pretax basis by an employer, such as transportation benefits or moving expenses;
   15. Employer contributions to certain pretax benefits funded by an employee's elective salary reduction, such as amounts for a flexible spending account;
   16. Distribution of pension payments paid by the employee (such as premiums or contributions) that were previously subject to tax;
   17. Gifts as described in IRS Publication 559; Survivors, Executors, and Administrators;
   18. Cash or noncash inheritances, except that the agency counts income produced by an inheritance;
   19. Death benefits from life insurance and certain benefits paid for deaths that occur in the line of duty;
   20. Working families' tax credit payments under RCW 82.08.0206; and
   21. Other payments that are excluded from income under state or federal law.
3. Income received from other agencies or organizations as needs-based assistance is not countable income under this section.
   1. "Needs-based" means eligibility for the program is based on having limited income, or resources, or both. Examples of needs-based assistance are:
      1. Clothing;
      2. Food;
      3. Household supplies;
      4. Medical supplies (nonprescriptions);
      5. Personal care items;
      6. Shelter;
      7. Transportation; and
      8. Utilities (e.g. lights, cooking fuel, the cost of heating or heating fuel).
   2. Needs-based cash programs include, but are not limited to, the following apple health programs:
      1. Diversion cash assistance (DCA);
      2. Temporary assistance for needy families (TANF);
      3. State family assistance (SFA);
      4. Pregnant women's assistance (PWA);
      5. Refugee cash assistance (RCA);
      6. Aged, blind, disabled cash assistance (ABD); and
      7. Supplemental security income (SSI).

WAC 182-509-0315 MAGI income -- Ownership of income.

Effective January 9, 2014.

1. For purposes of determining eligibility for modified adjusted gross income (MAGI)–based Washington apple health (WAH) (see WAC 182-509-0300) income is considered available to a person if:
   1. An individual in the person's medical assistance unit receives or can reasonably predict that he or she will receive the income.
   2. The income must be counted based on rules under chapter 182-509 WAC.
   3. The person has control over the income, which means the income is available to them. If the person has a representative payee, protective payee, or other individual who manages the income on the person's behalf, it is considered as if the person has control over this income.
   4. The person can use the income to meet current needs.
2. Income that is included in the person's taxable gross income which is required to be reported to the Internal Revenue Service (IRS) is considered as available even if it is paid to someone else or withheld to pay a garnishment, lien or other obligation. (For example, a person manages a block of apartments and lives in one of the apartments. The employer withholds a portion of the person's monthly wages as rent due for the apartment in which he resides. The income that is counted is the gross amount prior to the deduction for rent.)
3. The agency may conduct post-eligibility reviews of health care applications as described in WAC 182-503-0050. Upon request by the agency, a person must provide proof about a type of income, including submitting clarification on:
   1. Who owns the income;
   2. Who has legal control of the income;
   3. The amount of the income; or
   4. If the income is available.

WAC 182-509-0310 MAGI income -- Timing of income.

Effective January 9, 2014.

For purposes of determining eligibility for modified adjusted gross income (MAGI)–based Washington apple health (WAH) (see WAC 182-509-0300):

1. The agency uses a point-in-time estimate to determine a person's countable income.
2. Point-in-time means that the income is received, or is likely to be received, in the month in which the person submits an application or renewal for WAH, or the month in which the agency completes a redetermination of coverage, with the following provisions:
   1. When a person is paid less frequently than on a monthly basis, (for example, they are self-employed), the agency uses an average to calculate the monthly amount. The average is calculated by:
      1. Adding the total income for representative period of time;
      2. Dividing by the number of months in the time frame; and
      3. Using the result as a monthly average.
   2. When a person is paid more frequently than on a monthly basis, the agency uses the following budgeting method to calculate a monthly amount:
      1. If the person is paid weekly, the agency multiplies weekly expected income by 4.3;
      2. If the person is paid every other week, the agency multiplies expected income by 2.15.
   3. If the person's current income does not represent his or her projected income as evidenced by clear indications of future changes in income, the agency permits the person to estimate a monthly amount by averaging income over a representative period of time.
3. If the person normally gets the income:
   1. On a specific day, the agency counts it as available on that date.
   2. Monthly or twice monthly and pay dates change due to a reason beyond the person's control, such as a weekend or holiday, it is counted in the month it would normally be received.
   3. Weekly or every other week and pay dates change due to a reason beyond the person's control, it is counted in the month it would normally be received.
4. For information about how income is verified, see WAC 182-503-0050.
5. If the person reports a change in income as required under WAC 182-504-0105 and the change is expected to last for two months or longer, the agency updates the estimate of income based on this change, unless the person receives categorically needy WAH coverage as a pregnant woman or child.