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VA Aged, Blind, and Disabled Income Exclusions - Medicaid

In order to determine income eligibility for Medicaid, you generally count only the earned and unearned income that is left after subtracting from gross income the various income exclusions. This is called Countable Income.

Exclusions never reduce unearned income below zero.

The exclusions are different for the Aged, Blind and Disabled (ABD) Covered Groups and the Family & Child (F&C) Covered Groups. (See F&C Income Exclusions for a list of exclusions when determining eligibility for F&C Covered Groups. See Medicaid Covered Groups for more information about the different groups.

This topic outlines the income exclusions for all ABD Covered Groups (except that only the first type of exclusion below applies when determining income eligibility for Long Term Care).

The exclusions are divided into four parts.

·             What Is Not Income

Types of incoming funds that are defined as "not income" are never counted in determining eligibility, even when the income to be compared to an income limit is Gross Income. (Gross Income is used in determining eligibility for ABD Long Term Care services.)

·             Exclusions that Apply to both Earned and Unearned Income

Three types of income apply to both earned and unearned income. They are: Infrequent or Irregular Income; the $20 General Exclusion; and income included in a PASS.

·             Earned Income Exclusions

Earned income may be received in cash, check, credited to an account or made available to the ABD individual, couple or parent, and consists of: Wages; Net earnings from self-employment; Payments for services performed in a sheltered workshop or work activities center; and Royalties earned by an individual in connection with any publication of his/her work and any honoraria received for services rendered.

·             Unearned Income Exclusions

Unearned Income is any income that is not earned and is not included in the What-is-Not-Income list below.

What is Not Income

All of the types of income listed below are not actually exclusions, because exclusions are defined as types of income that are subtracted from Gross Income in calculating Countable Income. Gross Income does not include the types of income listed below because they are defined as "Not Income."

The types of income that are "Not Income" for Medicaid purposes are listed alphabetically:

Bills Paid by a Third Party

Payment of an individual's bills (including supplementary medical insurance under Title XVIII or other medical insurance premiums) by a third party directly to the supplier is not income as long as the bills are not for food, clothing or shelter.

Conversion or Sale of a Resource

Money or goods received for the sale, exchange or replacement of resources are not income, but are resources that have changed their form. This includes any cash or items that are provided to replace or repair resources that have been lost, damaged, or stolen.

Credit Life or Credit Disability Insurance Payments

Payments made under a credit life or credit disability insurance policy on behalf of an individual are not income.

Food, clothing, and shelter received as the result of a credit life or credit disability payment are not income.

Income Tax Refunds

Refunds for income taxes paid are not income even if the taxes were claimed as Blind Work Expenses for Supplemental Security Income (SSI) purposes.

Earned Income Tax Credit (EITC) payments are income when calculating Gross Income, but they are excluded from earned income when calculating Countable Income.

Medical Services

Medical Services are not income for purposes of the Medicaid program. Under the circumstance specified in this section, cash and in-kind items received in conjunction with medical services are not income for Medicaid purposes.

Medical services are those services which are directed toward diagnostic, preventive, therapeutic, or palliative treatment of a medical condition and which are performed, directed, or supervised by a State licensed health professional. The term "medical services" also includes any room and board (i.e., food and shelter) provided during a medical confinement, as well as in-kind medical items such as prescription drugs, eyeglasses, prosthetics and their maintenance, etc.

Personal Services

Personal services performed for an individual are not income. Examples of personal services are: lawn mowing, house cleaning, grocery shopping, and babysitting.

Proceeds of a Loan

Proceeds of a loan are not income to the borrower because of the borrower's obligation to repay.

Interest received on money loaned is unearned income.

Rebates and Refunds

When an individual receives a rebate, refund, or other return of money he or she has already paid, the money returned is not income.

The key idea is applying this policy is a return of an individual's own money. Some "rebates" do not fit that category. For example, if a cooperative operating as a jointly-owned business pays a "rebate" as a return on a member's investment, this money is unearned income similar to a dividend.

Replacement of Income Already Received

If an individual's income is lost, stolen, or destroyed and the individual receives a replacement, the replacement is not income.

Returned Money Received by Mistake

A payment is not income when the individual is aware that he/she is not due the money and returns the check uncashed or otherwise refunds all of the erroneously received money.

Social Services

Social Services are not income for purposes of the Medicaid program. Under the circumstance specified in this section, cash and in-kind items received in conjunction with social services are not income for Medicaid purposes.

A social service is any service (other than medical) that is intended to assist a handicapped or socially disadvantaged individual to function in society on a level comparable to that of an individual who does not have such a handicap or disadvantage.

The following are income, though they may seem to be social services as defined above:

·             Remuneration for work or for activities performed as a participant in a program conducted by a sheltered workshop or work activities center is earned income. Incentive payments to encourage individuals to utilize specified facilities or to participate in specified medical or social service programs are unearned income, to the extent that these payments are unrestricted as to use and are not reimbursement for medical or social services already received.

·             Governmental income maintenance programs are not considered social services programs (e.g., Transitional Aid to Needy Families, Bureau of Indian Affairs General Assistance and/or Child Welfare Assistance, State general assistance, and Veterans Administration compensation or pension benefits).

·             Cash from any insurance policy that pays a flat rate benefit to the recipient without regard to the actual charges or expenses incurred is income. Examples of these types of insurance policies are per diem hospitalization or disability insurance, or cancer or dismemberment policies.

·             Food, clothing, or shelter provided by a non-government medical or social services organization are counted as unearned in-kind income. (All other in-kind items from non-government medical or social services organizations are not income. And note that food, clothing, and shelter provided by a government medical or social services organization are not income.)

Wage-Related Payments

Various payments made by employers that are not deducted from the employees' pay (such as the employer's share of FICA taxes) are not available to the employee as pay and are not income.

Weatherization Assistance

Weatherization assistance (e.g., insulation, storm doors, and windows, etc.) is not income.

Exclusions that Apply to both Earned and Unearned Income

The following income exclusions apply to both earned income and unearned income:

Infrequent or Irregular Income Exclusion

Infrequent: Income is infrequent if it is received no more than once in a calendar quarter from a single source.

Irregular: Income is irregular if it cannot reasonably be expected.

Exclusion Limits: Income that is received either infrequently or irregularly provided the total of such income does not exceed:

·             $10 per month of earned income; and/or

·             $20 per month of unearned income

Applicable to Both Earned and Unearned Income: This exclusion can apply to both earned and unearned income in the same month provided the total of each does not exceed the above limits. Thus it is possible to exclude as much as $30 in a month under this provision.

Total Exceeds the Limit: If, however, the total of such income exceeds the amounts above in a given month, the exclusion does not apply that month. Either all infrequent or irregular earned and/or unearned income or none of it is excluded, depending on the amount involved.

Limit as it Applies to Couples: The dollar amount of the exclusion does not increase even if both an eligible individual and spouse (eligible or ineligible) have infrequent or irregular income.

To Whom Applicable: The exclusion is applicable to income received infrequently or irregularly by an eligible individual, eligible or ineligible spouse, and parent of blind or disabled child.

$20 per Month General Exclusion

The first $20 per month of any unearned income other than Income Based on Need (IBON) is excluded.

The dollar amount of this exclusion is not increased when both an eligible individual and his/her eligible spouse have income. An eligible couple receives one $20 general exclusion per month.

If an individual (or couple) has less than $20 of unearned income (other than IBON) in a month and also has earned income in that month, the remainder of the $20 exclusion reduces the amount of the earned income.

Plan for Achieving Self-Support (PASS)

Income, whether earned or unearned, of a blind or disabled recipient may be excluded if such income is needed to fulfill a Plan for Achieving Self-Support (PASS). The Social Security Administration determines if an SSI recipient is entitled to a PASS exclusion.

This exclusion does not apply to a blind or disabled individual age 65 or older, unless he/she was receiving SSI or State disability or blind payments for the month before he/she became age 65.

Earned Income Exclusions

The earned income exclusions are the same as those that apply in determining Supplemental Security Income (SSI) benefit amounts.

The following types of income are excluded from gross earned income when calculating Countable Income. The exclusions are listed in the order that they are subtracted:

·             EITC: Earned Income Tax Credit (EITC) payments. If you receive a payment that exceeds the amount of taxes you pay, that income is excluded;

·             Infrequent or Irregular: Up to $10 of earned income in a month if it is infrequent or irregular;

·             Student Earned Income Exclusion: Up to $1,700 per month, but not more than $6,840 in a calendar year, of the earned income of a blind or disabled student child. (These are the amounts for 2012. They are normally adjusted each year according to a Cost of Living Adjustment (COLA). The amounts were $1,640 monthly and $6,600 annually in 2011.);

·             Unused General Exclusion: Any portion of the $20 monthly general income exclusion which has not been excluded from unearned income in that same month;

·             Earned Income Exclusion: $65 of earned income in a month;

·             IRWE: Earned income of disabled individuals used to pay impairment-related work expenses

NOTE: The IRWE exclusion is available to individuals aged 65 and over only if they received Supplemental Security Income in the month prior to attaining age 65).

·             One-half of Remaining: One-half of remaining earned income in a month;

·             BWE: Earned income of blind individuals used to meet work expenses;

·             PASS: Any earned income used to fulfill a Plan to Achieve Self-Support (PASS) that has been approved by the Social Security Administration (SSA).

Earned income is never reduced below zero. Any unused earned income exclusion (except PASS) is never applied to unearned income.

Any unused portion of a monthly exclusion cannot be carried over for use in subsequent months.

The $20 general and $65 earned income exclusions are applied only once to a couple, even when both members (whether eligible or ineligible) have income, since the couple's earned income is combined in determining Medicaid eligibility.

Unearned Income Exclusions

Except for the $20 general exclusion and PASS, no unused unearned income exclusion may be applied to earned income. (See Income Exclusions that Apply to Both Earned and Unearned Income above.)

Income of the following types is fully or partially excluded from unearned income in determining Countable Income. The exclusions are listed in alphabetical order:

ACTION Programs

See: Corporation for National and Community Service (CNCS).

Agent Orange Settlement Payments

AmeriCorps

See: Corporation for National and Community Service (CNCS).

Assistance Based on Need (ABON)

ABON is excluded from income.

ABON is assistance:

·             Provided under a program which uses income as a factor of eligibility; and

·             Funded wholly by a State (including the District of Columbia, Indian tribes and the Northern Mariana Islands), a political subdivision of a State, or a combination of such jurisdictions.

NOTE Possible Confusion: ABON is treated differently from Income Based on Need (IBON).

EXCEPTIONS: State supplementary payments, made to refugees are considered to be ABON even if the Federal government reimburses the State.

NOTE: If a program uses income to determine payment amount but not eligibility, it is not ABON (e.g., some crime victims compensation programs).

For purposes of this section, Federal funds means monies supplied and directed by the Federal government for a specific use or specific type of program (e.g., community service block grants, Federal matching funds for AFDC). Monies not allocated for specific purposes are not considered Federal funds.

Revenue sharing funds are not "Federal funds" for purposes of this section and programs using these funds are considered wholly State funded.

Austrian Social Insurance Payments

BIA Student Assistance

Student Assistance under the Bureau of Indian Affairs is treated similarly to all Educational Assistance.

Child Support

Alimony and support payments are cash. In-kind contributions for food, clothing or shelter are not income. Support payments may be made voluntarily or because of a court order. Alimony (sometimes called "maintenance") is an allowance made by a court from the funds of one spouse to the other spouse in connection with a suit for separation or divorce.

Alimony, spousal, and other adult support payments are unearned income.

Child support payments are unearned income; however, one-third of the amount of a payment made to or for an eligible child by an absent parent is excluded.

Child support collected by a State and retained as reimbursement for AFDC/TANF payments is not income to a Medicaid recipient. This is true even if the original support was collected on behalf of an SSI child.

Child support collected by a State and paid to an AFDC/TANF assistance unit as a $50 (or less) pass-through of child support is not income to blind/disabled child if the AFDC/TANF unit would have received the same pass-through payment if the child were removed from the AFDC/TANF family unit. (That is, there is another child responsible for the pass through.)

If the AFDC/TANF family would have received a lower pass-through amount with the blind/disabled child removed from the AFDC/TANF family unit, the difference between the pass-through amount actually paid and the pass-through amount which could have been paid had the child not been included in the AFDC/TANF family unit is income in the form of child support to the blind/disabled child.

Community Services Block Grants

The U.S. Department of Health and Human Services (HHS) makes community service block grants to States to provide a broad range of services and activities to assist low-income individuals and alleviate the causes of poverty in a community. States may subsequently make grants or enter into contracts with private nonprofit organizations or political subdivisions.

Assistance involving community service block grants is subject to the general rules pertaining to income. It is neither IBON nor ABON.

Therefore, if you are told that assistance is coming from a block grant, determine whether or not it is excluded from income according to its listing in this entire topic.

Corporation for National and Community Service (CNCS)

Through the Corporation for National and Community Service (CNCS), the Federal Government administers a number of national and community service programs. CNCS is the Federal agency that also administers VISTA and the National Senior Volunteer Corporation programs formerly funded under the ACTION Agency.

Payments to volunteers in the following programs are excluded from income and resources:

·             AmeriCorps

·             National Civilian Community Corps (NCCC)

·             Volunteers in Service to America (VISTA);

·             University Year for ACTION (UYA);

·             Special and Demonstration Volunteer Programs;

·             Retired Senior Volunteer Program (RSVP);

·             Foster Grandparent Program;

·             Senior Companion Program.

Disaster Assistance

This section addresses disasters declared by the President of the United States of America. There are no specific instructions or exclusions addressing other disasters.

The value of support and maintenance in cash or in kind is excluded from countable income if:

·             The individual lived in a household which he or she (or he/she and another person) maintained as his/her or their home at the time a catastrophe occurred in the area; and

·             The individual stopped living in his/her home because of the catastrophe and began to receive support and maintenance within 30 days after the catastrophe; and

·             The individual receives support and maintenance while living in a residential facility maintained by another person. A residential facility is to be interpreted broadly, including a private household, a shelter, or any other temporary housing arrangement resorted to because of the disaster.

Assistance (other than support and maintenance described above) is excluded from countable income without regard to the above restrictions. This includes assistance to repair or replace the individual's own home or other property, and disaster unemployment assistance.

NOTE: See FEMA Assistance for information about emergency food and shelter assistance provided by the Federal Emergency Management Agency (FEMA).

Educational Assistance

Any portion of a grant, scholarship, or fellowship used for paying tuition, fees, or other necessary educational expenses is excluded from income. This exclusion does not apply to any portion set aside or actually used for food, clothing, or shelter.

It is expected that expenses will include carfare, stationery supplies, and impairment-related expenses necessary to attend school or perform schoolwork (e.g., special transportation to and from classes, special prosthetic devices necessary to operate school machines or equipment etc.).

Energy Assistance and Support & Maintenance

Government Energy Assistance: Through a block grant, the Federal Government provides funds to States for energy assistance (including weatherization) to low income households. (See the Low-Income Home Energy Assistance Program (LIHEAP) topic for additional information.) This assistance may be provided by a variety of agencies (e.g., state or local welfare offices, community action agencies, special energy agencies, etc.) and known by a variety of names (e.g., HEAP, Project Safe, etc.) It is most often provided in a medium other than cash (e.g., voucher, two-party check, direct payment to vendor, etc.) but may be in cash. Such home energy assistance payments or allowances are excluded from income and resources.

Home Energy and Support & Maintenance Assistance: Home energy or support and maintenance assistance is excluded from income if it is certified in writing by the Virginia Department of Social Services (DSS) to be both based on need and:

·             Provided in kind by a private nonprofit agency; or

·             Provided in cash or in kind by a supplier of home heating oil or gas, a rate-of-return entity providing home energy, or a municipal utility providing home energy.

Support & Maintenance is in-kind support and maintenance, or cash provided for the purpose of meeting food, clothing, or shelter needs. It includes home energy assistance.

Farmers Home Administration Housing Assistance (FMHA)

See Housing Assistance.

FEMA Emergency Food and Shelter Programs

Through a national board chaired by the Federal Emergency Management Agency (FEMA) and local boards, funds are provided to private nonprofit organizations and State and local governmental entities for the purpose of providing emergency food and shelter to needy individuals. The entity receiving these funds decides how they will be best used (e.g., to buy beds and blankets, to stock a soup kitchen or to pay an individual's rent). The Federal funds are not provided to meet ongoing basic needs.

Assistance involving FEMA funds is subject to the general rules pertaining to income and income exclusions. It is neither IBON nor ABON.

NOTE: Assistance involving FEMA funds is most often provided in kind by private nonprofit organizations and with State certification will qualify for exclusion as Support & Maintenance.

See Disaster Assistance for information about funds for Support & Maintenance and home repair during a disaster declared by the U.S. President.

Food/Meal Programs

SNAP (Food Stamps): The value of the food under the food stamp program to any household is excluded from income and resources. (See the Supplemental Nutrition Assistance Program (SNAP) [Food Stamps] topic for additional information.)

School Lunch Programs: The value of any assistance to children under chapter 13 of title 42 of the U.S. Code, School Lunch Programs, is excluded from income and resources.

Child Nutrition Programs: The value of any nutrition assistance to children (e.g., school breakfasts, WIC Program, Milk Programs) is excluded from income and resources

Nutrition Programs for Older Americans: The value of any assistance (other than a wage or salary) provided by any project under chapter 35 of title 42 of the U.S. Code, Programs for Older Americans, is excluded from income.

Foster Grandparents Program

See: Corporation for National and Community Service (CNCS).

General Assistance (General Relief)

General Assistance is Assistance Based on Need (ABON). ABON is excluded from income.

German Reparation Payments

Gifts Occasioned by a Death

A death benefit is something received as the result of another's death.

Death benefits provided to an individual are income to such individual to the extent that the total amount exceeds the expenses of the deceased person's last illness and burial paid by the individual.

NOTE: Recurring survivor benefits such as those under title II, private pension programs, etc. are not death benefits.

Examples of death benefits include:

·             Proceeds of life insurance policies received due to the death of the insured;

·             Lump sum death benefits from SSA;

·             RR burial benefits;

·             VA burial benefits;

·             Inheritances in cash or non-cash;

·             Cash given by relatives, friends, or a community group to "help out" with expenses related to the death.

Last illness and burial expenses include:

·             Related hospital and medical expenses;

·             Funeral, burial plot, and interment expenses; and

·             Other related expenses.

Gifts of Domestic Travel Tickets

The value of a ticket for domestic travel received by an individual, or his her spouse, or parent whose income is subject to deeming is excluded from income if:

·             The ticket is received as a gift; and

·             The ticket is not converted to cash (e.g., cashed in, sold, etc.).

A ticket received as a gift is treated as unearned income in the month the ticket was converted to cash.

Grants, Scholarships, and Fellowships

See Education Assistance.

HUD Subsidies

See Housing Assistance.

Home Energy Assistance

See Energy Assistance.

Home Produce

Home produce is excluded from income if the produce is consumed by those in the household.

If the produce is sold, then the income is treated differently depending on whether or not the selling of produce is a trade or business, and by whether or not the individual is an "Indian."

Not a business: If the selling of produce is not a trade or business, then the proceeds are counted as unearned income whether or not the individual is an Indian.

Is a business: If the selling of produce is a trade or business and the individual is not an Indian, then the proceeds are counted as earned income (net earnings from self-employment).

If the selling of produce is a trade or business and the individual is an Indian, then the proceeds are counted as unearned income if they are exempt from income tax by federal law or treaty. The proceeds are counted as earned income if they are not exempt from income tax.

Hostile Fire Pay

Hostile Fire Pay from the Uniformed Services of the United States is excluded from income and resources in determining eligibility for Medicaid in the Aged, Blind and Disabled (ABD) Covered Groups.

Housing Assistance

The value of any housing assistance provided by the U.S Department of Housing and Urban Development (HUD) and the Farmers Home Administration (FmHA) is excluded from income and resources.

This assistance may be provided directly by the Federal Government or through other entities such as local housing authorities, nonprofit organizations, etc.

Income Based on Need (IBON)

Income based on need (IBON) is assistance:

·             Provided under a program which uses income as a factor of eligibility; and

·             Funded wholly or partially by the Federal government (e.g. the Department of Veteran's Affairs) or a nongovernmental agency (e.g., Catholic Charities or the Salvation Army) for the purpose of meeting basic needs (i.e., the funds are provided specifically for a formalized program whose general purpose is similar to that of the SSI program).

EXCEPTION: State supplementary payments made to refugees are not IBON despite involvement of Federal funds.

IBON is counted as income dollar for dollar, unless it is totally excluded by statute (e.g., food stamps) or excluded under a PASS. The $20 general income exclusion does not apply to IBON.

NOTE Possible Confusion: IBON is treated differently from Assistance Based on Need (ABON).

NOTE: If a nongovernmental agency is involved, the assistance may qualify for exclusion as Home Energy Assistance and Support and Maintenance Assistance, or meet the definition of a social service.

Interest on Excluded Burial Funds

Interest earned on the value of excluded burial funds is excluded from income (and resources), if left to accumulate.

Interest earned on agreements representing the purchase of an excluded burial space is excluded from income (and resources), if left to accumulate.

This income exclusion applies only if the burial fund or space purchase agreement is excluded at the time the interest is paid.

Japanese-American and Aleutian Restitution Payments

Low Income Energy Assistance

See Energy Assistance.

Meals for Older Americans

See Food/Meal Programs.

Milk Programs

See Food/Meal Programs.

National Defense Student Loans (NDSL)

See Education Assistance.

Netherlands WUV Payments to Victims of Persecution

Pell Grants

See Education Assistance.

Radiation Exposure Compensation Trust Fund (RECTF) Payments

RECTF payments are excluded from income, but interest earned on unspent RECTF payments is counted as income.

Refunds of Taxes Paid on Real Property or Food

Any amount received from any public agency as a return or refund of taxes paid on real property or on food purchased is excluded from income.

Relocation Assistance

Relocation assistance for individuals or households that are displaced by a government (federal, state or local) project is generally exempt from income.

Retired Senior Volunteer Program (RSVP)

See: Corporation for National and Community Service (CNCS).

School Breakfasts and Lunches

See Food/Meal Programs.

Senior Companion Program

See: Corporation for National and Community Service (CNCS).

Special and Demonstration Volunteer Program

See: Corporation for National and Community Service (CNCS).

State Student Incentive Grants (SSIG)

See Education Assistance.

Support and Maintenance

See Energy Assistance and Support and Maintenance.

For Support and Maintenance during a declared disaster see Disaster Assistance.

Supplemental Education Opportunity Grant (SEOG)

See Education Assistance.

Supplemental Security Income (SSI)

SSI cash benefits are excluded from unearned income. (Note, however, that Social Security Disability Insurance (SSDI) is counted as unearned income.)

University Year for Action (UYA)

See: Corporation for National and Community Service (CNCS).

Victim's Compensation Payments

Any payment received from a fund established by a State to aid victims of crime is excluded from income.

Volunteers in Service to America (VISTA)

See: Corporation for National and Community Service (CNCS).

Walker v. Bayer Settlement Payments

Certain payments resulting from the Walker v. Bayer class action lawsuit are excluded from income.

Women, Infants, and Children Program (WIC)

See Food/Meal Programs.

See Also:

F&C Income Exclusions

Back to:

VA Medicaid Eligibility

VA Medicaid Covered Groups

VA Medicaid Overview

VA Benefit Information System Welcome and Introduction

Source:

Information for this topic was drawn from Chapter S08 of the Department of Social Services (DSS) Medicaid Manual.

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