Medicaid Buy-In

Budgeting Income

Summary

The Medicaid Buy-In for Working People (MBI-WPD) program has the same generous earned income disregards as the Supplemental Security Income (SSI) program for beneficiaries who work or return to work. In addition, Medicaid uses deeming and allocation when budgeting households with members who are not eligible for MBI-WPD.

Income Disregards

INTRODUCTION

When determining whether a household meets the income criterion of MBI-WPD, first assess all sources of income the household receives in a calendar month before taxes, or any other expense is deducted from the household’s income. This is known as gross income.

Certain types of the household’s income are not counted when determining whether the household passes MBI’s income guidelines. These are known as income disregards or income deductions. The income disregards are subtracted from gross countable monthly income. Any remaining net monthly income is compared to the appropriate income level using the appropriate household size. If the household is at or under the limit, the household passes MBI’s income test.

COMMON MBI-WPD INCOME DISREGARDS

SSI-related budgeting is used to determine net income for the MBI-WPD program. The following types of income are disregarded or excluded when determining eligibility for the MBI-WPD program:

  • $20 per month general income exclusion

  • Third Party Health Insurance Premiums, including Medicare Part B

  • Student loans

  • Earned Income Tax Credit (EITC)

  • Income from tax refunds

  • Value of SNAP or WIC benefits

  • Certain scholarships, grants and fellowships

  • Foster care payments of a non-applying child living in the household

  • Bona fide loans from non-legally responsible relative – must be documented as such

  • Disaster relief assistance

  • Home energy assistance (HEAP) payments

  • Payments from a non-legally responsible individual to pay for expense items other than food or shelter (e.g. payment of phone bill, housekeeping services).

  • Infrequent earned income, up to $30 per quarter

  • Infrequent unearned income, up to $60 per quarter

  • Interest on an excluded burial fund, established as a separate bank account and not withdrawn

  • Earned income of blind or disabled student children up to the student earned income exclusion amount, that is, earnings up to $2,220 per month, but not more than $8,950 per calendar year in 2023 for any student under the age of 22 who is regularly attending school, college, or a course of vocational or technical training.

Budgeting Earned Income

In addition to the common disregards listed above, the MBI-WPD program has generous earned income deductions, the same that the Social Security Administration uses for SSI beneficiaries who return to work.

When applying the following earned income deductions, the deductions must be deducted in the order presented below. If the deductions are not done in the prescribed order, the net earned income may be calculated incorrectly.

When budgeting earned income, it is important to follow the order of the deductions, as follows

  • The first $65 per month of earned income (or, if there is no unearned income, $85 per month)

  • Impairment-related work expenses (IRWEs), see below

  • One-half of the remaining earned income

  • Plan for Achieving Self Support (PASS), see below

  • Work expenses of the blind, see below

Jennifer is single living alone. She is receiving SSDI benefit of $1,600 per month. She has begun to work, has earnings of $580 gross per month and has approved impairment-related work expenses totaling $155 per month. Her net available income is as follows:

$1,600 – $20 (general income exclusion) = $1,580

$580- $65 (earned income disregard) – $155(IRWE’s) = $360/2 = $180

$1,580 + $180 = $1,760, which falls between 150% and 250% FPL and thus she is eligible for the MBI-WPD.

Since the income deductions for earnings are greater than for unearned income, individuals whose source of income is mostly from earnings will be able to have a higher gross income and still be eligible for MBI.

DESCRIPTION OF IRWE’S

The cost of certain impairment-related services and items that a person with disabilities needs to work can be deducted from gross earnings, even when these items and services are also needed for non-work activities. The items or services, however, must aid the individual to work and without which s/he would not be able to work. These services or items are called impairment-related work expenses (IRWE’s). The cost of these expenses can be deducted from the individual’s earnings when determining the net available income. Expenses must be reasonable and the costs for these items and services must be actually paid by the disabled person, if Medicare/Medicaid covers the cost of such items they cannot be used as a deduction.

OBTAINING APPROVAL

IRWE’s must be documented and an explanation of how these items and/or services are used specifically for work must be provided to the local Medicaid office. Medicaid must approve the IRWE as such expenses are not automatically deducted from the individual’s earnings. Once approved, the IRWE will be used in the budgeting process.

Blind Work Expenses

DESCRIPTION OF BLIND WORK EXPENSES (BWE’S)

Blind individuals who receive earned income are entitled to deduct work-related expenses from gross income. That is, any work-related expenses, not only impairment-related expenses can be deducted. There is no specific dollar limit on the amount that can be deducted under this exclusion. However, the amount must be reasonable and not exceed the blind individual’s earned income in that month.

EXAMPLES OF BLIND WORK EXPENSES

  • Income taxes (federal, state and local)

  • Social security and Medicare taxes, i.e. FICA

  • Mandatory pension contributions

  • Meals consumed during work hours

  • Union dues

  • Attendant care services (in work setting, to get a person to and from work, and, in some cases, in the home)

  • Transportation to and from work

  • A guide dog (cost of purchase and all associated expenses, including food, licenses and veterinary services)

  • Readers

  • Medical devices, medical supplies and physical therapy

  • Training to use an impairment-related item or an item which is reasonably attributable to work (e.g. cane travel, Braille, computer course for computer operator)

In many cases, a blind work expense might also be available as an impairment-related work expense. When an item can be used as either one, it is best to use them as BWE’s because it is more advantageous when calculating the individual’s net available income.

Plan for Achieving Self Support (PASS)

INTRODUCTION

A PASS account is an SSI work incentive. The PASS account can also be used as an exclusion from income and/or resources for individuals receiving Medicaid based on disability or blindness. Since the MBI-WPD program uses these same budgeting rules, the PASS account is also available as a work incentive for the MBI-WPD program.

Although SSI’s policy governing the PASS is extensive, the Medicaid policies on PASS are short and follow the SSI criteria. Much of the information below references SSI’ PASS criteria because New York’s Medicaid program is required to follow the SSI criteria in making PASS-related decisions.

For information on PASS accounts for SSI recipients, refer to Cash Benefits, Supplemental Security Income, Returning to Work, Plan for Achieving Self-Support (PASS).

DESCRIPTION OF PASS ACCOUNTS

A PASS account allows an individual to set aside money for short-term objectives for education, vocational training, starting a business or for work-related items, such as a computer or a customized van. It allows the individual to save for services and items needed for work, not to make income available for everyday expenses. Go to https://www.ssa.gov/redbook/eng/ssdi-and-ssi-employments-supports.htm#a0=4 and click on PASS or go to https://www.ssa.gov/pubs/EN-05-11017.pdf for information on establishing PASS accounts and allowable items.

A PASS account can fund a wide range of items, including childcare, equipment or supplies to start a business, and modifications to vehicles. As long as the cost is connected to long-term vocational goals, it should be allowed as a Medicaid PASS deduction.

INCOME DEDUCTION FOR MBI-WPD PROGRAM

In the SSI program, the PASS account can be used to reduce countable income when determining eligibility and/or monthly payment amount. It can also be used to reduce countable resources that would otherwise count toward the SSI program’s $2,000 resource limit. With Medicaid, the PASS can be used to reduce countable income thereby reducing or eliminating the spenddown. In the case of MBI-WPD program, the PASS can be used to bring income below the 250% FPL eligibility threshold. The PASS can also be used to reduce countable resources below the MBI-WPD resource limit.

By putting aside money from various sources, such as Social Security Disability Insurance, pension, earnings, personal injury settlement, or an inheritance, an individual can use it as an income deduction, thus reducing his/her net available income when budgeting to determine net available income for the MBI-WPD program or as a resource exclusion.

DURATION OF A PASS ACCOUNT

The Medicaid Reference Guide indicates that aA PASS account is limited to 18 months with the possibility of two extensions, the first an additional 18 months, the second extension for 12 months, for a total of 48 months.

Natalia is an SSDI beneficiary. She is receiving an SSDI payment of 1,350 per month, as well as a pension of $350 per month. She just began working 35 hours a week as a paralegal earning $2,300 monthly and has entered her Trial Work Period, a 9-month period of time in which he can receive both her earnings and her SSDI benefit without any reduction in her SSDI benefit. Natalia has decided she would like to start her own yoga store. She is planning to put $700 a month into a PASS account for the next 18 months. This money will be used toward the initial start-up costs for her business, which will include rental space, yoga equipment, computers, and other business essentials. She applies for a PASS account through her local Medicaid office while applying for the MBI-WPD. She is approved. Her income will be budgeted as follows:


$1,350 + $350 = $1,700 – $20 (unearned income disregard) = $1,680

$2,300 – $65 = $2,235/2 (earned income disregards) = $1,117.50 – $700 (PASS account) = $417.50

Net available income: $1,680 + $417.50 = $2,097.50. She falls below the MBI-WPD income guidelines and is eligible for MBI.


Note: Without the approved PASS, Natalia’s countable income would be $2,797.50 ($1,680 + $1,117.50), which is above the MBI-WPD income eligibility guidelines. With the PASS her countable income is reduced and she is eligible for the program.

PASS APPROVAL

The Medical Assistance Program (MAP) must approve the PASS account in order to be exempt. Progress on the plan will be monitored. If the applicant fails to comply with all terms and conditions of the approved plan, the PASS may be discontinued.

PASS APPLICATION

There is no specific PASS application for the MBI-WPD program; individuals are not required to use SSA’s PASS application. However, since SSA’s PASS application covers all the key factors that must be in place for a Medicaid based PASS, it is a practical choice.

To obtain a copy of the PASS application Form SSA-545-BK go to https://www.ssa.gov/forms/ssa-545.pdf or pick one up from a local SSA office. Write on the first page, “Medicaid Plan for Achieving Self Support”.

For assistance in completing a PASS application, contact a local Work Incentive Planning and Assistance (WIPA) provider. Go to https://www.ssa.gov/work/WIPA.html to find a listing of local providers.

MBI-WPD Budgeting In Households with Ineligible Members

INTRODUCTION

This section covers one of the most complicated parts of the MBI-WPD program. Presented below are the most important concepts the reader needs to know to understand MBI-WPD eligibility when there are ineligible household members living in the household. The examples included are among the most common household situations.

Note 1: Where both members of a couple are eligible for MBI-WPD, the MBI income guidelines for a couple are applied and the above earned and unearned income disregards are applied, although there is only one $20 unearned income disregard per household.


Note 2: The relevant MBI-WPD budgeting rules use the term “SSI related” to describe individuals who meet the program’s criteria for disability or blindness. The rules use the term “non-SSI related” to describe individuals who do not meet the criteria for disability or blindness.

SSI-RELATED ADULT LIVING WITH A NON-SSI-RELATED SPOUSE

If only one member of a couple is disabled and potentially eligible for the MBI-WPD program, a portion of the non-SSI-related spouse’s income is deemed when determining eligibility for the applicant.

The SSI-related adult (MBI-eligible) living with a non-SSI-related spouse, will have MBI-WPD eligibility budgeted as a household of two, unless the income of the non-SSI-related spouse is less than the difference between the Medicaid income level for a two-person household and a one person household (i.e. less than $433 in 2022). If it is below that amount, the non-SSI-related spouse and his/her income are not counted and the MBI-WPD applicant is budgeted as a household of one. If the non SSI-related spouse’s income is used, eligibility for MBI-WPD will be determined as a household of two.

If the non-SSI-related spouse’s income will be considered, apply the SSI-related income disregards to the total income in the household. If the remaining amount falls below MBI-WPD’s income guidelines for a household of two, the spouse with the disability is eligible.

Jerry is disabled and receiving an SSDI benefit of $890 every month. He just began his trial work period, a 9-month time period in which he can receive both his earnings and his SSDI benefit without any reduction in his SSDI benefit. He is earning $1,100 each month. He has approved IRWE’s at $155 per month. He is married to Paula, who is earning $2,500 every month. MBI-WPD budgeting is as follows:


Since Paula’s income is more than $433, her income will be counted in the budgeting process.


$890 – $20 = $870 (Jerry’s countable unearned SSDI income)

$2,500 + $1,100 = $3,600 (gross earned income) $3,600- $65 – $155 = $3,380/2= $1,690

Total countable income is $1,690 + $870 = $2,560.


Jerry is eligible for the MBI-WPD program because total countable income falls below the MBI-WPD’s income guidelines for a household of two.

SSI-RELATED ADULT LIVING WITH NON-SSI-RELATED HOUSEHOLD MEMBERS

When an SSI-related (MBI-eligible) individual is residing with a non-SSI-related spouse and non-SSI-related dependent children, eligibility should be evaluated using the concepts of allocation and deeming, which takes the needs and income of other family members into consideration.

Allocation

Allocation sets aside income for the needs of non-SSI related children (i.e. children who do not meet the SSI disability or blindness criteria) under the age of 18 residing in the household. Allocation to dependent children ceases at age 18. The allocation amount to each non-SSI related child is the difference between the Medicaid medically needy income standard for one and two in the current year. In 2022 this amount is $433. This amount will be offset by any other income the child receives in his/her own right, such as child support.

This allocation amount will first be allocated from the unearned income of the non-SSI-related parent (after deducting any court-ordered support paid by the non-SSI-related parent) from his/her unearned income. If s/he does not have unearned income or if the unearned income is not sufficient to meet to meet the allocation, the remaining allocation is made from the non-SSI-related parent’s earned income (after deducting any court-ordered support paid by the non-SSI-related parent).

Rachael is an SSDI beneficiary who began to work, earning $2,000 per month. She is in her extended period of eligibility, refer to Cash Benefits, SSDI, Returning to Work, Extended Period of Eligibility, and no longer in receipt of an SSDI benefit. She is married to Mike, a non SSI-related spouse, who is earning $4,000 a month, with no unearned income. They have two non-SSI-related children under the age of 10. She wants to apply for the MBI-WPD program. The MBI-WPD budgeting will allocate a part of Mike’s income to the two children as follows:

There is no unearned income, so we deduct the allocation for the two children, $866 ($433 × 2), from Mike’s earned income.

$4,000 – $866 = $3,134

(Example will be continued in the next section).

Deeming

An SSI-related adult, living with a non-SSI-related spouse, will be budgeted as a household of two, unless the income of the non-SSI-related spouse is less than the difference between the Medicaid income level for a two-person household and a one person household (in 2022, $433). If it is below that amount, the non-SSI-related spouse and his/her income are not counted and the MBI-WPD applicant is budgeted as a household of one. If the non-SSI-related spouse’s income is used, MBI-WPD eligibility will be determined based on a household of two.

If the non-SSI-related spouse’s income will be considered, apply the SSI-related income disregards to the total income in the household. If the remaining amount falls below MBI-WPD’s income guidelines for a household of two, the spouse with the disability is eligible.

Continuing the example of Rachael and Mike from above.

Since Mike’s income is more than the difference between the Medicaid income level for a two person household and one person household, Mike’s income will be counted in the budgeting process.


Earned income is $3,134 (Mike’s remaining earnings after allocating to the children) + $2,000 (Rachael’s earnings) = $5,134

Next apply the earned income disregards:

$5,134 – $85 = $5,049/2 = $2,524.50


Rachael is eligible for the MBI-WPD program because the combined countable income falls below the MBI-WPD’s income guidelines for a household of two.

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