The Making Work Pay Tax Credit provides for a tax credit of up to $400 per year for
the years 2009 and 2010 (up to $800 per year for filers of joint tax returns).
During verification, if the applicant’s resources exceed the lower or higher resource
limits for Medicare Part D Extra Help and the applicant reported wages on the application,
develop the resource exclusion for this tax credit.
This tax credit increases the take home pay of working applicants because the employer
reduces the rate of income tax withholding deducted from the applicant’s paycheck.
Do not count the increase in take home pay due to this tax credit as a resource in
the month received and exclude it from resources for the following two months.
It is not feasible to determine the actual amount an applicant receives each month
from this tax credit. For purposes of determining the excludable resource amount for
the Medicare Part D Extra Help, we assume that the applicant receives a $35 per month
excludable tax credit for any month that he or she receives wages. Assume that the
excludable tax credit is $70 per month for a married couple for any month that both
members of the couple receive wages.
If the applicant has more than one employer, assume that the tax credit is $35 per
employer. For example, if the applicant has two jobs and the spouse has one job, the
excludable amount would be $105 per month (3 times $35).
For purposes of applying this resource exclusion, assume that we retain the tax credit
when making the resource determination. Assume that the applicant receives a tax credit
in every month, he or she alleges wages on the application, and there is no allegation
of a stop work date.
Applicants who have very low wages may not receive their full tax credit through an
increase in their take home pay.
Self-employed applicants also do not receive the tax credit in take home pay. These
applicants can get the tax credit as part of their tax refund when they file their
income tax return. If the applicant receives a tax credit in their tax refund, exclude
it from resources for the month of receipt and the following two months. In these
situations, ask the applicant the amount received from the tax credit and exclude
If the applicant also received the $250 one-time economic recovery payment, we reduce
the Making Work Pay Tax Credit by that amount. Thus, if the applicant is eligible
for the full $400 tax credit in his or her tax refund, the $400 tax credit is $150
($400 minus $250).
Document the tax credit exclusion, determination on the MAPS Report of Contact screen
EXAMPLE: Tax credit received in take home pay
Mr. Johnson files for Medicare Part D Extra Help in June 2009. The application indicates
that his spouse is working and there is no work stop date on the application. During
verification, the claims representative (CR) determines that the Johnsons’ resources
are over the lower resource limit and develops the resource exclusion for the Making
Work Pay Tax Credit. The CR determines that $105 is excludable from resources ($35
per month for April, May, and June 2009) due to Mrs. Johnson’s wages. The CR does
an input to correct the amount of the Johnsons’ resources and documents the verification
contact and determination on the MAPS Report of Contact screen.
EXAMPLE: Tax credit received in tax refund
Ms. Wilson, receives Title II benefits, is self-employed, and files for Medicare Part
D Extra Help in June 2010. During verification, the CR determines that Ms. Wilson’s
resources are over the upper resource limit. Because she is self-employed, she received
the Making Work Pay Tax credit in her tax refund. Because she also received the $250
economic recovery payment in 2009, there is a reduction in her Making Work Pay Tax
Credit by $250. Based on her 2009 federal income tax return, she received a $150 Making
Work Pay Tax Credit as part of her tax refund in April 2010. This $150 tax credit
is not countable as a resource in April 2010, and excluded from resources for May
and June 2010.
We do not exclude the $25 weekly ARRA unemployment compensation increase from income
or resources. This issue does not require additional documentation or development
verification. For more information about the $25 unemployment compensation increase,
see HI 03030.020.