TN 16 (07-10)
HI 03020.040 How Unearned Income is Counted
A. Policy - When Unearned Income is Counted
Unearned income is counted at the earliest of the following points:
when it is received;
when it is credited to an individual’s account; or
when it is set aside for his or her use (see SI 00830.010 for counting of retroactive Title II benefits paid by installments at the individual’s request).
B. Policy - Amount Counted as Income
We may count more or less income than the individual actually receives.
1. Overpayment Recovery
We count more income than the individual receives where a benefit payment (such as a Social Security benefit) has been reduced to recover an overpayment. In such a situation, the individual is repaying a legal obligation through the withholding of a portion of his or her benefit amount, and the amount of this withholding is part of the individual’s unearned income (SI 00830.110).
2. Garnishment or Debts
We also include more than the individual receives if amounts are withheld from unearned income because of a garnishment, to pay a debt or other legal obligation, or to make any other payment such as payment of the individual’s Medicare Part B, C, or D premiums (SI 00830.115).
(See HI 03035.010C for instructions on processing cases where the Title II benefit has been garnished)
3. Expenses of Obtaining Income
We count less than the individual actually receives if part of the payment is for an expense incurred to obtain the payment. For example, if an individual received money from an accident settlement, we subtract any medical, legal, or other expenses connected with the accident from the amount of the payment. Similarly, if the individual receives a retroactive check from a benefit program such as workers compensation, we subtract legal fees connected with the claim. We do not subtract the amount used to pay personal income taxes from any taxable unearned income. The payment of taxes is not considered an expense of obtaining income (SI 00830.100).
4. Retroactive Benefits
We count retroactive monthly benefits such as Social Security benefits as unearned income in the month the individual receives the retroactive benefits.
5. One-Time Payment
We evaluate one-time payments following normal income counting rules. Since a one-time payment is not a recurring monthly payment, we count the average monthly income derived from a one-time payment. Calculate the average monthly income amount received by dividing the one-time payment amount by 12 months. For example, an individual receives a one-time payment of $3,600.00. Divide the $3,600.00 by 12 months. We determine that the individual receives average monthly income of $300.00 from the one-time payment. The CR inputs $300.00 of income in the Medicare Application Processing System (MAPS). MAPS will treat this as $300 per month and correctly count $3,600.00 as annual income for the individual.
6. Veterans Benefits
a. Augmented Benefit
An augmented benefit is an increase in the benefit payment to a veteran or a veteran’s surviving spouse because of a dependent. An augmented Department of Veteran Affairs (VA) benefit usually is a single payment that includes the benefit for the veteran or veteran’s surviving spouse and one or more dependents. We do not count the dependent’s portion of the benefit as income to the veteran or the veteran’s surviving spouse. The dependent’s portion is income to the dependent (See SI 00830.314).
b. Apportioned Benefit
An apportioned benefit is the dependent’s portion of VA benefits that is paid directly to a dependent spouse or child. We do not count any apportioned VA benefit as unearned income to the veteran or the veteran’s surviving spouse, if the dependent spouse or child receives a separate payment from the VA or resides with the veteran or veteran’s surviving spouse (SI 00830.314).
c. Unusual Medical Expenses
VA payments resulting from unusual medical expenses are not income (SI 00830.312).
7. Rental Income
We count the average monthly net rental income as unearned income for subsidy determination. Do not follow SSI procedures for determining net rental income for subsidy purposes. Request the individual’s last Federal income tax return to determine the annual amount of net rental income. Divide the annual amount by 12 months to determine the average monthly net rental income. Input this amount into the unearned income portion of MAPS.
8. Patrimony Funds Received by Members of Religious Orders who have Taken a Vow of Poverty (nuns, priests, monks, etc.)
Patrimony traditionally refers to a family inheritance. Members of religious orders relinquish control of the patrimony to the order.
a. When the Patrimony is Income
We count funds placed into the patrimony as unearned income in the month the member receives funds (e.g., the inheritance), if he or she can access the funds for his or her own use. If the patrimony agreement permits the member to withdraw funds from the patrimony only for a special expense, the funds permitted for withdrawal are counted as income in the month they are withdrawn.
REMINDER: Consider all SSI income exclusions (SI 00810.007) including the irregular or infrequent exclusion (SI 00810.410) to determine the amount of patrimony funds countable as unearned income.
b. When the Patrimony is not Income
The funds placed into the patrimony are not income if the patrimony agreement prohibits the member from accessing the funds.
c. Interest Earned on the Patrimony
All interest and dividends earned by the patrimony are excluded from income for purposes of determining eligibility for the subsidy (HI 03020.050).
d. When the Patrimony is not a Resource
Patrimony funds are not a resource if the member has no access to the funds for personal support and maintenance, even though he or she may retain ownership of the patrimony.
C. First-Time Homebuyer and Deemed First-Time Homebuyer Tax Credit
The American Recovery and Reinvestment Act of 2009 (ARRA) established the first-time homebuyers tax credit of up to $8,000. On November 6, 2009, the President signed the Worker, Homeownership and Business Assistance Act of 2009 (WHBA) which extended the deadline for purchasing a home under the ARRA first-time homebuyer tax credit. WHBA also established a smaller tax credit, up to a maximum of $6,500, for homebuyers who have lived in their principal residence 5 out of the last 8 years and purchased a new principal residence. These individuals are considered “deemed” first-time homebuyers for purposes of the tax credit.
The first-time homebuyer’s and deemed first-time homebuyer’s tax credit are not excluded from income by law and are considered unearned income for SSI purposes. Only the amount of the tax credit the individual receives back in the form of a refund is considered countable income.
The individual or couple must file a tax return to obtain either the first-time homebuyer’s tax credit or the deemed first-time homebuyer’s tax credit.
The first-time homebuyer’s tax credit and the deemed first-time homebuyer’s tax credit may be claimed by qualified individuals purchasing their home on or after April 9, 2008, and before May 1, 2010. However, the taxpayer is also eligible to receive the tax credit if the taxpayer enters into a written binding contract before May 1, 2010, to close on the purchase of a qualified home before July 1, 2010. Additionally, certain individuals on qualified extended duty outside the United States for at least 90 days between December 31, 2008 and April 30, 2010 may qualify for the tax credit on a home purchased before May 1, 2011 or July 1, 2011, in the case of an individual who signs a written, binding contract before May 1, 2011.
The amount of the tax credit which is countable unearned income for Part D Extra Help is the same as for the SSI program.
Instructions for determining the amount of countable income from these tax credits are found in the SSI instructions in SI 00830.060.
NOTE: For information about how these tax credits are treated under resource rules, see HI 03030.020.
SI 00830.160, Annuities, Pensions, Retirement, or Disability Programs
SI 00830.210, Benefits Paid Under Title II of the Social Security Act
SI 00830.225, Railroad Retirement Payments
SI 00830.235, Workers’ Compensation
SI 00830.300, Department of Veterans Affairs Payments
SI 00830.418, Alimony and Spousal Support
SI 00830.505, Rental Income
GN 02820.025, Effect of the “American Recovery and Reinvestment Act of 2009” (ARRA) on SSI Income and Resources.