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Medicare Savings Programs Manual

E. Financial Requirements

Effective 3/1/21

1. Overview of Assets

Unearned income, earned income and resources are assets. For QMB/SMB/SMF, treat assets as follows unless otherwise specified in other administrative rule(s): all resources are excluded in the QMB/SMB/SMF programs, so an asset is either counted as income or excluded in any given month. "Excluded” means an asset is not counted as either income or as a resource. When determining financial eligibility, count all income not excluded or otherwise considered unavailable. Exclude all assets as resources.

For information on specific assets, see Counting Client Assets A.2.

In order to be excluded as income, funds must be identifiable, but this does not mean that the funds have to be physically apart from other assets (see 461-140-0070).

For information on the availability of income, see 461-140-0040. Unavailable income does not affect a benefits group’s eligibility or benefit level.

• Note: If a client receives an LDS from their spouse who is not in the household group, that amount is counted as unearned income for the Medicare Savings programs. Code it as OTH on CMS.

461-140-0010

2. Income Limits

For QMB-BAS, the individual's financial group must have adjusted income at or below the QMB-BAS income standards.

For SMB and SMF, the individual's financial group must have adjusted income below the SMB and SMF income standards.

The adjusted income standards are as follows.

QMB-BAS Adjusted Income Standard 100% FPL

461-155-0290

QMB-DW Adjusted Income Standard 200% of FPL

461-155-0291

SMB Adjusted Income Standard
Income greater than 100% but less than 120% FPL

SMF Adjusted Income Standard
Income equal to or greater than 120% but less than 135% FPL

461-155-0295

• Protected eligibility from SSA COLAs - Each year, from January 1st until the new program income standards are put into effect, all ongoing clients in any QMB subprogram have protected eligibility from the annual SSA Cost of Living increase (COLA). This includes those requiring a redetermination. The mainframe computer will have an inflated Income Standard programmed to keep clients from going No Action (NA) and having their case closed during this period of time. When the new income changes are instituted (2 months after the new poverty level is published in the Federal Register), all cases will be compared to the new standards and some may go NA at this time. The standards usually change in March of each year, but it is dependent upon when the Federal Government publishes the new Poverty Level standards.

For information on lump sum and periodic income policy see Counting Client Assets A.4 and A.5, respectively.

3. Income Deductions

Use this section to determine financial eligibility and adjusted income for all MSP clients. Determine which income deductions to allow and calculate adjusted income by subtracting allowable deductions from countable income.

In the QMB-BAS program, a client is eligible if his or her adjusted income is equal to or less than the QMB adjusted income standard.

In the QMB-SMB and QMB-SMF programs, a client is eligible if his or her adjusted income is less than the adjusted income standard.

Allow income deductions from the financial group's income in the following order:

• All child support paid by a non-applying spouse to any individual who does not live in the household
• One standard deduction of $20 (see note below)
• One standard earned income deduction of $65
• An income deduction for documented Impairment-Related Work Expenses (see OAR 461-001-0000)
• One half of the remaining earned income
• An income deduction for documented Blind Work Expenses (see OAR 461-001-0000)
• Any earned income used to fulfill a plan for self-support approved by the Social Security Administration

• Note: Subtract the $20 standard deduction from unearned income. If the financial group has no unearned income or less than $20 in unearned income, subtract the remainder from any earned income.
• Note: The financial group is made up of the client and their spouse (and children, if advantageous), whether that spouse is eligible for Medicaid or not.

Financial eligibility: 461-160-0540
Adjusted income: 461-160-0552

4. Resource Limits

All resources are excluded for QMB-BAS, SMB, and SMF.

Use of Resources in Determining Financial Eligibility 461-160-0010

Resource Limits 461-160-0015

5. Prospective Eligibility and Budgeting

To use prospective eligibility and budgeting:

• For the initial month and ongoing months:
  • Except for periodic and self-employment income (see below), in any month in which a new source of income begins, an existing source ends, or the amount changes, only income actually received or expected to be received is counted.
  • In a retroactive month for which the individual is requesting benefits:
  • Income is averaged and converted to a stable monthly amount as needed.
  • For any retroactive month in which a new source of income begins, an existing source ends, or the amount changes, if averaging and converting the income results in ineligibility, then only income actually received or expected to be received in that month is counted.
  • Any ongoing periodic income received in a retroactive month is averaged over the period it covers
  • A new source of periodic income received in a retroactive month is averaged from the month of receipt forward
  • See CCA A.5 for more information on how to budget periodic income received in an initial month
  • Otherwise, the Department converts and averages prospective income in accordance with the budgeting rules for stable income (OAR 461-150-0070), periodic income (OAR 461-140-0110), and variable income (461-150-0080).
• There are also monthly exclusions applicable to periodic and lump-sum income, see sections A.4 and A.5 or Counting Client Assets for more information.

Note: We anticipate and average prospective income in accordance with the budgeting rules for self-employment income (see below and OAR 461-150-0095).

For prospective eligibility and budgeting:

• The budget month and payment month are the same.
• The client and Department jointly anticipate the client's income based on the income already received and the income the client expects to receive. In other words, you are looking ahead (prospective) rather than using actual income from each month (retrospective).  This way, clients are not required to report income monthly. The exception is when a new source of income begins or an existing source ends or the amount changes, in which case, we will use the actual amount received (or expected to be received) without converting or averaging (except for periodic income, see CCA A.5). When a new source of self-employment income begins in the initial or retroactive month, see Section C of Counting Client Assets for more information about how to anticipate and count the income.
• Prospective budgeting is used for self-employment income that is averaged over 12 months, periodic income that is averaged over the period it covers, and variable income that has been averaged and/or converted to a monthly amount.
• When prospective budgeting is used and the actual income differs from the anticipated income:
  • If the anticipated income exceeds the actual income, a client is not entitled to a benefit supplement.
  • If the actual income exceeds the anticipated income, there may be a client-error overpayment.

Prospective: 461-150-0020
OSIPM Specific: 461-150-0050

Averaging and Anticipating Self-employment Income

Income from self-employment is averaged over 12 months in accordance with 461-150-0095.  If past income is not representative of future income, the client hasn’t been in business very long, or when a substantial change is expected in next year's income, income can be anticipated.  See OAR 461-150-0095 to determine how to anticipate income and costs. For more information about and examples of averaging and anticipating self-employment income, see Section C of Counting Client Assets.  Note:  Contract income (such as educational income) is no longer addressed in the self-employment rule; nor is it pro-rated.  It is treated as earned income and budgeted based on when it is received (i.e. variable, periodic, stable, etc.).

Prospective budgeting of self-employment income 461-150-0095

Prospective Budgeting of Variable Earned and Unearned Income

Income that can be defined as variable (see OAR 461-001-0000) should be averaged and converted to a monthly amount, with a couple of exceptions:

•  In any month in which  a new source of variable income begins, when an existing source of variable income ends, or the amount changes significantly (e.g. the individual gets a hourly pay increase). the actual amount received or expected to be received should be counted.
• When variable income begins, ends, or when an existing source of variable income changes in any month for which the individual is requesting retroactive benefits, the variable income should be averaged and converted.  If doing so makes them ineligible, then actual income should be used.  See CCA A.6 for examples of calculating and budgeting variable income.

Prospective Budgeting of Variable Income 461-150-0080

Prospective Budgeting of Periodic Income

Beginning 10/1/18, periodic income is averaged over the period for which it is paid. This means income received quarterly is averaged over 3 months, annual income is averaged over 12 months, semi-annually income is averaged over 6 months, etc.  For more information about and examples of averaging and counting periodic income (including monthly exclusions), see Section A.5 of Counting Client Assets. 

Treatment of Periodic Income 461-140-0110

6. Use of Rounding When Calculating Countable Income

Starting 7/6/20, all gross income received for a certain time period should be rounded to the nearest dollar.  If any calculations are required to convert the income to a stable monthly amount, the result of each calculation is also rounded to the nearest dollar.  

IMPORTANT:  Rounding is not used when calculating adjusted income or client liability! In other words, you still use rounding to determine countable income, but any calculations after that to determine adjusted income and liability are not rounded.  This includes medical costs and any other applicable deductions – they are not rounded at any stage of the calculation.

Example 1:  Molly works 10 – 15 hours per week the Coffee Hut for $12.25 per hour and is paid weekly on Friday.  She provides paystubs for an entire month, so her earned income must be first averaged to determine an average amount per pay-period, and then that amount must be converted to a stable monthly amount using the weekly pay-period multiplier.  See below for how rounding should be used:

$122.50 received 6/5/20 (round to $123)
$159.25 received 6/12/20 (round to $159)
$134.75 received 6/19/20 (round to $135)
$140.88 received 6/26/50 (round to $141)

Calculate her countable earned income as follows:

$123 + $159 + $135 + $141 = $558.00/4 pay periods = $139.50 average pay rounded to $140
$140 x 4.3 = $602.00 total countable income (no rounding needed here, but if the result was $602.45, it would be rounded to $602 and if it was $602.75, it would be rounded to $603)

Example 2:  Ruby receives quarterly periodic retirement income payments of $1,015.25.  Her monthly countable income would be calculated as follows:

$1015.25 is rounded to $1015.00.  That amount is averaged over (or divided by) 3 months and the result is rounded to the nearest dollar: $1015/3 = $338.33 rounded to $338 countable income per month.

For self-employment income, gross income received should be rounded to the nearest dollar.  Excluded costs are also rounded to the nearest dollar, and then the result of subtracting costs to determine countable self-employment income is rounded to the nearest dollar.

Example: Mitch reports $1,000.50 in gross self-employment income, and a total of $300.25 in allowable costs.  The $1,000.50 is rounded to $1,001.00, costs are rounded to $300.00.  Total countable income after excluding costs is $701.00.

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