601 General Information About Income

Revised 03/22/2022

For some AHCCCS Medical Assistance (MA) programs, the budget group’s income must not be higher than the income limit for that program. How income is calculated and the income limits are not the same for all programs.

The income of budget group members may be considered available to the customer when determining eligibility. (See MA602 for information about income budget groups.)

Policy

1) Programs with Income Eligibility Requirements

The MA programs that have an income limit to qualify are:

• ALTCS;

• SSI-MAO;

• Medicare Savings Program (MSP);

• Freedom to Work (FTW);

• Adult;

• Caretaker Relative;

NOTE     Including an income limit for the second six-month Transitional Medical Assistance (TMA) extension.

• Pregnant Woman;

• Child;

• KidsCare.

Some MA programs have an income limit, but income eligibility is determined by another agency (see MA400):

• SSI Cash;

• Breast and Cervical Cancer Treatment Program (BCCTP); and

• Title IV-E Foster Care and Adoption Subsidy.

2) Income Categories

Income is divided into two categories, earned and unearned:

• Earned income is received from employment or self-employment. It may be received as wages, salaries, commissions or profits. 

NOTE     Earned income may also be received as goods or services other than cash in return for work. Goods and services received in return for work are also known as bartering income or in-kind income. The value of the goods or services received is considered the income amount received.

• Unearned income is cash income received from sources other than employment or self-employment.

Within each category there are many types of income. 

NOTE     Some unearned incomes may receive a Cost-of-Living Adjustment (COLA) increase.

 

3) Treatment of Income

Depending on the program, each type of income is either counted or excluded. See MA606 for treatment of each type of income.

NOTE     Always use the gross amount of USD when determining eligibility and entering amounts into the system. The gross amount of income paid in foreign money can be converted to USD using the online calculator at http://www.xe.com/currencyconverter/.

4) Modified Adjusted Gross Income

Modified Adjusted Gross Income (MAGI) is a method for determining:

• How income is counted;

• Whose income is counted (the budget group); and

• The income limit based on the size of the budget group.

Beginning January 1, 2014, the following programs will use MAGI to determine income eligibility:

• Adult;

• Caretaker Relative;

NOTE     Including Transitional Medical Assistance (TMA) and Continuous Coverage (CC).

• Pregnant Woman;

• Child; and

• KidsCare.

NOTE     The programs that do not use MAGI rules are referred to as “Non-MAGI” throughout this Chapter.

 

Definitions

Term	Definition
Budget Group	The people whose income is considered when determining eligibility.
Gross Income	Income before taxes or other deductions.
Modified Adjusted Gross Income (MAGI)	MAGI is based on federal tax rules for determining adjusted gross income (AGI), with some modification. MAGI includes the following sources of income that are not included in AGI: Certain foreign investment income excluded from AGI by § 911 of the tax code; Tax exempt interest income; and Social security benefits excluded from AGI by § 86 of the tax code. In addition to these modifications, for Medicaid purposes only, MAGI will exclude the following income even if it is included in AGI: Scholarships, fellowship grants and awards used for educational purposes; Certain American Indian/Alaska Native income; and Lump sum income (will only be counted in month of receipt).
Adjusted Gross Income (AGI)	A measure of income used to determine how much of income is taxable. The AGI is gross income from taxable sources minus allowable deductions.
Non-MAGI Programs	The following programs will not use MAGI methodology for determining household composition and income eligibility: ALTCS; SSI-MAO; Medicare Savings Program (MSP); and Freedom to Work (FTW).
Self-Employment	Income from a person’s own business, including: Independent contracting; Taking in roomers or boarders, and other rental income; Ranching or farming; Can and bottle recycling collections; Baby-sitting; Blood and plasma sales; Providing services, like cleaning or accounting; Any wholesale or retail sales.

 

Proof

The Agency uses the reasonable compatibility standard to verify income. Income information for the members of the budget group is collected through the Federal and State Data Services Hubs, if available, and then compared to the income information reported on the application to see if it is reasonably compatible. See MA605.1 for details.