To help streamline the application process for the citizen prior to having to enter income for the household, the application attempts to use income data from existing state and federal sources. For annual income, this could typically mean retrieving tax return income from the IRS. For current income this could retrieve wage and salary income from a state wage system. A number of conditions are executed as part of a check to determine if it is worthwhile displaying the IRS income for an individual. The check involves:
The application script for income loops through each member of the household to determine:
Step 3, which we call manual income capture is where an applicant would enter wages and other income information for household members if this has not been retrieved from tax return income, or from income via the current income service. The benefits of using these information sources mean that these income records are verified. If an applicant modifies information that has been retrieved from other systems, or enters income manually, this may require verification by a case worker.
Tax return income is returned as MAGI income. If the income is entered manually it must be built up to a MAGI income total per individual. For each member income is summed to a Gross Income (GI) total, and a page is displayed to capture a few allowable deductions to determine an Adjusted Gross Income (AGI) total for each member. The MAGI calculation involves adding in the tax-exempt income portions for interest, foreign earnings and social security income.
The MAGI income for an individual is what is used when adding up the household income which is necessary for eligibility determination for insurance assistance. However for Medicaid/CHIP determinations the rules must determine eligibility using a MAGI-based income total. Essentially there are a few income types that are counted as part of a MAGI income determination but are excluded as part of a MAGI-based income determination. Certain types of American Indian/Alaska Native income, and income from scholarships or awards that are used for education purposes are not counted in MAGI-based income. Similarly, lump sum income is only counted in the month it is received for MAGI-based income, otherwise it is not counted. It is important therefore that these income types are identified as part of the application process, for example, if an AI/AN individual has income derived from distributions or ownership interests, then this income is not counted in their eligibility determination for Medicaid.