Texas Health and Human Services Commission
Texas Works Handbook
Revision: 13-4
Effective: October 1, 2013

Part D — Section 1000

Income

D—1010  General Policy

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Income is any type of payment that is of gain or benefit to a household. Income is either counted or exempted from the budgeting process. Earned income is related to employment and entitles a household to deductions not allowed for unearned income. Unearned income is income received without performing work related activities. It includes benefits from other programs. To determine the date income can reasonably be anticipated, use factors specific to the source of income, distance it has to travel through the mail, weekends and holidays.

Consider the income of each household member in the budget group to determine if it is countable or exempt. Eligibility is based on gross income prior to any payroll deductions less deductions for allowable child-care expenses. See D-1100, Deductions.

For income not specifically addressed, see A-1300, Income, in the Texas Works Handbook to determine how to treat the income.

D—1020  Income Limits

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

An eligible child must live in a household with Federal Poverty Income Limits (FPIL) at or below 200% and not be otherwise eligible for Children's Medicaid.

D—1030  Types of Income

Revision 08-4; Effective October 1, 2008

D—1031  Disability Benefits

Revision 11-4; Effective October 1, 2011

D—1031.1  Agent Orange Settlement Payments

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt Agent Orange Settlement Payments disbursed by Aetna Inc. and paid to:

  • disabled veterans exposed to Agent Orange while in Vietnam who suffer from total disabilities caused by any disease; and
  • survivors of deceased disabled veterans.

Disabled veterans receive yearly payments. Survivors of deceased disabled veterans receive a lump-sum settlement payment.

Note: Count Veterans Affairs payments as unearned income, including benefits paid to veterans with service-connected disabilities resulting from exposure to Agent Orange. See D-1034.1, Veterans Benefits.

D—1031.2  Disability Insurance Benefits

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count the gross amount of benefits as unearned income.

D—1031.3  Radiation Exposure Compensation Payments

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt payments from the Radiation Exposure Compensation Act, Public Law 101-426.

The Act established a program to pay damages to individuals for injuries or deaths caused by exposure to radiation from nuclear testing and uranium mining. When the affected individual is deceased, the surviving spouse, children, parents, grandchildren or grandparents receive the payments.

D—1031.4  Workers’ Compensation

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count as unearned income the gross benefit, less the amounts:

  • recouped for a prior workers' compensation overpayment; or
  • paid for attorney's fees. Note: The Texas Workers' Compensation Commission or a court sets the amount of the attorney's fee to be paid.

Do not allow a deduction from the gross benefit for court-ordered child support payments.

Exception: Exclude workers' compensation benefits paid to the individual for out-of-pocket medical expenses. Consider these payments as reimbursements.

D—1032  Education and Training

Revision 11-4; Effective October 1, 2011

D—1032.1  Educational Assistance

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt educational assistance, including educational loans, regardless of the source. Consider loans for education, including loans from relatives or other people, as educational assistance only if payment is deferred.

Educational assistance is:

  • any financial aid for vocational or educational courses from:
    • an organization (such as fraternal, alumni, etc.).
    • a government program or agency (such as U.S. Office of Education, Veterans Affairs or Texas Department of Assistive and Rehabilitative Services).
  • provided to students of a:
    • program that provides for the completion of a secondary high school diploma (must be issued by a state-accredited school to a student who successfully completes the curriculum requirements for secondary school as approved by the State Board of Education), or the equivalent, such as a general equivalency diploma (GED) (a high school equivalency certificate issued after an individual completes a State Board of Education-approved high school equivalency program).
    • school for mentally or physically handicapped.
    • post-secondary institution.

Note: Post-secondary includes institutions of higher education and others not requiring a high school diploma (such as community colleges and vocational educational programs) authorized by the state to provide educational or training programs beyond secondary education.

The U.S. Office of Education under Title IV of the Higher Education Act administers most educational assistance programs. A few examples of the most common Title IV educational assistance grants include:

  • Pell Grants
  • Stafford Loan Program
  • Parent Loans for Students (PLUS Loans)
  • Supplemental Educational Opportunity Grants
  • College Work Study
  • Carl D. Perkins Loans (Title IV, Part E, formerly National Direct Student Loans)

The National Community Services Act (NCSA) program also provides educational assistance. Individuals are awarded $1,000 to $4,000 per year of completed services to apply toward past or future educational expenses. Do not count the educational award as it is always made payable directly to the financial institution or institution of higher learning.

Veterans Affairs administers education programs designed for veterans, reservists, members of the National Guard, and their widows and orphans. These include:

  • Montgomery GI Bill (MGIB) Active Duty Educational Assistance Program
  • Vocational Rehabilitation
  • Post Vietnam Era Veterans Educational Assistance Program (VEAP)
  • Survivors' and Dependents' Educational Assistance (DEA)
  • MGIB - Selected Reserve Educational Assistance Program

D—1032.2  Job Training

Revision 11-4; Effective October 1, 2011


D—1032.2.1  Workforce Investment Act (WIA) of 1998

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt WIA payments except on-the-job training payments funded under the Workforce Investment Act of 1998.

D—1032.2.2  Other Job Training and Training Allowances

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count on-the-job payments as earned income for adults. Exempt portions earmarked as reimbursements for training related expenses.

Related Policy
Children's Earned Income, D-1033.1

D—1033  Employment and Self-Employment

Revision 11-4; Effective October 1, 2011

D—1033.1  Children’s Earned Income

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Count a dependent child's earned income, unless the child attends school. Exempt the income if the family indicates the child attends school.

Note: A minor parent’s earnings is counted if the minor parent is applying on behalf of their child. Consider the minor parent to be an adult and/or head of household.

D—1033.2  Contractual Earnings

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Contractual earnings are wages and salaries only. Self-employment income, unearned income or income received on an hourly or piecework basis are not included. The two basic types of contractual earnings are:

  • Seasonal employment – Available only during certain months of the year and recurs each year. Examples: school-related employment, certain types of farm work, and summer or winter employment. Divide seasonal employment that is a household's annual means of support over 12 months. If the income supports the household for only a portion of the year and the household has income from other sources the rest of the year, average the earnings over the time they are intended to cover.
  • Contractual employment – Non-seasonal employment that is contracted for a specific time and does not recur. Divide earnings over the time covered by the contract.

D—1033.2.1  Monthly Budgeting of Contractual Earnings

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

If the income is not received as stipulated in the contract or if labor disputes interrupt income, do not apply the steps below. If the individual's employment situation changes:

  • Recompute the income or adjust the benefits accordingly.
  • Document all of the facts that caused the recomputation or adjustment.

To budget contractual earnings monthly:

  • Divide the total gross amount earned under the contract by the number of months the contract covers or by 12 months, whichever is applicable.
  • Add this amount to any other income, and budget the Eligibility Determination Group (EDG) according to usual procedures.

D—1033.3  Wages, Salaries, Commissions and Tips

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Count the actual gross amount of all wages, salaries, commissions, bonuses and tips as earned income before deductions such as flexible fringe benefits, cafeteria plans and employee retirement contributions are withheld from the amount.

If an individual asks their employer to hold their wages or the individual's wages are garnished, count these earnings as income in the month the household would otherwise have been paid. If, however, an employer holds employee wages as a general practice, count this money as income in the month it is paid. Count an advance in the month the individual receives it.

D—1033.3.1  Flexible Fringe Benefits

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Fringe benefit plans (also called cafeteria plans) allow the employee to choose from benefit components such as insurance, extra vacation time and payments to third parties for medical bills or child care. Under some plans, employers withhold wages to pay for the benefits selected by the employee.

Under other plans, employers offer benefit credit in addition to wages, which the employee can use to purchase benefits. If the employee does not use all of the credit to purchase benefits, some plans pay the employee the excess as part of the employee’s wages.

If the employer... then count...
withholds the employee's wages to purchase benefits, the held wages as earnings in the pay period the employee would have normally received the wages.
provides credit in addition to wages, as earnings only the portion that is paid directly to the employee. If the employer pays the unused credit in cash, then follow the steps below to determine countable excess income.
  1. Determine the total amount of gross wages/salary.
  2. Add the benefit credit amount to the wages/salary from Step 1.
  3. Subtract the cost of fringe benefits up to the amount of the benefit credit from the amount in Step 2.
  4. The remaining income from Step 3 is the countable gross earned income.

D—1033.3.2  Earned Income Tax Credits (EIC)

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Households with tax dependents and gross monthly earnings below levels established by the Internal Revenue Service (IRS) are potentially eligible to receive EIC.

EIC money is included in an individual's:

  • paycheck (advance EIC payments) before the individual’s income tax return is filed; or
  • IRS refund after the individual files his annual income tax return.

Exempt EIC payments/refunds from income.

D—1033.3.3  Income from Tips

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Household members who are employed in service-related occupations (beauticians, waiters, delivery staff, etc.) are likely to earn tips in addition to wages. Count tips as earned income.

Add tip income to wages before applying conversion factors.

Note: Do not consider tips as self-employment income unless related to a self-employment enterprise.

D—1033.4  Self-Employment

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Self-employment income is usually income from one's own business, trade or profession rather than from an employer. However, some individuals may have an employer and receive a regular salary. If an employer does not withhold income or Federal Insurance Contributions Act (FICA) taxes, even if required to do so by law, the person is considered self-employed.

Types of self-employment include:

  • odd jobs, such as mowing lawns, babysitting and cleaning houses;
  • owning a private business, such as a beauty salon or auto mechanic shop;
  • farm income; and
  • income from property.

Allowable costs of producing self-employment income include labor, sales tax, stock, raw materials, rent, insurance premiums, utilities, repairs that maintain income-producing property, supplies, fuel, linen service, property tax, interest from business loans on income-producing property, identifiable costs of seed and fertilizer, payments on the principal of loans for income-producing property, capital asset purchases, such as real property, equipment, machinery and other durable goods (items expected to last for at least 12 months), capital asset improvements and allowable transportation costs. The individual may choose to use the current allowable mileage rate found in A-1323.4.5, Allowable Costs of Producing Income, instead of keeping track of individual transportation expenses. Note: Do not allow travel to and from the place of business.

Do not deduct any of the following:

  • net losses that occurred in a previous period;
  • work-related expenses, such as federal, state and local income taxes, and retirement contributions;
  • depreciation;
  • costs not related to self-employment; or
  • costs related to producing income gained from illegal activities, such as prostitution and the sale of illegal drugs.

If the applicant conducts a self-employment business in their home, consider the cost of the home (for example, rent, mortgage, utilities) as shelter costs, not business expenses, unless you can identify the costs separately as necessary for the business.

Tax Returns Submitted as Verification Sources for Self-Employment

Consider all income listed on the tax returns as indicated below. If the amount is negative or blank, consider the income as zero.

Form 1040 (U.S. Individual Income Tax Return)

  • Line 7 – Wages, salaries and tips
  • Line 8a – Taxable interest
  • Line 9a – Ordinary dividends
  • Line 11 – Alimony received
  • Line 12 – Business income
  • Line 13 – Capital gains
  • Line 14 – Other gains
  • Line 15a – IRA distribution
  • Line 16a – Pensions
  • Line 17 – Rental real estate, royalties, partnerships
  • Line 18 – Farm income
  • Line 19 – Unemployment
  • Line 20a – Social Security
  • Line 21 – Other income

Schedule C (Profit or Loss from Business)

Add the following lines back to Line 31 from Schedule C.

  • Line 13 – Depreciation
  • Lines 18 – Office expense (if business address is same as home address)
  • Lines 19 – Pension and profit-sharing plans
  • Line 24b – Meals and entertainment
  • Line 25 – Utilities (if business address is same as home address)
  • Line 27 – Other expenses – Review the expenses listed on Page 2 to determine the allowable expenses of conducting the self-employment business. If the expense is not allowable, add the expense to Line 31. If the applicant fails to provide Page 2 of Schedule C, Part V, do not allow the expenses. Add the total amount listed in Line 27, Schedule C, to Line 31.
  • Line 31 – Net profit or loss (this amount is entered in Line 12 of Form 1040).
  • If the applicant conducts a self-employment business out of the home, the cost of the home (rent, mortgage, utilities) is not considered an allowable business expense. Add Line 30 from Schedule C (expenses for business use of your home) back to self-employment net income (Line 31 from Schedule C).

Schedule C-EZ (Profit or Loss from Business)

  • Line 1 – Gross receipts
  • If the applicant does not submit valid expense verifications, do not deny the application. Budget $0 in the expense amount and use the total amount of verified self-employment income. If the applicant provides expense verification, determine if the deductions are valid, then calculate and use that amount as the reported expense deduction.

Schedule F (Profit or Loss from Farming)

Add the following lines back to Line 36 from Schedule F:

  • Line 16 – Depreciation
  • Line 25 – Pension and profit-sharing plans
  • Line 32 – Utilities (if business address is the same as home address)
  • Line 34 – Other expenses – meals and entertainment. Review the expenses listed on Schedule F to determine the allowable expenses of conducting the self-employment business. If the expense is not allowable, add the expense to Line 36.
  • Line 36 – Net profit or loss (this amount is entered in Line 18 of Form 1040).

D—1033.5  Military Pay and Allowances

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count military pay and allowances for housing, food, base pay and flight pay as earned income less pay withheld to fund education under the GI Bill.

D—1033.5.1  Family Subsistence Supplemental Allowance (FSSA)

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

The FSSA is a monthly payment made to certain low income service members and their families so they will not have to depend on the Supplemental Nutrition Assistance Program (SNAP) to make ends meet. The service members' pay statements usually include the FSSA.

Count as earned income.

D—1033.5.2  Combat (Hazardous Duty) Payments

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Count all of the combat payments, also known as hazardous duty payments, received by a legal parent who is a member of the U.S. military, absent solely due to deployment to a combat zone.

D—1033.6  Temporary Census Income

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt as income.

D—1034  Government Payments

Revision 11-4; Effective October 1, 2011

D—1034.1  Veterans Benefits

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count the gross amount of benefits, less any amount recouped for a Veterans Affairs (VA) overpayment, as unearned income.

Exempt VA special needs payments (such as annual clothing allowances or monthly payments for an attendant for disabled veterans not included in the Health and Human Services Commission (HHSC) standard of need or not considered other than normal living expenses) as reimbursements.

HHSC standard of need represents food, clothing, housing, utilities and incidentals. Incidentals include normal day-to-day transportation, telephone, laundry, medical supplies not paid by Medicaid, home remedies, recreation and household equipment.

D—1034.2  Retirement, Survivor and Disability Income (RSDI)

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count the gross amount of benefits, including the Medicare premium deduction, less any amount that is being recouped for a prior RSDI overpayment. RSDI is unearned income.

D—1034.3  Supplemental Security Income (SSI)

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

SSI is exempt.

D—1034.4  Railroad Retirement

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Railroad retirement benefits are considered pensions. Count as unearned income.

D—1034.5  Civil Service Award Payments

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Civil Service award payments are considered pensions. Count as unearned income.

D—1034.6  Unemployment Compensation

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count the gross amount of unemployment benefits as unearned income.

D—1034.7  Adoption Subsidies

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Adoption subsidies are exempt.

Note: Do not include a person receiving adoption assistance in a budget or a certified group.

D—1034.8  Crime Victim Compensation Payments

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Crime victim compensation payments are from the funds authorized by state legislation to assist a person who:

  • was a victim of a violent crime;
  • was the spouse, parent, sibling or adult child of a victim who died as a result of a violent crime; or
  • is the guardian of a victim of a violent crime.

The Office of the Attorney General distributes the payments monthly or in a lump sum. Exempt these payments.

D—1034.9  Government Disaster Payments

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt federal disaster payments and comparable disaster assistance provided by states, local governments and disaster assistance organizations if the household is subject to legal penalties when the funds are not used as intended (including temporary employment of six months or less for disaster-related work, paid under the Workforce Investment Act and funded by the National Emergency Grant).

Examples:

  • Payments by the Individual and Family Grant Program or Small Business Administration to rebuild a home or replace personal possessions damaged in a disaster.
  • Payments from the Federal Emergency Management Agency (FEMA) to assist with rent.

D—1034.10  Government Housing Payments

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt the value of government housing or rental payments, whether cash, two-party check, in-kind or vendor paid.

D—1034.11  Native and Indian Claims

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Exempt payments made to Native Americans under various public laws including:

  • Distributions from Native Corporations made under the Alaska Native Claims Settlement Act, ANCSA, (Public Law [PL] 92-203 and Section 15 of PL 100-241).
  • Funds distributed per capita or held in trust by the Indian Claims Commission for members of Indian tribes, as follows:
    • Grand River Band of Ottawa Indians (PL 94-540).
    • Income to certain tribal members from land held in trust by the U.S. government (PL 94-114, Section 6).
    • Income resulting from provisions of PL 92-254.
    • Red Lake Band of Chippewas (PL 98-123, Section 3) or Assiniboine Tribe of the Fort Belnap Indian Community, and the Assiniboine Tribe of the Fort Peck Indian Reservation (PL 98-124, Section 5).
  • Funds distributed by the Secretary of Interior to tribal members from:
    • tribal trust funds on a per capita basis (PL 98-64); or
    • judgment funds from claims against the U.S. and held in trust or distributed on a per capita basis (PL 93-134, as amended by 97-458).
  • Payments by the Indian Claims Commission to the:
    • Passamaquoddy Tribe, the Penobscot Nation, and the Houlton Band of Maliseet Indians or any of its members (Maine Indian Claims Settlement Act of 1980, PL 96-420, Section 9(c)).
    • Confederated Tribes and Bands of Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation (PL 95-433).
    • Seneca Nation or its members (Seneca Nation Settlement Act of 1990, PL 101-503).
    • Blackfeet, Grosventre and Assiniboine tribes of Montana (PL 97-408).
    • Saginaw Chippewas of Mississippi (PL 99-123, Section 6(b)(2).
  • Payments to the Turtle Mountain Band of Chippewas, Arizona (PL 97-403).
  • Payments to heirs of deceased Indians made under the Old Age Assistance Claims Settlement Act (PL 98-500).

Exception: Money given to Native Americans from gaming revenues (such as from casino profits, race tracks, lotteries, etc.) is not exempt under these laws. Count gaming revenues as unearned income.

D—1034.12  Nutrition Programs

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt:

  • the value of food assistance under the Child Nutrition Act of 1966 and National School Lunch Act; and
  • benefits received under Title VII, Nutrition Program for the Elderly, of the Older American Act of 1965.

D—1034.13  Temporary Assistance for Needy Families (TANF)

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count the TANF benefit amount after recoupment as unearned income.

D—1034.13.1  TANF Annual School Subsidy Payment

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt as income.

D—1034.13.2  One-Time TANF (OTTANF) Payment

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt OTTANF as income.

D—1034.14  One-Time Grandparent Payment

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt One-Time Grandparent Payments as income.

D—1034.15  Payments to Vietnam Veterans’ Children

Revision 11-4; Effective October 1, 2011


D—1034.15.1  Payments to Vietnam Veterans’ Children Born with Spina Bifida (Public Law 104-204)

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

These are Veterans Affairs payments made to Vietnam veterans' children who are born with spina bifida.

Exempt these payments.

D—1034.15.2  Payments to Children of Women Vietnam Veterans Born with Certain Birth Defects (Public Law 106-419)

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

These are Veterans Affairs payments made to the children of women Vietnam veterans who are born with a birth defect.

Exempt these payments.

D—1034.16  Payments to Victims of Nazi Persecution

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

These are payments made to individuals because of their status as victims of Nazi persecution.

Exempt these payments.

D—1034.17  National and Community Services Act (NCSA)

Revision 12-3; Effective July 1, 2012

CHIP, CHIP Perinatal

The NCSA established a corporation to administer paid volunteer service programs. The corporation provides funds, training and technical assistance to states and communities to develop and expand human, education, environmental and public safety services.

The corporation oversees programs created under the Domestic Volunteer Service Act (DVSA) of 1973 such as:

  • Volunteers in Service to America (VISTA)
  • Retired and Senior Volunteer Program (RSVP)
  • Foster Grandparents
  • Senior Companion Program

The corporation also administers programs established in 1993 that include:

  • Americorp
  • Learn and Serve
  • National Senior Service Corps (Senior Corps)

Programs Established in 1973

Exempt payments, living allowances and stipends.

Programs Established in 1993

Exempt payments except on-the-job (OJT) training payments. Count OJT payments for adults as earned income. Exempt a child's OJT payment if the child is under:

  • age 19; and
  • parental control of another household member.

Exception: Exempt OJT training payments received by Americorp volunteers.

D—1034.18  Relocation Assistance

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Exempt payments provided under:

  • Title II of the Uniform Relocation Assistance and Real Property Acquisitions Act of 1970.
  • Title I of Public Law 100-383. These payments are made to Aleuts or individuals of Japanese ancestry (or their heirs) who were relocated during World War II.
  • Public Law 93-531 to members of the Navajo or Hopi Tribes.

D—1034.19  Transitional Living Allowance

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt transitional living allowance (TLA). The Department of Family and Protective Services distributes TLA to a foster child who:

  • is under age 21;
  • has completed the preparation for adult living (PAL) classes; and
  • has left foster care or is transitioning out of foster care.

Payments:

  • are received for a maximum of 12 months;
  • cannot exceed $500 a month;
  • cannot total more than $1,000; and
  • are intended for expenses other than ongoing room and board.

D—1035  Income from Property

Revision 11-4; Effective October 1, 2011

D—1035.1  Dividends and Royalties

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count dividends as unearned income. Exception: Exempt dividends from insurance policies as income.

Count royalties as unearned income, less any amount deducted for production expenses and severance taxes.

D—1035.2  Payments for Mineral Rights

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count as unearned income.

D—1036  Other

Revision 11-4; Effective October 1, 2011


D—1036.1  Cash Gifts and Contributions

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count cash gifts and contributions as unearned income unless they:

  • are made by a private, nonprofit organization on the basis of need; and
  • total $300 or less per household in a federal fiscal quarter. The federal fiscal quarters are January through March, April through June, July through September and October through December.

If these contributions exceed $300 in a quarter, count the excess amount as income in the month received.

Exception: Budget contributions from non-certified household members, as explained in D-1036.1.1, Contributions from Non-Certified Household Members.

D—1036.1.1  Contributions from Non-Certified Household Members

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

If a non-certified person(s) lives in the home with a budget group and shares household expenses (no landlord/tenant relationship), exempt any payment the non-certified person makes to the unit for common household expenses (including food, shelter, utilities and items for home maintenance). If a non-certified household member makes additional payments for use by a certified member, it is a contribution.

D—1036.1.2  Gifts from Tax-Exempt Organizations

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt gifts from tax-exempt organizations if the gift is for a child with a life-threatening condition and the amount of the gift is:

  • less than $2,000 annually; and
  • not converted to cash.

If the gift is converted into cash or exceeds $2,000 a year, count the conversion or the excess as unearned income in the month of receipt, and exempt as a resource in the months that follow.

D—1036.2  Child and Medical Support

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Payments from an alleged or legal parent are considered child support if the:

  • payments are court ordered; or
  • child's caretaker (or the person paying the support) states that the payment is intended for the child's support.

Consider child support payments as unearned income available to the child even though someone in the home that is outside the budget group may receive it. If a single payment is received for two or more children with no specific amount designated for each child, prorate the payment among the children.

Count child support arrears received as unearned income to the designated adult (head of household or second parent).

Count medical support payments from the absent parent that the individual indicates they will continue to keep and that are not a reimbursement. Count the medical support under the child's name.

D—1036.3  Interest

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count interest income as unearned income.

D—1036.4  Pensions

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

A pension is any benefit derived from former employment, such as retirement benefits or a disability pension. Count as unearned income.

D—1036.5  Energy Assistance

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt energy assistance. Exception: Count cash payments received from private non-profit organizations as unearned income.

D—1036.6  Foster Care Payments

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt foster care payments.

Note: Do not include a person receiving foster care payments in a budget or certified group.

D—1036.7  In-Kind Payments

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Exempt in-kind payments.

D—1036.8  Loans (Non-Educational)

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Consider a loan as financial assistance if:

  • there is an understanding that the individual will repay the money, and
  • the individual can reasonably explain how the loan will be repaid.

Exempt these loans from income. Count contributions that are not considered loans as unearned income.

D—1040  Types of Payments

Revision 11-4; Effective October 1, 2011

D—1041  Vendor Payments

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Exempt payments that a person or organization outside the household makes directly to the individual's creditor or person providing the service.

Exception: Count as income money legally obligated to the household, but that the payer makes to a third party for a household expense.

Example: The non-custodial parent is court-ordered to pay $400 per month. Instead, the non-custodial parent pays $150 cash support and also pays $300 of the custodial parent's rent directly to the landlord for a total of $450. Count the $150 cash and $250 of the vendor paid rent as child support, since that portion is legally obligated to the individual. The $50 amount over the legally obligated child support of $400 is considered an exempt vendor payment.

D—1042  Reimbursements

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Exempt a reimbursement (not to exceed the individual's expense) provided specifically for a past or future expense:

  • that is not included in HHSC's standard of need; or
  • for medical needs that are not paid by Medicaid, CHIP or CHIP Perinatal.

If the reimbursement exceeds the individual's expenses, count any excess as unearned income. Do not consider a reimbursement to exceed an individual's expenses unless the individual or provider indicates the amount is excessive.

Note: Exempt a reimbursement for future expenses only if the individual plans to use it as intended.

D—1050  Calculating Household Income

Revision 11-4; Effective October 1, 2011

D—1051  Averaging

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Average all pay amounts when all:

  • are representative, and
  • pay stubs are dated within 60 days before or after the file date.

Exception: For applications reopened because of a request for review outcome, use pay stubs dated within 60 days of the request for review.

When two or more pay stubs are submitted and the income amounts on the stubs are not identical, the eligibility determination is based on an average of the income reflected in the multiple pay stubs. Exclude pay stubs that appear to be non-representative when averaging.

The treatment of overtime, holiday or other pay must conform to the policy of determining eligibility on the basis of regular and consistent income.

D—1052  Income Frequency

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Income received must be converted to a monthly amount, unless received monthly. Use the following conversion factors. (Monthly pay means that the employee is paid once a month.)

Income Frequency Conversion Factor
Weekly (paid once every week) Multiply by 4.33
Bi-weekly (paid every other week) Multiply by 2.17
Semi-monthly (paid twice a month) Multiply by 2.0
Annually (paid once a year) Divide by 12

If the income frequency cannot be determined based on the information listed on the application or from the verification, trigger a Missing Information letter to request the income frequency.

D—1053  Terminated Income

Revision 11-4; Effective October 1, 2011

CHIP, CHIP Perinatal

Count terminated income in the month received. Use actual income and do not use conversion factors if terminated income is less than a full month's income. If the income terminated in the application month, the CHIP administrator must request missing information to verify the termination. Self-declaration is not acceptable verification.

D—1054  Budget Months

Revision 13-4; Effective October 1, 2013

CHIP

The system will determine CHIP eligibility for the following months:

At Application

  • Application month
  • Process month

At Redetermination

The month following the last month of CHIP coverage.

D—1060  Verification Requirements

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Countable income must be verified unless the amount of income reported by the applicant makes the child(ren) ineligible.

When more than one form of income verification is submitted (for example, both a tax form and pay stubs for the same person), the most current form of verification is used to determine eligibility.

If an applicant does not indicate earnings on the application but provides income verification, use the income verification provided and count the income.

Use the following chart when an amount on the application and verification source is different.

If the income on the application is... and verification is... then...
greater than the limit, not provided, deny the application.
greater than the limit, less than or equal to the limit, if otherwise eligible, certify the application based on the verification.
greater than the limit, greater than the limit, deny the application.
less than or equal to the limit, not provided, request missing information and certify/deny based on the verification.
less than or equal to the limit less than or equal to the limit, if otherwise eligible, certify the application based on the verification.
less than or equal to the limit, greater than the limit, deny the application.

D—1061  Verification Sources

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Earned Income

  • A paycheck stub (dated within 60 days before or after the file date)
  • Most recent IRS tax return. Tax returns include the Federal Return Recap Form.
  • Letter from an employer verifying current income and frequency of pay (letter should contain identifying information for the individual, identifying information for the employer, gross income and frequency, employer's signature, and be dated within 60 days from the file date).
  • Form H1028, Employment Verification
  • Data Broker

Self-Employment

  • Most recent IRS tax return.  Tax returns include the Federal Return Recap Form.
  • Tax Form 1099
  • Business records and receipts
  • Form H1049, Client's Statement of Self-Employment Income, completed and signed by the individual.

Notes:

  • When the applicant submits a hand-written statement of earnings, ledger, business records, Form H1049, statement of estimated earnings or receipts for goods/services provided, the applicant, spouse or authorized representative must sign at least one verification document. The date of the signature is not required.
  • Accept tax returns within the last two years from the current year.
  • IRS Form 1099, Dividends and Distributions, is not acceptable income verification by itself. If the applicant submits Form 1099 and Form 1040 and the income amounts match, then accept the tax forms as verification. In this instance, no Schedule C, Profit or Loss from Business, is needed.
  • IRS Form 1040 by itself is not acceptable verification of self-employment income. Most recent Schedule C, Schedule C-EZ, Net Profit from Business, or Schedule F, Profit or Loss from Farming, must accompany it. Schedules C, C-EZ or F are acceptable verification of self-employment income and may be submitted without IRS Form 1040.

Veterans Affairs (VA) Benefits

  • Check or copy of check (dated within 60 days before or after the file date)
  • Current award notice, letter or official written statement
  • Most recent tax return dated within the last two years. Tax return includes the Federal Return Recap Form
  • Tax Form 1099

RSDI

  • Most recent Social Security statement
  • Most recent Social Security check
  • Most recent award letter
  • Wired Third Party Query System (WTPY)
  • State On-Line Query (SOLQ)
  • Computer inquiry to Bendex file, if it is consistent with the individual's statement
  • Most recent IRS tax return dated within the last two years. Tax returns includes the Federal Return Recap Form
  • Tax Form 1099
  • Most recent itemized bank statement showing direct deposits from the U.S. Treasury

SSI

  • Most recent Social Security statement
  • Most recent Social Security check
  • Most recent award letter
  • WTPY
  • SOLQ
  • Computer inquiry to the SDX file (this source also provides sufficient proof of other types of income available to an SSI recipient)
  • Most recent tax return dated within the last two years. Tax return includes the Federal Return Recap Form
  • Most recent itemized bank statement showing direct deposits from the U.S. Treasury

Railroad Retirement

  • Check or copy of check (dated within 60 days before or after the file date)
  • Most recent award letter (issued annually)
  • Most recent tax return dated within the last two years. Tax return includes the Federal Return Recap Form.

Civil Service Award Payment

  • Check or copy of check (dated within 60 days before or after the file date)
  • Most recent award letter (issued annually)
  • Most recent tax return dated within the last two years. Tax return includes the Federal Return Recap Form

Unemployment Compensation

  • Check or copy of check (dated within 60 days before or after the file date)
  • Most recent tax return dated within the last two years. Tax return includes the Federal Return Recap Form  
  • Tax Form 1099
  • Award letter (must be signed and dated)
  • Texas Workforce Commission (TWC) inquiry

Cash Contributions

  • Check or copy of check (dated within 60 days before or after the file date)
  • Cancelled checks (dated within 60 days before or after the file date)
  • A letter from the payer (signed and dated within 60 days before or after the file date) indicating the amount and frequency paid

Child and Medical Support

  • Most recent child support check (dated within 60 days before or after the file date)
  • Office of Attorney General (OAG) Texas Child Support and Enforcement System (TXCSES)
  • Cancelled checks (dated within 60 days before or after the file date)
  • Attorney General collection and distribution records
  • County Clerk records
  • Withholding statements from unemployment compensation
  • Written statement from parent providing support (must be signed and dated with an address and/or telephone number)
  • Current court records, such as court order, court support agreement or divorce or separation papers
  • Bank statement, if unable to access OAG inquiry and no other verification can be obtained

Interest, Dividends and Royalties

  • Check or copy of check
  • Statement from bank paying dividends and interest (self-declaration is acceptable at redetermination)

Workers' Compensation

  • Check or copy of check (dated within 60 days before or after the file date)
  • Current award letter (must be signed and dated)
  • Statement from claims adjuster, attorney or insurance company
  • Most recent tax return dated within the last two years. Tax return includes the Federal Return Recap Form
  • Tax Form 1099
  • Texas Worker’s Comp Commission

Disability Income

  • Check or copy of check (dated within 60 days before or after the file date)
  • Current award letter
  • Letter from the payer (signed and dated within 60 days before or after the file date)

Pensions

  • Check or copy of check (dated within 60 days before or after the file date)
  • Statement from company or union providing pensions or union benefits
  • Most recent tax return dated within the last two years. Tax return includes the Federal Return Recap Form

Terminated Income

  • Letter or statement from previous employer indicating the last date worked and gross pay amount
  • TWC inquiry
  • Data Broker reflecting the last date worked and pay amount

Other

  • Check or copy of check (dated within 60 days before or after the file date)
  • Bank statement or record
  • Written, signed and dated statement from the payer of the amount and frequency paid
  • Most recent proof of other income received
  • Form H1050, Check Verification

Other Government Benefits

  • Award letter
  • Copy of check or check stub

D—1070  Documentation Requirements

Revision 13-4; Effective October 1, 2013

CHIP, CHIP Perinatal

Exempt Income

Document:

  • why it is exempt, and
  • the name and address or telephone number of the income source.

Terminated Income

Document:

  • the name and address or telephone number of the income source, and
  • vacation pay received before or after termination, including the dates received.

Income

Document the:

  • date of each income statement or stub used;
  • date income actually received;
  • date income is anticipated using factors such as time it has to travel via mail, weekends and holidays;
  • name and address or telephone number of the income source;
  • gross amount of income;
  • frequency of receipt (such as weekly, every two weeks, semi-monthly, monthly); and
  • calculations used.

Income Computations

Document verification and computation of household income at the initial application, when a change is reported and at each subsequent application/redetermination. Record all sources, amounts, dates and computations.

Other Income

Document the method used to verify income other than earned income. This documentation includes the type of income, the check or document seen, the date on the check or document, the amount recorded on the check or document, the date the income was verified and any computations performed to determine the total income.

Self-Employment

Document:

  • the method for averaging income;
  • deductions for the cost of doing business;
  • the number of hours engaged in the enterprise;
  • other factors used to determine the amount of income;
  • that the individual was informed to keep self-employment records and receipts for verification purposes for future recertifications; and
  • when using Form H1049, Client's Statement of Self-Employment Income, as the only source of verification, the reason Form H1049 is the only source of income.