Manual Section 406 – Income

Manual Section 406 - Income Manual Section 406 – Income Trainer: Nancy Buczeskie nbuczeskie@state.pa.us (717) 772-0655 1

Manual Section 406 - Income When is this chapter effective? 9/1/2010, when finalized and posted to the OCDEL Intranet site. Performance Standards will be revised to reflect the changes in policy with regard to calculating income. There will be a “Transition Period”. Divisions of Policy and Operations will continue discussion. 2

Manual Section 406 - Income 406.1 - General policy & regulation All gross income is counted, including overtime, bonuses, piece-rate, shift differentials and holiday pay. All income is associated with a p/c in PELICAN CCW, NEVER a child. Income associated with a child will display incorrectly across multiple cases when the child exists in more than one case (i.e., joint custody). 3

Manual Section 406 - Income 406.4 – income inclusions:In-kind payments A payment for goods and services made in the form of other goods and services, not cash or other forms of money. Usually, the payee returns with the same kind of good or service (i.e., if someone's tire blows out, the payee buys another tire to replace the first one). In the securities world, securities pay bondholders in more bonds instead of cash interest. Different from Barter because the payer gets the same goods and services in return, not other goods or services of equivalent value, as is the case in barter. 4

Manual Section 406 - Income 406.4 – income inclusions:unemployment compensation The timeframe the calculating Unemployment Compensation is generally 52 weeks, unless the p/c submits verification indicating the a lesser timeframe (i.e., 26 weeks, which is the standard without extensions). Currently, with all of the extensions available, Unemployment Compensation may continue to up to 99 weeks. 5

Manual Section 406 - Income 406.4 – income inclusions:Using YTD history The CCIS may use YTD history as another way to help determine whether overtime or bonuses are received by the p/c. The CCIS may or may not make use of it. If the CCIS uses the YTD information, the CCIS must have additional discussion with the parent to determine how to use the information to ensure income is most accurately ascertained. 6

Manual Section 406 - Income 406.4 – income inclusions:Using YTD history for bonuses If a parent receives a $250 ongoing bonus on a paystub for her January redetermination, but in July that bonus is still $250 in YTD history, is the YTD divided by 7 months? No, the bonus is entered as a “one-time” amount with a frequency of “Annual”. Next January, do we remove the bonus if it does not appear on the paystub? The bonus should be removed at the next redetermination (i.e., in July) because the bonus amount has not changed in the YTD History. 7

Manual Section 406 - Income 406.4 – income inclusions:social security benefits The CCIS is NOT required to obtain an Award Letter only as acceptable verification. The parent may choose which type of verification he/she will submit as set forth in § 3041.65(c) (relating to verification of income), but if the parent submit s an Award Letter all pages are required. If the Award Letter indicates an overpayment or other amount withheld, in addition to the monthly amount received, the CCIS will process all of this information. 8

Manual Section 406 - Income 406.4 – income inclusions:social security benefits The CCIS is NOT required to obtain an Award Letter only as acceptable verification. The CCIS must: Consider whether the verification is acceptable. Ensure the verification is submitted in its entirety (i.e., all pages). Process the information received. 9

Manual Section 406 - Income 406.5.1 – Medical deductions: The amount of a medical deduction is based upon the gross or “pre-tax” amount, NOT the “post-tax” amount. The amount of the deduction is the portion that EXCEEDS 10%, not the total amount reported. 10

Manual Section 406 - Income 406.5.1 – Medical deductions:Entry into Pelican ccw This procedure changed, but a slight modification will be incorporated into the chapter in response to concerns voiced by several CCIS agencies. The CCIS may continue to enter medical deductions into PELICAN CCW, but will delete the information if it does not meet the criteria set forth in the regulation. If entering the medical deduction into PELICAN CCW, the total amount reported must be entered. PELICAN CCW will automatically calculate the amount of the deduction to apply to the income calculation. 11

Manual Section 406 - Income 406.5.1 – Medical deductions:Revised procedures for Entry Enter the medical deductions on the Deductions (Support) page. Assess eligibility. Click on “Eligibility Details” at the bottom of the Family Composition Eligibility Results page. Review the “Total Adjusted Deductions” row. If the “Total Adjusted Deductions” equal $0, delete the medical deduction from the Deductions (Support) page, reassess and confirm eligibility. If the “Total Adjusted Deductions” is NOT $0, confirm eligibility. 12

Manual Section 406 - Income 406.5.2 – stepparent deductions The stepparent deduction is deducted from the family’s annual income, NOT gross monthly income. The Stepparent Deduction Chart listed in Appendix C of the regulations lists ANNUAL deduction amounts for ease in calculation. The annual amount may be calculated into a monthly amount, but this adds an unnecessary level of complexity. When a family includes a same sex couple, inclusion in the family composition is determined based upon whether one of the parents is a biological parent, whether the individuals are married or whether one or both of the individuals are adoptive parents. 13

Manual Section 406 - Income 406.5.3 – child support:arrearages paid to the cao If a p/c is currently paying child support arrearages to the CAO, the p/c is NOT eligible for a child support deduction. The p/c is considered to be settling an outstanding bill with the Department only. 14

Manual Section 406 - Income 406.5.3 – child support:reconciling parents In cases where parents are reconciling and are awaiting a future DRO appointment to terminate the child support order, the child support income is NOT counted and the family is NOT eligible for a child support deduction. 15

Manual Section 406 - Income 406.6 – child support amount:principles for determining support One quarter or any 13-week period is to be the standard acceptable period for AVERAGING child support payments. This requirement is to be used going forward ONLY; there is no need to adjust calculations or request additional verification for current recipients. Obtaining 13 weeks worth of verification is not necessary if the amount and frequency can be easily determined using verification covering a lesser number of weeks. The period of verification must cover a minimum of 4 weeks and may cover up to 13 weeks (if there is a need to average). The 13-week rule may be used to determine the actual amount of a child support deduction as well as child support income received. 16

Manual Section 406 - Income 406.6 – child support amount:principles for determining support 2. The CCIS must demonstrate the method used to calculate the resulting child support amount either in the application and/or redetermination packet, as well as in case comments. 17

Manual Section 406 - Income 406.6 – child support amount:principles for determining support 3. If a p/c reports that he/she does not receive child support and the CCIS has no demonstrative reason to believe differently, the p/c is NOT required to verify that he/she does not or no longer receives support payments. This speaks to applicants or recipients who have NEVER REPORTED the receipt of child support income. This requirement does NOT apply to recipients who have been receiving child support income but, during a redetermination, reports he/she is no longer receiving the income (i.e., cross it out on the Redetermination Summary). If a p/c reports a decrease or that child support income in no longer received , the p/c MUST submit verification of this change. 18

Manual Section 406 - Income 406.6 – child support amount:principles for determining support 4. The CCIS may NOT create a standard business practice by which information is obtained from the DRO for each p/c when the p/c has not reported the receipt of child support payments. This speaks to applicants or recipients who have NEVER REPORTED the receipt of child support income. 19

Manual Section 406 - Income 406.6 – child support amount:principles for determining support If the CCIS is using a 13-week period to average and notice the p/c has not received child support income in the past two week, does the CCIS continue to average the amount or indicate the p/c is no longer receiving child support income? If the CCIS determines the p/c received any child support income in the most recent 6-week period, the CCIS MUST include the child support income. If payments are sporadic , the CCIS MUST average. If the CCIS averages the amount and the p/c later submits additional verification indicating the amount decreased or that child support income was no longer received, the CCIS will process the incormation and PELICAN CCW will decrease the co-pay, if appropriate. 20

Manual Section 406 - Income 406.6.2 – Irregular receipt of payments:tracking date alert When setting a tracking date alert, reminding the user to review the child support information after one year since a lump sum payment was calculated over 12 months, the CCIS must set the tracking date alert one year from the date eligibility was confirmed in PELICAN CCW. 21

Manual Section 406 - Income 406.7 – income exclusions There was an error in the lead-in paragraph, the word “included” was used instead of “excluded”. The chapter has been revised to correct this error. 22

Manual Section 406 - Income 406.7 – income exclusions:vista payments Information regarding VISTA payments, requirements and what constitutes “volunteer” activities can be found at the following url: http://www.nationalservice.gov/help/vistahandbook/chapter1.html There was an inadvertent error regarding VISTA payments. #4 will be removed. A family is either eligible or ineligible for subsidized child care. The availability of funding through VISTA may be explored, but has no bearing on the eligibility determination process. 23

Manual Section 406 - Income 406.8 – conversion table:How is this information used? It is purely informational. PELICAN CCW automatically determines the total gross annual income based upon the income amount(s) (earned and unearned), deductions and income frequency entered by the CCIS. 24

Manual Section 406 - Income 406.9 – deciphering paystubs:overtime The CCIS is no longer required to verify or inquire whether overtime will continue for the next 60 days. If the income verification indicates overtime in any of the four weeks out of the most recent 6-week period, the overtime is included. The overtime policy has reverted to the policy used prior to the training on implementation of the new regulations. The CCIS should contact the p/c if the inclusion of overtime, bonuses, shift differentials or piece-rate income will result in ineligibility, and allow the p/c to self-declare and submit additional verification that is more representative of the income the p/c actually receives. 25

Manual Section 406 - Income 406.9 – deciphering paystubs:cafeteria plans OCDEL considers what constitutes a “Cafeteria Plan” in the same manner as the IRS. State law and regulation dictate what constitutes a “Cafeteria Plan”. “Cafeteria Plans” may include a multitude of things, but will typically be considered for purposed of determining the amount that may be used toward a deduction ONLY. “Cafeteria Plans” generally allow employees to choose between cash compensation, tax-exempt benefits and taxable benefits without the choice itself resulting in the inclusion of the tax-exempt benefits in taxable income. The CCIS should attempt to obtain additional information from the employer if the “Cafeteria Plan” is not specified on the paystub in a manner that is easily decipherable. 26

Manual Section 406 - Income 406.11 – estimating versus anticipating income:Prospective employment Verification is handled in the same manner, regardless of whether the p/c has not yet started employment or the p/c has been working for less than four weeks. An EV may serve as the primary verification, followed by the p/c submitting one week of income verification. For a p/c who has not yet started working, the p/c must submit verification of receipt of the first pay no later than 10 calendar days following receipt of the first pay. For a p/c who has not been working for four weeks, the p/c may submit the verification in the form of the next paystub. For purposes of determining eligibility, the p/c must start working no later than 30 calendar days following the CCIS’s receipt of the application for subsidized child care. The CCIS must change the verification to “NA” (i.e., Not Available), if the p/c fails to submit verification of the first pay no later than 10 calendar days following receipt of the first pay. 27

Manual Section 406 - Income 406.11 – estimating versus anticipating income:prorating income When the CCIS prorates income, the CCIS must enter the details regarding how the income was prorated in a case comment and must file the income verification in the family file. 28

Manual Section 406 - Income 406.12.1 – Seasonal employment When a school district worker works a second job over the summer months, the income from the summer job MUST be included in the income calculation. Example #1 has an incorrect amount of $18,143.82/year. The chapter will be revised to reflect the accurate amount of $20,159.80/year. 29

Manual Section 406 - Income 406.12.1 – Seasonal employment:construction workers How should the CCIS handle seasonal construction workers who state they will work until the first snowfall or until weather conditions no longer allow outside work and will return to work as soon as the weather breaks in the Spring, is this income prorated? No, the CCIS may NOT prorate the income in this case. This case would not be eligible following 73 calendar days (60 following loss of employment + 13 for the AA period). If the p/c receives Unemployment Compensation, what must the CCIS do? If the case remains eligible at the time the p/c reports receipt of Unemployment Compensation, the CCIS must obtain verification and enter the information into PELICAN CCW to be included in the income calculation. 30

Manual Section 406 - Income 406.12.1 – Seasonal employment:temporary versus seasonal workers The income received for temporary or seasonal work is annualized, NOT prorated, unless the workers are school district employees. 31

Manual Section 406 - Income 406.12.1 – Seasonal employment:per diem jobs When determining the income received for a per diem job, the CCIS must determine the amount earned for the period of time the p/c was employed, similar to seasonal employment. The income remains in PELICAN CCW until the next redetermination. If the p/c works at a per diem job for two weeks, 40 hours/week at $10/hour, what is the income to be counted? $800. The CCIS must enter $800 with an “Annual” frequency. 32

Manual Section 406 - Income 406.12.3 – foster parent income:self-employment When a p/c is a self-employed foster parent, the foster parent is REQUIRED to submit income verification so the CCIS may determine whether the self-employment meets the definition set forth in the regulation (i.e., work for a profit). Any verification set forth in § 3041.67 (relating to verification of work, education and training) is acceptable to verify the foster parent is meeting the work-hour requirement. 33

Manual Section 406 - Income 406.12.4.1 – CAO unearned income There was an inadvertent error regarding verification. If the parent contacts the CCIS within the first 60 days following the date TANF benefits ended, the parent may self-certify incomebased upon the information entered in CIS. If the parent contacts the CCIS following Day 60 or indicates a change in the information entered in CIS, the parent may self-declare the income, but must submit additional verification within 30 days. The p/c must submit additional verification if there is any change in the income information entered in CIS. The CCIS may print and use the Unearned Income page in CIS instead of the PELICAN CCW CAO Unearned Income page if it chooses. 34

Manual Section 406 - Income 406.13 – entering income in Pelican ccw:Holiday pay There was a change in the policy regarding holiday pay. Holiday pay is counted at the higher rate. The answer to question #41 has been revised to reflect the fact that holiday pay is now counted at the higher rate. 35

Manual Section 406 - Income 406.13.1.2 – entering employment & wage information:#8(a) The information is incorrect and will be revised . The CCIS must enter the hours/week in the “Hours per week” field, NOT the number of hours associated with the number of weeks entered . 36

Manual Section 406 - Income Income Verification: principles When determining income, the CCIS must use four weeks out of the most recent 6-week period. Once the CCIS determines income, if the p/c indicates the amount is not representative and wishes to submit additional verification in an attempt to lower the co-pay, the CCIS must determine how much additional verification is needed to recalculate income. If the p/c submits additional verification that still falls into the most recent 6-week period, only one week’s worth of additional verification is needed; additional weeks of verification may be needed if the CCIS must establish a new 6-week period. 37

Manual Section 406 - Income Income Verification: examples The CCIS is processing verification on 11/10. The p/c is paid weekly and submits four weeks of verification out of the most recent 6-week period as follows: 10/1/2010 - $500 10/15/10 - $550 10/29/10 - $550 11/5/10 - $500 The p/c indicates the amount is not representative, that the typical amount is $500/week and later submits one week of verification dated 11/19/10. The verification requirement is met and the co-pay may be adjusted since the CCIS has four weeks of verification out of the most recent 6-week period. 38

Manual Section 406 - Income Income Verification: examples 2. The CCIS is processing verification on 11/10. The p/c is paid weekly and submits four weeks of verification out of the most recent 6-week period as follows: 10/1/2010 - $500 10/8/10 - $550 10/22/10 - $550 10/29/10 - $500 The p/c indicates the amount is not representative, that the typical amount is $500/week and later submits one week of verification dated 11/19/10. The p/c must submit one additional week of income verification to meet the verification requirement to adjust the co-pay. 39

Manual Section 406 - Income Income Verification: examples 3. The CCIS is processing verification on 11/10. The p/c is paid weekly and submits four weeks of verification out of the most recent 6-week period as follows: 10/1/2010 - $500 10/8/10 - $550 10/15/10 - $550 10/22/10 - $500 The p/c later submits one week of verification dated 12/17/10. The p/c must submit three additional weeks of income verification to meet the verification requirement to adjust the co-pay. 40

Manual Section 406 – Income