E-1700, Things That Are Not Income

Revision 09-4; Effective December 1, 2009

Some things a person receives are not income because the person cannot use those things as food or shelter, or cannot use those things to obtain food or shelter. In addition, what a person receives from the sale or exchange of that person’s own property is not income; the proceeds of the sale or exchange of the person’s property remains a resource. The following are some items that are not income.

 

E-1710 Medical Care and Services That Are Not Income

Revision 09-4; Effective December 1, 2009

Medical care and services. Medical care and services are not income if they are any of the following:

  • Given to a person free of charge or paid for directly to the provider by someone else.
  • Room and board a person receives during a medical confinement.
  • Assistance provided in cash or in kind (including food or shelter) under a federal, state or local government program whose purpose is to provide medical care or medical services (including vocational rehabilitation).
  • In-kind assistance (except food or shelter) provided under a nongovernmental program whose purpose is to provide medical care or medical services.
  • Cash provided by any nongovernmental medical care or medical services program.
  • Direct payment of the person’s medical insurance premiums by anyone on the person’s behalf.
  • The value of any third-party payment for medical care or medical services furnished to a person.
  • The value of advice, consultation, training or other services of a strictly social nature furnished to a person.
  • Payments from the Department of Veterans Affairs resulting from unusual medical expenses.
  • Cash provided under a health insurance policy (except cash to cover food or shelter) if the cash is either:
    • repayment for program-approved services a person has already paid for; or
    • a payment restricted to the future purchase of a program-approved service.
  • Third-party resource (TPR) reimbursements to the person (for example, from medical insurers) for a given medical service that do not exceed the amount spent by the person for that same service.

A premium payment for supplementary medical insurance benefits (SMIB) under Title XVIII (Medicare), paid by a third party directly to the Social Security Administration, is not income.

Refunds to a recipient from the state’s Third-Party Recovery Unit are made if TPR payments (for example, from medical insurers) for a given medical service exceed the amount Medicaid paid for that same service. These refunds are income to the person upon receipt.

Examples of medical services include:

  • Room and board (food and shelter), provided an individual is an inpatient in a medical treatment facility.
  • Payment of bed-hold charges for a nursing facility (NF) resident who is temporarily discharged from the facility.
  • In-kind medical items, such as prescription drugs, eyeglasses, and prosthetics and their maintenance. In-kind medical items also include devices intended to make the physical abilities of a person with disabilities equal to those of a person without disabilities, such as electric wheelchairs, modified scooters, specially equipped vehicles, or construction of a carport to a house to protect a specially equipped vehicle. Also included are specially trained animals, such as seeing eye dogs and their maintenance, such as dog food.
  • Transportation to and from medical treatment.

 

E-1720 Social Services That Are Not Income

Revision 18-4; Effective December 1, 2018

A social service is any service, other than medical, that is intended to assist a person with a physical disability or social disadvantage to function in society on a level comparable to that of a person who does not have such a disability or disadvantage. No in-kind items are expressly identified as social services.

Social services. Social services are not income if they are any of the following:

  • Assistance provided in cash or in kind (but not received in return for a service the person performs) under any federal, state or local government program whose purpose is to provide social services, including vocational rehabilitation (for example, cash from the Department of Veterans Affairs to purchase aid and attendance).
  • In-kind assistance (except food or shelter) provided under a nongovernmental program whose purpose is to provide social services.
  • Cash provided by a nongovernmental social services program (except cash to cover food or shelter) if the cash is either:
    • repayment for program-approved services the person already has paid for; or
    • a payment restricted to the future purchase of a program-approved service.

Examples of social service programs:

  • Title XX of the Social Security Act provides services directed at the following goals: achieving and maintaining self-sufficiency; preventing and remedying abuse, neglect or exploitation; and preventing inappropriate institutionalization.
  • Title IV-B of the Social Security Act, Child Welfare Services, provides for the protection and promotion of the welfare of children.
  • Title V of the Social Security Act, Maternal and Child Health and Crippled Children's Services.
  • The Rehabilitation Act of 1973 provides services to disabled persons, including vocational rehabilitation, expanding employment opportunities, and promoting self-sufficiency and independence.

Note: Wages and salaries from Title V of the Older Americans Act, such as Green Thumb and Senior Texan Employment Program (STEP), are countable earned income.

Examples of governmental programs that may provide medical and social services in combination are:

  • state behavioral mental health programs and programs for individuals with developmental disabilities under the umbrella of services from HHSC; and
  • state substance abuse programs.

Examples of nongovernmental organizations that provide medical and social services in combination are the:

  • Salvation Army; and
  • American Red Cross.

Examples of what is not a social service:

  • Training for a specific job skill or trade (vocational training). Do not confuse vocational training with vocational rehabilitation.
  • Governmental income maintenance programs, such as SSI, TANF, Bureau of Indian Affairs General Assistance and VA pension or compensation benefits.

Cash received in conjunction with medical or social services:

  • Any cash provided by a governmental medical or social services program is not income. An example is cash payments from the Department of Family and Protective Services via the Relative and Other Designated Caregiver Program.
  • Any cash from a nongovernmental medical or social services organization is not income if the cash is:
    • for medical or social services already received by the individual and approved by the organization and does not exceed the value of those services; or
    • a payment restricted to the future purchase of a medical or social service.
  • Cash from any insurance policy that pays a flat rate benefit to the person without regard to the actual charges or expenses incurred is countable income. An exception to this is if the insurance policy is considered a long-term care insurance policy.

In-kind items received in conjunction with medical or social services:

  • In-kind items that meet the definition of medical services are not income regardless of their source.
  • Room and board provided during a medical confinement, such as in a medical treatment facility, is not income.
  • In-kind items (including food or shelter) provided by a governmental medical or social services program are not income.
  • In-kind items (other than food or shelter) provided by a nongovernmental medical or social services organization for medical or social service purposes are not income.
  • Food or shelter or other in-kind income provided by a nongovernmental medical or social services organization is income unless excluded under some other section of this handbook (for example, food is provided while a patient is in a medical treatment facility and consequently is not income).

 

E-1730 Sale of a Resource is Not Income

Revision 09-4; Effective December 1, 2009

Receipts from the sale, exchange or replacement of a resource are not income, but are resources that have changed their form. This includes any cash or in-kind item that is provided to replace or repair a resource that has been lost, damaged or stolen.

Example: If a person sells an automobile, the money a person receives is not income; it is another form of a resource. If fair market value was received for the sale of the automobile, no transfer of assets occurred.

 

E-1740 Miscellaneous Things That May Not Be Income

Revision 09-4; Effective December 1, 2009

Income tax refunds. Any amount refunded on income taxes the person has already paid is not income. Income tax refunds are subject to restitution policy (in the month of receipt) for co-payment purposes, to the extent that withholding tax was excluded in the co-payment budget.

Payments by credit life or credit disability insurance. Payments made under a credit life or credit disability insurance policy on the person's behalf are not income.

Example: If a credit disability policy pays off the mortgage on the person's home after the person becomes disabled in an accident, neither the payment nor the increased equity in the home is income.

Bills paid for the person. Payment of the person's bills by someone else directly to the supplier is not income. However, the value of anything a person receives because of the payment if it is in-kind income is counted.

Receipt of certain noncash items. Any item a person receives (except shelter as defined in Section E-1210, Other Terms, or food) that would be an excluded nonliquid resource (as described in Chapter F, Resources) if a person kept it is not income.

Example: A community takes up a collection to buy a specially equipped van, which is the person's only vehicle. The value of this gift is not income because the van does not provide the person with food or shelter and will become an excluded nonliquid resource under in the month following the month of receipt.

Replacement of income a person has already received. If income is lost, destroyed or stolen and a person receives a replacement, the replacement is not income.

Weatherization assistance. Weatherization assistance (for example, insulation, storm doors or storm windows) is not income.

 

E-1750 Proceeds of a Loan

Revision 12-2; Effective June 1, 2012

Money a person borrows or money a person receives as repayment of a loan is not income. However, interest a person receives on money a person has lent is income. Buying on credit is treated as though a person were borrowing money and what a person purchases this way is not income.

A loan requires a bona fide agreement that is legally valid and made in good faith. For the borrower, the loan agreement itself is not a resource. The cash provided by the lender is not income, but is the borrower's resource if retained in the month following the month of receipt.

Proceeds (amount borrowed) of either a commercial loan or an informal loan for which repayment is required with or without interest are not counted as income in the month in which they are received. The proceeds are considered to be a resource in the following month(s). To claim exemption of the proceeds of a loan, a person must prove that he acknowledges an obligation to repay and that some plan for repayment exists. If these conditions can be verified, no written contract is required.

Note: Federal Educational Loans (Federal PLUS Loans, Perkins Loans, Stafford Loans, William D. Ford Loans, etc.) under Title IV of the Higher Education Act (HEA) are exempt from income and resources.

See Chapter F, Resources, and Chapter I, Transfer of Assets.

 

E-1760 Wage-Related Payments

Revision 10-1; Effective March 1, 2010

See Section E-3110, Wages, for a definition of earned income from wages. Employers make various payments on behalf of their employees that are not earnings and are not available to meet food or shelter needs. If an employer pays an employee's share of Social Security (FICA) or unemployment compensation taxes without making a reduction in the employee's wages, the amount the employer pays is considered income.

The following payments by an employer are not income unless the funds for them are deducted from the employee's salary:

  • Funds the employer uses to purchase qualified benefits under a cafeteria plan.
  • Employer contributions to a health-insurance or retirement fund.
  • The employer's share of FICA taxes or unemployment compensation taxes, in all cases.
  • The employee's share of FICA taxes or unemployment compensation taxes paid by the employer on wages for domestic service in the private home of the employer or for agricultural labor only, to the extent that the employee does not reimburse the employer.

 

E-1770 Mandatory Payroll Deductions

Revision 16-2; Effective June 1, 2016

See Section E-3110, Wages, for a definition of earned income from wages. If an employer pays an employee's share of Social Security (FICA) or unemployment compensation taxes without making a reduction in the employee's wages, the amount the employer pays is considered income. The amount the employer pays is not considered income in the following two work situations:

  • The employee is in domestic service in the employer's home.
  • The employee does agricultural labor only.

When considering a person’s earned income, do not consider mandatory payroll deductions as income for the purpose of determining a co-payment. The mandatory payroll deductions are:

  • income tax;
  • Social Security tax;
  • required retirement withholdings; and
  • required uniform expenses.

 

E-1780 Cafeteria Plan

Revision 09-4; Effective December 1, 2009

A cafeteria plan is a written benefit plan offered by an employer in which:

  • all participants are employees; and
  • participants can choose, cafeteria-style, from a menu of two or more cash or qualified benefits.

A qualified benefit is a benefit the Internal Revenue Service (IRS) does not consider part of an employee's gross income. Qualified benefits include, but are not limited to:

  • accident and health plans (including medical plans, vision plans, dental plans, accident and disability insurance);
  • group term life insurance plans (up to $50,000);
  • dependent care assistance plans; and
  • certain profit-sharing or stock bonus plans under section 401(k)(2) of the Internal Revenue Code. IRS does not exclude from income salary reductions made under 401(k)(1) plans. Salary reductions to fund benefits under 401(k)(1) are counted as wages for eligibility and applied income purpose.

Cash is not a qualified benefit.

A salary-reduction agreement is an agreement between employer and employee whereby the employee, in exchange for the right to participate in a cafeteria plan, accepts a lower salary or foregoes a salary increase.

Most cafeteria plans are funded by salary-reduction agreements. However, employers may make contributions to fund basic benefit levels under a cafeteria plan without a salary-reduction agreement.

Salary reductions to purchase qualified benefits under a cafeteria plan are not part of the employee's wages and are not income for eligibility or co-payment purposes.

Payroll deductions may be used to purchase cafeteria-plan benefits in addition to or instead of cafeteria-plan benefits provided under a salary-reduction agreement or employer contribution. The amount of the individual's payroll deductions for cafeteria plan benefits is the employee's wages and is earned income.

Important: Pay slips that appear to show payroll deductions may actually show how funds from a salary-reduction agreement have been allotted among qualified benefits.

The following indicators on a pay slip may indicate an approved cafeteria plan: Flex, Choices, Sec. 125, or Cafe Plan.