Skip To: Main content|Subnavigation|
Minnesota Department of Human Services Child Care Assistance Program (CCAP) Policy Manual
Advanced Search|  

6.15 Annualizing Income

ISSUE DATE: 10/2017

Annualize income to determine eligibility. There are several methods used by MEC2 to annualize income. The worker should enter the verified individual income components and MEC2 will calculate the annualized income. See case example below. The individual components needed within MEC2 will vary depending upon the type of income.

  • The income components used in MEC2 include:
  • · Payment Frequency: Identifies how often the income is paid to the client
  • · Income Projection Amount: Identifies the amount to be used by MEC2 in the annualized income calculation.
  • · Income Projection Payment Frequency: Identifies the payment frequency to be used by MEC2 in the annualized income calculation.
  • · Income Projection Hours per Week: Identifies the hours per week to be used by MEC2 in the annualized income calculation if necessary. Not all annualized income calculations require the hours per week.
  • Most often the Payment Frequency and Income Projection Payment Frequency periods will be the same.

    MEC2 uses the following multipliers to annualize income:

  • · Multiply a weekly income projection payment frequency by 52.
  • · Multiply a biweekly income projection payment frequency by 26.
  • · Multiply a semimonthly income projection payment frequency by 24.
  • · Multiply a monthly income projection payment frequency by 12.
  • If the individual income component information entered into MEC2 is not supported by the verification information, it is recommended that the worker include a detailed case note describing the relationship between the individual income components and the verification information.

    Changes in income during the eligibility period

    Do not reannualize income during the eligibility period unless the reported change would result in the family exceeding 85% of the State Median Income (SMI) for their household size or the family verifies a reduction in income.

    Workers must request verification if a family reports an income change that exceeds 85% of SMI before taking an adverse action. After allowing for a 15-day verification request, if verification is not received, the change can be entered and processed as reported.

    If families report income changes that do not result in an annualized income exceeding 85% of SMI, workers should inform clients that verification may be required at redetermination. Income decreases should not be entered into MEC² without verification. See Chapter 7.6 (Verification – Eligibility redetermination).

    Annualizing income at redetermination

    At redetermination, annualize the family’s current income. Do not reconcile the family’s income annualization for the previous year unless there is evidence the family’s income exceeded 85% of SMI during their 12 month eligibility period. Verify the income that is annualized for the next 12 month eligibility period. See Chapter 7.6 (Verification – Eligibility redetermination).

    Case example

    Worker receives four earned income pay stubs as verification from client. Each pay stub shows the following gross wages per week at an hourly wage of $12.00 per hour and hours worked per week.

    Pay Period

    Gross Wages

    Hours Worked

    Pay Period 1

    300

    25

    Pay Period 2

    420

    35

    Pay Period 3

    312

    26

    Pay Period 4

    360

    30

    After discussions with the client, the worker has determined the best indicator of future income should be the average of the data from pay periods 3 and 4. The worker would enter in the following information into MEC2:

  • · Payment Frequency: Weekly (client receives payment weekly)
  • · Income Projection Amount: 336 (average of 312 and 360)
  • · Income Projection Payment Frequency: Weekly
  • · Income Projection Hours per Week: 28 (average of 30 and 26)
  • Alternatively, the worker could enter the following information into MEC2:

  • · Payment Frequency: Weekly (client receives payment weekly)
  • · Income Projection Amount: 12
  • · Income Projection Payment Frequency: Hourly
  • · Income Projection Hours per Week: 28 (average of 30 and 26)
  • The worker and client determined that using all the pay stubs did not provide the best indicator of future income, therefore it is recommended that the worker include a case note identifying why all the verifications provided were not used and how the individual income components entered into MEC2 were calculated. An example of a case note follows:

    Based on discussions with the client, it was determined the best indicator of future income should be the average of the data from pay periods 3 and 4. Worker used this information to determine the income components entered into MEC2. Income Projection Amount: 336 (average of 312 and 360 from pay periods 3 and 4), Income Projection Hours per Week: 28 (average of 30 and 26 from pay periods 3 and 4).

    Legal authority

    Minnesota Statutes 119B.09
    Minnesota Rule 3400.0170
    Minnesota Statutes 119B.011

    Rate/Report this pageReport/Rate this page

    © 2017 Minnesota Department of Human Services Updated: 10/20/17 11:30 AM | Accessibility | Terms/Policy | Contact DHS | Top of Page | Updated: 10/20/17 11:30 AM