Annualize income to determine eligibility. Annual income of the applicant family is the current monthly income of the family multiplied by 12, income for the 12-month period immediately preceding the date of application or income calculated by the method which provides the most accurate assessment of income available to the family.

Income components to consider when annualizing income

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 family member.

· 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.

How does MEC² annualize income?

There are several methods MEC2 uses to annualize income. Generally, the worker should enter the verified individual income components, and MEC2 will calculate the annualized income. Annualize income using the verification and method that is the best indicator of future income.

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.

Annualizing expected future income at application

When a family applies for CCAP and has income starting in a future biweekly period, there are two acceptable methods to annualize the income. Using one of these methods ensures application policies are correctly applied and allows the copay to increase with the application approval. Treat all families in similar situations the same.

· If an income change starts after the date of eligibility but becomes known while the application is in the application processing period, 12-month eligibility policies apply. Changes that occur after the start date of eligibility must be processed after the application has been approved for the system to correctly apply 12-month eligibility policies. See Chapter 3.7.4 (Changes During the Application Processing Period). An increase in income during the application processing period does not impact the family’s copay until the redetermination. See Chapter 6.21 (Family Copayment).

Method 1: Enter new income in future period

Enter the new income in the biweekly period it starts and approve the future copay increase as part of the application eligibility package.

Considerations for this approach:

· Preferred method for a parentally responsible individual (PRI) starting a new job.

· Family will not have a copayment until income starts.

· If income increases in a future biweekly period that brings the family’s income over 47% of SMI or 67% of SMI (whichever entrance guideline is applicable to the family), the family is still eligible at application if income is under 85% of SMI.

· If the biweekly period is unavailable, do not hold up processing the application. It is appropriate to approve the application without the future income entered. After the application is approved, enter the future income when the period becomes available. The copay will not increase until redetermination.

Method 2: Annualize new income offline

Annualize the new income offline, accounting for the weeks without income. Enter the annual income in MEC2, and case note how the income was annualized. This results in stable income and copay amounts for the biweekly periods in the eligibility approval package (unless other changes in income or family size were made).

Considerations for this approach:

· Preferred method for a PRI on leave or has seasonal/temporary income.

· Family will have a copayment before income starts.

Annualizing income ending at application

Method 1: Enter income ending in biweekly period last check was received

Enter the verified income end date in the biweekly period with the end date and the future copay decrease as part of the application eligibility package. For example, if the income ends 8/6/2025, enter the end date in the 8/4/2025 – 8/17/2025 biweekly period.

Considerations for this approach:

· Preferred method for a parentally responsible individual (PRI) with a verified income end date.

· Family will have a copayment at application and a copay decrease in the biweekly period after the verified income end.

· If income is over 85% SMI and the known decrease is under 47% of SMI or 67% of SMI (whichever entrance guideline is applicable to the family), the family is not eligible until the verified income end date.

· If the biweekly period is unavailable, do not hold up processing the application. It is appropriate to approve the application without the future income ending. After the application is approved, enter the future income end when the biweekly period becomes available.

Method 2: Annualize income offline

Annualize the remaining income offline, accounting for the weeks without income. Enter the annual income in MEC² and case note how the income was annualized. This results in stable income and stable copay amounts for the biweekly periods in the eligibility approval package.

Considerations for this approach:

· Do not remove income type until next redetermination.

· Family with have a copayment for the entire 12-month eligibility period.

· If the income ending at application is due to seasonal and/or temporary income, see chapter 6.15.18. (Annualizing Seasonal and Temporary Income)

Changes in income during the 12-month eligibility period

You must re-annualize income during the 12-month eligibility period when:

· The reported change results in the family’s income exceeding 85% of SMI. See Chapter 7.4 (Verification – 12-Month Eligibility Period)

OR

· The family verifies a decrease in income. See Chapter 8.1.12 (Changes in Income or Expenses).

Do not enter unverified income decreases in MEC². See Chapter 6.21 (Family Copayment).

Annualizing income at redetermination

At redetermination, annualize the family’s current income or the income that is the most accurate assessment of income available to the family. 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).

Annualizing expected future income at redetermination

When a family has income starting in a future biweekly period, determine if including the expected future income would be the best assessment of income available to the family at redetermination.

If including the expected future income would be the best assessment of income available to the family, then annualize the new income offline, accounting for the weeks without income. Enter the annualized income in MEC2 in the biweekly period with the redetermination due date, and case note how income was annualized. This results in stable income and copay amounts for the biweekly periods in the eligibility approval package (unless other changes in income or family size were made). See Method 2 under “Annualizing expected future income at application” above.

Do not enter expected future income in a future biweekly period and approve as part of the redetermination package. This will result in system errors.

Treat all families in similar situations the same.

Case example of annualized income

Worker receives four earned income pay stubs as verification from the parent. 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 parent, the worker has determined the most accurate assessment of income available to the family should be the average of the data from pay periods three and four. The worker would enter in the following information into MEC2:

· Payment Frequency: Weekly (parent 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 (parent 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 parent determined that using all the pay stubs did not provide an accurate assessment of income available to the family; 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.

Case note example

Based on discussions with the parent, it was determined the most accurate assessment of income available to the family should be the average of the data from pay periods three and four. Worker used this information to determine the income components entered into MEC2. Income Projection Amount: $336 (average of $312 and $360 from pay periods three and four), Income Projection Hours per Week: 28 (average of 30 and 26 from pay periods three and four).

Legal authority

Minnesota Statutes 142E.01
Minnesota Statutes 142E.10
Minnesota Rule 3400.0170