IHSS Income and Medi-Cal Eligibility: The Live-In Exemption
The most critical factor determining if you must report IHSS income to Medi-Cal is whether you are a live-in provider. Under IRS Notice 2014-7, payments made by a state Medicaid waiver program for personal care services are generally excludable from the gross income of a provider who lives in the same household as the recipient. This means if you are a live-in caregiver for your spouse, parent, or minor child, your IHSS wages may not be counted for federal tax purposes or for Modified Adjusted Gross Income (MAGI)-based Medi-Cal eligibility.
How the IRS Notice 2014-7 Impacts Medi-Cal
IRS Notice 2014-7 defines certain Medicaid waiver payments, including many IHSS payments, as "difficulty-of-care" payments, which are excludable from gross income for tax purposes. Since MAGI-based Medi-Cal eligibility is determined by your federal Adjusted Gross Income (AGI), an income that is excluded from federal gross income also gets excluded from MAGI. This exemption is what allows many live-in IHSS providers to maintain their own Medi-Cal eligibility, even with IHSS wages.
The Importance of the Live-in Provider Certification Form
For the live-in exemption to be properly recognized by Medi-Cal, providers in California may need to submit a specific form, such as the SOC 2298, "In-Home Supportive Services Live-In Provider Self-Certification". This form formally declares your status as a live-in provider, ensuring that your IHSS wages are treated as exempt income for the purpose of MAGI-based Medi-Cal determinations. Failing to submit this certification can lead to county eligibility workers mistakenly counting your IHSS income, resulting in a denial or reduction of your Medi-Cal benefits.
Reporting Requirements for Non-Live-In Providers
For IHSS caregivers who do not live in the same home as the recipient, the income is not exempt under IRS Notice 2014-7. This means the wages are considered taxable income and must be reported for tax purposes. Because non-live-in IHSS wages are not exempt from gross income, they will be counted towards MAGI for Medi-Cal eligibility.
- Regular W-2 Wages: Non-live-in providers will receive a W-2 form from the state and should report this income to Medi-Cal, as it will be used to determine their eligibility.
- 10-Day Reporting Rule: According to Covered California and county guidelines, any change in income, including starting or stopping IHSS payments, should be reported within 10 days to the county human services agency.
- Documentation is Key: When reporting, it is crucial to provide documentation like pay stubs or the W-2 form to ensure accurate information is recorded.
Potential Complications with IHSS Income
While the rules seem clear-cut, real-world application can sometimes be complex. The exemption for IHSS income applies specifically to federal gross income and MAGI-based Medi-Cal. This does not mean the income is exempt for all purposes.
A Table of Income Exemptions by Program
| Program | Live-In Provider IHSS Income Exempt? | Non-Live-In Provider IHSS Income Exempt? | Key Takeaway |
|---|---|---|---|
| MAGI-based Medi-Cal | Yes, if you live with the recipient. | No, income is counted. | The live-in status is the determining factor for MAGI eligibility. |
| CalFresh (Food Stamps) | No, income is generally counted. | No, income is counted. | A special rule allows separating budgets for CalFresh, but income is not exempt. |
| Taxable Income (Federal/State) | Yes, if you live with the recipient and it's a qualified program. | No, standard taxable wages. | Your tax reporting may differ even if your Medi-Cal is unaffected. |
| Social Security (SSI) | No, it is still considered earned income for SSI. | No, it is still considered earned income for SSI. | IHSS wages will likely affect your SSI benefits. |
Why County Workers May Not Always Know the Rules
Some IHSS providers have reported issues with county eligibility workers incorrectly counting their exempt IHSS income, even when they live with the recipient. This is often due to a lack of awareness of the specific IRS and state guidelines that create this exemption. Providers experiencing this should be prepared to present the relevant information, such as documentation of the live-in status and the specific state and federal notices confirming the exemption for MAGI-based Medi-Cal. Seeking assistance from advocacy groups can be valuable in these situations.
How to Report Changes to Medi-Cal Correctly
If your IHSS income situation changes, such as starting or stopping caregiving, you must report this to Medi-Cal. The process is typically managed through your county human services agency or online via portals like BenefitsCal.com.
- Online: Log into your BenefitsCal.com account to report changes in income, household members, or other circumstances.
- Phone: Call the designated phone number for your county's human services agency to report changes.
- In-Person: Visit your local county office to report changes with a caseworker.
- Mail/Fax: Some counties still accept reports of changes via mail or fax. Always make copies of documents and send them via certified mail for tracking.
Remember to provide clear and accurate documentation of your income, especially noting your live-in status if applicable, to prevent processing errors.
Conclusion
The question of whether you have to report IHSS income to Medi-Cal depends heavily on your living arrangement with the care recipient. For live-in providers, payments are generally considered exempt income for MAGI-based Medi-Cal, provided the proper certification is filed. Non-live-in providers, however, must report their IHSS wages, as they will be counted toward eligibility. Staying informed, maintaining accurate records, and properly communicating your situation to your county's eligibility workers are key to protecting your Medi-Cal benefits. For the most authoritative and up-to-date information, it's always wise to consult official government sources and, if necessary, seek assistance from advocacy organizations specializing in IHSS and Medi-Cal issues. You can find official guidance on the California Department of Social Services website.
