Communal Colonies 510-05-75-15

(Revised 1/1/13 ML #3358)

Individuals who live communally (i.e. Hutterites, Mennonites, Amish, etc.) may or may not have a collective ownership of property and income. In determining eligibility, it will first be necessary to determine whether collective ownership of assets and income exists. If it does not, medically needy policy applies to individuals and families, as it does for any other individual or family.

If the commune has collective ownership, also determine whether the commune is self-employed. Most communal colonies are self-employed in agricultural or manufacturing and are incorporated, or set up as a large partnership. Occasionally, some colonies are not self-employed, but may be working under contract for wages.

Assets. When colonies have a collective ownership in assets, no individual ownership rights remain, and the assets of the colony are not considered available.

Any personal assets owned by an applicant or recipient that are not owned collectively, and are not otherwise excluded, are countable, and the medically needy asset limits apply.

Income. Most colonies have collective ownership of income, which is often generated from their self-employment venture. When colonies have a collective ownership in income, a share attributable to each individual or family must be determined. Countable income is established as follows:

If the colony is self-employed, from the colony’s corporate or partnership tax return:

From the total gross income, subtract any cost of goods for resale, repair, or replacement, to arrive at the colony’s adjusted gross income; and
Divide the total amount of adjusted gross income by the number of members in the colony to establish each individual’s share of income. Multiply this amount by the number of individuals in the Medicaid unit to determine the unit’s share. If the tax return represents an entire year of the business operation, one twelfth of the unit’s share is the monthly income; and
Apply the medically needy self-employment income disregards described in 05-85-20; and

Example: There are 124 members in a colony that is engaged in farming. A family of six in the colony applies for Medicaid. The corporate tax return indicates $4,922,603 in adjusted gross earnings. Divide $4,922,603 by 124 members to arrive at each individual’s share of $39,698.41. Multiply $39,698.41 by six to arrive at the unit’s share of $238,190.46. The self-employment disregard for farming is 75%, which gives the family $59,547.62 in countable annual income. Divide by 12 to determine the Medicaid unit’s monthly income of $4,962.30.

Identify the income as belonging only to the adults in the Medicaid unit, or older children who are actively engaged in the operation and are not students, and allow the appropriate earned income deductions for those individuals who are actively engaged in the operation. If no individuals in the Medicaid unit are actively engaged in the business, such as an aged or disabled individual, the income is considered to be unearned income; or

Example: An aged individual from a colony engaged in farming applies for Medicaid. The corporate tax return indicates $4,922,603 in adjusted gross earnings, which is divided by the 124 members in the colony to arrive at each individual’s share of $39,698.41. Because there is only one individual in the unit, the unit’s share is $39,698.41. The self-employment disregard for farming is 75%, which gives the individual $9,924.60 in countable annual income. Divide by 12 to determine the Medicaid unit’s monthly income of $827.05. The income is shown as unearned income because the aged person is no longer actively engaged in the business.

If the colony is not self-employed, but is working under contract for wages:

Divide the total contract income by the number of members in the colony to establish each individual’s share of income. Multiply this amount by the number in the Medicaid unit to determine the unit’s share; and
Identify the income as belonging only to the adults in the Medicaid unit, or older children who are actively engaged in the operation and are not students, and allow the appropriate earned income deductions for those individuals who are actively engaged in the operation. If no individuals in the Medicaid unit are actually engaged in the business, such as an aged or disabled individual, the income is considered to be unearned income; and

For members who have other earned or unearned income, the income counts as income of the individual who receives it and the medically needy policies apply to the income. Income is counted for the individual, even if the income has been given to the colony.

Adding or deleting individuals.

Changes in the unit’s share of income must be changed when adding or deleting members to the unit and is based on the number of individuals in the unit. The share is not changed when adding an unborn child until the child is born.

Example: The individual share of income established for a colony, based on the colony’s self-employment, is $350 per individual per month. A family within the colony consists of 5 individuals so the Medicaid unit’s total monthly income is $1,750 (5 x $350). A child is born and added to the unit, so now the unit consists of 6 individuals, and monthly income is $2,100 (6 x $350). If the unit had instead lost a member and reduced in size to 4, the income would have decreased to $1,400 (4 x $350).

The individual’s share of income, which is based on the number of members in the colony, is normally determined when calculating annual income from self-employment for self-employed colonies, or for a new contract period for colonies working under a contract for wages. The number of members in the colony does not need to be changed in between these calculations, or when adding or deleting a member from the household. However, if the colony reports a change in the number of members, the individual share must be recalculated based on the new information.

Example 1: The individual share of income has been established for a colony at $350 per individual per month. This amount was originally calculated based on the number of members in the colony and the colony’s self-employment income. A child is born to a family. A new calculation does not have to be made because there may now be more members in the colony, but the $350 per person per month continues to be used as the individual share of income.

Example 2: The individual share of income has been established for a colony at $350 per individual per month, and was based on 124 members. A child is born to a family and reported. At the same time, new information is provided that the colony now has 118 members because a different family left the colony, and one member died. A new calculation must be made because a change in the actual membership number has been confirmed by the colony. The new individual share has now increased to $367.80 per person per month.