Recipient Net Income Test

[WIC 11267 and 11450.12]

Once it is determined that an applicant AU's total gross income meets the Applicant Gross Income Test, the RNIT is determined prospectively (i.e., income anticipated to be received in the next payment period is used to determine financial eligibility for the next payment period).

When the Net Non-Exempt is over the MAP amount, the application must be denied, sent the appropriate notice of actions and the case must be evaluated for Medi-Cal and CalFresh eligibility.

Note: Applicants and recipients must meet the RNIT when adding a new person to an existing AU. The AU is subject only to the recipient net income test, not the applicant gross income test.

Example Example An AU consists of a parent and 1 child. They have disability based income of $500. They also have special needs of $20. Since the disability based income of $500 is less than $1020 [$1,000 MAP (Effective 10/1/22) plus $20 special needs], the AU is financially eligible.

Example Example An AU consists of 2 parents and 3 children. The Principal Earner (PE) gets a full-time job and his income exceeds the IRT. He reports the change to his EW timely and the EW determines that the income exceeds the RNIT. CalWORKs must be discontinued at the end of the month in which a timely and adequate notice of action can be sent.

Use of Income Disregard in the Recipient Net Income Test

The Income Disregard is allowed per family not per individual. The Income Disregard is applied first to the disability based income. The remaining balance of the Income Disregard is then applied to any earned income and 50% of any remaining earned income. The total net income is any remaining disability based income plus the remaining earned income plus any unearned income.

These deductions are applied to the income of:

The AU
Non-AU members and
Penalized/Sanctioned persons.

When two (2) people in a family have earned income, the earned income is combined and the balance of the Income Disregard is applied along with 50% of any remaining earned income.

Recipient Net Income Determination

To determine if the Recipient Net Income Test is passed, use either actual nonexempt income (if known), or a reasonable estimate of the income expected to be received. The estimate is based on all relevant information known to the EW and the recipient.

Nonexempt income is gross income minus all applicable income disregards and exemptions. This includes the Income Disregard for disability based income and the remainder of the Income Disregard and 50% of the remaining earned income.
Child support less the disregard, whether received by the county or directly by the client, must be included in the recipient net income determination.

Required Actions

When anticipated nonexempt income exceeds the CalWORKs Tier 2 amount:

Recipient cases must be discontinued as follows:

For Mandatory Change Reports (i.e. Earnings over IRT), at the end of the month in which a timely and adequate notice can be provided,
For voluntary Change Reports, at the end of the current payment period,
For SAR 7 Changes, at the end of the current payment period.

Reminder: If the AU reports a change in earnings on the SAR 7 that should have been reported earlier as a Mandatory Change Report (i.e. earnings over IRT), the EW must determine if an overpayment has occurred. Refer to Overpayments General [MPP 44-350].

Computation of Recipient Net Income Test

To determine if the family passes the Recipient Net Income Test, the EW must follow these steps:

Determine the total disability based income of both the AU and Non-AU members.
Subtract the Income Disregard.
Determine the gross earned income of both the AU and Non-AU members.
Subtract any remainder of the Income Disregard.
Deduct 50% of the remaining income.
Add any remaining disability based income after the Income Disregard was deducted.
Add any other nonexempt unearned income of both the AU and Non-AU members. The Net Non-exempt Income is rounded to the next lower dollar.
Subtract this amount from MAP plus Special Needs for the family (AU and Non-AU members). The remainder equals potential grant # 1.
Determine MAP plus Special Needs for AU members only.
The grant to be paid is the lesser of potential grant #1 (# 8 above) or MAP plus Special Needs (# 9 above).

Examples of Recipient Net Income Determination

Important: Current Income Disregard and MAP values must be used in calculations. Income Disregard and MAP values in these examples may not reflect current values.

Example 1Example 1

The AU consists of a mother and her 2 children. She has been working full-time. She reports on her SAR 7 that she has received a promotion and her gross weekly wage will be $550. There is no other income to the AU. Her average gross monthly income anticipated for the next payment period is $2,381 ($550 x 4.33/conversion factor used for weekly income = $2381). She receives the Income Disregard plus 50% of remainder.

Her total nonexempt income is above MAP for 3 of $878 (Effective 10/1/19). However, the AU’s income is less than the CalWORKs Tier 2 amount for 3, $2,311 (130% of FPL) and AU remains eligible with a Zero Basic Grant.

Example 2Example 2

AU consists of father and two children. He has gross non-exempt earned income of $600 per month. The children each receive $172.50 per month in non-exempt unearned income from the non-custodial parent’s disability.

Example 3Example 3

A non-exempt AU of three has gross non-exempt earned income of $600 per month. The children each receive $337 per month in DIB from non-custodial parent’s disability claim.

Example 4

An AU consists of the father and two children. He has gross income of $1,000 monthly. There is no other income to the AU. His recipient net income is computedcomputed below.

Reasonably Anticipated Income (RNI)

When the EW makes a reasonable estimate that the AU's reasonably anticipated non-exempt income will be equal to or in excess of the CalWORKs Tier 2 IRT amount for the future payment period, the AU becomes ineligible for aid at the end of the current payment period. Refer to Budgeting [EAS 44-313] on how to determine RNI.

If aid is discontinued because anticipated income is expected to result in financial ineligibility, and this amount of income is NOT actually received, the discontinuance must be rescinded, and the correct grant issued.

Once a reasonable estimate has been made that an AU is financially eligible, they CANNOT be considered financially ineligible for that payment period, if actual income later exceeds MAP.

Exception: Earnings in excess of IRT (130 % of FPL); refer to Income Reporting Threshold (IRT)

Example Example An AU consists of a mother and 3 children. She is employed full-time. She reports to her EW that her ex-husband has told her he will start sending child support the following month. Her net nonexempt income, plus anticipated child support, exceed the Income Reporting Threshold (IRT) level. This is a mandatory recipient mid-period report and the EW must discontinue her cash grant at the end of the month with a timely NOA. Her case is evaluated for continuing Medi-Cal. The next month she calls to report no child support was actually received. Without the anticipated child support, her AU is financially eligible. The discontinuance of her cash grant must be rescinded, and the correct grant paid.

Example Example A father applied for CalWORKs on July 6th for himself and his child. His Unemployment Insurance Benefits (UIB) stopped on June 16th and it is anticipated that he will have no income July or August. He applied for an extension of his UIB. The verification from the UIB office states that they cannot anticipate if the extension will be approved. The case is established effective July 6th and it is anticipated that he will pass both the Applicant Gross Income Test and the Recipient Net Income Test for July. When the SAR 7 for November is received in December, he reports that his extension was granted and he received UIB in excess of MAP in August. Because reasonably anticipated income is NOT reconciled with actual income, there is no overpayment for this payment period. However, the EW will need to contact the client to determine the amount of UIB anticipated for the future payment period in order to determine ongoing eligibility for the future.