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 Nonexempt Income (NNI) is over the MAP amount, the application must be denied. Send the appropriate notice of action and evaluate the case 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 RNIT, not the Applicant Gross Income Test.

Example Example An AU consists of a parent and 1 child. They have disability based income (DBI) of $500. They also have special needs of $20. Since the DBI of $500 minus the DBI disregard of $600 = $0 and is less than $1,020 [$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 RNIT 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 reasonably anticipated Net Nonexempt Income (NNI) exceeds the CalWORKs Tier 2 IRT level, 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 RNIT, the EW must follow these steps:

1. Determine the total disability based income of both the AU and Non-AU members.
2. Subtract the Income Disregard.
3. Determine the gross earned income of both the AU and Non-AU members.
4. Subtract any remainder of the Income Disregard.
5. Deduct 50% of the remaining income.
6. Add any remaining disability based income after the Income Disregard was deducted.
7. Add any other nonexempt unearned income of both the AU and Non-AU members. The NNI is rounded to the next lower dollar.
8. Subtract this amount from MAP plus Special Needs for the family (AU and Non-AU members). The remainder equals potential grant # 1.
9. Determine MAP plus Special Needs for AU members only.
10. 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

Example 2Example 2

Example 3Example 3

Example 4Example 4

Related Topics

Financial Eligibility Determination

Applicant Gross Income Test

Income Reporting Threshold (IRT)

MAP Levels

Examples of MAP Status

Federal Financial Participation

State-Only Payments