Tax Exempted Waiver Payments

Recently, The Arc became aware of an IRS Bulletin (2014-4) as well as an accompanying Q&A clarification document which, as of January 3, 2014 under IRS Code §131, allow payments to qualified Medicaid waiver providers to be excluded from gross income tax for reporting purposes. The clarification document states, in part, “… the IRS will treat ‘qualified Medicaid waiver payments’ as difficulty of care payments excludable from gross income under § 131 of the Internal Revenue Code.  For purposes of the notice, qualified Medicaid waiver payments are payments by a state, a political subdivision of a state, or a certified Medicaid provider under a Medicaid waiver program to an individual care provider for nonmedical support services provided under a plan of care to an individual (whether related or unrelated) living in the individual care provider’s home.” The Arc is seeking further clarification from the Internal Revenue Service and will share additional information accordingly.

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