Taxable and Non-Taxable

by Confused
(New Mexico)

I'm not a coder nor payment poster. My position is more in with data entry and bookkeeping. There is some confusion about insurance payments and what is taxable and not taxable, I'm hoping maybe someone here will have an answer as well as an explanation.


Here is the situation. There is a bundled EFT payment from Molina Medicaid (state is NM), Let's just say the payment is $1000.00. It pays for 6 patients DOS's. 2 of the 6 patients have Medicare as their primary insurance and the Molina Medicaid as a secondary.

Molina Medicaid paid $400.00 total for these 2 patients that have medicare as the primary. The other 4 are just straight medicaid.
I'm being told that this payment would be broken down as $600 taxable and $400 non-taxable.

Is this correct? Would the $400 be non taxable because the primary insurance is Medicare?

Response:
Not sure if the recipient of these payments is a provider, a facility (such as a hospital or out-patient), or an agency providing care to Medicaid.


We have not had experience with reporting and accounting of insurance payments with regards taxable income for providers but hopefully one of our visitors can comment below and offer their insight.

If Medicaid payments are made to a healthcare provider (such as a physician), I would assume those payments are treated as income just like any other insurance payment.

There is an Internal Revenue Service notice 2014-7 which gives guidance and answers questions regarding payments to care providers of Medicaid patients. This includes agencies which are certified Medicaid providers.

Here's the link for the IRS notice:

https://www.irs.gov/individuals/certain-medicaid-waiver-payments-may-be-excludable-from-income

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