In December of 2012 the U.S. Department of Health & Human Services Centers for Medicare & Medicaid Services released a letter to state officials. It provides guidance on conversion of net income standards to MAGI equivalency standards. This is part of the Affordable Care Act.
MAGI is New Methodology
MAGI stands for modified adjusted gross income. These thresholds will be used in Medicaid and Children’s Health Insurance Program (CHIP). The letter outlines conversion methodologies and timelines. The new methodology will become effective on January 1, 2014.
Eligibility for both benefits programs will be based on this new standard, which determines income levels for individuals and their households. This basis is the same standard that will be used in assessing eligibility for tax credits to purchase insurance coverage under Affordable Insurance Exchanges beginning in 2014.
However, MAGI-based standards will not apply to Medicaid eligibility for elderly and disabled people. The methodology applies to pregnant women, children, parents and other caretaker relatives, and the new state applicable adult group.
The new standards include some unique rules regarding income counting and composition of households. Each state must prepare its own set of standards based on the MAGI methodology and submit it to the federal authorities for approval.
States will apply these converted income standards in order to:
• Establish standards for income eligibility
• Follow requirements for minimum eligibility
• Identify income thresholds for premium payments
• Establish levels of income for determining adults who are newly eligible.
The federal government will plan a contingency approach for states in cases where a state is unable to gain approval for its planning or doesn’t complete it in time.
Unsworth LaPlante, PLLC offers Medicaid Planning services to Vermont residents.