Wednesday, October 22, 2014

A surprise (to me) regarding Medicaid eligibility under the ACA

I learned an interesting fact about the ACA from Kaiser's Larry Levitt on Twitter today.

It's well-known to ACA watchers that a low-income worker whose employer offers insurance deemed "affordable" according to ACA formula cannot buy subsidized private coverage on the exchanges. What I suspect is less well-known, and what Larry spelled out, is that the availability of employer-sponsored insurance does not negate Medicaid eligibility for someone whose household income is low enough to qualify for Medicaid.

It may seem unlikely that a worker offered ACA-compliant insurance by her employer would be low-income enough (under 138% of the Federal Poverty Level) to qualify for Medicaid as expanded by the ACA.  But that's not true for a sole breadwinner in a multi-person household. A single parent with two children could earn $26,000 and be eligible for Medicaid. A married person with an unemployed spouse and two children could earn $31,000 and qualify.

ACA enactment did not much affect children's eligibility for CHIP, the Children's Health Insurance Program (though there are some changes in the method of calculating eligibility). The children of our single mother of two earning $26k should have been eligible for CHIP prior to ACA enactment (state formulas for CHIP eligibility vary, with household income thresholds ranging from 175-400% FPL). But the presence of those children in the household changes the eligibility status of their parent(s).

That goes for foster children too, by the way (per this healthcare.gov fact sheet, which says to include "anyone..under 21 who you take care of and lives with you" as a household member).. In the inner city, I gather a lot of households take in foster children, including those who take in relatives and obtain foster parent status. Foster parents get a modest stipend, however, which here in New Jersey would outpace the rate at which FPL increases per person.  That is, fostering would make the adults in a household less likely, rather than more likely, to qualify for Medicaid.  Assuming, that is, that such stipends are figured into the Modified Adjusted Gross Income (MAGI) that determines ACA benefit eligibility -- a question I will have to come back to.

This Advocate's Guide to MAGI, published by the National Health Law Program, has a lot of detail about what income qualifies as MAGI, but nothing I could see about foster care stipends. It does, however, lay out this scenario, which is written as if the stipends don't exist:
EXAMPLE: Foster child joins the tax household
A family of four with a total income of $60,000 (255% FPL) qualifies for APTCs, but
not cost sharing assistance which is limited to those making less than 250% FPL. If
that family took in a foster child for at least six months and expected to claim the child
as a dependent on the family’s tax return, the family size would increase from 4 to 5
people, and their income as an FPL percentage would decrease to 218% FPL for a
family of 5. As a result, the family would qualify for cost sharing subsidies and
increased premium assistance, even if the foster child were enrolled in Medicaid.
Remember, an individual does not have to qualify for assistance in order to be
counted as a member of the household (p. 43).
Yevgeniy Feymann tweets that he doesn't believe the stipends are taxable income. To be continued...

UPDATE: Via Judith Solomon and Tara Straw of the Center for Budget and Policy Priorities: most foster care stipends are not taxable, but extra stipends for extraordinary care may be:
Foster care providers.   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments.
  A qualified foster individual is a person who:1.      Is living in a foster family home, and
2.      Was placed there by:
a.      An agency of a state or one of its political subdivisions, or
b.      A qualified foster care placement agency.
Difficulty-of-care payments.   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home.
  You must include in your income difficulty-of-care payments received for more than:
  • 10 qualified foster individuals under age 19, or
  • 5 qualified foster individuals age 19 or older.
Also, while a dependent child living in the home is straightforwardly a member of the household, there are various ambiguous situations:

A qualified foster individual is a person who:
1.      Is living in a foster family home, and
2.      Was placed there by:
a.      An agency of a state or one of its political subdivisions, or
b.      A qualified foster care placement agency.

Difficulty-of-care payments.   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home.
  You must include in your income difficulty-of-care payments received for more than:
  • 10 qualified foster individuals under age 19, or
  • 5 qualified foster individuals age 19 or older.
P.S. If the adults who take in foster children earn too much to qualify for Medicaid but lack access to employer-sponsored insurance, the increase in household size will increase their subsidy for private plan coverage via the ACA marketplaces by reducing their FPL percentage, if their household income is under 400% FPL.  


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