Translating Modified Adjusted Gross Income (MAGI) to current monthly income
- Author(s):
- Czajka, John L., author
- Contributor(s):
- State Health Access Data Assistance Center, University of Minnesota. State Health Access Reform Evaluation, issuing body.
- Publication:
- [Minneapolis, Minn.] : State Health Access Reform Evaluation, 2013
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Eligibility Determination Health Care Reform Income Income Tax Medicaid -- economics Adult Middle Aged State Government Humans United States United States. Centers for Medicare & Medicaid Services (U.S.)
- Genre(s):
- Technical Report
- Abstract:
- To increase access to health care across the nation, the Affordable Care Act (ACA) expands eligibility for Medicaid among adults under age 65 and establishes a system of premium tax credits and cost-sharing reductions to assist individuals and families in purchasing health insurance from state exchanges. Income eligibility for Medicaid among this population will extend to 138 percent of the federal poverty level (FPL). Income eligibility for the cost-sharing reductions will extend to 250 percent of the FPL, with eligibility for the premium tax credits continuing to 400 percent of the FPL. To help create a seamless eligibility system for these programs, the ACA specifies a standard definition of income--Modified Adjusted Gross Income (MAGI)--that will be used to determine eligibility for both Medicaid and the premium tax credits and cost-sharing reductions. In principle, a uniform definition of income will eliminate gaps in coverage and simplify transitions between programs. The adoption of MAGI as the standard definition of income creates a number of issues for the states, both in implementing the new definition and in applying it to eligibility determination for Medicaid: (1) First, MAGI is a tax concept, and major sources of income are defined differently for tax purposes than for reporting into the administrative databases that are used for income verification. (2) Second, MAGI represents annual income, and the ACA mandates that initial eligibility determinations for Medicaid continue to be based on current--that is, point-in-time or monthly--income. This use of current income will ensure that Medicaid remains available as a source of coverage when people experience a reduction in income that leaves them unable to maintain private coverage. However, some elements of MAGI do not translate readily into current income. (3) Third, the use of MAGI means that tax returns could end up playing a role in determining Medicaid eligibility, yet not all of those who are eligible for Medicaid file returns. (4) Fourth, some of the sources and especially adjustments to income that are used in calculating MAGI are not counted in determining Medicaid eligibility currently, so Medicaid applications do not collect this information at present. States using their eligibility data to estimate the impact of MAGI will have no information on these components. This brief reviews the income that is included in MAGI and how income is currently counted in determining Medicaid eligibility. Issues related to measuring MAGI on a monthly basis are discussed, and some thoughts are offered on how states might begin to address these issues in their application of MAGI to determine eligibility for Medicaid. It is important to note that there do remain specific MAGI-exempt populations (i.e., the elderly, the disabled, the medically needy, and those who are eligible for Medicaid through participation in other programs), for whom income will continue to be calculated using the traditional Medicaid formula in each state. The observations in this paper pertain to the larger population to whom MAGI will apply.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY-NC-DC license. (More information)
- Extent:
- 1 online resource (1 PDF file (9 pages)).
- NLM Unique ID:
- 101613268 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/101613268