Frequently Asked Questions

Yes. A state's decision whether or not to extend Medicaid coverage for low-income adults in 2014 is not related to the use of MAGI. MAGI rules simplify the eligibility rules and promote coordination between Medicaid and CHIP and coverage available through the Marketplace; coordination will be important for consumers in all states regardless of a state's decision on Medicaid eligibility for low-income adults.

FAQ ID:92471

The eligibility standards (where there's been no expansion) are not any higher than the old standards; they are expressed in a different way (gross versus net).

In the past, Medicaid and CHIP eligibility used a combination of an income eligibility standard--often expressed as a percentage of the Federal Poverty Level (FPL)--and a series of deductions (known as "disregards" that were like footnotes or 'below the line' adjustments to income and were determined by each state. The new way of calculating eligibility based on MAGI translates that two-part process into a one step process using an income standard that incorporates the 'below the line' deductions. This makes the new standard appear higher than the old one (e.g. from 185% of the FPL to 193% of the FPL for pregnant women). In effect, however, the new income standard represents what the state's old two-step process would have resulted in, just expressed in a different way.

FAQ ID:92476

No, overall the new methodology does not change the number of people eligible for Medicaid. The MAGI-based standard will result in approximately the same number of people being eligible under the new standard as would have been eligible under the old standard. However, there may be some differences in which people will qualify--or not qualify--depending on how they might have fared under the old system (with deductions and disregards).

FAQ ID:92481

Before MAGI, if a state's income limit was 100% of the FPL--the state would first look at the person's gross income, then subtract out (for example) 30% of their earned income and an amount they spend on childcare as work-related expense deductions and then compare that net income to 100% of the FPL. This means that under the pre-MAGI rules, in a state with an income eligibility limit of 100% of the FPL, a person with income over 100% of the FPL can qualify for Medicaid (because of the deductions and disregards).

FAQ ID:92486

The state will look at the individual's modified adjusted gross income, deduct 5%, which the law provides as a standard disregard, and compare that income to the new standard.

FAQ ID:92491

Based on guidance issued in December 2012 (PDF, 177.59 KB), CMS worked with states to set their new standards. Most states used a model that determines the average value of the disregards a state had in place and then added that amount to the old standard to create the new eligibility levels. In the example above, in a state with a net income standard of 100% of the FPL, if the average value of the disregards equaled 6 percentage points of the FPL, that value would be added to the old standard for a new eligibility standard of 106% of the FPL.

FAQ ID:92496

The Affordable Care Act established an income disregard equal to five percentage points of the FPL disregard "for the purposes of determining income eligibility" for individuals whose eligibility is based on MAGI. In our final rule issued July 15, 2013, we provide that the disregard is applied to the income calculation of individuals only to the extent that the disregard matters for the purposes of determining eligibility for Medicaid or CHIP under MAGI-based rules-that is, those for whom the application of the disregard means the difference between being eligible for Medicaid or CHIP and being ineligible.

The disregard matters for purposes of determining Medicaid or CHIP eligibility only in cases where individuals have MAGI-based income that is above the highest applicable income standard under the program (Medicaid or CHIP), but would be within that income standard if the disregard were applied. This is the case only when the MAGI-based income is no higher than five percent of the FPL higher than that income standard. The disregard would not be applied for a determination of the particular eligibility group in which the individual qualifies, but only for overall eligibility for Medicaid or CHIP. We understand that this policy changes how disregards have been applied in the past, but believe this policy should be administratively simple to apply, for example, by applying the disregard at the point before a decision of ineligibility based on income would otherwise be made. This also ensures that the disregard does not reduce the "newly eligible" population for whom the increased federal matching rate is available.

For example, in a state that extends coverage to the new adult group, if a parent applied and has MAGI-based income within five percentage points of the FPL above the net income standard for the mandatory parent/caretaker relative group, the disregard would not apply because the disregard would not be needed for eligibility. The parent could be made eligible in the adult group instead. In that same state, if a parent applied with MAGI income within five percentage points of the FPL above the net income standard for the adult group (133% FPL), the five percent disregard would be applied to ensure that the parent could obtain eligibility in Medicaid and the parent would be made eligible in the adult group.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 295.71 KB)

FAQ ID:92591

The Medicaid statute provides several options for states to pay premiums for adults and children to purchase coverage through private group health plans, and in some case individual plans; in most cases, the statute conditions such arrangements on a determination that they are "cost effective." Cost effective generally means that Medicaid's premium payment to private plans plus the cost of additional services and cost sharing assistance that would be required would be comparable to what it would otherwise pay for the same services. Similar provisions also apply in the Children's Health Insurance Program (CHIP).

Under all these arrangements, beneficiaries remain Medicaid beneficiaries and continue to be entitled to all benefits and cost-sharing protections. States must have mechanisms in place to "wrap-around" private coverage to the extent that benefits are less and cost sharing requirements are greater than those in Medicaid. In addition under the statutory options in the individual market beneficiaries must be able to choose an alternative to private insurance to receive Medicaid benefits.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 40.01 KB)

FAQ ID:93841

Some states have expressed interest in section 1115 demonstrations to provide premium assistance for the purchase of QHPs in the Exchange. Under section 1115 of the Social Security Act, the Secretary may approve demonstration projects that she determines promote the objectives of the Medicaid program. HHS will consider approving a limited number of premium assistance demonstrations since their results would inform policy for the State Innovation Waivers that start in 2017. As with all such demonstrations, HHS will evaluate each proposal that is submitted and consider it on a case by case basis relative to this standard.

With regard to premium assistance demonstrations, HHS will consider states' ideas on cost effectiveness that include new factors introduced by the creation of Health Insurance Marketplaces and the expansion of Medicaid. For example, states may quantify savings from reduced churning (people moving between Medicaid and Exchanges as a result of fluctuating incomes) and increased competition in Marketplaces given the additional enrollees due to premium assistance. As with all demonstration proposals, the actuarial, economic, and budget justification (including budget neutrality) would need to be reviewed and, if approved, the program and budgetary impact would need to be carefully monitored and evaluated.

To ensure that the demonstrations further the objectives of the program and provide information in a timely way, HHS will only consider proposals that:

• Provide beneficiaries with a choice of at least two qualified health plans (QHPs).
• Make arrangements with the QHPs to provide any necessary wrap around benefits and cost sharing along with appropriate data; this would be done within the context of premium assistance, for example through a supplemental premium. This ensures that coverage is seamless, that cost sharing reductions are effectively delivered and that there is accountability for the payments made.
• Are limited to individuals whose benefits are closely aligned with the benefits available on the Marketplace, that is, individuals in the new Medicaid adult group who must enroll in benchmark coverage and are not described in SSA 1937(a)(2)(B)(an example of a population that is described in SSA 1937(a)(2)(B) is the medically frail). Marketplace plans were not designed to offer broader benefits and could experience unexpected adverse selection due to enrollment of groups that are described in SSA 1937(a)(2)(B).
• End no later than December 31, 2016. Starting in 2017, State Innovation Waiver authority begins which could allow a range of State-designed initiatives.

In addition, a state may increase the opportunity for a successful demonstration by choosing to target within the new adult group individuals with income between 100 and 133 percent of FPL. Medicaid allows for additional cost-sharing flexibility for populations with incomes above 100 percent of FPL; this population is more likely to be subject to churning and would be eligible for advance premium tax credits and Marketplace coverage if a state did not expand Medicaid to 133 percent of FPL.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 40.01 KB)

FAQ ID:93846

No. As stated in the past, the Affordable Care Act does not provide for a phased-in or partial expansion. States that wish to take advantage of the enhanced federal matching funds for newly eligible individuals must extend eligibility to 133% of the federal poverty level (FPL) by adopting the new adult group. Arkansas has initiated discussions about "premium assistance" options for Medicaid beneficiaries; partial expansion is not part of these discussions.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 40.01 KB)

FAQ ID:93851