Frequently Asked Questions

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 Affordable Care Act provides significant federal support to ensure the availability of coverage to low-income adults. Enrollment caps limit enrollment in coverage on a first come, first serve basis. Periods of ineligibility delay or deny coverage for otherwise eligible individuals. These policies do not further the objectives of the Medicaid program, which is the statutory requirement for allowing section 1115 demonstrations. As such, we do not anticipate that we would authorize enrollment caps or similar policies through section 1115 demonstrations for the new adult group or similar populations.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 105.59 KB)

FAQ ID:93751

Demonstrations focused on changes to how health care services are delivered, such as the use of managed care, will not generally affect the state's matching rate. Please refer to our February 2013 FAQs (PDF, 135.35 KB), which provide further clarification on the two increased federal match rates: the newly eligible rate and the expansion state rate as well as the final FMAP rule published on April 2, 2013. Additionally, CMS issued two State Medicaid Director letters, on July 10, 2012, that provide guidance on how states can adopt integrated care models without the need for a section 1115 demonstration.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 105.59 KB)

FAQ ID:93756

Effective January 1, 2014, MAGI eligibility rules will be used to determine eligibility for nonelderly, nondisabled eligibility groups. The transition to MAGI also involves converting current net income eligibility standards to MAGI standards. MAGI rules apply regardless of whether a state adopts the new adult eligibility group. The December 28, 2012 Modified Adjusted Gross Income (MAGI) conversion guidance (PDF, 177.59 KB) sets out options for a state to use a standardized MAGI conversion methodology (using Survey of Income and Program Participation (SIPP) data or with state data) or to propose an alternative methodology for converting to MAGI.

There are two potential ways of using the standardized MAGI conversion methodology:

• States may choose to have CMS calculate the converted income levels for eligibility groups requiring conversion using state-adjusted data from the Census Bureau's SIPP; or
• States may choose to use their own data as the source for applying the standardized conversion methodology.

For each eligibility group income level that needs to be converted, under the standardized MAGI conversion methodology, individuals whose net income is within 25 percentage points of the FPL below the current income standards will be selected (for example, if the current standard is 80 percent of the FPL, the analysis will include people with incomes between 55 and 80 percent FPL). The next step is to calculate disregards as a percent of FPL for each selected individual. The resulting average disregard amount as a percent of FPL is added to the current net income standard to get the converted standard.

For example, if the average disregard is 8 percent FPL, the converted standard would be 88 percent FPL. This basic process is the same regardless of whether SIPP data or state data is used.

Alternatively, states have the option to propose their own method, subject to approval by CMS. States are asked to provide a statement of intent by February 15, 2013 and must submit their MAGI conversion plans by April 30.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 25.85 KB)

FAQ ID:93931

Factors that states might want to consider in choosing an income conversion method and data source include whether the state currently maintains or can easily access the data that are needed to do the conversions, as well as the quality and completeness of the state's data. In addition, states will want to consider whether they have the analytical resources needed to do the conversions with their own data, how long it would take them to run the conversions and how much it would cost to pay a contractor to do the analysis. Finally, states should also consider preferences about using state-adjusted SIPP or state data.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 25.85 KB)

FAQ ID:93936

Detailed information on how to use state data to apply the standardized conversion methodology is forthcoming, but in general states will need 1) information on net income of each person and the size of the Medicaid eligibility unit to establish which enrollees fall within the 25 percentage point band below the current net income standard; and 2) data on the total amount of disregards for each individual within the 25 percentage point band - if this is not stored as a data element in the state's system, this can be calculated by adding up individual disregards, or as the difference between gross income and net income.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 25.85 KB)

FAQ ID:93941