How States can Implement the Standardized Modified Adjusted Gross Income (MAGI) Conversion Methodology from State Medicaid and CHIP Data. Affected Eligibility Groups

02/11/2013

In section III.A. of the March 23, 2012 Final Rule on Eligibility Changes Under the Affordable Care Act (March 2012 final eligibility rule), CMS consolidated eligibility groups included in multiple statutory provisions into the first three simplified regulatory sections listed below, and established the new eligibility group for low-income adults [2] :

·         §435.110 - Parents and Other Caretaker Relatives [3]

·         §435.116 - Pregnant Women [4]

·         §435.118 - Children under age 19 [5]

·         §435.119 — Adult Group.

For each of the first three consolidated groups, the final rule requires states to use the highest converted MAGI-equivalent standard for any of the prior eligibility groups subsumed in the consolidated group to establish a new income eligibility standard for the consolidated group. For children, this income standard must be maintained at least until October 1, 2019. For adults, states may choose to maintain the converted income standard after Calendar Year (CY) 2013, lower their income standard to statutory minimums, or select a new income standard in between the minimum and the converted income standard.

As set forth in § 435.110, 435.116 and 435.118 of the March 2012 final eligibility rule, the converted income eligibility standards will be based on the highest income standards in effect on March 23, 2010 or December 31, 2013 for each included eligibility group under the Medicaid state plan or 1115 demonstration. States that currently cover optional eligibility groups that are not MAGI-exempt will also need to convert the income standards for those optional eligibility groups. These income conversions will set the maximum eligibility levels for the mandatory and optional MAGI groups in the state in CY 2014. Mandatory and optional groups for aged, blind, or disabled individuals, the medically needy, and the Medicare Savings Program are MAGI-exempt; and current income and resource counting methods, standards, and disregards will continue to apply for these groups.

States that use an 1115 demonstration to increase the income standard for other MAGI-included populations above the minimum required levels under title XIX or title XXI or to cover adults without dependent children also will need to convert the income standards for such demonstrations, whether they continue such demonstrations beyond December 31, 2013 or transfer the populations into state plan coverage. The 1115 demonstration MAGI-based income standard will set the new maximum income standard allowed for the population covered under the 1115 demonstration, even if that maximum is applied only to a state plan eligibility group. For example, if a state covers parents/caretaker relatives in a mandatory state plan coverage group to 75 percent of FPL but in an 1115 demonstration up to 150 percent of FPL, the state would have to convert both of these income standards for parents/caretaker relatives. The higher converted income level would set the maximum income standard permitted for parents/caretaker relatives in the state plan under section 1931. If the state terminated its demonstration, the maximum income standard could be applied to the mandatory coverage group for parents/caretaker relatives.

For additional information regarding MAGI eligibility groups, see Attachment 1, The Medicaid and Children’s Health Insurance Program Eligibility Groups in 2014.

Table 1, sets forth maximum income eligibility standards for each eligibility group that will need to be converted to a MAGI equivalent income standard, as well as the minimum income standards for section 1931 and for full coverage of pregnant women in accordance with the January 22, 2013 notice of proposed rulemaking, Medicaid, Children’s Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing (78 FR 4594) (January 2013 proposed rule) [6] .

 

Table 1. Maximum Allowable Eligibility Thresholds

Determining Maximum Allowable Eligibility Thresholds

2014 eligibility group

Current eligibility groups

Maximum standard in 2014

MANDATORY ELIGIBILITY CATEGORIES

Parents and caretaker relatives (42 CFR 435.110)

Section 1931

Section 1115 demonstrations 

 

Higher of:

1)      The effective income standard as of 3/23/10 (or 12/31/13, if higher), converted to MAGI-based standard; or

2)      The State’s AFDC income standard in effect as of July 16, 1996 increased by no more than the increase in the CPU-U between July 16, 1996 and the effective date of such increase.

Pregnant women —pregnancy related coverage (42 CFR 435.116)

Sections 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(ii) (IX)

Section 1115 demonstrations

 

Higher of:

1)      The highest effective income standard in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to MAGI-based standard; or

2)      185% FPL.

Pregnant women — full Medicaid coverage (42 CFR 435.116)

Section 1902(a)(10)(A)(i)(III) Section 1931

 

Highest effective income standard under section 1902(a)(10)(A)(i)(III) or under section 1931in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard.

Children under age 1 (42 CFR 435.118)

Sections 1902(a)(10)(A)(i)(III) and (IV)

Section 1902(a)(10)(A)(ii)(IX)

Section 1931

Section 1115 demonstrations

Higher of:

1)      185% FPL; or

2)      Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

Children ages 1 through 5 (42 CFR 435.118)

Sections 1902(a)(10)(A)(i)(III) and (VI)

Section 1931

Section 1115 demonstrations

Higher of:

1)      133% FPL; or

2)      Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

Children ages 6 through 18 (42 CFR 435.118)

Sections 1902(a)(10)(A)(i)(III) and (VII)

Section 1931

Section 1115 demonstration

Higher of:

1)      133% FPL; or

2)      Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

Adult group (42 CFR 435.119)

Parents/caretaker relatives, individuals aged 19 and 20, and childless adults;

New group under Section 1902(a)(10)(A)(i)(VIII)

133% FPL

 

 

 

 

OPTIONAL ELIGIBILITY CATEGORIES

Individuals with MAGI-based income above 133% FPL (42 CFR 435.218)

New optional group under 1902(a)(10)(A)(ii)(XX)

None--state-specified above mandatory limits.

Optional coverage of parents and other caretaker relatives (42 CFR 435.210)

Section 1902(a)(10)(A)(ii)(I)

Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

Optional targeted low income children (42 CFR 435.229)

Section 1902(a)(10)(A)(ii)(XIV)

 

Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

Reasonable classifications of individuals under age 21 (<18, 19, 20, or 21)(42 CFR 435.222)

Section 1902(a)(10)(A)(ii)(I)-(IV)

Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

State adoption assistance agreements (<18, 19, 20, or 21) (42 CFR 435.227)

Section 1902(a)(10)(A)(ii)(VIII)

 

Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

Independent foster care adolescents (<19, 20, or 21)

Section 1902(a)(10)(A)(ii)(XVII)

 

Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

Family Planning Services

Section 1902(a)(10)(A)(ii)(XXI)

Section 1115 demonstration

Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

Individuals needing Tuberculosis-related services

Section 1902(a)(10)(A)(ii)(XII)

Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

Separate CHIP programs for children under 19, pregnant women, and/or unborn children

Title XXI

Section 1115 demonstration

Highest effective income level in effect under the State plan or waiver as of 3/23/10 (or 12/31/13, if higher), converted to a MAGI-based standard

 

In addition to the required income conversions listed above, because the Act requires that MAGI be used for premium calculations as well, states will need to convert any income determination amounts for premium payments that the state employs in Medicaid or CHIP if those limits differ from the limits for eligibility. States will need to convert the upper income thresholds for pre-CHIP Medicaid as of March 31, 1997 if those income standards differ from the current Medicaid upper income thresholds for children, in order to ensure appropriate Title XXI enhanced FMAP claiming beginning in CY 2014. Finally, in the January 2013 proposed rule, CMS proposed that states convert the statutory minimum for section 1931 and for full coverage for pregnant women. This is equal to the AFDC payment standard by family size from May 1, 1988 in each state.

The rules set forth above indicate that states must determine the highest effective income level in effect under the state plan as of March 23, 2010 or December 31, 2013, if higher, converted to a MAGI-based standard. If the state has raised the income standard for the applicable group and disregards have not changed, states may do one conversion (the higher income standard) for the eligibility group. Similarly, for the three consolidated mandatory groups, if it is apparent on its face which is the highest income standard for the underlying eligibility groups, because the methodology is the same for all of them or because there is such a large difference between the highest and the next income standard, the state may only convert the highest of the underlying groups to establish a new income eligibility standard for the consolidated group.

If a state uses a gross income standard, such as for a CHIP group, the gross income standard does not need to be converted. The state can continue to use the gross income standard in 2014.

CMS is working with every state to create Income Conversion Plan templates specifying the income standards and disregards that each state is currently using for the eligibility groups that it will be required to convert to MAGI. Templates consist of a Summary Form and an Excel Spreadsheet with three tabs and contain the information described below:

·         Tab 1 has the income standards as of March 23, 2010 for each eligibility group that is considered a MAGI group as of March 23, 2010.

·         Tab 2 has dollar income standards including the AFDC payment standard as of May 1, 1988, the AFDC payment standard as of July 16, 1996, any different 1931 income limits as of March 23, 2010. States will need to convert all the dollar income standards using the special conversions for dollar income standards described later in this document. A state may have multiple sets of 1931 or AFDC limits based on regions, household composition, etc., each of which will need to be converted.

·         Tab 3 has the disregard information applicable to the AFDC payment standard as of July 16, 1996, to 1931 if the state uses more liberal financial methodologies for its 1931 group and for other AFDC-related groups, 1115’s, CHIP and family planning groups.

·         Summary Forms will set forth the income standards that will be required for what populations to be converted from the templates. It will also have the income determinations for premium conversions and the upper income thresholds for Pre-CHIP Medicaid as of March 31, 1997 if those income standards differ from the current Medicaid limits.

After the information on the templates is finalized, CMS will highlight in bold the highest income standard by group and date and the specific disregards that it will use to do income conversions using the SIPP. CMS will provide copies of these finalized templates to states. These templates are intended to be helpful to states doing conversions using state data and states will likely want to convert the same bolded income standards, but use all disregards captured in state data (not just the ones bolded by CMS on the templates). In addition, CMS will send ABD group related templates to states over the coming months to document relevant state variations for SSI-related groups. These templates will be used for FMAP related conversions.

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