The Affordable Care Act changes the way income will be counted for determining Medicaid and CHIP eligibility. Historically, states have calculated eligibility using net income standards incorporating various disregards. After 2014, states, the District of Columbia, and territories (Note: hereafter any reference to “states” includes the District of Columbia and the territories) will assess eligibility using modified adjusted gross income (MAGI) for most populations, and current state specific disregards will be replaced by a general disregard of 5 percent of the current federal poverty level (FPL) for the applicable family size.
The December 28, 2012 State Health Official letter on Modified Adjusted Gross Income (MAGI) Conversion explains the purpose and options for conversions under Section 2002 of the Affordable Care.  As discussed in the letter, states utilizing the Centers for Medicare and Medicaid Services’ (CMS) recommended Standardized MAGI Conversion Methodology may choose to establish converted thresholds based on Survey of Income and Program Participation (SIPP) data, as calculated by CMS, or based on state data, as calculated by the states. This document explains various considerations for states deciding between SIPP and state data, how to use the eligibility templates provided by CMS for the conversion process, and the steps that states wishing to perform the conversions using state Medicaid and CHIP data will need to follow.
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