Modified Adjusted Gross Income (MAGI) Income Conversion Methodologies. Appendix 1: Distribution of Disregards by Net Income for Selected State and Eligibility Categories

03/01/2013

Tables 1A and 1B support the hypothesis that net income and the amount of monthly disregards are correlated. Table 1A uses Arizona state data to show the distribution of average monthly disregards by income levels for Arizona parents who are in the expanded eligibility category permitted by Section 1931 of the Social Security Act.19 Note that the net income standard for this group varies across states. For Arizona, the net income standard is 100% of FPL. For this group, Table 1A shows that as income increases, disregards also increase. It also shows that the average amount of disregards for people between 60% and 100% of FPL are higher than the aggregate average disregard. As discussed further in the main paper, this demonstrates support for the Marginal Disregard Method with 25 percentage point band (MDM/25), which will focus the analysis of disregards on those populations for which it is most likely to have an impact on eligibility.

Table 1B uses West Virginia state data to show the distribution of average monthly disregards by net income levels for children under age 6 and children eligible for CHIP. For children under age 6, the net income standard is 133% of FPL; for children eligible for CHIP, the net income standard is 250% of FPL. This table implies that the state may not have recorded all disregard information for individuals with net incomes below 20% of FPL, as evidenced by the very low average disregard amount for that group, compared to higher net income groups. This table also shows that as income increases, so do disregards. These two key points demonstrate support for MDM/25.


Table 1A.  ARIZONA PARENTS (1931 EXPANDED) DISTRIBUTION OF MONTHLY DISREGARDS BY NET INCOME: STATE ADMINISTRATIVE DATA

Average Monthly Disregard (%FPL) for Arizona Parents (1931 Expanded) by Net Income, State Data

  Average Disregard as % of FPL Count of Records Percent of Total Count

Parents, 1931 Expanded

<=20%

0.76

2,373

3.09

20% to <= 40%

2.13

41,472

5.41

40% to <= 60%

3.23

189,036

24.65

60% to <= 80%

4.53

257,039

33.52

80% to <= 100%

5.15

277,004

36.19

All

4.29

766,924

100.00


Table 1B.  WEST VIRGINIA DISTRIBUTION OF MONTHLY DISREGARDS BY NET INCOME: STATE ADMINISTRATIVE DATA

Average Monthly Disregard (%FPL) for West Virginia Children by Net Income, State Data

  Average Disregard as % of FPL Count of Records Percent of Total Count
Children, <6
<=20% 1.26 120 2.72
20% to <= 40% 4.33 75 1.70
40% to <= 60% 4.64 122 2.76
60% to <= 80% 5.38 174 3.94
80% to <= 100% 6.19 342 7.74
100% to <= 120% 6.51 2,368 53.61
120% to <=140% 6.86 1,216 27.53
All 6.31 4,417 100.00

Net Income Standard: Children 0-6: 133% FPL

Source: Analysis of West Virginia Administrative Data.


Tables 1C, 1D, and 1E indicate that SIPP data, like state data, also show a clear relationship between income level and the size of disregards in most of the eligibility categories tested.

  • Table 1C shows the distribution of average monthly disregards by net income level for Arizona parents in the 1931 expanded group. Similar to Arizona state data, the SIPP data in Table 1C show that as income rises, the amount of monthly disregards also rises.
  • Table 1D uses SIPP data to show the distribution of average monthly disregards by net income level for children less than age 1, children between the ages of 1 and 5, and children between the ages of 6 and 18 in New York. Table 1D shows that, in most cases, as income rises, the amount of monthly disregards also rises.
  • Table 1E uses SIPP data to show the distribution of average monthly disregards by net income level for children less than age 1, children between the ages of 1 and 5, and children between the ages of 6 and 18 in Nebraska. Similar to previous analyses, these data demonstrate the correlation between net income and the amount of disregards.

All three tables support the use of the MDM because the total average disregard amount is heavily influenced by very low income individuals who have few disregards.  These people are not at risk for losing eligibility due to the conversion, and therefore should not be incorporated in the calculation.


Table 1C.  ARIZONA PARENTS (1931 EXPANDED) DISTRIBUTION OF MONTHLY DISREGARDS BY NET INCOME: SIPP DATA

Average Monthly Disregard (%FPL) for Arizona Parents (1931 Expanded) by Net Income, SIPP Data

  Average Disregard Sample Size Weighted Count of Records Percent of Sample
20% to <= 40% 4.1 384 36,279.4 16.13
40% to <= 60% 4.5 567 60,717.8 23.81
60% to <= 80% 4.9 728 74,736.3 30.58
80% to <= 100% 5.8 702 58,690.9 29.48
All 4.9 2381 230,424.3 100.00

Net Income Standard: 100% FPL, Parents

Source: Analysis using SIPP data


Table 1D. NEW YORK CHILDREN DISTRIBUTION OF MONTHLY DISREGARDS BY NET INCOME: SIPP DATA

Average Monthly Disregard, Percent of FPL

  Average Disregard as % of FPL Sample Size Weighted Count of Records Percent of Sample
Children, 6-18
<=20% 0.4 2,406 477,258.5 38.23
20% to <= 40% 3.4 539 118,755.4 8.56
40% to <= 60% 3.6 685 133,461.3 10.88
60% to <= 80% 4.4 792 155,147.7 12.58
80% to <= 100% 5.1 785 152,327.7 12.47
100% to <=120% 5.4 644 108,084.4 10.23
120% to <=140% 5.1 443 78,311.2 7.04
All 2.9 6294 1,223,346.2 100.00
Children, 1-5
<=20% 0.4 1,142 239,750 40.61
20% to <= 40% 3.3 224 50,090.5 7.97
40% to <= 60% 4.7 305 63,010.8 10.85
60% to <= 80% 5.1 349 78,437.2 12.41
80% to <= 100% 6.8 285 52,525.9 10.14
100% to <= 120% 5.5 277 49,538.1 9.85
120% to <=140% 5.9 193 41,626.7 6.86
All 3.2 2812 579,890.7 100.00
Children, <1
<=20% 0.3 230 59,949.7 40.00
20% to <= 40% 3.4 39 9,732.8 6.78
40% to <= 60% 4.4 34 9,898.7 5.91
60% to <= 80% 4.7 50 12,103.7 8.70
80% to <= 100% 4.9 42 9,102.1 7.30
100% to <= 120% 4.9 40 9767 6.96
120% to <= 140% 6.3 46 12,439.9 8.00
140% to <=160% 5.6 33 8,705.9 5.74
160% to <=180% 5.2 23 6,029 4.00
180% to <=200% 6.3 38 9,952.8 6.61
All 3.1 575 147,681.6 100.00

Net Income Standard: Children <1: 200%;  Children 1-5: 133%; Children 6-18: 100%.

Source: Analysis using SIPP data.


Table 1E. NEBRASKA DISTRIBUTION OF MONTHLY DISREGARDS BY NET INCOME: SIPP DATA

  Average Disregard as % of FPL Sample Size Weighted Count of Records Percent of Sample
Children, 6-18
<=20% 0.7 2428 36,403 46.27
20% to <= 40% 4.7 533 8,573.1 10.16
40% to <= 60% 4.4 664 9,883.2 12.65
60% to <= 80% 5.6 833 11,436.9 15.87
80% to <= 100% 6.2 790 13,177.4 15.05
All 3.2 5248 79,473.6 100.00
Children, 1-5
<=20% 0.6 1191 18,461.1 42.07
20% to <= 40% 3.8 213 3,250.2 7.52
40% to <= 60% 5 275 4,363.5 9.71
60% to <= 80% 5.4 374 5,287.7 13.21
80% to <= 100% 6.8 303 5,088.1 10.70
100% to <= 120% 6.5 281 4,942.1 9.93
120% to <= 140% 6.7 194 3,859.1 6.85
All 3.7 2831 45,251.8 100.00
Children, <1
<=20% 0.4 231 4,532.6 46.20
20% to <= 40% 5 40 793.8 8.00
40% to <= 60% 4.9 33 702.4 6.60
60% to <= 80% 5 49 914.7 9.80
80% to <= 100% 5.7 42 894.4 8.40
100% to <=120% 6.9 43 1,049.8 8.60
120% to <=140% 7.9 47 1,097.8 9.40
140% to <=160% 8.7 15 443.2 3.00
All 3.7 500 10,428.7 100.00

Net Income Standard: Children <1: 150%; Children 1-5: 133%; Children 6-18: 133%

Source: Analysis using SIPP data.

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