Modified Adjusted Gross Income (MAGI) Income Conversion Methodologies. Endnotes

03/01/2013

1 The Affordable Care Act consists of the Patient Protection and Affordable Care Act (Public Law 111-148) and Health Care and Education Reconciliation Act of 2010 (Public Law 111-152).

In this paper, the term “Exchange” means “Health Insurance Marketplace.”

2 All references to eligibility in this document are inclusive of both Medicaid and CHIP eligibility unless otherwise stated.

3 The analysis to develop the Standardized MAGI Conversion Methodology was conducted by CMS and other offices of the U.S. Department of Health and Human Services.  While CMS is the operating division of the Department responsible for helping states to implement MAGI converted standards in their Medicaid and CHIP programs, the recommendation is a Department recommendation.   

4 Available at http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SHO12003.pdf

5 We use the term “disregards” to refer both to income that is disregarded and expenses that are deducted when determining Medicaid eligibility.

6 For further discussion of the MAGI definition of income as related to Medicaid financial eligibility determination see the Notice of Proposed Rulemaking (NPRM) published in the Federal Register on August 17, 2011 at www.gpo.gov/fdsys/pkg/FR-2011-08-17/html/2011-20756.htm..  See also the final rule, published in the Federal Register on March 23, 2012 at www.gpo.gov/fdsys/pkg/FR-2012-03-23/html/2012-6560.htm.

7 See http://aspe.hhs.gov/poverty/faq.shtml for further discussion of the federal poverty guidelines.

8 States may also use so-called “block disregards” to expand income eligibility by disregarding a set amount of income.  For example, if a state’s income eligibility standard for pregnant women is 133% FPL, the state could choose to disregard all counted income between 134% and 185% FPL, effectively expanding the income eligibility to those with incomes up to 185% FPL.

9 Information about the SIPP is available from the Census Bureau site at http://www.census.gov/sipp/.

10 The pilot states are: Arizona, California, Indiana, Nebraska, New Hampshire, New York, Oregon, Tennessee, Virginia, and West Virginia. 

11 The term “MAGI” income, as used in the discussion of the analysis of these methods, means income adjusted for household composition and income counting rules, as well as for disregards.  As explained in the section above defining key terms,  “MAGI” as defined in the Internal Revenue Code and “MAGI” for purposes of Medicaid eligibility are similar but not identical in their treatment of income.  In addition, the analyses conducted by the Department to determine whether the recommended conversion methodology should adjust for “MAGI” (as well as disregards) were focused primarily on the MAGI rules addressing household composition and income counting. We have therefore labeled these methods as Disregard/HCIC Methods to indicate that they account for household composition and income counting, as well as for disregards.

12 This analysis did not include pregnant women.

13 Section 2002(a) of the Affordable Care Act.  This section of the Affordable Care Act also authorizes the Secretary to waive such provisions of Title XIX and Title XXI of the Social Security Act “as are necessary to ensure that States establish income and eligibility determination systems that protect beneficiaries.”

14 IRS guidelines can be found at http://www/irs.gov/pub/irs-pdf/p501.pdf.

15 In the Department’s Guidance of December 28, 2012, the Marginal Disregard Method with the margin defined as a band of 25 percentage points of FPL is called the “Standardized MAGI Conversion Method.”  In the discussion of this table, the MDM/25 method is the same as the “Standardized MAGI Conversion Method.”

16 The Department was not able to use state data to conduct analyses for all the eligibility categories listed or all the pilot states, for several reasons. First, the data submitted from the 10 pilot states required extensive effort to clean and refine before it could be used for analysis.  In some states, the data did not provide information at the individual level, as opposed to the household level, and therefore could not be used.  In other states, the data were incomplete for certain categories and therefore not reliable.  Finally, some pilot states were not able to submit their data until the Department’s analyses was well underway and certain methodologies had already been examined and rejected.  Consequently, in refining its analysis, the Department focused on those states and eligibility categories for which it had the most usable data.  For these reasons, Tables 4 and 5 do not show results using state data for all categories tested. 

17 These criteria are: unbiased; accuracy; precision; data quality; and administrative burden, as explained above.

18 The results shown are illustrative for selected pilot states.  The Department is working with states as they select a conversion method.  Therefore, these are not the final, official converted standards for any of these states or categories. 

19 Under this section, states may increase their net income standard or use less restrictive income and resource methodologies. Hereafter, this group of individuals will be referred to as the “1931 expanded” group.

20 77 FR 17144-17217 (March 23, 2012), available at http://www.regulations.gov/#!documentDetail;D=CMS-2011-0139-0489.

 

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