Simulation of Medicaid and SCHIP Eligibility: Implications of Findings From 10 States. Final Report.. B. Defining Income

08/16/2000

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  • 1. Earnings Disregards

    • Earnings disregards are employed by most states and most programs that use a net income test. The exceptions in our sample are Colorado's Medicaid poverty expansion and S-SCHIP programs. Earnings disregards are frequently time sensitive--that is, the disregard becomes less generous over time--and the disregard can differ between applicants and recipients.9 Tables II.2 and II.3 show earnings disregards for applicants and recipients, respectively. Today, states have the option to continue using the old AFDC standard earnings disregard policies, or establish new disregards for their TANF and Medicaid programs which are at least as generous as the standards in place on July 16, 1996.10 Among all states, 42 have chosen to establish new earnings disregards for their TANF programs (ACF 1998). In our sample of 10 states, the 1931 Medicaid programs in Arkansas, Florida, and New York have adopted the new earnings disregards used by the state's TANF programs. Other 1931 Medicaid programs continue to use the old AFDC standard, such as the $90 disregard applied to each person with earnings.11 As a result, the disregard used by the state's TANF program may differ from the one used by the 1931 Medicaid program--examples include Alabama, Connecticut, and New Jersey. The Medicaid expansion programs (poverty and M-SCHIP) in our sample states continue to use the old AFDC standard earnings disregard when the program uses a net income test.

      TABLE II.2
      DESCRIPTION OF EARNINGS DISREGARDS FOR APPLICANTS
        Medicaid SCHIP Other
      TANF 1931/AFDC Poverty Expansion M-SCHIP S-SCHIP
      Alabama Othera AFDC Standard AFDC Standard AFDC Standard NA NA
      Arkansas Otherb Otherb AFDC Standard AFDC Standard NA NA
      California AFDC Standard AFDC Standard AFDC Standard AFDC Standard NA NA
      Colorado AFDC Standard AFDC Standard NA NA NA NA
      Connecticut AFDC Standard AFDC Standard AFDC Standard AFDC Standard AFDC Standard NA
      Florida AFDC Standard AFDC Standard AFDC Standard AFDC Standard MediKids:
      AFDC Standard
      Healthy Kids: NA      		 NA
      Massachusetts Otherc NA NA NA NA NA
      Michigan AFDC Standard AFDC Standard AFDC Standard AFDC Standard AFDC Standard NA
      New Jersey AFDC Standard AFDC Standard AFDC Standard AFDC Standard NA NA
      New York AFDC Standard AFDC Standard AFDC Standard AFDC Standard NA NA
      SOURCE: MPR State Income Eligibility Requirements Database.

      NOTE:
      NA = Not applicable
      AFDC Standard: Disregard $90 of earned income.

      aDisregard 100 percent of earnings for three months.
      bDisregard 20 percent of earnings.
      cDisregard $90 of earned income, if exempt. Disregard $120 of earned income for each person with earned income and 50 percent of the remainder, if not exempt.

      TABLE II.3
      DESCRIPTION OF EARNINGS DISREGARDS FOR RECIPIENTS
        Medicaid SCHIP Other
      TANF 1931/AFDC Poverty Expansion M-SCHIP S-SCHIP
      Alabama Othera AFDC Standard AFDC Standard AFDC Standard NA NA
      Arkansas Otherb Otherb Otherc Otherc NA NA
      California Otherd Othere Otherc Otherc NA NA
      Colorado AFDC Standard Otherc NA NA NA NA
      Connecticut Otherf AFDC Standard AFDC Standard AFDC Standard Otherg NA
      Florida Otherh Otherh Otherc Otherc MediKids: Otherc Healthy Kids: NA NA
      Massachusetts AFDC Standard NA NA NA NA NA
      Michigan Otheri AFDC Standard AFDC Standard AFDC Standard AFDC Standard NA
      New Jersey Otherj Otherc Otherc Otherc NA NA
      New York Otherk Otherk AFDC Standard AFDC Standard NA NA
      SOURCE: MPR State Income Eligibility Requirements Database.

      NOTE: NA = Not applicable

      AFDC Standards: Disregard $90 + $30 + 1/3 of the remainder of earned income for each person for the first four months. Disregard $90 + $30 of earned income for months 5 through 12. Disregard $90 of earned income for each person with earned income for month 13 and beyond.
      aDisregard 100 percent of earnings for three months and disregard 20 percent of earnings for month 4 and beyond.
      bDisregard 20 percent of earnings and 60 percent of the remainder.
      cDisregard $90 of earned income for each person with earned income.
      dDisregard first $225 of the family's disability-based income and earnings and disregard 50 percent of remaining earnings (not including disability-based income).
      eDisregard first $240 from the earnings of the two highest earners and disregard first $120 from the earnings of all others. If it is a Sneede case, disregard first $240 from the earnings of each working family member, and disregard 50 percent of the remaining earnings.
      fDisregard all earnings below the poverty level.
      gDisregard up to 65 percent of the federal poverty level as long as income after disregard is above 235 percent of the federal poverty level.
      hDisregard first $200 of earned income and 50 percent of the remainder.
      iDisregard $200 and 20 percent of the remainder.
      jDisregard 100 percent of the earnings for the first month and 50 percent thereafter.
      kDisregard first $90 of earned income for each person with earned income and 45 percent of the remainder.
  • 2. Disregards for Child Care

    • Many programs continue to use the old AFDC standard disregard for child care expenses.12 All the programs in Alabama, Florida, and New York that use a net income test employ this disregard. Some TANF programs, however, have dropped this disregard when the state implements other forms of child care support for TANF families--for example, programs in Arkansas and California. The treatment of child care expenses, like other policies, may differ across programs within a state, so that the TANF and S-SCHIP programs may not use this type of disregard, but the Medicaid 1931, poverty expansion, and M-SCHIP programs may do so--a pattern found in Arkansas, California, Colorado, and Connecticut.

  • 3. Disregards for Child Support Payments

    • Medicaid and SCHIP programs are not required to provide a disregard for child support payments made or received. When a program uses this disregard, it typically uses the old AFDC standard of the first $50 received. California continues to use the old AFDC standard but also disregards all court-ordered child or spousal support payments made by the family. Connecticut enhanced the old AFDC standard by raising it to $100 of payments received.

  • 4. Other Disregards

    • With some exceptions, few states had other significant disregards.13 Connecticut's TANF program raised the irregular gift disregard to $200 per year, but the Medicaid programs use only a $30 yearly disregard for irregular gifts. The Medicaid program in New Jersey disregards all alimony payments. In California, the 1931 Medicaid program and the Medicaid expansion programs (poverty and M-SCHIP) disregard all dependent care expenses from earned income. In Colorado, the S-SCHIP program disregards all medical bills due and payable in the next 12 months.

  • 5. Definition of Countable Income

    • States have some discretion over the types of income they may or may not count when determining eligibility for Medicaid and SCHIP. Earnings of persons included in the family unit are typically counted, but some states and programs do not count the earnings of children and students-- for example, Arkansas and Connecticut. Arkansas and California also do not count earnings from job training programs. Many states and programs continue the old AFDC standard of not counting SSI benefits, foster care payments, adoption assistance payments, housing subsidies, and earned income tax credits (EITC). In California, however, the S-SCHIP program counts a housing subsidy as income when the subsidy is included in an employment benefit plan. The Connecticut Medicaid program counts housing subsidies--eight percent of the need standard or the actual subsidy, whichever is less.14 The TANF program in Connecticut counts EITC as earned income when it is received as an advance payment. Other types of income that were mentioned as not counted are: supplemental food assistance payments, WIC and food stamp benefits, sibling income, welfare benefit payments, certain types of veteran benefits, and rent received from a roomer or boarder. It is important to note that a state may use gross income tests for its Medicaid and SCHIP programs, but then not count several types of income such as welfare and disability benefits. Massachusetts is an example of such a state.

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MedicaidChildren's Health Insurance Program (CHIP)Children's Health Insurance and CHIPInsuranceMedicaid