Sunday, November 6, 2011

MAGI and Medicaid: How one may change the other

"The Patient Protection and Affordable Care Act” creates a new eligibility category in Medicaid, which will expand access to health care for millions of low-income Americans. For the first time, Medicaid will extend eligibility to all individuals who have income up to 133 percent of the Federal Poverty Level (FPL).  As part of this, states were going to start using a new calculation for income based on the Internal Revenue Code of 1986.  This income test uses a calculation called Modified Adjusted Gross Income, or MAGI, which allows all Social Security benefits to be left out of the calculation.  So, starting on January 1, 2014, all SSDI recipients as well as SS retirement beneficiaries would be able to apply for Medicaid and would be eligible (from an income perspective) if their MAGI (which excludes SS payments) fell at or below 133% of FPL (or $14,484 for a single person in 2011).  So, let me do the math, if a person makes $2,300 in monthly income, and $1,200 of that is from SS retirement payments, and $1,100 is from pension payments, that person (with an annual income of $27,600) could qualify for Medicaid because only $13,200 is counted as income for Medicaid qualification purposes.  (Now, I'm sure there will still be asset limits that will affect Medicaid eligibility, and most people will not meet those asset limits.)

In response to this new change, US Congressman Diane Black (TN-R) proposed HR 2576 to address MAGI.  Her bill would change the IRS code from 1986 so that MAGI would include all Social Security Benefits.  If her bill is adopted (and it passed the house 262-157 on October 27th), then my person in the example above would not be eligible for Medicaid.  Rep. Black assumes that this use of MAGI was an unintended consequence of the ACA that should be fixed (see her post http://black.house.gov/press-release/black-medicaid-bill-passes-house-bipartisan-vote), but I am not so sure. I have listened to both the supporters and the critics, and I am not sure how I feel about it.  This change may result in the denial 500,000 possible Medicaid recipients.  Would these people be better off with Medicaid? Would we all be better off if they had Medicaid (see http://www.cbo.gov/ftpdocs/124xx/doc12484/hr2576.pdf)?  If those 500,000 end up not receiving Medicaid, does that mean they will not be able to afford any health insurance?  And if they have no health insurance (or have to pay a significant portion of their income to health care), will we all be hit harder with higher premiums and increases in healthcare as their medical bills will likely go unpaid?  I suppose if they all did get Medicaid we'd all be paying higher taxes or higher fees for government services.  The assumption seems to be that these individuals would not be eligible for Medicaid but would be eligible to purchase "affordable" health insurance from the health insurance exchanges. I am not so sure those insurance plans will be "affordable."  In regards to HR 2575, my US Rep, Hank Johnson, voted "nay" on October 27th. The Senate will consider HR 674 (HR 2576 was attached to HR 674, and that is another issue altogether) on Monday, November 7, 2011. I suppose we shall see, and I am still not sure where I stand on this issue.

1 comment:

  1. I just realized that this discussion does not affect our dual-eligible or LTC populations. Although MAGI will apply to most people eligible for Medicaid, states must retain existing income methods for certain populations; people eligible for Medicare, people in the Medicaid medically needy category, people with disabilities, people living in nursing homes (or in state waiver programs), and those who are eligible for Medicaid because of their eligibility for another program. So, when they talk about MAGI and ACA's changes to Medicaid, Medicaid recipients that are over 65 or living in a nursing home are not a part of this discussion. So far the changes they are talking about for our population would streamline the enrollment process and ongoing COB (coordination of benefits) for dual-eligibles.

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