Improving SNAP and Medicaid Access: Filling Income Eligibility Gaps to Maximize Health Coverage

When determining households’ program and subsidy eligibility, Medicaid agencies and the federal and state insurance marketplaces count income for most households using the tax-based Modified Adjusted Gross Income (MAGI) methodology. Medicaid generally bases eligibility on monthly income, while marketplaces use annual income to determine eligibility for subsidies. Even in states that have expanded Medicaid, the use of different budget periods can lead to coverage gaps for households whose monthly income is too high for Medicaid but whose annual income is below the poverty line, making them ineligible for subsidies.

Medicaid regulations address this gap by requiring Medicaid agencies to use annual income when monthly income is above the Medicaid eligibility threshold and annual income is below the poverty line. However, not all Medicaid agencies have correctly implemented policies or systems to address these situations. People who fall in the gap may be sent back and forth between the marketplace and Medicaid when they apply or report changes. Medicaid agencies should implement screening questions, policies, and system improvements that ensure eligible beneficiaries receive coverage without gaps.

Regulations

• Medicaid agencies use monthly income to determine applicants’ financial eligibility for Medicaid. Agencies can account for predicted changes in income, such as seasonal or temporary work, when determining eligibility. 42 CFR §435.603(h)(1) and (3).
• Medicaid agencies must determine eligibility for individuals with monthly income above Medicaid eligibility levels and annual income below the poverty line based on annual income. 42 CFR §435.603(i).^[1]

 Look out! 

• Under this rule, individuals are only eligible for Medicaid if their annual income is below 100 percent of the poverty line. If annual income is between 100 and 138 percent of poverty, individuals are eligible for marketplace subsidies but ineligible for Medicaid.

Medicaid Applicants

Medicaid applicants may have income that changes throughout the year. They might be temporarily or seasonally employed, or they might be employed for some months of the year and unemployed for others. To ensure accurate eligibility determinations, Medicaid agencies must have effective screening questions to identify these applicants, and policies to use average or annual income where appropriate.

Screening Questions

Applications for health coverage should include questions that identify applicants with variable income or whose monthly income is not representative of their annual income. Applications should include additional questions for those identified as being in these situations, and the caseworker (or system) should automatically determine eligibility using both monthly and annual incomes based on the information provided in the application.

Applications should ask questions such as:

• Does your income change from month to month, for instance due to temporary employment or seasonal work? If yes:
  • What is your expected income this month, next month, and the month after?
  • What is your expected total income for this year (January through December)?
• Did you recently start a new job or start working more hours? If yes:
  • What was your monthly income before you started a new job or started working more hours?
  • What is your expected total income for this calendar year (January through December)?

 Look out! 

• Review the Medicaid application to see how it asks about variable income. The questions must be specific enough to flag situations where monthly income is not representative of annual income and gather enough information to make an eligibility determination using annual income.

Policy

If an applicant states that their income changes due to temporary or seasonal work, agencies can account for predicted changes in income by averaging the applicant’s income over several months, including months with high income and months with low or no income.

If an applicant states they started a new job or started working more hours, agencies should first evaluate eligibility based on monthly income, and then consider annual income if monthly income exceeds the eligibility threshold.

For accounts transferred from the marketplace to Medicaid, the Medicaid agency should automatically check eligibility based on annual income if the applicant is found ineligible based on monthly income, since the applicant has already been determined ineligible for premium tax credits.

 Look out! 

• The Medicaid agency should not require applicants like Jackson to first apply at the marketplace and be denied before approving him for Medicaid.

Medicaid Beneficiaries

These gap-filling rules also apply to Medicaid beneficiaries when they report a change in circumstances, renew their coverage, or when the Medicaid agency conducts a wage match. In many cases, the Medicaid agency will have income information for the whole year and should be able to determine annual income. When monthly income exceeds the eligibility threshold, the agency must consider annual income so eligible beneficiaries don’t incorrectly lose coverage.