Q. I know that whether I qualify for expanded Medicaid depends on whether my income is less than 138 percent of the Federal Poverty Level (FPL). I also understand if I earn too much to qualify for Medicaid, I can buy insurance in the exchange, where I may be eligible for premium subsidies (premium tax credits), again depending on how my income compares to the FPL. Can you spell out what that means in dollars?
of Federal Poverty Level
A. First, in states that have expanded Medicaid you will qualify for Medicaid if you earn up to 138 percent of the FPL. For a single individual in 2020, the upper income limit for Medicaid eligibility is $17,608, and for a family of four, the upper income limit is $36,156 (here’s the federal website that shows the current year FPL for various family sizes). Regardless of where you live, if you qualify for Medicaid or CHIP, you will not qualify for premium subsidies.
Medicaid eligibility depends on whether your state has expanded Medicaid under the ACA
In states that have not accepted federal funding to expand Medicaid, eligibility for Medicaid has remained unchanged despite the ACA, and in most cases, able-bodied adults without dependent children are not eligible for Medicaid regardless of how low their income is. In states that have not expanded Medicaid, eligibility for premium subsidies in the exchange starts at 100 percent of the poverty level, whereas it starts above 138 percent of the poverty level in states that have expanded Medicaid. So a person who earns 120 percent of the poverty level would qualify for Medicaid in some states and for premium subsidies in others.
As of late 2020, there are 14 states that have not expanded Medicaid under the ACA. But one of them (Wisconsin) does provide Medicaid coverage to able-bodied non-elderly adults with income up to the poverty level, two of them (Oklahoma and Missour) will expand Medicaid as of mid-2021, and one of them (Georgia) will partially expand Medicaid in mid-2021, following the same general protocol that Wisconsin already uses, albeit with a Medicaid work requirement as well.
Medicaid/CHIP eligibility is based on current FPL guidelines; premium tax credit eligibility is based on the prior year’s FPL guidelines
It’s important to note that Medicaid and CHIP eligibility start to be determined based on the most recent FPL guidelines as soon as they’re published (usually in January each year). But eligibility for premium subsidies in the exchange is based on the prior-year FPL guidelines. So for coverage that is effective in 2021, the 2020 FPL guidelines are used to determine premium subsidies, both during open enrollment (which takes place in 2020) and for special enrollment periods throughout 2021. But for Medicaid/CHIP eligibility, the new 2021 poverty level numbers will start to be used once they’re published in early 2021.
Premium tax credit eligibility
If you buy insurance in the state marketplaces – or exchanges – you may be eligible for tax credits (subsidies) that help you cover premiums. The tax credits are available if
- you’re not eligible for Medicaid or CHIP. It’s important to note that children are eligible for Medicaid or CHIP at much higher household incomes than the Medicaid eligibility limits for adults. So it’s common to see households where the kids are eligible for Medicaid or CHIP, while the parents are eligible for premium tax credits instead. If the family chooses to enroll the kids along with the parents on the private plan in the exchange, they have to pay full price for the kids’ coverage, since they could have enrolled in Medicaid or CHIP instead.
- your income is at least 100 percent of the poverty level but not more than 400 percent of FPL (if the unsubsidized premiums are low enough, subsidy eligibility will end below 400 percent of FPL). For plans effective in 2021, the upper income limit for subsidy eligibility is $51,040 for a single person, and $104,800 for a family of four. And again, the lower income threshold for premium subsidy eligibility is higher in states where Medicaid has been expanded, since a household has to earn more than 138 percent of the poverty level in those states in order to be ineligible for Medicaid (and thus eligible for premium subsidies).
- you don’t have access to affordable employer-sponsored health insurance that provides minimum value (it’s important to understand the family glitch in this scenario).
So in states that have expanded Medicaid, subsidy eligibility starts at 139 percent of the poverty level (ie, above the cutoff for Medicaid eligibility, which is 138 percent of FPL), while in states that haven’t expanded Medicaid, subsidy eligibility starts at 100 percent of the poverty level.
In all cases, the exchange first checks to see if applicants are eligible for Medicaid. Subsidy eligibility is only determined if and when the exchange has determined that the applicant is not eligible for Medicaid. So if a person applies for coverage during a special enrollment period in July 2021, the exchange would first compare the applicant’s income to the 2021 FPL numbers to see if the person is eligible for Medicaid or CHIP. If they aren’t, the exchange would then compare the applicant’s income to the 2020 FPL numbers to determine subsidy eligibility.
This system is used because open enrollment happens near the end of the year, for coverage effective the following year — but the FPL numbers for the following year aren’t yet available at that point. And although they become available early in the year, the exchanges don’t switch to those new numbers until the next open enrollment period, so that everyone with coverage effective in a given year will have their subsidy eligibility based on the same FPL numbers.
In addition, if your income is above 138 percent of FPL (or at least 100 percent of FPL in states that haven’t expanded Medicaid) and also doesn’t exceed 250 percent of the FPL, you will be eligible for cost-sharing subsidies if you buy a silver plan in the exchange in your state. Cost-sharing subsidies reduce the maximum out-of-pocket costs for the health plan, and also lower the deductibles and copays that you’ll have to pay if you need care. For a description of how this subsidy works, see this overview of cost-sharing subsidies and this update about cost-sharing subsidies and the Trump Administration.
For coverage effective in 2021, 250 percent of FPL is $31,900 for a single individual, $54,300 for a family of three, and $87,900 for a family of six.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
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