Posted: January 7, 2014
If you buy insurance through a marketplace and you lose your job, it will pay to let the marketplace know. The reduction in income while you're unemployed could make you eligible for a bigger tax credit to help pay for coverage.
The new year is upon us, and with it a fuller implementation of the Affordable Care Act. The questions about the health care law haven't slowed. Here are some of the latest queries and answers.
I live in Georgia. Our modified adjusted gross income is about $4,900 because our Social Security payments (about $27,000 a year) aren't counted as income. When I phoned for information, I was told that we qualified for Medicaid. Our income is rental income. From what I could tell online, the assets themselves — houses — aren't counted. However, I thought Medicaid does count assets, and then we wouldn't qualify. I can't get a concrete answer from anyone. Would we qualify for Medicaid or not?
Without knowing all the particulars of your situation, it's hard to say for sure. But you probably won't qualify for Medicaid.
There are different financial eligibility tests for different Medicaid groups; some include assets in the calculation and others do not. Under the health law, if someone lives in one of the 25 states or the District of Columbia that have so far decided to expand Medicaid to adults with incomes up to 138 percent of the federal poverty level (currently $15,856 for an individual or $21,404 for a couple), financial eligibility is based on modified adjusted gross income, or MAGI. There's no asset test for this group.
In addition, all states now use the MAGI income definitions. There is no asset test for other core Medicaid groups, including low-income pregnant women and children and parents with dependent children, says Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities.
Georgia hasn't expanded Medicaid to childless adults. But if you lived in a state that had done so, your modified adjusted gross income would be too high to qualify.
Contrary to what you were told, your nontaxable Social Security income would be included in determining your eligibility under the Medicaid expansion, says Brian Haile, senior vice president for health policy at Jackson Hewitt Tax Service.
Medicaid financial eligibility thresholds for other groups, such as seniors or people who are disabled, are typically below the federal poverty level. Members of those groups also generally face an asset test, says Haile. It's unlikely you'd meet the eligibility criteria.
Are the subsidies under the health law a permanent feature, or are they only required for the first two or three years, and then we'll be expected to pay the full premium?
Unless Congress and the president enact a law repealing them, the subsidies are here to stay. The premium tax credits and cost-sharing subsidies that can make marketplace plans more affordable are written into the law as mandatory spending, says Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)
"Unlike other parts of the law, where the law authorizes a program or spending but doesn't appropriate that spending, the subsidies are specified in the law and that spending is mandatory," Tolbert says .
Premium tax credits are available to people with incomes up to 400 percent of the federal poverty level (currently $45,960 for an individual and $94,200 for a family of four), while cost-sharing subsidies that reduce deductibles, copays and other out-of-pocket costs are available to those with incomes up to 250 percent of poverty ($28,725 for an individual and $58,875 for a family of four).
The law spells out eligibility requirements as well as details about how the subsidies will increase over time based on a formula that incorporates national measures of both premium and income growth.
What if you have a job, pay a certain premium and then are laid off or let go? How do you qualify for tax credits in the middle of the year, outside of the enrollment period?
If you have health insurance through your employer and lose your job, you'll be eligible for a special enrollment period to shop for coverage on the health insurance marketplace. At that time, you can also apply for tax credits that are available to people with incomes between 100 and 400 percent of the federal poverty level, as described above.
If you already have a marketplace plan and you lose your job, you should notify the marketplace right away to have a new tax credit determination done, says Tolbert. You could qualify for a bigger subsidy.
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