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Focus on Regulation

CMS Proposes New Standards for Medicaid and CHIP Income Eligibility

CMS released a solicitation for public input on June 21, 2012, seeking comments on two potential methodologies for converting current state Medicaid and Children’s Health Insurance Program (CHIP) net income eligibility standards to equivalent modified adjusted gross income (MAGI) standards in accordance with section 2002 of the Patient Protection and Affordable Care Act (PPACA).

Starting January 1, 2014, for most individuals, eligibility for Medicaid and CHIP will be determined using methodologies based on MAGI, as defined by the Internal Revenue Code of 1986.  Moreover, aside from a five-percent across-the-board income disregard, there will no longer be any applicable income disregards.  CMS issued regulations regarding these new income eligibility standards on March 27, 2012.  As required by PPACA, these standards will not apply to certain exempted populations, whose eligibility will continue to be determined using current income eligibility standards.

To effectuate these changes, section 2002 of PPACA requires states to convert their current financial eligibility income standards from net standards that incorporate current income disregards to an equivalent MAGI income standard.  States must further ensure that this “income conversion” does not render individuals eligible for Medicaid on the date of PPACA’s enactment ineligible for Medicaid coverage.  In its solicitation for public input, CMS sets forth two potential methodologies for implementing these requirements:  (1) the average disregard/major average disregard method; and (2) the same number net and gross method.  Both of these methods aim to ensure that the same number of individuals is eligible for Medicaid, although not necessarily the same exact individuals.

CMS solicits comments from interested stakeholders regarding the feasibility of these two options as well as with respect to hybrid or alternative methodologies. Comments may be submitted electronically to incomeconversion@cms.hhs.gov and should be submitted by July 23, 2012.