Last week, we released a primer on the basics of MAGI – how rules for counting household size and income to determine eligibility for Medicaid and CHIP have been aligned with Marketplace subsidies. The move to MAGI has brought about a number of changes in Medicaid and CHIP, but to further complicate things, there are some differences that apply only to Medicaid and CHIP. Today, we’re going to drill down on the three exceptions in household counting rules for certain tax dependents, and discuss when an adjustment is made for married spouses filing separately and for pregnant women.
Determining household size for tax filers. Generally, the household for Marketplace and Medicaid/CHIP eligibility consists of the tax filer(s) plus any tax dependents. In some cases, an individual may be a tax filer and claimed as a tax dependent by someone else (e.g., a child files a tax return to get withholdings refunded but is claimed as a tax dependent on her parent’s taxes). In these cases, the household size is based on the tax-filing household that claims the individual as a tax dependent.
Determining household size for tax dependents. Whenever an individual is claimed as an exemption on someone else’s tax return, the tax filer rules apply in determining the Marketplace household – that is, the household of the tax dependent will include the same individuals as the household of the tax filer. The same rules apply in determining the individual’s Medicaid or CHIP household unless the tax dependent meets one of three exceptions. In these cases, the non-filer rules apply to Medicaid and CHIP eligibility:
- A tax dependent (either child or qualifying relative) is claimed by someone who is not their parent or spouse (e.g., a child claimed by a grandparent)
- A child is claimed as a tax dependent by a non-custodial parent
- A child lives with both parents who file taxes separately or are not married.
Determining household size for non-filers. The rules for counting household members for tax dependents who meet an exception are the same as those used to determine Medicaid/CHIP eligibility for people who do not file taxes. Non-filer rules count people living together who are related but note the differences in who counts in the household of a child versus adult. These distinctions, along with the exceptions for certain tax dependents, means that members of the same family may have different household sizes for the purposes of determining individual eligibility for Medicaid or CHIP.
Eligibility for Marketplace subsidies is always based on tax-filer rules. The exceptions only apply to Medicaid and CHIP, and only for the individual who meets the exception. Moreover, even when a tax dependent meets an exception, he is still counted toward the eligibility of the tax filer(s) and other tax dependents.
Adult children claimed as a tax dependents by a parent. Based on MAGI rules, an adult child claimed as a tax dependent will always be included in the parent’s household. This has been confusing because pre-MAGI, once children turned 19 (or age 21 at state option), they were considered their own household. Children can be claimed as a “qualifying child” tax dependent up to age 19; or if a full time student, up to age 24. There is no age cutoff for children who are permanently and totally disabled. However, if a parent continues to provide at least half of an adult child’s income and the adult child’s income is less than $3,950, the parent can continue the claim their offspring as a qualifying relative, regardless of age. In these cases, the adult’s child household is the same as the tax-filing parent who claims her as a tax dependent.
Married spouses filing separately. Married spouses, living together, who file separate tax returns are not eligible for Marketplace subsidies. However, they may be eligible for Medicaid. In these situations, the tax filer rules apply, but the spouses are counted each other’s household. This adjustment does not impact the household size for any tax dependents.However, using non-filer rules when exception 3 applies, both parents will be included in a child’s household. The key difference here is that for the parents, tax-filing rules still apply, but the spouse is added to the other spouse’s household size. For the child when an exception applies, non-filer rules are used, which count both parents if living with the child.
Pregnant women. The number of children a pregnant woman is expected to deliver is added to her household size in determining her eligibility for coverage in Medicaid or CHIP. States have the option to count a pregnant woman as 1, 2, or 1 + the number of expected children toward the household size of other family members.
Examples for these situations are included in the longer brief, and may be helpful in understanding how these exceptions and adjustments apply. Stay tune for tomorrow’s blog when we feature a new tool to help assisters apply these exceptions and adjustments in determining the household size for Medicaid and CHIP eligibility. A special thanks to the Robert Wood Johnson Foundation for its support of “Getting MAGI Right: A Primer on the Differences that Apply to Medicaid and CHIP” and this blog series.