Getting MAGI Right: Do COVID-19 Stimulus Payments and Extra Unemployment Count toward Medicaid Eligibility?

The most popular blogs I’ve ever written were part of a 2015 series about Getting MAGI right. At the time, MAGI was a little understood acronym for Modified Adjusted Gross Income, which changed the way income and household size is counted for Medicaid and CHIP eligibility for children, pregnant women, parents and expansion adults. As part of the Affordable Care Act, MAGI was intended to align the way income and household size are calculated for Medicaid and CHIP with eligibility for financial assistance to purchase a qualified health plan in the ACA’s health insurance Marketplace. The purpose was to make sure no one slipped through the cracks, which could easily happen if Medicaid and CHIP used a different methodology for determining income and household size than Marketplace coverage.

Once again, MAGI-related questions are cropping up about the stimulus payments and extra unemployment compensation that families and workers will receive as part of Families First and CARES’ coronavirus response laws. Here’s the scoop:

  • The stimulus payments ($1,200 for an individual, $2,400 for joint filers, and $500 per child) are “rebates against taxes imposed.” This means these payments are NOT taxable and will not be counted as income for Medicaid, CHIP or financial assistance in the Marketplace.
  • The unemployment bump of $600 per week is a different story. For individuals qualifying for regular unemployment, the CARES act established an additional weekly payment of $600 until July 31, 2020. The act expressly excludes this additional payment – but not the base unemployment compensation – from counting toward income in Medicaid and CHIP. Unfortunately, this does not apply to eligibility for premium tax credits or cost-sharing subsidies in the Marketplace.

Given the fact that the ACA sought to align income eligibility, it’s a bit of a head scratcher as to why the CARES act exempted the extra payment from inclusion in Medicaid and CHIP but not Marketplace financial assistance. That said, the fact that it doesn’t count as income in determining eligibility for Medicaid or CHIP means that more people will qualify. However, if total family income without the bump is over the Medicaid limit, then individuals will get less financial assistance in the form of premium tax credits, as well as cost-sharing assistance, in purchasing a Marketplace qualified health plan.

There are differences in how household size and income are determined in Medicaid, particularly for individuals who do not file taxes and for children who are tax dependents of someone who is not their parent (i.e., a grandparent). But these and other differences regarding lump sum payments and using current monthly income rather than projected annual income, complicate coordination along the continuum of coverage across Medicaid, CHIP and the Marketplace. The unemployment compensation issue matters more for individuals applying through (or state-based Marketplaces), which has to calculate income differently when first screening for eligibility for Medicaid or CHIP. Let’s hope that this time gets it right!

Tricia Brooks is a Research Professor at the Center for Children and Families (CCF), part of the McCourt School of Public Policy at Georgetown University.