Unwinding Wednesday #17: It’s Imperative for States to Use the 2023 Federal Poverty Levels During the Unwinding





The Assistant Secretary for Planning and Evaluation (ASPE) has released the 2023 federal poverty levels (FPL). As expected, there was a notable increase in the poverty threshold stemming from inflation that will help families keep pace with rising costs. On average, the FPLs rose by about 8 percent, ranging from 7.3 percent for an individual to 8.4 percent for a household of eight. Given the bump in income eligibility, states should prioritize implementing the updated FPL levels prior to initiating the first batch of renewals to ensure that eligible people are not disenrolled.

What does this mean in terms of real dollars?

The 2023 annual poverty threshold for a family of three increased by $1,830 from $23,030 to $24,860. With the median child Medicaid and CHIP income eligibility at 255 percent FPL, this means that children in a family of three would not lose their health insurance if their family experienced an increase in income of $4,666 or less. In expansion states with adult eligibility at 138 percent FPL, the increase in annual income is $2,525 for parents in a family of three and $1,366 for single adults.

What should states and CMS do?

Implementing the 2023 FPL thresholds should be a high priority for states given the unprecedented nature of the unwinding. It should also be included in CMS’ assessment of state system readiness. Although there is no set deadline for updating the FPL levels, the Consolidated Appropriations Act requires states to comply with all federal requirements applicable to renewals, including temporary flexibilities using section 1902(e)(14)(A) waiver authority or “other alternative processes and procedures approved by the Secretary of Health and Human Services,” in order to continue to receive enhanced federal Medicaid funding. Short of that, CMS could require states to reassess eligibility for all disenrollees after the FPLs are updated and reinstate coverage for everyone whose coverage was terminated based on the outdated FPL. Now that would be a lot of unnecessary re-work for states, so it might serve as an incentive for them to do the right thing and implement the 2023 FPLs before they start initiating renewals.

What does this mean for parents in non-expansion states?

The FPL increase will not help improve access to health coverage for parents in states that have not expanded Medicaid and continue to rely on a specific income dollar threshold rather that establishing eligibility based on an FPL level, which helps to keep pace with inflation. Seven of the 11 non-expansion states (FL, GA, MS, NC, TN, TX, WY) rely on dollar thresholds that are not routinely adjusted for inflation. Therefore, the FPL equivalency erodes each year. Take Tennessee, for example, where the income eligibility for a  parent/caretaker in a family of three is $1,611 per month or 93 percent FPL (including the 5-percentage point standard disregard) in 2022. In 2023, the FPL equivalent for parent/caretakers in Tennessee will drop to 83 percent FPL (rounding up), down from 98 percent FPL just five years ago. Believe it or not, Tennessee has the highest income eligibility for parents/caretakers among these seven states. Texas is at the bottom with income eligibility for parents/caretakers at $2,760 for a family of three PER YEAR! or roughly 16% FPL. If Texas’ eligibility were based on the FPL, income eligibility for a single parent in a family of three would rise to $2,979 annually.

Parent eligibility in most non-expansion states is less than half the poverty level. Moreover, the way poverty is determined doesn’t really reflect the economic realities of families. In other words, it’s a misnomer to think that only people with income below the poverty threshold are living in poverty. The basis for determining FPL levels is sorely outdated with the government using a formula that was established in the 1960’s. It considers poverty to be three times the expected cost of food, adjusted for family size, while it ignores other basic needs such as housing, utilities, and transportation. But that’s a story for another time.

[Editor’s Note: For more information, visit our PHE Unwinding resource page where you’ll find other blogs in this series, reports, webinars and the 50-state tracker.]

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.