With so many households losing income due to the COVID-19 pandemic, it’s a good time to revisit the income eligibility rules for households with fluctuating income. In most cases, income eligibility for insurance affordability programs offered through Maryland Health Connection is based on a household’s income in comparison to the income limits expressed as a percentage of federal poverty level (FPL) for each Medicaid program or coverage group. Also, it is based on an income tier between 138% and 400% of FPL for premium tax credit or up to 250% of FPL for cost-sharing reductions, both of which are used to help make private health plans more affordable for households who are over income limits for Medicaid.
Many households do not have steady, predictable income all the time, especially households in lower income brackets or in times of economic crisis. To reduce churn between programs, Maryland considers Reasonably Predictable Changes (RPC) in income, as allowed by federal regulation, when determining Medicaid eligibility. This means that even if a household’s monthly income is over the Medicaid threshold, if a reasonable prediction of annualized income is below the Medicaid annual income threshold, the consumer’s eligibility for Medicaid is considered. When applying RPC income, only the income of the future 12 months, including the month of application, is counted. This allows seasonal workers or consumers expecting income fluctuation over the next 12 months to be eligible for Medicaid if their expected average monthly income is within Medicaid eligibility limits for the year.
In the application, the applicant can choose Yes to the question about varying monthly income and enter their expected income for the next 12 months. Maryland Health Connection will then annualize the income entered and divide by 12 to calculate monthly income. If a household uses the RPC income flow, even if current month’s income is zero, the system will calculate eligibility based on RPC. All eligibility based on RPC will generate an income Verification Checklist (VCL) so the applicant can show why and how their income varies. The VCL is open for 30 days, and eligibility will be pending until verified. In addition, households with RPC eligibility will not auto-renew, but will need to reapply at the end of each certification period.
A consumer can use any of these documents to verify RPC income:
Let’s consider a consumer who works seasonally during the spring and summer and earns $1,600/month for six months of the year, but does not earn a paycheck between October and March. If the consumer applies for coverage through the marketplace on June 1, the income should be entered like this:
With RPC, the months of income are averaged against the months without income and allows eligibility. First, each month’s income is added together for a total of $9,600, then divided by 12 for an average monthly income of $800, within Medicaid program limits. Without RPC, the consumer’s $1,600 monthly income would have made her ineligible for Medicaid until she lost her income in October, then ineligible again when her income resumed in April.
Married couples who file joint returns may have a household where one spouse earns a fixed income and the other has a varying income. For example, one spouse earns a fixed income of $1,300 a month and the other earns a variable income that averages $400 per month. Together, the household’s RPC income is $1,700/month making them eligible for Medicaid through RPC when they apply in July, even though their joint income for July is over scale:
Another example with a two-member household is one where the couple together earns $4,000 a month for January and February, but in March one spouse finds out the last day of work will be April 30. The new monthly household income will be $1,500 from May. When they apply for coverage through HBX in the month of April, through RPC, both spouses are eligible for Medicaid. Income flow should look like this:
Without RPC, the couple would be ineligible for Medicaid based on $4,000 in income in April. With RPC, the income is annualized for a total of $20,500, divided by 12, average monthly income is $1,708 and within Medicaid limits. Don’t let prior month’s income throw you off when using RPC.
Remember, for RPC, only the month of application and future months are considered.
Be sure to review each household scenario carefully, especially where significant changes in household income have occurred, to determine if using the RPC income flow is suitable for your consumer.
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