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Income rules for new MAGI Medicaid
Old 02-04-2014, 09:55 PM   #1
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Income rules for new MAGI Medicaid

Hi,

I am trying to piece together the income rules for the new MAGI Medicaid.
According to what I have read, it looks like non-periodic income is either not countable, or only countable in the month received (in the old Medicaid).

NY has two cases of IRA distributions not being counted as income for Medicaid since they were irregular payments and counted as a resource transfer, not income. So, could we conclude that irregular non-periodic events like capital gains (ex. on stock / real estate), IRA Distributions, or Roth Conversions, inheritances, lottery winning, simply have no effect on MAGI Medicaid, or worst case only effects things for the one month received? I am wondering how this would work, tell Medicaid I am doing a Roth Conversion for month X, get private insurance for that month, convert the $40,000, then go back to Medicaid after that?

Any experts have any thoughts on this?


------------------------
Old style Medicaid ( Non-MAGI )
Income eligibility for Medicaid is determined on a monthly basis. Because of this,
Medicaid differentiates between periodic income and non-periodic income. Periodic income
is received on a regular schedule, for example, once a month, once a quarter, once a year, etc.
Some examples of periodic income are pensions, annuities, and IRA withdrawals. Non-
periodic income is income received on an irregular schedule such as an inheritance, or an
award.

Non-periodic income is counted in the month in which it becomes available. After that, it
is considered a resource. This means that if the individual were to receive moneys that would
cause his/her income to exceed the cost of his/her care, he/she would be ineligible for Medicaid
for that month only, regardless of whether the money is all spent by the end of the month. For
example, needed care is $5,000/month and a CD matures that, when the CD's interest is
combined with regular monthly income, gives the individual $7,000 that month. In this instance,
the individual would be ineligible for Medicaid in that month but eligible in the following month
even if he/she merely deposits the extra amount.

Periodic income is applied on a monthly basis regardless of how often it is received
during the year. For example, if an annuity paid out once a year, the amount paid would be
divided by twelve (12) to establish total monthly income.
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Old 02-04-2014, 11:35 PM   #2
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This makes sense because they ignored my large distribution and bumped me into medicaid when I applied for ACA but my yearly income was over the medicaid limit.
I guess you could take a monthly distribution to work around it, if you don't want to be
in medicaid.
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Old 02-05-2014, 05:46 AM   #3
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Quote:
Originally Posted by jim584672 View Post
So, could we conclude that irregular non-periodic events like capital gains (ex. on stock / real estate), IRA Distributions, or Roth Conversions, inheritances, lottery winning, simply have no effect on MAGI Medicaid, or worst case only effects things for the one month received?
There is no doubt IRA withdrawals and capital gains are included in MAGI calculation, just as there is also no doubt eligibility for an ACA exchange policy with premium assistance and cost sharing is based on yearly income.

The state may not have a well developed process to handle this. Other members have reported facing similar issues but seem to have found a way to deal with them You may want to browse some threads for ideas.
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Old 02-05-2014, 07:21 AM   #4
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Quote:
Originally Posted by MichaelB View Post
There is no doubt IRA withdrawals and capital gains are included in MAGI calculation, just as there is also no doubt eligibility for an ACA exchange policy with premium assistance and cost sharing is based on yearly income.

The state may not have a well developed process to handle this. Other members have reported facing similar issues but seem to have found a way to deal with them You may want to browse some threads for ideas.
I have no doubt that these ARE counted when concerning the ACA Exchanges and it is possible to increase your income by Roth converting to get out of Medicaid (if you so wish).

MAGI concerning Medicaid has different rules about lump sums than the MAGI for the Exchanges. MAGI for the exchanges are yearly based, where MAGI Medicaid is monthly based.

From NYLAG ACA Part 2 - MAGI.ppt New York Health Access - Download
MEDICAID RULE -- The lump sum is treated as income in the month received, and then is a resource in subsequent months. Since resources are not counted in MAGI budgeting, the lump sum in effect does not hurt eligibility.
EXAMPLE Lottery winning, lawsuit settlement
Gifts and inheritances are NOT counted as income under MAGI.
NOTE that MAGI budgeting for the Premium Tax Credit and Coinsurance subsidy is different. Those are based on annual income, so a lump sum that would be taxable is counted as income (e.g. lottery). Not all lump sums are taxable such as gifts and inheritances.

http://www.health.ny.gov/health_care.../04_attac4.pdf
Income Excluded from Gross Income for MAGI-Like Budgeting...
Lump Sum payments only count in the month received

Recent fair hearing cases support non-periodic IRA Distributions are not income, but a transfer of resources, and since resources are not considered under the new MAGI rules, it is a non-event.
Periodic distributions like SEPPs would be income.

http://www.otda.ny.gov/fair%20hearin...d_5773586M.pdf
http://www.otda.ny.gov/fair%20hearin...d_5696948L.pdf
Just a note, NY eliminated the resource test for Medicaid in 2010.
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