The ACA introduced a new concept of eligibility based on what it defines as the person's "Modified Annual Gross Income" or MAGI. If your household MAGI is under a specified level, essentially 138% of the current year's Federal Poverty Level, you can be eligible for Medicaid coverage. Importantly, the "MAGI individuals," as the Centers for Medicare and Medicaid Services (CMS) calls people newly eligible under these rules, are not subject to asset or resource limits. Formerly, a poor person who was in one of the permitted categories would be eligible only if he had less than $2,000 in countable assets. Under the MAGI criterion, a person can have thousands of dollars in the bank and still qualify for Medicaid as long as his MAGI is under the limit.
On February 21, 2014, Cindy Mann, Director of CMS, issued a letter to all of the state Medicaid agencies (PDF) addressing several questions that have arisen under this new program, as it concerns persons receiving Long-Term Supports and Services (LTSS) such as nursing home care. Few people will be eligible for LTSS under the MAGI criteria. The letter observes that "The vast majority of people in need of Medicaid-covered LTSS will qualify under eligibility categories related to age or disability." But for those who will become newly-eligible, some of the MAGI rules will be different from those that apply to persons eligible based on age and disability.
We can paraphrase the letter's conclusions as follows:
Estate recovery - States will not be able to assert claims for estate recovery for medical assistance paid to persons eligible only under MAGI, since they are regarded as exempt under the new law. States may continue to assert claims for estate recovery for those over the age of 55 for nursing home care, home-based community services, and some other benefits, as previously.
CMS has announced that it "intends" to eliminate or limit estate recovery for any benefits other than LTSS; just how it plans to put that intent into practice is not clear.
Asset transfers during a 5-year lookback period - will apply to MAGI individuals.
Annuities, promissory notes, life estate interests - will apply to MAGI individuals.
Special needs trusts - At least as they concern self-settled trusts, CMS considers that the current rules will apply to MAGI individuals. The letter is silent as to third party trusts.
Home equity limitations - As with other beneficiaries, MAGI individuals will only be able to exempt the first $543,000 to $810,000 of the value of the home. (Why CMS has arrived at this conclusion is unknown; it does not seem to be consistent with the "no asset test" stance of the new law.)
Post-eligibility income - CMS has determined that its regulations "as currently written" cannot be applied to MAGI individuals, but it is considering new regulations on this topic. It does believe that it has the authority to do so under the Medicaid statute.
For additional information:
- UC Berkeley's Labor Center's explanation of MAGI under the ACA (PDF)
- The eligibility levels publications at Medicaid.gov