On March 18, the Kaiser Family Foundation released a brief, examining income verification for Medicaid and the national health reform law’s insurance exchange subsidies.  Because Medicaid eligibility and the size of an individual’s health subsidy are income-dependent, the brief suggests that the timing of an income assessment has significant implications for individuals’ coverage and costs.  The brief concludes that, because changes in income can significantly affect coverage determinations, procedures should be put in place to monitor changes in individuals’ income over time, ensuring that they receive appropriate coverage or subsidies.

From the report: 

A major goal of the Affordable Care Act (ACA) is to significantly expand coverage and reduce the number of uninsured. Beginning in 2014, the ACA establishes a new continuum of coverage that will provide assistance to people with incomes up to 400% of the federal poverty level. Under this expansion, Medicaid eligibility will be expanded to a national floor of 138% of poverty and premium tax credits will be available to eligible individuals with incomes between 139% and 400% of poverty to purchase coverage through new Health Insurance Exchanges. The law standardizes the definition of income used to determine eligibility for Medicaid and the tax credits to Modified Adjusted Gross Income (MAGI). However, there are important distinctions related the timing of income used to determine eligibility. Under the ACA, individuals may claim advance payments of the premium tax credits based on income measured by the most recent tax return available, potentially updated with more current information. Eligibility for Medicaid, however, remains based on current income at the time of enrollment. This analysis examines how income for adults measured with a prior tax return compares with current income and the implications for enrollment processes under reform.

Full report: Determining Income for Adults Applying for Medicaid and Exchange Coverage Subsidies: How Income Measured With a Prior Tax Return Compares to Current Income at Enrollment (PDF | 575.48KB)

Kaiser Family Foundation.  (2011).  Determining income fore adults applying for Medicaid and exchange coverage subsidies: how income managed with a prior tax return compares to current income at enrollment.