What Happens If My Income Increases While On Medicaid?
Medicaid is a need-based benefit, so you may no longer be eligible for the program if your income increases. Fortunately, other sources of coverage are available, such as health insurance plans from the ACA Marketplace.
It’s important to report changes to Medicaid as soon as possible, even if you think you’ll lose eligibility for Medicaid. States run periodic checks to ensure beneficiaries still meet the program’s eligibility criteria, and people found ineligible may face penalties.
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What Are the Eligibility Criteria for Medicaid?
Medicaid is a U.S. government program that provides free or low-cost health coverage to specific groups of low-income Americans, including families, pregnant women, older adults, and people with disabilities. Each state administers its own Medicaid program, so eligibility criteria vary from state to state.
For most groups, financial eligibility is based on Modified Adjusted Gross Income (MAGI). It’s your Adjusted Gross Income plus a few other income sources, such as non-taxable Social Security benefits and untaxed foreign income. For other groups, eligibility is based on Supplemental Security Income criteria. Contact Medicaid for details.
What Is Medicaid Expansion?
States can expand their Medicaid programs to cover nearly all adults under age 65 with household incomes below 133% of the Federal Poverty Level. As of 2023, 40 states and Washington D.C. have chosen to adopt the Medicaid expansion.
Children’s Medicaid and CHIP Criteria
Children’s Medicaid provides health coverage to children in low-income families. The Children’s Health Insurance Program (CHIP) is for children in families who cannot afford health insurance but earn too much for Medicaid. For both programs, eligibility criteria vary from state to state.
Why Report Income Changes to Medicaid?
State Medicaid offices require beneficiaries to report income changes as soon as possible. Some examples of changes that need to be reported include pay raises or pay cuts, switching jobs or getting a second job, and changes in the number of hours worked per week. Reporting income changes to Medicaid helps you:
- Get the right amount of assistance: States may charge copayments, coinsurance, and deductibles that vary based on income. People with Medicaid may lower their care costs by reporting an income decrease.
- Have the right health insurance coverage: Income is a critical factor in Medicaid eligibility. Reporting changes to Medicaid helps beneficiaries find out if they’re still eligible or if they need to look for other options.
- Avoid paying penalties: Reporting income changes to Medicaid helps protect beneficiaries from fines, repayment penalties, or other punishments.
Consequences of Not Reporting Income Changes
There are potential consequences of not reporting changes to Medicaid. If you do not notify Medicaid of an income increase, you could:
- Lose your Medicaid coverage: States have processes to ensure beneficiaries are still eligible for Medicaid. Even if you do not report income increases, the state can determine and end your coverage.
- Have to repay benefits: People who receive benefits they’re not entitled to may be expected to pay back the overpayment.
- Face criminal penalties: Under-reporting income to continue receiving Medicaid may seem harmless, but it’s a crime that can result in fines or even jail time.
How to Report Income Changes to Medicaid
If your household income recently changed, it’s essential to notify Medicaid. Follow this step-by-step guide to report changes to Medicaid.
1. Gather Necessary Documentation
When you report changes to Medicaid, you may be asked to prove your income increased or decreased. Be ready to provide documentation such as recent pay stubs or an employer statement.
2. Report the Change Online, by Mail, by Phone, or in Person
Contact your state Medicaid agency to update your income. Methods of reporting changes to Medicaid include online, by phone, mail, or in person at a local Medicaid office. Some states also allow beneficiaries to provide updates via email.
3. Await Decision on Medicaid Eligibility After the Change
After receiving updated income information from beneficiaries, Medicaid re-determines eligibility. Medicaid’s decisions may include recalculating spend down amounts, reducing benefits, or ending coverage. You will receive a letter in the mail with Medicaid’s decision.
4. Take Advantage of a Special Enrollment Period if You Are No Longer Eligible for Medicaid
People who lose eligibility for Medicaid are allowed to apply for a Marketplace plan outside of the standard enrollment period. You can apply during the 60 days before your Medicaid coverage ends. From Mar. 31, 2023, to Jul. 31, 2024, applying anytime after losing Medicaid coverage is possible.
5. How to Appeal Medicaid Eligibility Decisions
Medicaid beneficiaries can appeal eligibility decisions they disagree with. To request a hearing, complete your state’s appeals request form. Gather evidence supporting your case, and consider consulting a Medicaid lawyer.
Putting It All Together
Medicaid is a program that provides free or reduced price healthcare to individuals with low income. Therefore, when your income changes, you may no longer be eligible for coverage. Ensure you notify your state Medicaid agency of any income increases or decreases as soon as possible to ensure you receive the right amount of assistance.
Income is not the only change that can affect your Medicaid coverage. If you have changes in medical expenses, or if your mailing address or marital status changes, remember to update Medicaid right away.