A final 2024 letter from our Chief Executive Officer, Lydia McCoy.
Recent articles
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An interview with Dr. Virginia Eubanks, CAP 2024 keynote speaker
A letter from our CEO: November 2024
A letter from CCLP's CEO on the results of the 2024 elections.
CCLP Policy Forum: Tax credits & you recap
CCLP presented our fourth Policy Forum event discussing tax credits in Colorado.
Tax-code wrinkle could expand Medicaid eligibility
Over the past 20 years, Colorado Center on Law and Policy has challenged Colorado Medicaid on issues ranging from eligibility problems to undecipherable termination of benefits notices. While some of those interactions involved court action or legislation, most have been worked out more swiftly and amicably.
The latest example of cooperative action along these lines is a change that will ensure that the tens of thousands of households that have a working teen don’t lose Medicaid eligibility due to over-counting of income, or can qualify for larger premium tax credits.
Beginning January 2018 as a result of the 2017 tax reform bill, the individual tax filing threshold moved from $6,350 to $12,000 per year, meaning that those who make less than $12,000 are not in the class of people who are required to file on the basis of income. They may be required to file for other reasons, however. Why does this matter for applicants to Health First, Colorado’s Medicaid program, and for those who purchase individual plans through the state’s health insurance exchange, Connect for Health Colorado?
Eligibility for both programs is based on Modified Adjusted Gross Income, or MAGI, which only includes the income of dependents in certain, limited circumstances – specifically when the dependent’s earnings are high enough that they are required to file taxes. With the tax change, the earnings of tens of thousands of Colorado teenagers who work after school or during the summer should be excluded from household income unless the dependent’s earnings are at least $12,000. That makes sense, because kids should have the opportunity to get work experience and save money toward college or a first apartment, rather than having their income go to family health premiums. So, if your hard-working 16-year-old worked full-time all summer in 2018, plus half-time much of the school year, that roughly $11,000 in income should not add to household income and cause you to lose Medicaid eligibility or inappropriately reduce the level of tax credits received. Unfortunately, the higher income threshold was not implemented earlier in the year by Health First.
Changes to Colorado Medicaid’s eligibility system require significant time and effort, and CCLP’s initial request for prompt implementation was not met with a reassuring response. It was particularly important to get that change done in time for Open Enrollment, by Nov. 1, because Connect for Health Colorado would be using the new, higher threshold, and any misalignment between their system and Medicaid’s could be disastrous for families stuck in the middle – found to be too low-income for tax credits, and incorrectly found to be too high-income for Medicaid.
CCLP’s Claire Sheridan analyzed Colorado households with working dependents who earned income higher than the old threshold but below the new one, finding that a full third of those households were under 200 percent of the federal poverty line and potentially Medicaid-eligible. We looked at all households in the range of Medicaid and tax-credit eligibility — up to 400 percent of the federal poverty level (FPL). Some of those with higher incomes would have access to coverage through an employer, but we estimate that between 140,000 and 170,000 Coloradans would see countable income shrink, with 75,000 to 90,000 of those family members under 200 FPL.
The very good news is that CCLP’s advocacy, both regarding the Department’s legal obligations and the impact on Coloradans, helped spur Health Care Policy and Financing, Colorado’s Medicaid agency, to make the change in time for open enrollment, and align with Connect for Health. This will make all the difference to a lot of hard-working families.
Some examples:
- A family of four where the parents make $2,500 a month and the child earns $600 on average per month would have lost eligibility for Health First Colorado with the old threshold. With the new threshold in place, the child could put in extra time in the summer and not jeopardize her family’s eligibility, as long as earnings remained below $12,000.
- A mother who makes $2000 a month and has two teenagers, both of whom work part-time after school, can get healthcare through Health First Colorado as long as each makes less than $12,000.
- And at the other end of the scale, the family of four with $90,000 in parental income and two working teens could retain eligibility for tax credits through Connect for Health.
Though the 2017 tax bill may have primarily helped higher-income earners, one pleasant surprise for working families is that dependent teens can earn more without that affecting a family’s ability to get comprehensive health coverage. Due to Colorado Medicaid’s planned action, that benefit will be in place very soon.
-By Bethany Pray