Oct 11, 2018

Bethany Pray serves as CCLP's Chief Legal and Policy Officer. Her areas of expertise include regulatory analysis and advocacy for Medicaid and commercial coverage, access to behavioral health benefits, Medicaid eligibility and much more.Staff page ›

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Tax-code wrinkle could expand Medicaid eligibility

by | Oct 11, 2018

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

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HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.