Information About Household Income

To help streamline the application process for the citizen prior to having to enter income for the household, the application attempts to use income data from existing state and federal sources. If an applicant has filed taxes previously, the applicant is given an option to attest that the annual income available in the tax return is an accurate representation of his or her income for the coverage year as well; the applicant has the opportunity to enter a different annual income if the tax income is no longer representative of their current financial picture. If tax return information is not available (or if any of the below checks fail) then information on current income is retrieved from state systems and presented to the applicant. A number of conditions are executed as part of a check to determine if it is worthwhile to give an option for the applicant to attest to the IRS income. The check involves:

• running household composition rules to see whether there is more than one financial household within the overall household
• checking whether there are any American Indian/Alaska Native (AI/AN) individuals in the household
• checking whether the household income indicated by the tax returns is below the Medicaid/CHIP threshold for any of the applicants in the household

The application script for income loops through each member of the household to determine:

1. If tax return information is available, there is only one financial unit required and the estimated household income is above the Medicaid/CHIP income levels for all applicants, and there is no AI/AN individual, then the applicant is provided the option to confirm if the income for the coverage year is the same as that of the annual income on the tax return. To ensure compliance with Federal law, and to reduce the amount of identity proofing during the application process, the federal tax return income and title II benefits from SSA are not displayed. The 'expedited' income approach is still supported; an applicant can still confirm that the income for the upcoming coverage year is the same as that of the federal tax return income, but no income value is displayed. Note that tax return income and title II benefits continue to be used for verifications and determining eligibility.
2. If the applicant has tax return income but indicates the returned information is not accurate, or if they have no tax return income, then the current income service is polled to see if there are any records for the applicant. If there are, they are presented to the applicant and the applicant can remove them if desired, or add new income manually.
3. If neither the tax return page nor the current income page have been presented to the user, they will be asked whether they have any income and given a chance to add any if they do.
4. If the member has income other than what is on their tax return, they are asked whether they have any adjustments they need to make to it and given an option to provide the details.
5. If the member has income other than their tax return, they are presented with an estimated summary of their projected annual income for the following year, and given a chance to enter a new amount if they expect it to be something different

Next, the manual income capture step allows the applicant to enter wages and other income information for household members that has not been retrieved from tax return income, or from income via the current income service. The benefits of using these information sources means that these income records are verified. If an applicant modifies information that has been retrieved from other systems, or enters income manually, this may require verification by a case worker.

Tax return income is returned as a MAGI amount. If the income is entered manually it must be built up to a MAGI income total per individual. For each member, income is summed to a Gross Income (GI) total, and a page is displayed to capture a few allowable deductions to determine an Adjusted Gross Income (AGI) total for each member. The MAGI calculation involves adding in the tax-exempt income portions for interest, foreign earnings, and social security income. However, there are varying types of interest, some of which are entirely exempt from tax, such as municipal bonds, and some of which are taxable. As a result, the interest income type is captured as either taxable Interest or tax-exempt interest. Both are counted in the MAGI determination, but only the taxable interest type is counted initially in gross income calculations. The implementation for social security benefits and foreign earnings is unchanged. When either income type is entered, the system identifies how much of that amount is tax-exempt. Again, the tax exempt amount is excluded from the GI total but included in the MAGI total for an individual. These aren't listed as distinct income types (as they are for the interest type) as their tax-exempt portions are identified above a certain threshold for the same income type. This approach differs from the Centers for Medicare and Medicaid Services (CMS) model application which doesn't identify tax-exempt portions. A detailed breakdown of GI, AGI and MAGI is provided that is available on the program display rules for a case worker. This is also representative of how citizens report their income on their annual tax returns.

The MAGI income for an individual is what is used when adding up the household income which is necessary for eligibility determination for Insurance Assistance. However, for Medicaid/CHIP determinations, the rules must determine eligibility using a MAGI-based income total. Essentially there are a few income types that are counted as part of a MAGI income determination but are excluded as part of a MAGI-based income determination. Certain types of American Indian/Alaska Native income, and income from scholarships or awards that are used for education purposes are not counted in MAGI-based income. Similarly, lump sum income is only counted in the month it is received for MAGI-based income, otherwise it is not counted. It is important therefore that these income types are identified as part of the application process, for example, if an AI/AN individual has income derived from distributions or ownership interests, then this income is not counted in their eligibility determination for Medicaid.