1805.030.20 Income, Deductions, and the Five Percent (5%) Disregard

1805.030.20.20.05 Calculation of the Five Percent Disregard

IM-36 March 30, 2022; IM-178 December 23, 2020; IM-26 March 30, 2020; IM-48 March 20, 2019; IM-27 March 30, 2018; IM-127 October 10, 2017; IM-108 August 08, 2017; IM-36 April 24, 2017; IM-25 May 5, 2016; IM-97 November 9, 2015

The income disregard equals five percent (5%) of the Federal Poverty Level (FPL) for the household size. The five percent (5%) disregard is added to the income standard for the program based on household size, when an individual would be determined eligible if the FPL income standard was five percent (5%) higher. This disregard applies to the following programs:

  • Children’s Health Insurance Program (CHIP) at 300% of FPL
  • MO HealthNet for Kids (MHK) at 148% of FPL
  • MO HealthNet for Pregnant Women (MPW) at 196% of FPL
  • Show Me Healthy Babies (SMHB) at 300% of FPL
  • Uninsured Women’s Health Services (UWHS) at 201% of FPL
  • Adult Expansion Group (AEG) at 133% of FPL

EXAMPLES:

Always refer to MAGI Appendix A for current monthly income maximums with the 5% Disregard included in the income threshold.  

EXAMPLE 1: Mr. Jones is applying for CHIP on behalf of his two children. He files taxes and claims both children as dependents. The household composition for each child is the same as the tax filer’s, and consists of Mr. Jones, Child 1, and Child 2. Mr. Jones is employed and has income that is 301% of FPL for a household size of three.

In this example, it appears the children are not eligible for any coverage as the household income is above 300% of FPL for their household size. However, Mr. Jones’s income is barely above the limit for CHIP coverage, so the 5% disregard may make a difference in the level of care.

In order to calculate the 5% disregard you will need to determine that 100% of the annual federal poverty level for a household of three by using Appendix D to locate 100% of FPL for the household size and multiply by 12.

To determine the CHIP 75 income level including the 5% disregard:

  • 5% of FPL is added to the 300% CHIP standard (5% + 300% = 305%)
  • Multiply the 100% FPL annual income standard for the household size by 305% which equals the new annual income threshold (threshold plus 5%)
    • Use Appendix D to locate 100% of FPL for the household size and multiply by 12
  • Divide the new annual income threshold by 12 which equals (=) the monthly limit with the 5% for 305% of FPL
  • Round up for the final income threshold standard that includes the 5%
  • Compare household income to the new income threshold standard that includes the 5%

Since Mr. Jones’s income is at 301% of FPL but below 305% of FPL, his children are eligible for CHIP 75 level of care. He will have a premium to pay.

EXAMPLE 2: Mr. Brown is applying for MO HealthNet for Kids (MHK) for his three children all over the age of six. Mr. Brown files taxes and claims the three children as dependents. The household composition for each child is the same as the tax filer, and consists of Mr. Brown, Child 1, Child 2, and Child 3. Mr. Brown is employed and her earnings are at 152% of FPL for her household size of four.

In this example, it appears the children are not eligible for MO HealthNet for Kids (MHK) as the income threshold is 148% of FPL. However, Mr. Brown’s income is barely above the limit for MHK coverage, so the 5% disregard may make a difference in the level of care.

In order to calculate the 5% disregard, you will need to determine that 100% of the annual federal poverty level for a household of four by using Appendix D to locate 100% of FPL for the household size and multiply by 12.

To determine the CHIP 71 or 72 income level including the 5% disregard:

  • 5% of FPL is added to the 148% MHK standard (5% + 148% = 153%)
  • Multiply the 100% of FPL annual income standard for the household size by 153% which equals the new annual income threshold (threshold plus 5%)
    • Use Appendix D to locate the 100% of FPL for the household size and multiply by 12
  • Divide the new annual income threshold by 12 which equals (=) the monthly limit with the 5% for 153% of FPL
  • Round up for the final income threshold standard that includes the 5%
  • Compare household income to the new income threshold standard that includes the 5%

Since Mr. Brown’s income is below the income threshold of 153% of FPL for his household size, his children are eligible for MHK.

EXAMPLE 3: Mrs. Smith is applying for MO HealthNet for herself and her six children. Mrs. Smith plans to file taxes and her household composition consists of herself and her six children. Mrs. Smith has earned income, which equals 135% of FPL for her household size of seven.

In order to calculate the 5% disregard you will need to determine that 100% of the annual federal poverty level for a household of seven by using Appendix D to locate 100% of FPL for the household size and multiply by 12.

  • 5% of FPL is added to the 133% AEG standard (5% + 133% = 138%)
  • Multiply the 100% of FPL annual income standard for the household size by 138% which equals the new annual income threshold (threshold plus 5%)
    • Use Appendix D to locate the 100% of FPL for the household size and multiply by 12
  • Divide the new annual income threshold by 12 which equals (=) the monthly limit with the 5% for 138% of FPL
  • Round up for the final income threshold standard that includes the 5%
  • Compare household income to the new income threshold standard that includes the 5%

Since Mrs. Smith’s income is below the income threshold of 138% of FPL for her household size, Mrs. Smith is AEG eligible if all other eligibility factors are met.