Family MO HealthNet (MAGI) Manual

1805.030.20.20.05 Calculation of the Five Percent Disregard

IM-#178, December 23, 2020, IM-#26, March 30, 2020, IM#48, March 20, 2019,  IM#27, March 30, 2018IM#127, October 10, 2017,  IM#108, August 08, 2017IM#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)
  • MO HealthNet for Kids (MHK)
  • MO HealthNet for Pregnant Women (MPW)
  • Uninsured Women’s Health Services (UWHS)
  • MO HealthNet for Families – Adult category only

MO HealthNet for Families (MHF) eligibility is not based upon a percentage of federal poverty level. The income standard for MHF is a dollar amount based upon the July 16, 1996 Aid to Families with Dependent Children (AFDC) standard converted to a MAGI based standard. To determine the five percent income disregard for MHF, 5% of 100% of the FPL is added to the MHF income standard.

The resulting figure is always rounded up to the benefit of the participant.

EXAMPLES:

The following examples contain income maximums from 4/1/2019-3/31/2020.  Always refer to MAGI Appendix A for current income maximums effective 04/01/2020 and ongoing.  

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 earns $30.00 per hour working 40 hours per week or $5199.60 per month ($30.00 x 40= $1,200.00 x 4.333).

Mr. Jones’ income

$5,199.60 per month

CHIP 75 income maximum (300% FPL)

$5,195 per month

In this example it appears the children are not eligible for any coverage as the household income is above $5,195.00 (300%) per month. 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 know that 100% of the annual federal poverty level for a household of three is $21,330.00.

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 $21,330.00 X 305% which equals $65,056.50. This is the annual figure for 305% FPL;
  • Divide $65,056.50 by 12 which equals = $5,421.37. This is the monthly figure for 305% of FPL;
  • If needed, round up the monthly figure. In this instance, the monthly figure of $5,421.37 would be rounded up to $5422. This is the CHIP 75 income standard including the 5% disregard for this household size.

Since Mr. Jones’s income of $5,199.60 per month is below $5,5422.00 (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 earns $3,300 per month.

Mr. Brown’s income

$3,300 per month

CHIP 71 or 72 income maximum (150% FPL/non-premium)

$3,219 per month

CHIP 73 income maximum (185% FPL/premium)

$3,970 per month

(CHIP 71 is for children ages 1-5; CHIP 72 is for children ages 6-18)

In this example it appears the children are not eligible for a non-premium level of care as the income maximum for non-premium CHIP coverage is $3,219.00 per month. However, Mr. Brown’s income is barely above the limit for non-premium CHIP 71 or 72 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 know that 100% of the annual federal poverty level for a household of four is $25,750.00.

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

  • 5% of FPL is added to the 150% CHIP standard (5% + 150% = 155%);
  • Multiply $25,750 X 155% which equals $39,912.50. This is the annual figure for 155% of FPL;
  • Divide $39,912.50 by 12 which equals = $3,326.04 per month. This is the monthly figure for 155% of FPL;
  • Round up $3,326.04to $3327.00. This is the CHIP 71 or 72 income standard including the 5% disregard for this household size.

Since Mr. Brown’s income of $3,300 per month is below $3,327 (155% of FPL) his children are eligible for CHIP 72 level of care (all over the age of six) and he will not need to pay a premium.

EXAMPLE 3: Mrs. Smith is applying for MO HealthNet for Families (MHF) for herself and her six children. Mrs. Smith does not file taxes. Mrs. Smith’s household composition is herself and her six children. Her income is $519 per month.

Mrs. Smith’s income

$519 per month

MHF income maximum

$490 per month

MHK POV income maximum (above MHF/up to 148%)

$4,812 per month

In this example it appears Mrs. Smith and her children are not eligible for MHF coverage as the income maximum for MHF is $490 per month. However, Mrs. Smith’s income is barely above the limit for MHF 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 know that 100% of the annual federal poverty level for a household of seven is $39,010.00.

To determine the MHF income level including the 5% disregard:

  • 5% of 100% FPL is added to the MHF maximum of $490;
  • Multiply $39,010.00 X 5% which equals $1905.50. This is the annual figure for 5% of FPL;
  • Divide $1905.50 by 12 which equals = $162.54 per month. This is the monthly figure for 5% of FPL;
  • Round up $162.54 to $163.00.
  • Add the $163 to the $490 maximum. $653 is the MHF income standard including the 5% disregard for this household size.

Since Mrs. Smith’s income of $519.00 per month is below $653.00 (MHF standard plus 5% of FPL) she is eligible for MHF level of care; however, since the 5% is only added for MHF Adult and not MHF Child, the children remain eligible for MHK.