MEMORANDUM

DISCUSSION:

The purpose of this memorandum is to introduce new sections in the MO HealthNet manual relating to household composition under the Affordable Care Act (ACA) Modified Adjusted Gross Income (MAGI) standards. MAGI is a methodology for how income is counted and family size is determined for Family MO HealthNet eligibility based on federal income tax filing rules.

The household determination is based on the individual's:

• Intent to file a federal income tax return for the year coverage is requested,
• Expectation to be claimed as a tax dependent on a federal income tax return for the year coverage is requested,
• Intent to not file a federal income tax return or to be included in a non-tax filing household for the year coverage is requested.

Tax filer rules apply if the household intends to file a federal income tax return for the year coverage is requested; even when they are not required to file and regardless of whether the tax return is actually filed. Non-filer rules apply when the individual does not plan to file a federal income tax return and does not expect to be claimed as a tax dependent on a federal income tax return for the year coverage is requested. Tax dependents are normally part of the tax-filer's household with some exceptions.

Income of all of the household members forms the basis for establishing an individual's MO HealthNet eligibility. Income of a child will not count if the child is not required to file a tax return.

For tax filing households, the tax filer and individuals to be claimed as dependents on a taxpayer's federal income tax return are included when determining household size, (with some exceptions). This includes:

• Parents
• Stepparents (treated the same as parents),
• Children and siblings including step-children, and
• Children over age 19 (when claimed as dependents).

Apply non-tax filer rules when determining the household for an individual, if the individual is expected to be claimed as a tax dependent and meets any of the following exceptions.

Exceptions:

• The individual expects to be claimed as a tax dependent of someone other than a spouse or a biological, adopted or stepparent.
• The individual is a child under age 19 living with both parents, but will only be claimed as a tax dependent by one.
• The individual is a child under age 19 who expects to be claimed by a non-custodial parent.

Household composition based on non-tax filer rules continues to include the family members who live with the individual. Non-tax filer households include the following:

• The individual requesting coverage;
• The spouse of the individual requesting coverage;
• Children and step-children of the individual requesting coverage; and
• For individuals who are children:
  • The individual's parents, and
  • Any siblings and step-siblings, who are dependent children (children under the age of 19.)

  EXAMPLE:  Mary is a working grandmother who claims her daughter, Samantha, age 20, a full-time student, and granddaughter, Joy, age two, as tax dependents on her federal income tax return.

  Tax-filer rules apply for Samantha because she is a child over age 19 who her mother, Mary, claims as a dependent. The MO HealthNet household for Samantha consists of Samantha, Mary, and Joy.

  The MO HealthNet household for Joy consists of Joy and Samantha. Joy meets an exception to tax filer rules as someone other than her spouse or parent claims her as a dependent.

NECESSARY ACTION:

• Review this memorandum with appropriate staff.

AC/gc