Magical MAGI: Defining Who Gets ObamaCare Subsidies
A person who buys an ObamaCare health insurance policy can get a tax credit (subsidy) if his household’s Modified Adjusted Gross Income (MAGI) puts him below 400 percent of the Federal Poverty Level (FPL).
But what is a household?
It isn’t easy figuring out those magical MAGI groups when ObamaCare premium subsidies depend on family size and the definition of a family is, shall we say, rather flexible. As the Wisconsin training handout puts it, “the new MAGI methodology introduces tax relationships into the way we build BC+ [BadgerCare Plus] household composition. Under MAGI, household composition is formed using either ‘tax rules’ or ‘relationship rules.’ The use of tax rules versus relationship rules is based on whether or not the individual for whom the assistance group is being formed intends to file taxes or is a tax dependent.”
The manual goes on to say that it is important to remember that because Assistance Groups are person specific, “the household composition for each Assistance Group must be examined one person at a time and each Assistance Group is formed around a target (the individual who is requesting assistance). The target’s assistance group is formed based on that target’s age, marital status, tax filing status, tax relationships and/or family relationships.”
If you have a “target” living in a spare room or basement, here’s a flowchart that might come in handy:
We’ve always said that this convoluted formula virtually guarantees everyone will get the wrong subsidy. The only question is: will the subsidy be close enough to avoid claw back?
With as elaborate as the methodology is in determining the correct subsidy, I wouldn’t expect accuracy at all. And with inaccurate subsidies being issued, there will either be a backlash from the government issuing too much, or from enrollees being issued too little.
Very true. This flowchart, like every other aspect of the ACA, is purposely convoluted in order to 1) increase the number of people receiving subsidies, 2) make it tougher for policy evaluators to keep track of expenditures, and 3) create possibly perverse incentives in order for people to qualify for subsidies. As the NCPA has already written about, all of those have already happened.
http://healthblog.ncpathinktank.org/obamacare-subsidies-wrong-for-more-than-one-in-eight-obamacare-beneficiaries/
They will also continue to happen. Convoluted policies are how the government keeps the power away from consumers.
“…each Assistance Group is formed around a target (the individual who is requesting assistance).”
I find it strange that the person requesting assistance isn’t a potential recipient or enrollee, but a “target.” It takes away the human element.
Taking away the human element is the only way that the government can consciously mandate the purchase of ObamaCare insurance.
It’s crazy how the term “household” is suddenly so ambiguous. Just my opinion.
These comments are based on ignorance. The year-old manual referred to in the article is for Wisconsin’s *Medicaid* program in dealing with low-income folks referred by the Exchanges because they *aren’t eligible* for the Obamacare subsidies. There are a lot of problems with measuring family income in connection with the subsidies, but this isn’t particularly relevant to them.
Please get your facts straight before you comment. Remember, “You have the right to remain silent.” Use it!