Can You Lose Medicaid If You Make Too Much Money?

Yes, you can lose Medicaid eligibility if your income exceeds the program's established limits. Medicaid is a needs-based program designed to provide health coverage for low-income individuals and families, and as such, it has specific financial requirements that must be met to qualify and maintain coverage.

Understanding Medicaid Income Limits

Medicaid eligibility is primarily determined by your household income relative to the Federal Poverty Level (FPL). The exact income limits vary significantly based on several factors:

• State of Residence: Each state sets its own income thresholds. States that have expanded Medicaid under the Affordable Care Act (ACA) generally have higher income limits for adults (up to 138% of the FPL).
• Household Size: The larger your household, the higher the income limit typically is.
• Eligibility Group: Different income rules apply to various groups, such as:
  • Children
  • Pregnant individuals
  • Parents/caretaker relatives
  • Adults without dependent children (in expansion states)
  • Individuals who are aged, blind, or have a disability (ABD)

For most adults, children, and pregnant individuals, income is calculated using the Modified Adjusted Gross Income (MAGI) rules. This method considers taxable income and certain deductions to determine eligibility. For individuals who are aged, blind, or have a disability, different income and asset rules may apply, which can be more complex.

How Income Changes Affect Eligibility

Medicaid eligibility is not a one-time determination. States regularly review recipients' financial and household circumstances through a process called redetermination, which often occurs annually. If your income increases above your state's threshold for your specific eligibility group, you may become ineligible for continued coverage.

It's crucial to report any significant changes in your income, household size, or other relevant circumstances to your state Medicaid agency promptly. Failure to do so could lead to an overpayment that you might be required to pay back, or a lapse in coverage.

What Happens If Your Income Is Too High?

If your income rises above the Medicaid limit, you may face the prospect of losing your coverage. However, depending on your state and situation, you might have other options:

1. Potential Loss of Coverage

If your income consistently remains above the limit and no other options apply, your Medicaid benefits will likely be terminated. You will receive a notice from your state Medicaid agency informing you of the decision and your rights, including how to appeal.

2. The Medicaid Spend-Down Option

Some states offer a Medicaid spend-down program, also known as "Medically Needy" programs. This option allows individuals whose income is too high for regular Medicaid to become eligible by incurring medical expenses that effectively "spend down" their income to the state's eligibility limit.

Here's how it generally works:

• Your state determines a "medically needy income limit" (MNIL) and the amount of income you have over this limit.
• You are responsible for medical bills that equal this "excess income" amount (similar to a deductible).
• Once your out-of-pocket medical expenses reach that amount, Medicaid will cover eligible medical costs for the remainder of the spend-down period, which is often six months.

If your state Medicaid office informs you that your income is too high for standard Medicaid, it is important to ask them if a spend-down option is available. If a spend-down option exists, your state may require a separate application process. You should contact your local Medicaid office to inquire about the specific documents you will need and whether you can apply online or in person.

3. Exploring Other Health Coverage Options

If you lose Medicaid due to increased income and a spend-down option isn't available or suitable, you have other avenues for health insurance:

• ACA Health Insurance Marketplace: You may become eligible for tax credits (subsidies) on the Affordable Care Act (ACA) Health Insurance Marketplace to help reduce the cost of monthly premiums and out-of-pocket expenses. Losing Medicaid due to increased income is considered a qualifying life event, allowing you to enroll outside of the annual open enrollment period.
• Employer-Sponsored Health Plans: If you or a family member has access to health insurance through an employer, this may become a viable option.
• CHIP (Children's Health Insurance Program): If your children lose Medicaid but your income is still modest, they might qualify for CHIP in your state, which has higher income thresholds than Medicaid.

Key Factors Influencing Medicaid Eligibility