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In March, the Centers for Medicare and Medicaid Services (CMS) recently acknowledged, that due to a calculation error by the federal government, that approximately 40,000 families with a disabled or deceased parent may have received a lower subsidy than they should have received in order to purchase health coverage through the federal insurance marketplace.  However, CMS has not been clear if the issue existed when healthcare.gov was launched or appeared later when other changes to the system occurred.  Let us explain the reason for the miscalculation of insurance subsidies by the Federal Government.

Healthcare.gov, for the past few months, appears to have experienced issues in cases where children were receiving Social Security income, generally due to a parental disability or death.  This was primarily due to the fact that eligibility for subsidized marketplace coverage or Medicaid is factored per a household’s MAGI (modified adjusted gross income), which is typically the gross income, in addition to the tax-exempt Social Security benefits received, with any interest and foreign income.  MAGI is the methodology used by the Affordable Care Act to determine eligibility for Medicaid, the Children’s Health Program (CHIP), and coverage through the federal insurance marketplace.

The governmental error was the inclusion of Social Security income when it calculated the MAGI figure for a family.  The income of a child, though, should only be part of the calculation if the child was required to file a tax return.  A child, or other tax dependent, who only receives Social Security benefits would not be required to file a tax return.

The addition of the child’s Social Security income therefore inflated the family’s income, resulting in many households being incorrectly turned down for Medicaid coverage and others who received less in premium tax credits and cost-sharing subsidies for which they were eligible.

In order to correct the miscalculation, CMS will assist those affected households in submitting an appeal to the federal marketplace or applying through healthcare.gov or their particular state for a Medicaid determination.

Those families who believe they could be affected, according to CMS, have three options for initiating a review for eligibility determination:

1. Go to My Account in healthcare.gov and request a “full Medicaid determination;”

2. Submit an appeal to the Federally Facilitated Marketplace (FFM) – however, it is important to note that appeals must be filed within 90 days of the eligibility determination;

3. Apply directly at the state Medicaid or CHIP agency.

If a family believes they may have been affected by this error, they should immediately contact one of the aforementioned agencies to ensure they are enrolled in the right coverage and receiving the appropriate level of financial assistance for which they are eligible.

Keeping you informed are the trusted attorneys from Browning & Meyer Co., LPA. Please contact our law office with any questions about your estate planning needs.