TN 30 (02-23)

HI 03020.055 Income Limits for Subsidy Eligibility

A. Background of income limits for subsidy eligibility

To be eligible for the subsidy, an individual or couple must have countable income below certain limits prescribed by the law. We base these income eligibility limits on the Federal Poverty Levels (FPL) issued annually by the Department of Health and Human Services (HHS). For the current FPLs, see HI 03001.020C.3.

B. Policy for use of federal poverty levels

1. General description of poverty levels

The FPL is derived from the Federal Poverty Guidelines published in the Federal Register each year by HHS and are used to determine financial eligibility for certain federal programs. The poverty levels are the same regardless of the age of the family members.

2. Separate levels for Alaska and Hawaii

One set of poverty levels apply to the 48 contiguous States and the District of Columbia. Alaska and Hawaii have separate and slightly higher poverty levels. When an individual applies for subsidy, we apply the FPL that corresponds to the individual’s State of residence, in the month they file the application. We program the system to compute eligibility using the correct poverty levels for the applicable State of residence. Moving to a State that has a higher or lower FPL is not a subsidy-changing event (unless one of the events also occurred as in Processing Reports of Change and Subsidy Changing Events (SCEs) HI 03050.005). Therefore, the system will not schedule an immediate redetermination when a person reports they moved.

C. The effect of family size on income limits

1. Family size

HHS bases the FPL dollar amounts on the size of the individual’s family. The dollar amount increases as the family size increases. For purposes of determining eligibility for subsidy, family size is determined as follows:

  • the individual who is applying for the subsidy,

  • the spouse who is living in the household, and

  • any relatives who are living with the individual, and who are dependent on the individual or the individual’s spouse for at least one-half of their financial support.

2. Individual lives alone or does not provide support to relatives

If the individual who is filing for a subsidy lives alone, we base the income eligibility limit on the poverty guideline for a one-person family. If the individual lives with others, but is not married and does not provide one-half support for a relative living in the household, we base the income eligibility limit on the poverty guideline for a one-person family.

a. Example 1: Individual lives with other relatives

Margaret, who is a widow, files for a subsidy and lives with her two aged siblings who are also filing for a subsidy. Margaret does not provide the siblings with any financial support. Therefore, consider Margaret a one-person family when determining subsidy.

b. Example 2: Individual lives with non-relatives

John is filing for a subsidy. John lives with two other people who are not relatives and states that he provides one-half support to one of the persons who live in the house. Consider John a one-person family for subsidy determination purposes because John does not provide one-half support to any relatives who live in the house. If John supported a household relative, the family size would be two for subsidy determination purposes.

3. Married couple

If the individual filing for a subsidy lives only with their spouse, base the income eligibility limit on the poverty level for a two-person family. This is true whether only the individual files, or both spouses file for subsidy.

EXAMPLE: Rebecca and Rick Johnson are married and live together. Nobody else lives with them. Rick, age 67, applies for the subsidy. Rebecca is not old enough for Medicare and is not applying. For purposes of determining subsidy, the family size is two.

4. Other household members

If the subsidy applicant lives with a relative and provides that relative with at least one-half support, count the relative as a member of the family for purposes of determining the applicable poverty level. (We do not consider the relative’s income and resources in determining the subsidy.)

a. Example 1: Individual lives with relatives

Romaine and Phillip are married and live together. Phillip applies for the subsidy. Romaine is not old enough for Medicare and is not applying for the subsidy. At the time Phillip files for subsidy, Phillip and Romaine provide at least one-half support for their grandchild who lives with them. For determining subsidy, the family size is three.

b. Example 2: Individual lives with non-relatives

Jimmy and Doris are married and live together. Jimmy applies for the subsidy. Doris is not old enough for Medicare and is not applying for the subsidy. At the time Jimmy files for subsidy, Jimmy and Doris provide at least one-half support for a friend who lives with them. For determining subsidy, the family size is two.

5. Determining one-half support

a. Applicant indicates how many relatives get support

The subsidy application asks how many relatives live with the individual (and spouse) for whom the individual (or spouse) provide one-half of their financial support. Accept, absent evidence to the contrary, the individual’s allegation that they are providing one-half support for relatives and accept the allegation of the number of relatives living with them.

b. Applicant is unable to provide number of relatives who get support

If the applicant is unable to state the number of relatives getting one-half support, ask the applicant to check the number of dependents claimed on their federal tax return as a way to help the applicant provide the correct number. The tax return is always for a previous year; so if the individual uses a tax return to determine the number of relatives getting one-half support, you must ascertain whether the same number of relatives is currently getting one-half support from the applicant.

c. Applicant is unsure if they provides one-half support

If the applicant is reluctant to make an allegation because they do not know whether they provide one-half support, ask for estimates of the relative’s food and shelter expenses, and the applicant’s contribution to the support of the living-with relative. If the applicant’s estimated contributions are more than one-half of the living-with relative’s estimated expenses, determine that the applicant is supporting the living-with relative, and include the living-with relative in the applicant’s family unit to determine the FPL for subsidy purposes.

d. Applicant is unwilling to provide number of relatives who get support

If an applicant refuses to state the number of relatives living with him or her or refuses to provide information about one-half support, explain that we need the information to determine their eligibility for a subsidy and their subsidy amount. Explain that without the information, they may receive less of a subsidy or no subsidy. If the applicant still refuses to provide the information, assume that the applicant lives in a one-person family to determine the FPL.

D. Policy for income limits for subsidy eligibility

The income limits for subsidy eligibility are determined based on a percentage of the FPL.

1. Full subsidy

To be eligible for a full (100%) premium subsidy, the individual must have countable income less than, or equal to 135% of the FPL for the applicable State and family size.

NOTE: If the individual’s income is less than or equal to 135% of the FPL, they are eligible for a full premium subsidy, regardless of whether the individual’s countable resources are under the lower limit ($9,090 or less) or the higher limit ($15,160 or less). Although eligible for a full premium subsidy, the individual gets less help with deductibles and co-pays, if their countable resources are over the $9,090 limit but under the $15,160 limit. (For details on full and partial subsidies, see HI 03001.005G.)

2. Partial subsidy

The individual may be eligible for a partial premium subsidy if their income is greater than 135% of the FPL, but is less than 150% of the FPL.

NOTE: If the individual’s income falls within this range, they are eligible for a partial premium subsidy whether the countable resources are $9,090 or less, or they are $15,160 or less. If the individual’s countable resources exceed $15,160, they ares not eligible for any premium subsidy.

3. No subsidy

An applicant is ineligible for any subsidy if their countable income is 150% or more of the FPL for the applicable State and family size.

4. Table: Income limits for subsidy eligibility

Countable Income

Premium Subsidy

Less than or equal to 135% of FPL and countable resources are less than or equal $9,090 for an individual ($13,630/couple)

100%

Less than or equal to 135% of FPL and countable resources exceed $9,090 for an individual ($13,630/couple) but do not exceed $15,160 for an individual ($30,240 couple)

100% premium subsidy (but less help with co-pays and deductibles)

Greater than 135% FPL, but not more than 140%

75%

Greater than 140% FPL, but not more than 145%

50%

Greater than 145% FPL, but less than 150%

25%

150% or more

None

E. Examples of income limits for subsidy eligibility

The following examples illustrate how the income limits are determined for subsidy eligibility.

1. Example 1: Individual

Jeremy lives alone and applies for the subsidy. He receives $1,155 per month in Social Security benefits before the Medicare Part B premium deduction and a private pension of $450 per month before taxes. Assume that his countable resources are below the limit. Jeremy's countable income is:

Income Type

Income Calculation

Social Security

$13,860 (12 x $1,155)

Private pension

+$5,400   (12 x $450)

 

$19,260

- $240  (12 x the $20 general income exclusion)

 

Total Countable Unearned Income = $19,020

Assume that the applicable FPL for a one-person family is $14,580. (We used the 2023 FPL rates for this example. For the current FPL rates, see HI 03001.020C.3.). We determine the subsidy income limits as follows:

$14,580 x 135% = $19,683

$14,580 x 140% = $20,412

$14,580 x 145% = $21,141

$14,580 x 150% = $21,870

Analysis: Jeremy’s countable income is greater than 135% of the poverty guideline, but it is less than 140% of the poverty guideline. Therefore, Jeremy is eligible for a 75% premium subsidy. Assuming Jeremy’s Part D premium is $35 per month, his subsidy covers $26.25 (75%) of his monthly premium. Jeremy is required to pay $8.75 per month for the 25% of the premium not covered by the subsidy, assuming there are no late enrollment fees.

2. Example 2: Married couple

Billy and Norma are married and living together, and live in Kansas. Billy is age 70, receives Title II benefits of $1,308 and a private pension of $450 per month. Billy enrolls in Part D Medicare and applies for the premium subsidy. Norma is not old enough for Medicare and is still working. Norma expects annual gross earnings of $14,011. Assume their resources are within the limits for eligibility.

Income Type

Income Calculation

Billy’s Social Security

$15,696 (12 x $1,308)

Norma’s Pension

+$5,400 (12 x $450)

 

$21,096

 

- $240  (12 x the $20 exclusion)

 

Countable Unearned Income = $20,856

Income Type

Income Calculation

Norma’s Wages

$14,011

 

-$780  (12 x the $65 exclusion)

 

$13,231

 

$13,231 X .5 = $6,615.50 (one-half exclusion)

 

Countable Earned Income $6,615.50

 

Countable Unearned Income + $20,856

 

Total Countable Income = $27,471.50

Assume that the FPL for a two-person family is $19,720. (We used the 2023 FPL rates for this example. For the current FPL rates, see HI 03001.020C.3.). We determine the subsidy income limits as follows:

$19,720 x 135% = $26,622

$19,720 x 140% = $27,608

$19,720 x 145% = $28,594

$19,720 x 150% = $29,580

Analysis: The couple’s countable income ($27,471.50) is greater than 135% of the FPL and less than 140%. Therefore, Billy is eligible for a 75% subsidy.


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HI 03020.055 - Income Limits for Subsidy Eligibility - 02/07/2023
Batch run: 02/07/2023
Rev:02/07/2023