TN 20 (04-13)
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 that he or she files 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 he or she has 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
Mrs. Jones, who is a widow, files for a subsidy. She lives with her two aged sisters who are also filing for a subsidy. Mrs. Jones does not provide the sisters with any financial support. Therefore, consider Mrs. Jones a one-person family when determining subsidy.
b. Example 2: Individual lives with non-relatives
Mr. Holdenbrook is filing for a subsidy. He lives with two other people who are not relatives. He states that he provides one-half support to one of the persons who live in the house. Consider Mr. Holdenbrook as a one-person family for subsidy determination purposes because he does not provide one-half support to any relatives living with him. If Mr. Holdenbrook supported a relative living with him, the family size would be two for subsidy determination purposes.
3. Married couple
If the individual filing for a subsidy lives only with his or her 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: Mr. and Mrs. Johnson are married and live together. Nobody else lives with them. Mr. Johnson, age 67, applies for the subsidy. Mrs. Johnson 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
Mr. and Mrs. Smith are married and live together. Mr. Smith applies for the subsidy. Mrs. Smith is not old enough for Medicare and is not applying for the subsidy. At the time Mr. Smith files for subsidy, he and Mrs. Smith provides at least one-half support for their grandson who lives with them. For determining subsidy, the family size is three.
b. Example 2: Individual lives with non-relatives
Mr. and Mrs. Smith are married and live together. Mr. Smith applies for the subsidy. Mrs. Smith is not old enough for Medicare and is not applying for the subsidy. At the time Mr. Smith files for subsidy, he and Mrs. Smith provides 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 he or she is providing one-half support for relatives and accept the allegation of the number of relatives living with him or her.
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 his or her 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 he or she provides one-half support
If the applicant is reluctant to make an allegation because he or she does not know whether he or she provides 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 his or her eligibility for a subsidy and his or her subsidy amount. Explain that without the information, he or she 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, he or she is eligible for a full premium subsidy, regardless of whether the individual’s countable resources are under the lower limit (($7,560 or less) or the higher limit ($12,600 or less). Although eligible for a full premium subsidy, the individual gets less help with deductibles and co-pays, if his or her countable resources are over the $7,560 limit but under the $12,600 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 his or her 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, he or she is eligible for a partial premium subsidy whether the countable resources are $7,560 or less, or they are $12,600 or less. If the individual’s countable resources exceed $12,600, he or she is not eligible for any premium subsidy.
3. No subsidy
An applicant is ineligible for any subsidy if his or her countable income is 150% or more of the FPL for the applicable State and family size.
4. Table: Income limits for subsidy eligibility
Less than or equal to 135% of FPL and countable resources are less than or equal $7,560 for an individual ($11,340/couple)
Less than or equal to 135% of FPL and countable resources exceed $7,560 for an individual ($11,340/couple) but do not exceed $12,600 for an individual ($25,150 couple)
100% premium subsidy (but less help with co-pays and deductibles)
Greater than 135% FPL, but not more than 140%
Greater than 140% FPL, but not more than 145%
Greater than 145% FPL, but less than 150%
150% or more
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
Mr. Smith lives alone and applies for the subsidy. He receives $1012 per month in Social Security benefits before the Medicare Part B premium deduction and a private pension of $375 per month before taxes. Assume that his countable resources are below the limit. His countable income is:
$12,144 (12 x $1012)
+$4,500 (12 x $375)
-$240 (12 x the $20 general income exclusion)
Assume that the applicable FPL for a one-person family is $12,140. (We used the 2018 FPL rates for this example. For the current FPL rates, see HI 03001.020C.3.). We determine the subsidy income limits as follows:
$12,140 x 135% = $16,389.00
$12,140 x 140% = $16,996.00
$12,140 x 145% = $17,603.00
$12,140 x 150% = $18,210.00
Analysis: Mr. Smith’s countable income is greater than 135% of the poverty guideline, but it is less than 140% of the poverty guideline. Therefore, Mr. Smith is eligible for a 75% premium subsidy. Assuming that Mr. Smith’s Part D premium is $35 per month, his subsidy covers $26.25 (75%) of his monthly premium. He 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
John and Dorothy White are married and living together, and live in Kansas. Mr. White is age 70, receives Title II benefits of $963 and a private pension of $400 per month. He enrolls in Part D Medicare and applies for the premium subsidy. Mrs. White is not old enough for Medicare and is still working. She expects annual gross earnings of $13,230. Assume that the Whites’ resources are within the limits for eligibility.
Mr. White’s Social Security
$11556 (12 x $963)
Mr. White’s Pension
+$4,800 (12 x $400)
-$240 (12 x the $20 exclusion)
Countable Unearned Income
Mrs. White’s Wages
-$780 (12 x the $65 exclusion)
$12,450 X .5 = $6,225 (one-half exclusion)
Countable Earned Income
Countable Unearned Income
Total Countable Income
Assume that the FPL for a two-person family is $16,460. (We used the 2018 FPL rates for this example. For the current FPL rates, see HI 03001.020C.3.). We determine the subsidy income limits as follows:
$16,460 x 135% = $22,221.00
$16,460 x 140% = $23,044.00
$16,460 x 145% = $23,867.00
$16,460 x 150% = $24,690.00
Analysis: The couple’s countable income ($22,581) is greater than 135% of the FPL and less than 140%. Therefore, Mr. White is eligible for a 75% subsidy.