Many of Vermont’s low-income farmers, contractors and other sole proprietors who were previously ineligible for Medicaid benefits will find that they do qualify next year.
The formula the state uses to calculate these benefits is being replaced, and it’s just the tip of the iceberg for Vermont’s Medicaid reforms.
The state projects that in 2014, about 40,000 additional Vermonters will become eligible for Medicaid’s free or low-cost coverage. Of that amount, three quarters will shift from the state health insurance programs, Catamount and VHAP, which end Jan. 1.
“Anybody coming in from Catamount or Medicaid won’t pay a premium,” said Mark Larson, commissioner of Vermont Health Access. “They’ll have more expansive coverage, including things like a limited dental benefit and non-emergency transportation services.”
One of the other two major drivers of Medicaid growth is an increase in the eligibility level. Currently, only Vermonters earning up to the federal poverty level can qualify. For an individual, that’s an annual income of $11,490, and it’s $23,550 for a family of four.
In 2014, Vermonters earning up to 138 percent of the federal poverty level will be able to draw down Medicaid benefits. This is due to the Shumlin administration’s taking advantage of a section in the Affordable Care Act. On paper, the new threshold is 133 percent of the federal poverty level, but the state will allow for 5 percent wiggle room.
That means that an individual earning up to about $15,800 and a family of four earning up to $32,500 should be eligible for Medicaid in 2014.
The other major cause for the increase is that the Affordable Care Act makes the state use a line from the U.S. tax return to evaluate income eligibility. Rather than using a series of complicated calculations, Vermont will use the modified adjusted gross income of residents to determine their Medicaid eligibility.
Trinka Kerr, Vermont’s Health Care Ombudsman, says her office has worked for years with dairy farmers earning less than the federal poverty level, who were denied Medicaid benefits because they owned large assets.
“That often meant they went uninsured,” she said.
Modified adjusted gross income allows for deductions such as tuition, student loan interest and certain self-employment expenses.
Peter Sterling is the director of Vermont Campaign for Health Care Security and an advocate for universal health care coverage. He says that sole proprietors will benefit from this measurement because it doesn’t penalize them for their assets, and it allows them to account for the depreciation of their assets.
“That is a huge deal for a plumber, or a carpenter, a farmer, people in the trades. It’s a big, big deal,” he said. “Their adjusted gross income looks a lot bigger on paper than their modified adjusted gross income. Modified adjusted gross income more accurately reflects what your typical self-employed person in the trades is actually bringing home.”
Medicaid will also expand to another key population: adults without children.
“Right now, if you are an adult, you would not even be eligible for Medicaid unless you had children, were disabled or were elderly,” Kerr said.
She also notes that the change in calculation for the state’s primary Medicaid program would not affect two subsets of the program.
“This change does not apply to long-term care Medicaid or the Medicaid for the disabled that exist now,” she said. “They have their own income rules; they don’t use this new modified adjusted gross income stuff.”