Eligibility for ConnectorCare is based on an individual’s Modified Adjusted Gross Income (MAGI) for his or her tax household for the tax year in which he or she is enrolled in a ConnectorCare plan.  Eligibility for ConnectorCare and the amount of the Advance Premium Tax Credit is based on the applicants’ best estimate of their annual MAGI income for the tax year as they expect it to be shown on IRS Form 1040 when they file their return in the following year. 

What income is counted? The MAGI rules count all income that would be included in adjusted gross income (AGI) on the applicant’s federal tax return for the tax year. In addition the MAGI rules count three types of non-taxable income: Non-taxable social security income, tax exempt interest income and certain tax exempt foreign income. These amounts are shown on IRS Form 1040 and associated schedules as shown below:

• Form 1040 (2017) [1]

Adjusted Gross Income is on line 37.  Line 37 equals the difference between Total income on line 22 less adjustments to income online 36. 

Plus the following nontaxable income

• Non-taxable social security income (line 20a (total social security) less line 20b (taxable social security)) 
• Tax exempt interest income (line 8b), and 
• Tax exempt foreign income (Form 2555 [2])

• Form 1040 (2018) [3]

Adjusted Gross Income is on line 7. Line 7 includes additions to income from Schedule 1 line 22, less adjustments to income from Schedule 1 line 36. 

Plus the following nontaxable income

• Non-taxable social security income (line 5a (total social security) less line 5b (taxable social security)) 
• Tax-exempt interest income, (line 2a), and 
• Tax-exempt foreign income. (Form 2555 [2])

This would be easy if financial eligibility were based on the most recent year’s tax return, but eligibility is based on what applicants expect their current MAGI to be. A past year’s return will be helpful only if the current year is likely to be similar to the past year. There are several excellent guides to the MAGI rules from national advocacy organizations listed in the Resource section. The website at IRS.gov also contains extensive information including interactive tools designed for consumers. In some situations, applicants may need the advice of a tax professional. Low income tax clinics are listed in the Resource section. 

Some common types of income that are not taxable include: welfare payments such as TAFDC and SSI, child support income, gifts and inheritances, Veteran’s Administrations payments, and Worker’s Compensation.  A recent change in the tax laws has complicated the treatment of alimony. It is income for the recipient and a deduction for the payer if the alimony order was made before Jan. 1, 2019 but not if the alimony order was made on Jan. 1, 2019 or later. Tax losses from self-employment, rental income or investment income that reduce AGI will also reduce MAGI. Pre-tax deductions from earnings that reduce the amount of taxable wages will also reduce MAGI. To the extent that people make decisions that will reduce their AGI, such as purchasing certain IRAs, they will also reduce MAGI for purposes of ConnectorCare eligibility. 

Whose income is counted? The tax household includes the tax filer and spouse, if married filing jointly, and anyone they may claim as a dependent on their federal return. Under IRS rules, dependents are not limited to minor children. In certain circumstances, adult children, elderly parents, unmarried partners and other individuals supported by the tax filer may also qualify as dependents. 

The tax household determines family size. The income of the tax filers (including a spouse filing jointly) always counts. However, the income of a dependent is included in the MAGI of the tax household only if the dependent’s income is high enough to require him or her to file a return under IRS rules. An unmarried child claimed as a dependent with earnings as high as $12,000 (and no unearned income) is not required to file in 2018. For purposes of determining whether a dependent must file a return, the IRS does not count the dependent’s non-taxable social security as unearned income. The income of a dependent who is not required to file a return but chooses to do so, e.g. to obtain a refund, does not count. 

Consult IRS Publication 501 [4] or the guides in the Resource section [5] for more information on who may qualify as a dependent, and the filing requirements for dependents.

How does MAGI affect eligibility? Once the MAGI of the tax household has been calculated, it is compared to the applicable federal poverty level (FPL) standards for the family size to determine if the amount is at or under the upper income levels for ConnectorCare (300% FPL). If MAGI is over 300% FPL but not over 400% FPL, the applicant may qualify for an Advance Premium Tax Credit for a Qualified Health Plan. The federal government adjusts the Federal Poverty Level standards every year in late January. However, under federal law, the Connector uses the most recent FPL at the time open enrollment begins in November for the following calendar year. This is why the Connector uses the 2018 FPL standard that was in effect in November 2018 to determine eligibility for any month in 2019.  See Appendix 1 for 2019 amounts.

Differences between Connector MAGI and MassHealth MAGI. MassHealth also use MAGI to determine financial eligibility for most people under age 65. However, MassHealth is based on current monthly income, not expected annual income, and MassHealth makes various exceptions to both the tax household rules and the income-counting rules applied in the Connector. If an individual’s current monthly MassHealth MAGI income is over MassHealth income eligibility standards, but expected annual Connector MAGI is under 100% FPL, a special “safe harbor” rule deems the individual’s income to be under 100% FPL for MassHealth too. 130 CMR 506.008(D) [6]

26 CFR 1.36B [7], 45 CFR 155.305 [8], IRS Publication 525 Taxable and Non-taxable Income [9], and 501 Standard Deduction and Filing Information [10].

​

To qualify for ConnectorCare, individuals must not be eligible for Minimum Essential Coverage (MEC). For purposes of ConnectorCare eligibility, MEC includes government-sponsored programs, “affordable” employer-sponsored plans and certain other health benefits as described below. Sometimes MEC eligibility alone is disqualifying, but sometimes an individual who is eligible for a type of MEC but not actually enrolled is still eligible for ConnectorCare. 

26 CFR 1.36B-2(c) [11] (Premium tax credit) and 1.5000A-2 [12] (Minimum Essential Coverage)

Eligibility for the following types of government-sponsored programs counts as Minimum Essential Coverage (MEC) and disqualifies someone from eligibility for ConnectorCare:

• Medicare Part A.  

Eligibility for premium-free Medicare Part A.  

• A person enrolled in Medicare Part A or Medicare Advantage or eligible for premium-free Part A is not eligible for ConnectorCare. 

EXCEPTIONS:

• Individuals age 65 and over who are eligible for but not enrolled in Medicare who would be charged a premium for Part A are not considered eligible for MEC, and may qualify for ConnectorCare.  
• Individuals potentially eligible for Medicare solely based on End Stage Renal Disease (ESRD) who have not applied for Medicare and been found eligible may qualify for ConnectorCare.

IRS Notice 2013-41 (June 26, 2013) [13]

• ​The current March 2019 application form asks if individuals are enrolled in Medicare or eligible for premium-free Part A. If the answer is yes or if data sources show enrollment in Medicare Part A or Medicare Advantage, the individual will not be eligible for ConnectorCare. 
• After an eligible individual enrolls in ConnectorCare, the Connector conducts periodic data matches with Medicare during the year. An individual who later enrolls in Medicare Part A or Medicare Advantage will be notified that he or she is no longer eligible for ConnectorCare. Generally, insurance carriers cannot sell duplicate coverage to Medicare beneficiaries; however, a beneficiary who loses ConnectorCare can remain enrolled in the same QHP for the balance of the year with no subsidy. (The Connector does not offer Medicare Supplement plans).

Advocacy Reminder:

If people do not enroll in Medicare Part B during their initial enrollment period or certain special enrollment periods, they may face late enrollment penalties that increase the amount of their Part B premiums and may not be able to enroll in Medicare until later in the year. Being enrolled in a plan obtained through a Marketplace/Exchange, like the Health Connector, does not exempt individuals from these disadvantages the way that being enrolled in employer-sponsored insurance may.  In recent years, Medicare has given individuals enrolled in the Marketplace an opportunity to avoid the disadvantages of delaying enrollment in Part B. This relief extends to those who could have enrolled in Medicare Part B but did not do so during their Medicare Initial Enrollment Period or Part B SEP for the working aged or disabled, and currently are or were enrolled in coverage through the Marketplace during certain dates from 2013 to Sept. 30, 2019.    See,  https://www.cms.gov/Medicare/Eligibility-and-Enrollment/Medicare-andthe-Marketplace/Downloads/SHIP-and-Navigators-Fact-Sheet-10-102018.pdf [14]  Individuals can obtain more information about this assistance and about making the transition from ConnectorCare to Medicare from local SHINE counselors listed in the Resource section.

• Medicaid and the Children’s Health Insurance Program (CHIP)
  • ​​Medicaid and CHIP are both called MassHealth and eligibility for any type of MassHealth, other than MassHealth Limited (which only covers emergency services), counts as MEC.
  • The Children’s Medical Security Program (CMSP) and the Health Safety Net, like MassHealth Limited are not considered MEC.
  • There is a common application system for MassHealth (Medicaid and CHIP) and for ConnectorCare. An applicant who is found eligible for any kind of MassHealth except Limited will not be eligible for ConnectorCare. 

However, if an individual is initially eligible for ConnectorCare and is later found eligible for MassHealth, including a retroactive eligibility determination, the MEC disqualification will begin no earlier than the first day of the month beginning after the date of the MassHealth eligibility notice. 

• This is one of several situations where individual may have overlapping MassHealth and ConnectorCare without it being considered an excess payment of APTCs by the IRS. This will be important during the annual reconciliation process for advance premium tax credits discussed below in the Q & A 30. 
• TRICARE. 

Eligibility for medical coverage under TRICARE, 10 USC 55 [15], for active duty service members and their families is counted as MEC. Certain limited benefit TRICARE coverage is not considered MEC.

• Veterans programs. 
  • The Veteran’s Administration health system under 38 USC 1710 [16] and 1705 [17] is available to most but not all veterans. Veterans enrolled in the VA health system have MEC. However, veterans who are not eligible for the VA health system, as well as those who are eligible, but choose not to enroll, are not counted as eligible for MEC, and may be eligible for premium tax credits and ConnectorCare. 
  • The family members of veterans are generally not eligible for VA health benefits, but family members of certain veterans may be eligible for the VA Civilian Health and Medical Program (CHAMPVA) or for the spina bifida health care program. CHAMPVA and the spina bifida program both count as MEC.

• Peace Corp program. 

Eligibility for the health plans for Peace Corps volunteers under the law at 22 USC sections 2504(e) is counted as MEC.

26 CFR 1.36B-2(c) (2) [11] Government-sponsored MEC; IRS Publication 974 [18], Premium Tax Credits (2018).

A note on age: There is no upper or lower age limit for ConnectorCare, but most people under 19 or age 65 and older do not qualify because they are eligible for government-sponsored MEC. Children and youth under age 19 who are US citizens or lawfully present non-citizens with family income not over 300% FPL generally qualify for MassHealth, and most individuals age 65 or older qualify for Premium-Free Medicare Part A.

An employee or an employee’s family member who is qualified to enroll in employer-sponsored insurance that is “affordable” and provides “minimum value” is not eligible for a premium tax credit or ConnectorCare for any month in which the employee or family member could have enrolled in the employer plan. However, the disqualification does not extend to any required waiting period before employer-sponsored coverage becomes effective, or to family members who are not claimed as tax dependents by the employee. 

Employer-sponsored coverage is “affordable” for purposes of the MEC definition if --

• The employee’s required premium contribution for the lowest cost selfonly coverage does not exceed a certain percentage of household income for the year;
  • The required contribution percentage was 9.5% in 2014 but is adjusted annually. In 2019 the percentage is 9.86%.
  • If the employer offers coverage to the employee’s family members, affordability for the family members is also based on the cost of self-only coverage for the employee not the often much higher costs of couple or family coverage. This is sometimes called the “family glitch” but the IRS has determined this is how it must apply the ACA unless Congress amends the law.

​Employer-sponsored coverage provides “minimum value” if the plan’s share of the total cost of benefits provided to the employee are at least 60%. This provision will rule out plans with extremely high cost-sharing and deductibles;  such plans are unusual for employer-sponsored plans in Massachusetts.

• Employees can learn whether their health plan meets minimum value by requesting a Summary of Benefits and Coverage (SBC) from their employer. The SBC is a required plan document and should clearly state whether the plan meets the minimum value requirement.

Individuals enrolled in employer-sponsored insurance. If an individual is actually enrolled in employer-sponsored insurance it is considered MEC regardless of affordability or minimum value or the fact that a family member is not claimed as a dependent by the employee. 

Former employees. Eligibility for coverage as a former employee under a retiree, COBRA or mini-COBRA plan counts as MEC only in the months in which an individual is actually enrolled. 

Health Reimbursement Accounts (HRAs) and Qualified Small Employer HRAs. Currently, federal rules address affordability of Qualified Small Employer HRAs but not HRAs generally, check the rules for more information.

26 CFR 1.36B-2(c)(3) [11] (Employer-sponsored MEC); 1.36B-6 [19] (minimum value); 1.5000A-2 [12] (Minimum essential coverage).

ConnectorCare is subsidized through a premium tax credit that may be paid in advance to the HMO to lower the member’s premium costs during the year. In order to qualify for a premium tax credit and ConnectorCare the following criteria related to federal tax filing must be satisfied:

• An individual must file a federal tax return for the year in which the taxpayer is seeking a premium tax credit for the taxpayer, spouse or other individuals claimed as tax dependents, and an applicant for ConnectorCare must attest that he or she will file a federal tax return for the tax year in which the premium tax credit is paid in advance. 
• An individual, who will be “married” within the meaning of 26 USC 7703 [20] as of Dec 31, is not eligible for a premium tax credit if he or she plans to file a return as married filing separately unless the taxpayer is unable to file jointly due to abuse or abandonment of the other spouse.
  • Head of household. A person who is married but living apart from a spouse during at least the last 6 months of the year, and who supplies over half the costs of maintaining a household that is the principal home for a child for more than half the year and can claim the child as a tax dependent may file as a “head of household” and is not considered “married” under 26 USC 7703 [20]. 
  • Domestic abuse is broadly defined as physical or emotional including efforts to control or intimidate and may include abuse of the victim’s child or other family member. 26 CFR 1.36B2(a)(2)(iii) [11].
  • Abandonment in a taxable year is defined as being unable to locate a spouse after reasonable diligence. 26 CFR 1.36B2(a)(2)(iv) [11].
• An individual who received an advanced premium tax credit in any year and failed to file a federal return and the required form to reconcile the amount of the credit received in advance with the amount due, as described in Q & A 30, will not be eligible for an advance premium tax credit or ConnectorCare until filing the required tax forms for the prior period. However, a current enrollee will be notified in advance and given an opportunity to file the required tax forms before having their ConnectorCare terminated. 45 CFR 155.305(f)(4) [8].