Is it Possible to Maintain Medicaid by Adjusting Income?

If you have found yourself on the verge of losing Medicaid coverage due to an increase in income, you may still have options. Many states have implemented Modified Adjusted Gross Income (MAGI) guidelines for Medicaid eligibility, which consider pre-tax deductions. This means that by optimizing your pre-tax retirement contributions, you may be able to lower your income below the Medicaid threshold and continue receiving coverage.

What are your options
Traditional IRA Contributions: Contributing to a traditional IRA reduces your taxable income, thereby potentially making you eligible for Medicaid. You can open an account with a low-fee broker and make regular contributions to your IRA up to the annual limit.

401(k) Contributions: If your employer offers a 401(k) plan, it is another avenue for pre-tax deductions. By contributing to your 401(k), you lower your taxable income while saving for retirement.

Health Savings Account (HSA): If you have a high-deductible health plan (HDHP), you can contribute to an HSA on a pre-tax basis. This reduces your taxable income while also providing funds for eligible healthcare expenses.

When Other Options are Needed
In cases where pre-tax deductions are not enough to keep you within the Medicaid income threshold, you may need to consider alternative options such as:

ACA Marketplace Plans: If you earn less than 400% of the Federal Poverty Level (FPL), you may qualify for subsidized health insurance through the ACA marketplace. These plans offer financial assistance to help cover deductibles, co-pays, and other out-of-pocket costs.

Medicaid Waivers: Some states offer Medicaid waivers that extend eligibility to individuals who do not meet the traditional income requirements. These waivers are often based on specific health conditions or disabilities.

Employer-Sponsored Health Insurance: If your employer offers health insurance, you may want to explore this option. While employer-sponsored plans typically come with higher premiums, they can offer comprehensive coverage and may be more affordable than individual plans.

It’s important to note that the specific options available to you will vary based on your state of residence and individual circumstances. To determine the best course of action, it is highly recommended to contact a certified agent who can provide personalized guidance and assist you in finding affordable health insurance coverage.