Dear Emily McClellan,

The Virginia Poverty Law Center (VPLC) respectfully submits the following comments regarding the Department of Medical Assistance Services (DMAS) Eligibility Draft Manual Transmittal 31 and its impact on Medicaid beneficiaries. We appreciate DMAS’ attention to ensuring the timely implementation of policies as well as updating guidance material. Our comments will focus on some of our concerns regarding the MAGI dependents’ income clarifications and the patient pay obligation.

We have seen many of our clients harmed by confusion surrounding when a dependent’s income is included as part of the MAGI household. We believe that adding for children, when discussing the tax filing threshold would add more confusion that this tax filing threshold only applies only to children. Virginia Medicaid Manual M0440.100, B, 1, c (p. 15). The tax filing threshold applies to all dependents, regardless of age or whether they are being claimed by their parent. Internal Revenue Service. (2023). Dependents, Standard Deduction, and Filing Information. Retrieved from 2023 Publication 501 (irs.gov).

Additionally, we have concerns that the policy is not clear that a dependent’s income, regardless of age or who claims that dependent, is not included in the tax filer’s household income if the dependent is not required to file a tax return. The policy states that all incomes of everyone in the household is counted except the income of 1. Tax dependent of any age claimed by his parent(s), or 2. A child under 19 in a non-filer household who is living with a parent or parents. Virginia Medicaid M0440.100, B, 1, b (p. 15). The next bullet point that discusses what income is included is a child under 19 in a non-filer household who is not living with a parent or parent and who is not required to file taxes, this appears to mean that their income is included in the tax filer’s household. Virginia Medicaid M0440.100, B, 1, b (p. 15).

When you go down to the next section of what income is not counted, that policy states

When a child or other dependent is included in a parent or step-parent’s household, the Individual’s income is not countable as a household income unless they are required to file taxes because the tax-filing threshold is met. Virginia Medicaid Manual M0440.100, B, 2, c (p. 16).

Again, the policy is silent on how the income of a dependent affects the taxpayer’s household income. 42 CFR 435.603(d)(2)(i) discusses the exclusion of income when a child, regardless of age, is a part of the parent’s household if the child is not expected to be required to file a tax return. However, the second part of that section discusses how the income of a tax dependent who is not the spouse or the child of the tax filer and who is not expected to be required to file a tax return should be excluded from the household income of the tax filer. 42 CFR 435.603(d)(2)(ii).

As you are aware, the household size may not be the same for all members of the household. A taxpayer who expects to file a tax return, and who does not expect to be claimed by another taxpayer, their household consists of the taxpayer, their spouse, and all tax dependents. 42 CFR 435.603 (f)(1). However, the rules are different for tax dependents, for instance, if an individual is claimed by someone other than a spouse or parent, then that person has their household considered under the non-filer household rules. 42 CFR 435.603(f)(2)(i). The household of non-fillers includes the individual, their spouse, and any siblings or children under the age of 19. 42 CFR 435.603(4)(3). For instance, one of the more common examples we see is of a grandparent claiming a grandchild. Virginia Medicaid Manual M0450.200, B (pp. 23-24). The grandparent’s household would include the grandchild, but the grandchild’s household would not include the grandma. However, under the regulations, if the child had an expected income below the tax filing threshold, that income would not be included in the grandma’s household income.

We think that the policy could be clearer and more concise. For example, b. Income, including Social Security benefits, of everyone in the household is counted except

1. A tax dependent of any age claimed by his parent(s), when the tax dependent is not required to file a tax return,
2. A child under age 19 in a non-filer household who is living with his parent(s) when that child is not required to file to file a tax return,
3. A dependent of any age, who is claimed by someone other than their parent and the dependent is not required to file a tax return is not included in the taxpayer’s household’s income.

When determining whether a child or dependent is required to file taxes, Social Security only counts towards the total household income if the individual is required to file a federal tax return. Any Social Security Benefits the child or dependent may receive do not count as unearned income in determining whether the tax filing threshold is met. Effective January 1, 2024, the tax filing threshold for children and dependents is $1,2450 in unearned income and $13,850 in earned income. If the dependent is married, 65 or over, or blind, please see 2023 Publication 501 (irs.gov).

When a child doesn’t meet either (a) or (b) above, then the income of the child or dependent is always counted in determining their own eligibility, even if their income is below the tax filing threshold.

Another sentence could be added under M0440.100, B, 2, c (p. 16) that a dependent claimed by someone other than their spouse or parent who is not required to file a tax return, their income is not included in the tax filer’s household.

We also have some concerns regarding the patient pay responsibility not allowing a deduction for out-of-network dentist providers. We have seen numerous clients unable to access dental care through their Medicaid services due to the lack of providers that accept Medicaid. While we appreciate DMAS commitment to this issue, we do have concerns about preventing these deductions to patient pay pending additional dental service providers. Dental infections left untreated can lead to significant medical intervention as well as death. Bayetto, Cheng and Goss, Dental abscess: A potential cause of death and morbidity, Australian J of General Practice. 2020 Sept. 9; 49,(9).  Additionally, “poor oral conditions such as periodontal disease may induce pain, infection, and tooth loss, affection nutritional intake.” Alice Kit Ying Chan, et. Al. Diet, Nutrition, and Oral Health in Older Adults: A review of the Literature, Dent J, 2023 Sep; 11(9). Not allowing these deductions to patient pay obligations will require Medicaid beneficiaries to choose between dental care and nursing home care, placing them at risk for either oral infections or being discharged from their nursing facility because they are unable to pay the patient pay obligation that takes all but $40 of their income. We would urge DMAS to pause this change until additional dental providers begin participating in Medicaid.

The last thing I would like to point out is it appears that the updated income for the aged, blind, and disabled is not included in the draft manual.

Again, we would like to thank you for your dedication to ensuring that Virginia’s most vulnerable population has access to these necessary services.