Jane Dotson
Medicaid eligibility is determined by income and state law. In most states, children up to the age of 19 with a family income of up to $80,000 per year may qualify for Medicaid or the Children's Health Insurance Program (CHIP). Even if your employer offers health insurance, you can still qualify for Medicaid, and you can choose to keep it if you prefer it over your employer's insurance. However, if you lose your Medicaid coverage, you may miss the open enrollment period for your employer's insurance. Additionally, prior to 2023, if your employer's insurance was deemed affordable for you, your children were not eligible for subsidies, even if adding them to your plan was costly. Now, your children may be eligible for subsidies if the cost of covering your family under your employer's lowest-cost plan exceeds 9.12% of your household income.
| Characteristics | Values |
|---|---|
| Can children get insurance through their parents' employer? | Yes, employers offer health coverage for employees' children until they turn 26. |
| Is there a cost involved? | Yes, but employers may offer to pay part or all of the monthly premium as a job benefit. |
| Can children get insurance through Medicaid? | Yes, children can get insurance through Medicaid. |
| Is there a cost involved? | Depending on the family's income, they may get free health coverage or pay a modest enrollment fee, premiums, and copayments for specific services. |
| Can children get insurance through CHIP? | Yes, children can get insurance through CHIP. |
| Is there a cost involved? | CHIP provides low-cost health coverage to children in families that earn too much to qualify for Medicaid. |
| Can children have both employer-provided and Medicaid insurance? | Yes, children can have both. |
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What You'll Learn
Medicaid eligibility requirements
Medicaid is a federal and state program that provides health coverage for some low-income individuals and families. Eligibility is based on income and family size, and rules differ among states. In all states, Medicaid gives health coverage to some individuals and families, including children, parents, people who are pregnant, elderly people with certain incomes, and people with disabilities.
The Affordable Care Act of 2010 allowed states to expand Medicaid to cover nearly all low-income Americans under 65 years of age. Eligibility for children was extended to at least 133% of the federal poverty level (FPL) in every state, with most states covering children to higher income levels. States also had the option to extend eligibility to adults with incomes at or below 133% of the FPL, and most have chosen to do so.
Certain Medicaid eligibility groups do not require a determination of income by the Medicaid agency. Coverage may be based on enrollment in another program, such as SSI or the breast and cervical cancer treatment and prevention program. Children with an adoption assistance agreement in effect under title IV-E of the Social Security Act are automatically eligible, as are young adults who meet the requirements for eligibility as former foster care recipients.
To be eligible for Medicaid, individuals must meet certain non-financial eligibility criteria. They must be residents of the state in which they are receiving Medicaid and must be either citizens of the United States or certain qualified non-citizens, such as lawful permanent residents. In addition, some eligibility groups are limited by age, or by pregnancy or parenting status.
Medicaid and Children's Health Insurance Program (CHIP) eligibility thresholds vary by state, and in most states, children up to age 19 with a family income of up to $80,000 per year (for a family of four) may qualify for Medicaid or CHIP. Families with higher incomes may still be eligible for Medicaid or CHIP, depending on their state's income eligibility rules.
Once an individual is determined eligible for Medicaid, coverage is effective either on the date of application or the first day of the month of application. Benefits may also be covered retroactively for up to three months prior to the month of application if the individual would have been eligible during that period. Coverage generally stops at the end of the month in which a person no longer meets the requirements for eligibility. States have the option to establish a "medically needy program" for individuals with significant health needs whose income is too high to otherwise qualify for Medicaid. These individuals can become eligible by "spending down" their income to meet the state's medically needy income standard.
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Employer-sponsored coverage
If you have family coverage through your employer but have to pay the full cost of your children's premiums, you may be able to buy individual policies for your children. Prior to 2023, your children would not have been eligible for subsidies in the exchange/marketplace. However, the rules have changed, and they might now be eligible for subsidies. They may also be eligible for Medicaid or CHIP (Children's Health Insurance Program), depending on your household income and where you live.
The ACA's employer mandate requires businesses with 50 or more full-time equivalent employees to offer health insurance to their full-time employees and those employees' children. However, while the coverage must be considered affordable for the employees, there is no requirement that the employer funds any portion of the premiums for dependents. In other words, the employer is not required to pay any of the premium to add dependents to the plan. The average employer funds the majority of premiums even for family coverage, but smaller businesses are less likely to cover the cost of adding dependents to the plan.
Even if your children aren't eligible for subsidies in the exchange, you still have the option to buy coverage for them in the individual market (through the exchange or off-exchange) and pay the full price. Depending on the coverage you need and the cost of the employer-sponsored plan, that may or may not be a good value. In addition, Medicaid and CHIP eligibility thresholds are quite generous in some states. If your children are eligible for Medicaid or CHIP, you may be able to enroll them even if they have access to coverage from your employer (eligibility guidelines vary by state).
Starting in 2023, your children might qualify for premium subsidies in the exchange under the terms of the "family glitch" fix that the IRS finalized in 2022. If the cost to cover your family under the employer's lowest-cost plan (that still provides minimum value) is more than 9.12% of your family's household income, your family members are potentially eligible for subsidies in the exchange. However, if the employee-only coverage is considered affordable (no more than 9.12% of household income), the employee is not subsidy-eligible, even if the family coverage pushes the total cost above the 9.12% threshold.
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Children's Health Insurance Program (CHIP)
The Children's Health Insurance Program (CHIP) provides health coverage to eligible children through both Medicaid and separate CHIP programs. CHIP is designed for children in families with incomes too high to qualify for Medicaid but too low to afford private coverage. CHIP is funded by states and the federal government and is managed by states according to federal requirements. Each state offers CHIP coverage and works closely with its state Medicaid program.
The costs of CHIP coverage are different in each state, but families won't have to pay more than 5% of their annual income. Depending on their income, some families may get free health coverage for their children, while others may be required to pay a small enrollment fee or premiums, and copayments for specific services. The rest of the coverage cost is paid for by the federal government and the state.
CHIP benefits vary by state, but all states provide comprehensive coverage, including routine "well child" doctor and dental visits for free. There may be a fixed amount (for example, $20) that you pay for a covered health care service after you've paid your deductible.
CHIP eligibility requirements differ by state, but in most states, children up to the age of 19 with a family income of up to $80,000 per year (for a family of four) may qualify. Even if children have access to coverage from their parent's employer, they may still be eligible for CHIP, depending on the state's eligibility guidelines.
A parent, grandparent, guardian, or authorized representative can apply for CHIP on behalf of a child. There is no limited enrollment period for CHIP, and coverage can start immediately upon qualification.
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Cost of employer-sponsored coverage
The cost of employer-sponsored health insurance coverage varies depending on several factors. These include the type of plan selected, the number of dependents, and the employer's contribution.
Firstly, the type of plan selected significantly impacts the cost. Employers typically offer a range of health insurance plans, from comprehensive plans with low deductibles to high-deductible plans. Employees who opt for plans with lower deductibles and broader coverage generally pay higher premiums, while those who select high-deductible plans pay lower premiums but higher out-of-pocket expenses.
Secondly, the number of dependents affects the cost. While some employers may fully cover the premium for their employees, they often do not contribute to the premium cost for dependents. This means that employees have to bear the full cost of adding their children or other family members to the plan.
Additionally, the employer's contribution to the health insurance plan varies. Some employers may pay the entire premium for single coverage, especially in smaller firms, while others may only contribute a certain percentage. According to the Kaiser Family Foundation, 38% of covered workers in small firms have their single coverage premiums fully paid by their employers, compared to only 6% in large firms.
The average annual cost of employer-sponsored health insurance premiums also differs between single and family coverage. In 2023, the average annual premium for single coverage was $8,435, while family coverage averaged $23,968. These costs are projected to increase annually, with PwC's Health Research Institute projecting a 7% increase in healthcare costs in 2024.
It is worth noting that, prior to 2023, if an employer's offer of self-only coverage was deemed affordable, none of the family members were eligible for subsidies. However, the rules have changed, and now, if the cost of covering the family under the employer's lowest-cost plan exceeds 9.12% of the family's household income, they may be eligible for subsidies in the exchange.
Furthermore, it is important to consider the impact of Medicaid and the Children's Health Insurance Program (CHIP). Depending on the state, children up to the age of 19 with family incomes up to $80,000 per year may qualify for Medicaid or CHIP. These programs provide free or low-cost health insurance, and working parents can apply for their children even if they have separate coverage through their jobs.
In conclusion, the cost of employer-sponsored health insurance coverage depends on various factors, including the type of plan, the number of dependents, and the employer's contribution. It is essential for employees to carefully consider their budget, healthcare needs, and preferred level of flexibility when selecting an employer-sponsored health insurance plan.
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Applying for Medicaid
Medicaid provides free or low-cost medical benefits to eligible individuals. To apply for Medicaid, you must be a resident of the state where you are applying for benefits. Each state has its own requirements, but in most states, children up to the age of 19 with a family income of up to $80,000 per year (for a family of four) may qualify for Medicaid.
You can apply for Medicaid at any time, and there are no special open enrollment periods. You can apply online, by phone, by mail, or in person. To apply, you will need to provide certain information and documentation, such as employer and income information for everyone in your family. This can include pay stubs, W-2 forms, or wage and tax statements. If you are self-employed, you will need to provide self-employment expense information.
If you are applying for Medicaid for adults over the age of 19 with disabilities, or who are 65 or older, or for anyone who needs long-term care, you may need to complete additional forms, such as the ABD-LTC Application and the Application for Health Coverage & Help Paying Costs. Additionally, if you are applying for health care coverage for someone who needs help with everyday tasks or has a physical disability, you may need to complete the Nursing or Community-Based Care form.
You can find more information about the specific requirements and application process by visiting your state's Medicaid website or contacting your state's Medicaid agency.
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Frequently asked questions
Yes, many children who are eligible for Medicaid are in families where one or both parents are working. Working parents may not have health coverage through their jobs or the health plans they're offered may not cover their children.
Yes, you can buy coverage for them in the individual market (through the exchange or off-exchange) and pay full price. Depending on the coverage you need and the cost of the employer-sponsored plan, that may or may not be a good value.
There is no straightforward answer to this question. You could keep Medicaid and not take the insurance through your job, but if you lose your Medicaid coverage, you may have missed the open enrollment period with your employer. If that happens, you will still be able to get health insurance, but based on your income, you may not qualify for any tax credits.
