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Families and Children Manual Section: Financial Eligibility Policy Manual Number: 010.030 Chapter: The 5 Percent Federal Poverty Limit Disregard for Magi Legal Authority: 42 CFR 435.603; Tenn. Comp. R. & Regs. 1200-13-20 1. Overview The Affordable Care Act (ACA) requires that financial eligibility for certain TennCare Medicaid and CoverKids categories be determined using the Modified Adjusted Gross Income (MAGI) methodology. The MAGI methodology eliminates all characteristic-specific income disregards, such as the earned income disregard, dependent care disregard or child support disregard. Instead, a 5% Federal Poverty Level (FPL) disregard will be applied to any individual in a MAGI TennCare Medicaid, TennCare Standard or CoverKids category when the disregard would make the individual eligible. These individuals are those whose household income is within 5 FPL percentage points of the highest income standard for which they can obtain TennCare Medicaid, TennCare Standard or CoverKids eligibility under MAGI-based income rules. The 5% FPL disregard does not apply to the TennCare Medicaid Medically Needy categories. 2. Policy Statement A 5% FPL disregard is applied to applicants’ household income in the TennCare Medicaid, TennCare Standard and CoverKids categories that use the MAGI methodology to determine financial eligibility. The 5% disregard does not apply to TennCare Medicaid Medically Needy categories. Children and pregnant women whose household income is within 5 percentage points of a TennCare Medicaid or TennCare Standard category will receive the 5% disregard in order to be determined eligible for TennCare Medicaid or TennCare Standard rather than be determined eligible for CoverKids. 3. Application of the Disregard to TennCare Medicaid and TennCare Standard The 5% FPL disregard is provided by converting 5% of the FPL to a dollar amount based on the Eligibility Determination Group (EDG) size. The dollar amount is subtracted from the applicant’s/enrollee’s household modified adjusted gross income. Applicants whose household income is within the following ranges will be made eligible by applying the 5% FPL disregard: a. Children Aged 0-1 Years Old: Household income is between 195% and 200% FPL;