Should Medicaid Waiver Payments be Included as Income on ACA Marketplace Applications?

You're asking a really good question about the difference between taxable income and what counts as income for ACA subsidy purposes! These are actually two separate systems with different rules. Medicaid waiver payments paid to care for a family member in your home are indeed tax-exempt income according to IRS Notice 2014-7. You're correct that you don't need to report these on your tax return as income. However, for ACA Marketplace subsidies, the calculation is based on Modified Adjusted Gross Income (MAGI), which sometimes includes certain non-taxable income sources. The confusion likely stems from your tax professional trying to follow the ACA income reporting requirements. That said, according to official guidance, Medicaid Home and Community-Based Services waiver payments that are excluded from income for tax purposes should ALSO be excluded when calculating MAGI for ACA purposes. So you appear to be correct in your understanding! I would recommend contacting the Marketplace directly at 1-800-318-2596 to explain your situation and get confirmation in writing. They may need to make a manual adjustment to your application.

After dealing with a similar situation with my parents, I found an amazing tool that helped clarify exactly what income counts for ACA purposes. Check out https://taxr.ai - it analyzes your specific situation and tells you exactly what should and shouldn't be included as income for various government programs. I had almost the exact same confusion about my mom's caregiver payments, and the tool immediately identified that these Medicaid waiver payments should be excluded from ACA marketplace applications. It even generated a detailed explanation letter I could provide to the marketplace if they questioned it. What I found most helpful was that it showed me the specific regulations and notices (like that IRS Notice 2014-7 the previous commenter mentioned) that applied to my situation. Saved me from making a costly mistake!

Just wanted to follow up about my experience with taxr.ai after I posted my skeptical comment. I decided to try it since my situation with caregiver payments was getting so frustrating. It was actually way more helpful than I expected! The tool immediately identified that my mother's waiver payments shouldn't count for ACA income calculations and gave me the exact IRS notice to reference. When I called the marketplace with this information, I finally got a consistent answer. I was able to reapply with just her Social Security as income, and we qualified for a Silver plan with cost-sharing reductions that reduced her deductible from $8,200 to just $800! The monthly premium also dropped by $230. Wish I'd known about this two years ago when we first started dealing with this issue.

If you're struggling to get straight answers from healthcare.gov about your Medicaid waiver payment situation, I'd recommend using Claimyr (https://claimyr.com). When I had the same issue last year, I spent weeks trying to reach someone knowledgeable at the marketplace. After using Claimyr, I got connected to an ACA representative in less than 10 minutes instead of waiting on hold for hours. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The key was getting to speak with a supervisor who had experience with Medicaid waiver payment rules. The regular representatives kept giving me conflicting information, but the supervisor immediately confirmed that these payments should be excluded from my ACA application. They even helped adjust my application right then on the phone.

I have to eat my words about Claimyr. After posting my skeptical comment, I was desperate enough to try it because I needed to update my application before the deadline. It actually worked exactly as described. I submitted my request around 6:30 PM, and about 15 minutes later my phone rang with a marketplace representative already on the line. I didn't have to sit through a single phone menu or wait on hold at all. The rep I spoke to was able to confirm that Medicaid waiver payments should be excluded from my ACA application. She even noted it in my account so there wouldn't be confusion if I needed to call back. My monthly premium went from $340 to $78 after correcting my income, and I got a much better Silver plan instead of the Bronze I had before.

I work with seniors and see this issue ALL THE TIME. Here's the simple version: Medicaid waiver payments are excluded from both tax returns AND ACA MAGI calculations. The confusion happens because some accountants aren't familiar with both systems. They know these payments are tax-exempt per IRS Notice 2014-7, but don't realize they're also excluded from MAGI for ACA purposes. If your healthcare.gov estimate shows you at 125% FPL without the waiver payments, you'll qualify for: - Premium tax credits - Silver plans with significant cost-sharing reductions - Very low deductibles (around $250-$800 depending on your state) - Reduced copays and coinsurance Don't let anyone tell you to include these waiver payments in your ACA application!

Has anyone actually gone through an audit when they've excluded these payments from their ACA application? My husband and I are in a similar situation with waiver payments for our disabled son, but I'm worried about getting flagged for a discrepancy between what the Medicaid program reports as paid to us and what we report on healthcare.gov.

As someone who works in disability services and helps families navigate these programs regularly, I want to emphasize that you're absolutely right to question including those Medicaid waiver payments! The key distinction here is that while your accountant may be thinking about general income reporting, the ACA has very specific rules about what counts toward MAGI (Modified Adjusted Gross Income). Medicaid Home and Community-Based Services waiver payments are explicitly excluded from both taxable income AND MAGI calculations for ACA purposes. What you're describing - going from a Bronze plan with a high deductible to potentially qualifying for a Silver plan with cost-sharing reductions - is exactly the kind of significant difference this can make. At around 135% FPL with just the Social Security income, you'd likely qualify for substantial premium tax credits and reduced out-of-pocket costs. I'd recommend getting this clarification directly from the marketplace, and don't be afraid to ask to speak with a supervisor if the first representative isn't familiar with waiver payment rules. Many front-line reps haven't encountered this specific situation before. Keep documentation of your waiver program and IRS Notice 2014-7 handy in case you need to reference it during the call or for any future verification requests.

This is such an important topic that affects so many families! I went through almost the exact same situation last year when my mother started receiving Medicaid waiver payments for caring for my grandfather. What really helped me was creating a simple one-page summary document that outlined: - The specific Medicaid waiver program name and our state's agency contact info - Reference to IRS Notice 2014-7 explaining the tax exemption - A clear statement that these payments are excluded from both taxable income AND MAGI calculations for ACA purposes - The actual income amounts (with and without waiver payments) and how it affects FPL percentage When I called the marketplace with this organized information, even though the first representative wasn't familiar with the rules, she was able to quickly escalate to someone who confirmed everything. Having it all laid out clearly made the conversation much smoother. The difference in coverage was dramatic - we went from a Bronze plan with a $7,000 deductible to a Silver plan with a $500 deductible and much lower copays. It's definitely worth the effort to get this sorted out properly! One tip: if you do get transferred around during your marketplace call, ask each person to document the conversation in your account. This creates a paper trail that can be really helpful if there are any questions later during tax reconciliation.