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How Sponsor Residential Homes can get Health Insurance

How Sponsor Residential Homes can get Health Insurance

September 19, 2022

Sponsor Residential Homes is a unique profession and comes with issues that typical jobs don't face. Topics include how to contribute to retirement, budgeting for the household, what income is taxable and which is not, and how to get health care coverage. 

The topic we want to focus on is one of the most common we see, how to get health care coverage. Suppose your household's only income is through the Medicaid waiver, which under the Social Security Act section 1915(c) is excluded from gross income (nontaxable) under section 131 of the Internal Revenue Code. In that case, you may have questions about getting health insurance. 

As a Sponsor Residential Home provider, your income is not taxed like the ordinary taxpayer. You have non-taxable income from the individual you care for and taxable income from the individuals who pay rent. If you own a group home, under certain circumstances the entire income may be taxable and not just the rent. 

One of the most frequently asked questions is "how do I get health coverage"? It may be a new home provider switching jobs and doesn't fully understand the landscape of this business. Or it is a provider who hasn't had coverage and decided now is a good time to get it. 

Income as a provider can be confusing to understand and it is important to seek guidance from a tax professional to understand your tax situation. The rental income from the individuals is considered passive income and therefore subject to taxation. However, the income you get from the services you provide for the individuals can be tax-free depending on if it is your primary residence. 

The passive income from the rent of the individuals can help you qualify for benefits but it still may not be enough depending on the amount of rent you receive. If you are a home provider that has no other taxable income outside of the home you may qualify for health benefits under the Affordable Cares Act.

Healthcare coverage can be a hassle to get and it may be even more of a headache if you are a sponsor residential home provider. Since the premiums are based on the expected Modified Annual Gross Income (MAGI) for the coverage year, if all your income is through the sponsor residential home you may qualify for benefits. With that being said there are income requirements to get these benefits such as you must make over the Medicaid income limits to avoid being put into Medicaid. 

Why do you not want to be put on Medicaid? It may be difficult to find a medical provider that accepts Medicaid so you may not get access to specific healthcare that you need.  

An example that would be an issue would be where if you and your spouse did not make over the Medicaid income limits since the income they go off of is the expected (MAGI) for the coverage year. 

Once you have the income situation settled and qualify for coverage it is now time to pick a plan for you and your family. To do this you can compare plans on or see an insurance professional to find the best plan for you. 

There are taxable sponsor residential homes and nontaxable homes, to understand which one you fall under and if you fall under Medicaid income guidelines is a question for your tax professional.