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MAGI: Modified Adjusted Gross Income

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MAGI: Modified Adjusted Gross Income MAGI: Modified Adjusted Gross Income The Affordable Care Act introduced Modified Ad- Medicaid/CHIP justed Gross Income or MAGI as a new way of calcu- For a complete list of MAGI applicability for Medicaid, please lating income eligibility for health coverage through see National Health Law Program’s Advocate’s Guide to MAGI the state and federal marketplaces, as well as for the Children’s Health Insurance Program (CHIP) and MAGI Non-MAGI many Medicaid categories. MAGI has two compo- nents that must be considered: (1) who is in the Childless adults between Individuals who are aged, household and household size, and (2) what is the the ages of 19 and 64 blind or disabled household income. Pregnant women Long-term care MAGI applies one methodology to determine eli- Children up to age 19 (or 21 Medically-needy/spend gibility across multiple programs, replacing the if a full-time student, at down myriad of income counting rules, disregards, asset state option) tests, and household composition rules that pre- Parent/caretaker relatives Foster care (in most cases) viously existed for many Medicaid eligibility catego- ries. MAGI eligibility is based upon household in- Subsidy programs for con- come as a percentage of the Federal Poverty Level sumers dually eligible for (FPL) for that household’s size. Medicaid and Medicare (e.g., Qualified Medicare A marketplace household will be the same for all Beneficiaries, Specified Low members of the household, but the Medicaid house- -Income Beneficiaries, Qual- hold may vary for each individual. ifying Individuals) (Updated August 2018) Individuals eligible for other income-based programs granted TO WHOM DOES MAGI APPLY? Express Lane Eligibility for MAGI is used to determine financial eligibility for Medicaid (e.g., SNAP Advanced Premium Tax Credits (APTCs) and Cost- Sharing Reductions (CSRs) for individuals purchasing (Supplemental Nutrition coverage through the marketplace. MAGI also ap- Assistance Program) or plies to CHIP and many Medicaid categories. The TANF (Temporary Assis- chart to the right outlines a partial list of the major tance for Needy Families) Medicaid and CHIP categories that use and do not recipients) use MAGI. In the Loop is a joint project of MAGI: Modified Adjusted Gross Income WHAT INCOME GETS COUNTED IN MAGI? WHOSE INCOME COUNTS? MAGI is based on the income reported on a con- An individual’s income will only be counted toward sumer’s federal income tax return. To count the in- the total household income if the individual is re- come for MAGI, two steps are required: quired to file a federal income tax return. The in- come requirement for who must file a federal income First, identify the consumer’s adjusted gross In- tax return changed under the tax reform law passed come, which is the amount listed on Line 37 of by Congress at the end of 2017. Under the new IRS Form 1040 (or Line 4 of the IRS Form 1040 EZ) standard in effect for 2018, a single dependent un- used to file federal income taxes. der age 65 will be required to file if earned income is Second, add to adjusted gross income: the non- greater than $12,000, compared to $6,350 in 2017. A taxable portion of Social Security income, ex- dependent also must file if unearned income ex- cluded foreign income and tax exempt interest ceeds $1,050 (unchanged by the new law), or if gross to get the total Modified Adjusted Gross Income income is higher than some combination of earned or MAGI. and unearned income. Note: For Medicaid determinations, an additional Note that with this higher step is required to exclude certain types of scholar- filing threshold, the in- EXAMPLE: ship income and certain income received by Alaska come of dependents that If your child earns $6,000 Natives and American Indians. previously counted to- from a summer job or oth- Selected Income and Adjustments Included in MAGI ward total household in- er employment throughout come will now be exclud- the year, that does not Type of Income Not Count- Type of Income Counted ed, thus lowering total count toward the house- ed household income. One hold income because the Wages, salaries, tips (earned result of the tax reform child is not required to file Child support received a tax return. income) law is that more house- If your child earns $12,000, Supplemental Security In- holds will likely qualify for Interest and dividends that income will count to- come (SSI) Medicaid or more gener- ous APTCs/CSRs. ward the household in- Workers’ compensation come because the child is State income tax refunds payments Sometimes individuals required to file a tax re- will file a federal income turn. Profit or loss from self- Gifts/Inheritances tax return even if not re- employment (Schedule C) quired to do so, for ex- Veteran’s benefits (service- ample to receive a refund where taxes were with- Rental income related disability) held. Remember, income will only count toward the total household income for MAGI if the individu- Student loans and some al is required to file a federal income tax return. Unemploy- scholarship income (broader ment compensation exclusion for Medicaid de- terminations) Some non-taxable American Social Security benefits Indian income (excluded for (taxable + nontaxable) Medicaid determinations only) MAGI: Modified Adjusted Gross Income HOW DO YOU CALCULATE THE HOUSEHOLD SIZE? seeks an eligibility determination under Medicaid for herself. If a pregnant woman is in the household of Some differences exist in the rules for calculating someone else seeking a Medicaid eligibility deter- who is in a household for marketplace and Medicaid mination, states can count the pregnant woman as determinations. Therefore, it is best to calculate both one person, two people, or one plus the number of the marketplace and the Medicaid household for children expected to deliver (for example, 3 if she is each individual seeking an eligibility determination. expecting twins: the mother plus two expected chil- The marketplace application is designed to gather dren). relevant information for both calculations. WHO IS INCLUDE IN A MARKETPLACE HOUSE- HOLD? The marketplace household is calculated based up- on the tax household by applying the tax-filer rules. Under tax-filer rules, the tax household consists of the tax filer(s) plus any dependents. The household Medicaid Rules for Non-Filers/Non-Dependents of the tax dependent will be the same as the house- (also applies to dependent relatives and child claimed by one hold of the tax filer. Married couples filing jointly are both considered tax filers (and must file jointly in For adults, the Medicaid household consists of: most cases to be eligible for APTCs/CSRs). The mar- • the individual; ketplace household will be the same for each mem- • the individual’s spouse (if living with the individual); and ber of the household. • the individual’s children* (if living with the individual). For children,* the Medicaid household consists of: • the child; WHO IS INCLUDED IN A MEDICAID HOUSEHOLD? • the child’s parent(s) (if living with the child); Generally, the Medicaid household will be the same • the child’s sibling(s)* (if living with the child); • the child’s spouse, (if living with the child); and as the marketplace household, consisting of the tax • the child’s children,* (if living with the child). filer(s) plus any dependents. However, for individuals and families who do not file federal income taxes or *Child means under age 19, or under 21 for full-time students who are not claimed as dependents, Medicaid has (at state option); this applies to the child’s siblings too. special rules to calculate the household composition. A child can be natural/biological, adopted, or step child. WHAT OTHER RULES DETERMINE THE MEDICAID HOUSEHOLD ADDITIONAL RESOURCES: Variations on the rules to determine the Medicaid MAGI and Marketplace Eligibility: When to Count De- household exist in some circumstances. For exam- pendents’ Social Security Income, In the Loop ple, married couples who live together are counted Eligibility: What Definition of Child Applies?, In the Loop in the same Medicaid household regardless of whether they file federal income taxes jointly or sep- Advocate’s Guide to MAGI, National Health Law Program arately. Publication 501 (2016): Exemptions, Standard Deduction, Also, a pregnant woman is counted as one plus the and Filing Information, Internal Revenue Service number of children expected to deliver when she .
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