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Title 8: Medicaid Page 83 Iowa Department of Health and Human Services Employees’ Manual Chapter E: Income Income Policies for MAGI-Related Coverage… Revised April 11, 2025 Countable Income Under MAGI MAGI Income Deduction An amount equal to 5 percent of the federal poverty level for the applicable household size shall be subtracted from the total monthly countable MAGI income amount when:  An applicant’s monthly MAGI income exceeds the highest income limit of all of the MAGI-related Medicaid coverage groups for which the applicant meets the categorical requirements, and  Deducting the 5 percent results in the applicant’s income being within the income limit of this MAGI-related Medicaid coverage group. MAGI-Related Self-Employment A person is considered self-employed if:  The person carries on a trade or business with the goal of making a profit and the person is the sole proprietor of the trade or business, or  The person is an independent contractor and the person paying for the work has the right to control or to direct only the result of the work and not how the work will be done. Reported income losses allowable by the IRS must be subtracted from other income if indicative of current income. These losses can be used to offset any other type of income such as wages or pensions. Self-employment losses are allowable for both tax filers and non-filers. ELIAS will not accept a negative amount on the Income page. If there is a loss, enter the self-employment amount as zero on the Income page and enter the loss on the Expense page as MAGI Moving Expenses. Make a Journal entry stating that the client has an allowable income loss of $XX.XX from (allowable type of loss). If tax forms are provided, enter the business income or loss found on the tax form. Note: Also consider capital gains or losses and other gains or losses. If using ledgers to determine the business income or loss, use the net amount of income or losses provided. If the self-employment has been in existence for less than a year, the net profit shall be averaged over the period of time the self-employment has been in existence and the monthly amount projected for ongoing eligibility.