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INDIVIDUAL’S HOUSEHOLD (REFER TO CHAPTER 3200 FOR THE COMPLETE DEFINITION OF “HOUSEHOLD”).3 HOUSEHOLD INCOME DOES NOT INCLUDE: • Income of a child living with his or her natural, adopted, or stepparent and is not required to file a tax return for the taxable year in which Medicaid eligibility is determined whether a tax return is filed; or • Income of a tax dependent claimed by parents/s with whom they live, where the tax dependent is not required to file a tax return for the taxable year in which Medicaid eligibility is being determined (whether a tax return is filed). Cash support provided by the person claiming a tax dependent who is not a spouse or biological, adopted or stepchild is not counted as income.2

MAGI income includes taxable income for the year in which eligibility is being determined. Items which are tax-exempt now, such as payments for disability or retirement programs; but will be taxed later when/if there are disbursements, do not count in the MAGI budget; but when these later disbursements are paid, they will then be something which would be included. For the most part, MAGI use the same rules used by the Internal Revenue Service (IRS)3 to calculate the Adjusted Gross Income (AGI, or line 7 on the 1040 form). The Internal Revenue Code defines MAGI as adjusted gross income plus any foreign income, tax exempt interest, and non-taxable Social Security benefits. Supplemental Security Income (“SSI”) is excluded under MAGI, but Social Security Disability Income (SSDI) counts in the budget whether it is taxed or not. The following are four exceptions from MAGI for Medicaid eligibility purposes: • A lump sum amount is counted as income only in the month received. • Scholarships, awards, or fellowship grants for educational purposes and not for living expenses are excluded from income. • Parent Mentor Stipend • Certain American Indian and Alaska Native settlement trusts, distributions, and student financial assistance.5

Eligibility based upon MAGI-based income does not include an asset (resources) test and does not include any income or expense disregards except for an amount equivalent to 5 percentage points of the applicable income standard for the family size as set forth in IHCPPM 3465.05.00.4 any items that are tax deductible should be deducted from a person’s MAGI-based income. Note: if using the tax return to verify income, Line 7 on the 1040 will already have any allowable deductions considered and they should not be deducted again. Income under MAGI-based methodologies includes, but is not limited to, the following: • Wages and salaries • Rents • Royalties