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MISSISSIPPI DIVISION OF MEDICAID Eligibility Policy and Procedures Manual CHAPTER 200B – Income: MAGI Categories Page |127

Effective Month: July 2025

For MAGI purposes, income that is taxable under IRS rules is countable as income and income that is not taxable as income is not countable as income. There are exceptions to this rule, discussed in greater detail in this chapter, that include: • Social Security benefits received by adults are countable as income for MAGI even though the benefit may not be fully taxable for IRS purposes. Social Security benefits of a child are countable only if the child is otherwise required to file federal income taxes or the child does not live with their parent. • Any income of a child who is not required to file federal income taxes is not countable as income if the child is living with their parent. • Additional exceptions are discussed in Chapter 400, ABD and MAGI Eligibility Criteria and Budgeting.

Household income, as a general rule, is the sum of the MAGI-based income of every individual included in the individual’s household. After applicable income has been reduced by appropriate IRS-allowed tax deductions, the only MAGI allowed standard deduction that may be applied to total household income is an amount equal to 5 percentage points (5%) of the federal poverty level (100% FPL) for the applicable family size applied to the appropriate eligibility group when needed. For example, a MAGI household’s income exceeds 133% FPL for an applying child over age 6. Without the 5% deduction, the child would be placed in CHIP. However, with the 5% standard deduction applied, the child is Medicaid eligible.

If an IRS allowed deduction is not applicable to the type of income received, then gross income counts for eligibility purposes. The 5% FPL deduction is only applied when needed to allow Medicaid eligibility for an adult, to allow Medicaid or CHIP eligibility for a child or to place a child in Medicaid rather than CHIP, as outlined in the above example. Eligibility for MAGI is based on current income that is representative of ongoing “normal” income, all of which is detailed later in this chapter.