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B. Modified adjust gross income, as amended by the ACA, has the literal meaning of income that is:

1. Decreased by allowable tax deductions that include trade and business deductions, losses from the sale or exchange of property, deductions attributable to rents or royalties, and deductions for alimony paid. Generally, the same adjustments to income allowable under IRS rules are allowable deductions from countable income for Medicaid and CHIP purposes.

2. Increased by the amount of interest received or accrued that is exempt from tax and foreign earned income that is excludable as taxable income.

Source: Internal Revenue Code § 36B (d)(2)(A) and (B) (Rev. 2011)

Rule 11.3: Household Income

A. MAGI based income rules require that financial eligibility is based on household income for FCC related programs.

B. Household income is the sum of the MAGI-based income of every individual included in the individual’s household minus as amount equivalent to five (5) percentage points of the federal poverty level for the applicable family size, with the following exceptions.

1. The MAGI-based income of an individual who is included in the household of his or her natural, adopted or step parent and is not required to file a tax return is not included in the household income whether or not the individual files a tax return.

2. The MAGI-based income of a tax dependent other than a spouse or child and is not required to file a tax return is not included in the household income whether or not the individual files a tax return.

C. No other income disregards are permitted from gross income other than the five (5) percentage points disregard.

Source: 42 CFR § 435.603 (Rev. 2012)

Rule 11.4: Exceptions to IRS Income Rules for MAGI Based Income

A. The following are exceptions to using IRS rules for determining MAGI-based income for a household.

1. Income received in a lump sum, whether recurring or non-recurring, is counted in the month received. Recurring lump sum payments are not averaged.