Medical Programs

For Medical Programs, Modified Adjusted Gross Income (MAGI) financial eligibility is determined by comparing the applicable program income limit and the MAGI household income calculated using Step 1 through Step 5 below.

Follow the five steps below in the specified order for each person applying for benefits to determine MAGI financial eligibility for each person.

Step 1 — Determine MAGI Household Composition

The MAGI household composition for the person will be used to complete Steps 2, 3, 4, and 5.

Step 2 — Determine MAGI Individual Income

Identify and list all income, expenses, and overpayments for each person in the MAGI household.

Form H1042 , Modified Adjusted Gross Income (MAGI) Worksheet: Medicaid and CHIP, is used for each person included in the person’s MAGI household composition to list and calculate:

earned income, excluding any pretax contributions;

unearned income;

self-employment income;

American Indian/Alaska Natives (AI/AN) disbursement;

overpayments; and

expenses.

Step 3 — Determine Whether Any Exemptions Apply to MAGI Household Income

If a person meets one of the following exceptions for the taxable year in which Medicaid or Children’s Health Insurance Program (CHIP) eligibility is requested, their MAGI individual income is not included when calculating MAGI household income (as explained in Step 4 ).

Exception 1:

A person is a child (natural, adopted or step), regardless of age, who is:

included in the MAGI household composition of a parent or whose MAGI household composition includes a parent; and

not expected to be required to file a federal income tax return since the child’s monthly income is below the monthly Internal Revenue Service (IRS) income threshold.

Exception 2:

A person is a tax dependent who is:

included in the MAGI household composition of the taxpayer claiming them as a tax dependent; and

not expected to be required to file a federal income tax return since the tax dependent’s monthly income is below the monthly IRS income threshold.

If a person meets the criteria for Exception 1 or 2 and does not have any income, it is not necessary to determine whether the person is expected to be required to file an income tax return because there is no income to compare with the IRS income threshold. Move to Step 4 at this point.

Note: Even if a person’s tax status is “non-taxpayer/non-tax dependent,” the person may be “expected to be required to file” a federal income tax return based on the IRS threshold amounts.

For a person who is expected to be required to file a federal income tax return, all MAGI Individual Income from Step 2 counts in every household composition in which that person is included.

If a child meets Exception 1:

their income is excluded from the MAGI household income of every applicant or recipient whose MAGI household composition includes that child; and

the child’s income is exempt from their own MAGI household income.

If a tax dependent meets Exception 2:

the tax dependent’s income is excluded from the MAGI household income of the taxpayer who plans to claim that person on a federal income tax return for the taxable year in which the taxpayer is requesting Medicaid or CHIP eligibility; and

this tax dependent’s MAGI Individual Income counts in their own MAGI household income and counts in the MAGI household income of everyone else in whose MAGI household they are included.

If a person meets the criteria for both exceptions (a child (regardless of age) included in the MAGI household composition of a parent and a tax dependent included in the MAGI household composition of the taxpayer), Exception 1 applies. Exception 1 is more beneficial for the child because the child’s income would then be exempt from the child’s MAGI Individual Income.

Example: A child (regardless of age) lives with her mother, has no income, and her mother expects to claim the child on her federal income tax return. The child would meet Exception 1 and Exception 2. For the purposes of exempting the child’s income, the child (regardless of age) is considered a child who is included in the MAGI household composition of a parent whose MAGI group includes a parent (Exception 1). Because the child has no income to exempt, there is no need to compare her income to the tax thresholds. If the child did have income under the threshold, it would be more beneficial to allow her Exception 1 so that her income would not be counted on her own MAGI household income.

Example : Grandma Mary and Grandpa John expect to file taxes jointly and claim their three grandchildren, Sally, 8, Lucy, 12 and Mike, 14, as tax dependents. Grandma Mary and Grandpa John have not adopted their grandchildren. Grandma Mary applies for medical assistance for her grandchildren but does not apply for medical assistance for herself or Grandpa John.

Sally, Lucy, and Mike each receive $1500 a month in Social Security survivor benefits (SSB). The children meet a tax dependent exception because they are claimed as a tax dependent by a taxpayer who is not their spouse or parent. Their MAGI household compositions are determined using the non-taxpayer and non-tax dependent rules.

The MAGI household for each child includes the three siblings (Sally, Lucy and Mike) and the survivor benefits count in each child’s own MAGI household income and in the MAGI household income of their siblings. If Grandma Mary and Grandpa John had applied for medical assistance, the children’s survivor benefits would NOT count in their MAGI household income.

Step 4 — Calculate MAGI Household Income

First, the MAGI Individual Income for each person included in the applicant’s or recipient’s MAGI household composition is calculated by:

adding earned income, unearned income, self-employment income, and AI/AN disbursements (if AI/AN status is not verified per policy or the income source is not verified);

subtracting overpayments; and

subtracting expenses.

Income and Expenses Person 1 Person 2 Person 3 Person 4 Total earned/unearned income Add + + + + Total self-employment Income Add + + + + Total AI/AN disbursement Subtract - - - - Total recoupment of overpayments Subtract - - - - Total expenses Equals = = = = MAGI Individual Income

Second, the MAGI Individual Income for all people included in the applicant’s or recipient’s MAGI household composition must be totaled. Anyone’s income (as applicable) based on Exceptions 1 and 2 from Step 3 is exempt.

Add MAGI Individual Income + + + =

Third, the standard MAGI income disregard, by MAGI household size, must be subtracted from the sum of the MAGI Individual Incomes to get the MAGI household income. The standard MAGI disregard is an income disregard equal to five percentage points of the FPL. It is a standard amount based on the applicable household size across all Medical Programs that use MAGI rules to determine income.

Ex. Sum of MAGI Individual Incomes subtract Standard MAGI Disregard equals MAGI Household Income

Note: The standard MAGI income disregard is updated annually based on the annual updates to the FPL.

Step 5 — Determine MAGI Financial Eligibility

The person’s eligibility is determined by comparing whether the applicant’s or recipient’s MAGI household income is less than or equal to the income limit of the applicable program based on FPL and MAGI household size.

Steps 1 to 5 must be repeated for each person applying for Medical Programs.