Effective Date: April 1, 2023

Previous Policy

A. Income Based on Tax Rules

To determine the MAGI income, count taxable income that is used to determine an individual or couple's gross taxable income. In addition, certain types of income that are not taxable have to be added to the gross taxable income, and some types of income a person receives do not count in the MAGI-based income methodology.

B. Countable Income

1. Types of taxable income : The following types of income count as income for tax purposes and compose the gross income on an individual's tax return.

a. Wages, salaries, tips which include, but not limited to ( 419 & 419-4):

o Sick and vacation pay which is paid by the employer;

o Temporary census income; and

o Earned in-kind benefits such as housing provided by an employer that are part of the individual's taxable income from earnings.

b. Taxable interest

c. Ordinary dividends

d. Taxable refunds, credits, or offsets of state and local income taxes

e. Alimony received

f. Business (i.e.: self-employment) income (or loss as per IRS rules-IRS Schedule C or C-EZ) [If additional verification from the individual is required, see Sec. 419-2 ] This includes the sale of bodily fluids such as plasma, breast milk, ect.

g. Capital gains (or loss) (This can be from sale of stocks, bonds, real property such as a home, or other personal property not used for business)

h. Other gains (or losses) (IRS form 4797, generally for business property, rental property, farmland, and livestock sold)

i. IRA distributions (taxable amount)

j. Pensions and annuities (taxable amount if different than gross)

k. Rental real estate income, royalties, partnerships, S corporations (from IRS Schedule E)

l. Farm income (or loss) (from IRS Schedule F)

m. Unemployment insurance

n. Social Security benefits (the taxable portion, if any)

o. Other income (as defined by IRS) These may include:

o Prizes, winnings or awards,

o Alaska Permanent Funds dividends,

o Cash contributions. See section 415-7 for restrictions on counting cash gifts or contributions as income.

o Taxable amounts from certain educational savings accounts or health savings accounts, etc.

o Some of these sources may be reported to the individual on an IRS1099-MISC form and could be lump sums that only count in the month received.

2. Add-Back income : To determine the MAGI-based income for CHIP eligibility, some income types must be added to the individual's gross taxable income even though it is not taxable.

a. The portion of Social Security benefits that was not taxable (in many cases, this will be the full amount of the Social Security benefits.)

b. Non-taxable interest income (such as interest earned on municipal bonds)

c. Foreign earned income that was excluded from taxable income.

C. Additional Requirements for CHIP

3. Lump sum payments are countable for CHIP eligibility, but only in the month the payment is received. (Some types of lump sum income are excluded from countable income. Sec. 411 )

4. Count educational income that is used for living expenses or other non-educational related expenses.

5. Certain income of American Indians/Alaska Natives is excluded from income. (See 417-14 )

The gross countable income will be the sum of the taxable income, plus any add backs, and any lump sum or countable educational income.

See Sections 419-4 and 417 for income that does not count for MAGI-Based programs and for treatment of various other types of income.