How Income is Counted for MAGI

Most Medicaid eligibility pathways use Modified Adjusted Gross Income (MAGI) to determine eligibility. This guide explains what MAGI is, whose income counts, and what types of income are included or excluded.

What is MAGI?

MAGI is a household's adjusted gross income plus the following additions:

• Untaxed foreign income
• Non-taxable Social Security benefits
• Tax-exempt interest

MAGI does not appear as a line on consumers' tax returns. Unless someone is receiving Social Security benefits, it is often identical or very close to a household's adjusted gross income.

Who uses MAGI?

MAGI is used to determine eligibility for:

• Advance payments of the premium tax credit (APTC)
• Cost-sharing reductions (CSRs)
• Certain Medicaid eligibility groups
• The Children's Health Insurance Program (CHIP)

Whose Income to Include

Household size and composition are important factors when calculating MAGI and may differ between Marketplace and Medicaid/CHIP calculations.

Marketplace tax households

For APTC and CSR eligibility, individuals who appear together on the same tax return are in the same tax household. The basic equation is: Tax Household = Tax Filer + spouse + tax dependents. This includes:

• Spouse if legally married and filing jointly
• Anyone claimed as a tax dependent for the coverage year
• Spouse and tax dependents even if they do not need health coverage

Medicaid and CHIP tax households

A Medicaid/CHIP household is generally the same as a tax household, with some exceptions:

• A spouse is included if spouses live together but are not on the same tax return
• Pregnant women's household size is increased based on the child or children she is carrying
• Special non-filer rules apply for consumers who do not file federal taxes and will not be claimed as dependents

What Income is Counted

Taxable income to report

• Wages, salaries, and bonuses
• Self-employment income
• Tips and gratuities
• All Social Security retirement and disability income
• Unemployment compensation
• Rental income
• Alimony received (for divorces finalized before January 1, 2019)

Income NOT to report

Deductions to report

• Alimony paid (for divorces finalized before January 1, 2019)
• Student loan interest
• IRA contributions (if no retirement account through an employer)
• Educator expenses
• Limited charitable contributions (as allowed by IRS rules)

Deductions NOT to report

• Child or dependent care expenses
• Charitable contributions above certain limits
• Mortgage interest
• Child support payments
• Property taxes
• Tuition costs
• Alimony paid (for divorces finalized after January 1, 2019)

Special Considerations

Non-taxable income

A few non-taxable income types are included in MAGI:

• Non-taxable Social Security benefits
• Tax-exempt interest
• Excluded foreign income

Medicaid and CHIP specific rules

Medicaid and CHIP use current monthly household income and exclude:

• Certain scholarship income
• Certain tribal income
• Federal Pandemic Unemployment Compensation (2020–2021)

Income of children and tax dependents

A tax dependent's income only counts if they are required to file their own tax return. The filing threshold depends on the type of income the dependent receives. Income counting rules are the same whether or not they plan to file.

American Indians and Alaska Natives

Many types of AI/AN income are excluded from MAGI calculations, including:

• Distributions from Alaska Native Claims Settlement Act Corporations
• Distributions from trust or reservation property
• Income from hunting, fishing, and natural resource rights
• Income from cultural and subsistence property
• Certain student financial assistance
• Income within the IRS General Welfare Doctrine

Variable income

For households with unpredictable income such as self-employed or commission-based workers:

• Base estimates on past experience and known future changes
• Consider recent trends and similar situations
• Update your Marketplace application if income changes after applying