What is MAGI or modified adjusted gross income? | healthinsurance.org (2024)

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Under the Affordable Care Act (ACA), eligibility for Medicaid, premium tax credits or premium subsidies, and cost-sharing reductions or is based on modified adjusted gross income (MAGI). But the ACA has its own calculation of MAGI, which differs from MAGI calculations used for other purposes.

The details of the MAGI calculation are outlined here. If you have questions or want guidance about your particular circ*mstances, consult a tax advisor or other professional.

MAGI starts with adjusted gross income (AGI) from Form 1040, but three things must be added to AGI to get MAGI under the ACA. If applicable, you must add in these amounts:

• Non-taxable Social Security benefits (this includes Social Security Disability Insurance benefits (SSDI), but Supplemental Security Income (SSI) does not get counted when the ACA-specific MAGI is determined)
• Tax-exempt interest (typically earned on municipal bonds)
• Foreign-earned income and housing expenses for Americans living abroad

For Medicaid eligibility, some expenses can be subtracted, including scholarships and grants used for education, and certain American Indian/Native American income.

Income received as a lump sum is counted as income only in the month it’s received when determining eligibility for Medicaid (whereas it would be counted as part of an enrollee’s annual income for determining eligibility for premium subsidies), although there’s an exception for lottery and gambling winnings of $80,000 or more — those amounts can be counted as income spread out across up to 120 months.

If you receive advance premium subsidies (paid to your insurer on your behalf) based on your projected MAGI, the amount has to be reconciled on your tax return based on your actual MAGI for the year. But there’s no after-the-fact reconciliation process for Medicaid or cost-sharing reductions.

In other words, Medicaid and CSR eligibility are determined at the time a person applies for coverage, and the benefits do not have to be repaid if the person’s actual MAGI ends up being different from what they projected.