MAGI Household Composition

MAGI Household Composition

Use MAGI Rules for these Programs

In order to determine financial eligibility for MAGI Programs, the MAGI household composition must first be determined. Under new rules, the MAGI household composition is determined on the individual level. The MAGI Household Composition is used to determine whose needs, income, and expenses are used to determine Medicaid or CHIP eligibility. Each individual living at the same physical address may have a different MAGI household composition.

*An individual does not have to file a federal income tax return to apply for Medicaid or CHIP.

Determining MAGI Household Composition (Flowchart)

The MAGI household composition will be based on an individual’s:

•  ŸTax status
• Ÿ Tax relationships
• Ÿ Living arrangements
• Ÿ Family relationships

Note: Do not include children receiving foster care or adoption assistance.

Tax Status

An individual’s tax status must be designated before their MAGI household composition can be determined.

A tax status is based on the individual’s self-declaration for what he or she plans to report on his or her federal income tax return for the taxable year in which Medicaid or CHIP eligibility is requested.

Individuals must be designated as one of the following:

ŸA taxpayer – an individual who plans to file a federal income tax return for the taxable year in which Medicaid or CHIP eligibility is requested and who is not claimed by another taxpayer. Spouses who plan to file a joint or separate federal income tax return are both considered taxpayers.

ŸA tax dependent – an individual who plans to be claimed as a tax dependent by a taxpayer.

o An individual who is both a taxpayer and tax dependent is considered a tax dependent.

o Example: A college student who plans to file his or her own federal income tax return and expects to be claimed by his or her parents will be considered a tax dependent.

A non-taxpayer/non-tax dependent – an individual who does not plan to file a federal income tax return in the taxable year in which Medicaid or CHIP eligibility is requested and does not plan to be claimed by a taxpayer.

Tax Relationships

Individuals have a tax relationship to one another if they:

• Ÿ Plan to file a joint federal income tax return
• Ÿ Are the taxpayer that plans to claim specific tax dependent(s)
• Ÿ Are a tax dependent of a specific taxpayer

Individuals do not have a tax relationship to anyone if they:

• Ÿ Do not plan to file a federal income tax return
•  Are not the taxpayer planning to claim the specified tax dependent(s)
• Ÿ Are not a tax dependent of a specified taxpayer

 

Determining Custodial Parent

A custodial parent is established based on physical custody and who has legal authority to claim a child as a tax dependent specified in a court order, binding separation agreement, divorce agreement, or custody agreement.

If there is no order or agreement, or in the event of a shared custody agreement without specifications for filing federal income tax returns, the custodial parent is the parent with whom the child spends most nights. In the event that the child spends an equal amount of nights with both parents, the advisor must make a prudent person decision regarding which parent should be considered the custodial parent.

If both a custodial parent and a non-custodial parent declare that they plan to claim the same child as a tax dependent on their federal income tax return, the child’s MAGI household composition should be built as a tax dependent of the custodial parent.

Living Arrangements

Individuals are not required to live at the same physical address in order to apply for each other if they have a tax relationship. For example, a non-custodial parent may apply for Medicaid and CHIP on behalf of his or her child if he or she expects to claim the child as a tax dependent on his or her federal income tax return.

A caretaker/second parent must reside with a dependent child to receive benefits.

Family Relationships

Family relationships that impact MAGI household composition include:

• ŸMarriage (opposite and same-sex)
• ŸParents of children under age 19
• ŸSiblings under age 19 of a child under age 19

The tax status of the individual impacts how the family relationship is used in determining MAGI household composition.

Taxpayer’s MAGI Household Composition

The following individuals are included in the taxpayer’s MAGI household composition:

• The taxpayer
• The taxpayer’s spouse, if the taxpayer and the spouse live together
• The taxpayer’s spouse, if the taxpayer and spouse file a joint federal income tax return
•  Any individual the taxpayer plans to claim as a tax dependent.

 

Tax Dependent Exceptions

If a tax dependent meets any one of the following exceptions, use the non-taxpayer/non-tax dependent rules (not the tax dependent rules) to build the tax dependent’s MAGI household composition:

• ŸThe tax dependent is not the taxpayer’s spouse or the taxpayer’s child under the age of 19.
•  The tax dependent is a child under age 19 who lives with both parents who do not plan to file a joint federal income tax return and the child was claimed by one parent.
• ŸThe tax dependent is a child under age 19 who is claimed as a tax dependent only by a non-custodial parent.

For a child claimed as a tax dependent by both parents who are filing jointly, with one parent living outside the home, the child does not meet the third tax dependent exception; build the child’s MAGI household composition using the Tax Dependent Rules.

Tax Dependent’s MAGI Household Composition

If an individual is a tax dependent and does not meet a tax dependent exception previously listed, the following individuals must be included in the tax dependent’s MAGI household composition:

• The tax dependent.
• The individuals in the MAGI household composition of the taxpayer who is planning to claim the tax dependent.
• ŸThe tax dependent’s spouse, if the tax dependent and the spouse live together.

 

Non-Taxpayer/Non-Tax Dependent’s or Tax Dependent with an Exception MAGI Household Composition

If an individual does not plan to file a tax return nor plans to be claimed as a tax dependent, the individual is considered a non-taxpayer/non-tax dependent. All tax dependents who meet an exception – Tax Dependent Exceptions – will build his or her MAGI household composition using the non-taxpayer/non-tax dependent rules.

The following individuals must be included in the non-taxpayer/non-tax dependent or tax dependent with exception’s MAGI household composition if living together:

• The individual
• The individual’s spouse
• The individual’s children under the age of 19
• ŸIf the individual is a child under the age of 19:

o The individual’s parents

o The individual’s siblings under the age of 19

Inclusion of the Needs of the Unborn in MAGI Household Composition

The table below identifies when the unborn child(ren) will be counted in the MAGI household composition.

Type of Assistance	Inclusion of the Unborn
TP 07, TP 20, and TP 37,   Transitional MedicaidTP 08, Parents and Caretaker   Relatives MedicaidTA 31, TP 32, TP 33, TP 34,   TP 35, TP 36, Emergency MedicaidTP 40, Pregnant Women   MedicaidTP 43, Children Under Age One  TP 44, Children Ages 6-18TP 48, Children Ages 1-5TP 56 Medically Needy with   Spend DownTP 70, Medicaid for Transitioning   Foster Care Youth	Unborn child(ren) will   continue to be included in the MAGI household composition of: • A pregnant woman • Any child under age 19   whose MAGI household composition includes a pregnant woman certified on   Medicaid
TA 84, CHIP	Unborn child(ren) is/are  included in the MAGI household composition of the pregnant minor applying for CHIP.
TA 85, CHIP-P	Unborn child(ren) is/are included in the MAGI household composition.