MAGI/TANF Income

To determine MAGI financial eligibility under the MAGI rules, the following steps must be completed in the specified order for each individual applying for benefits.

Step 1: Determine MAGI Household Composition 

Step 2: Identify and List All Income, Expenses, and Overpayments for MAGI Individual Income

The following items must be identified for each individual within the MAGI household composition:

• Earned Income
• Unearned Income
• Self-Employment Income
• Expenses

Use this to determine if tax dependent’s income will also be counted

Based on the 2019 IRS thresholds, an individual is not expected to be required to file federal income tax return for the taxable year if all of the following statements are true:

• The individual’s unearned income is less than $87.50 monthly
• The individual’s earned income is less than $1,000 monthly

Cash support may only be counted if:

• It is given from a taxpayer to his or her tax dependent,
• It is given by a taxpayer who is someone other than the receiver’s spouse or parent, and
• The total amount exceeds $50 per month

Expenses Captured Under MAGI Rules

• Alimony Paid
• Educational Expenses/Student Loan interest
• Moving Expenses
• Tution or GI bill Deductions
• Educator Expenses
• Health Savings Account
• Deductible Part of Self-Employment Tax
• Self-Employed IRA, Simple IRA, And Qualified Plan Deductions
• Self-Employed Health Insurance
• Penalty on Early Withdrawal
• IRA Deduction
• Domestic Production Activities Deductions

TANF Medicaid

1. For TANF Medicaid, the following deductions from income are allowed:

• Up to $75 per month for child support received
• Child support payments made
• Alimony and payments to dependents living outside the home
• For dependent care:

• • • $200 per month for each child under age two, and
    • $175 per month for each dependent age two or older.

2. For TANF Medicaid only, add $120 per employed household member to family size income limit.

3. TANF Medicaid Self-Employment Income:

a. Allowable deductions for costs/expenses of producing self-employment income include:

• labor,
• sales tax,
• stock,
• raw materials,
• rent,
• insurance premiums,
• utilities,
• repairs that maintain income-producing property,
• supplies,
• fuel,
• linen service,
• property tax,
• interest from business loans on income-producing property,
• identifiable costs of seed and fertilizer,
• payments on the principal of loans for income-producing property,
• capital asset purchases such as real property, equipment, machinery and other durable goods (items expected to last for at least 12 months),
• capital asset improvements and allowable transportation costs. (The client may choose to use 50 cents per mile instead of keeping track of individual transportation expenses. Note: Travel to and from the place of business is not allowed.)

b. Do not deduct the following:

• net loss that occurred in a previous period;
• work-related expenses, such as federal, state and local income taxes, and retirement contributions;
• depreciation;
• costs not related to the self-employment; and
• costs related to producing income gained from illegal activities, such as prostitution and the sale of illegal drugs.

c. If the applicant conducts a self-employment business in his home, consider the cost of the home (rent, mortgage, utilities) as shelter costs, not business expenses, unless these costs can be identified as necessary for the business separately.

5. Sponsor’s Income for Medicaid:

1. Do not apply this policy to LPR’s who:

• • are children under age 18;
  • are ineligible for benefits;
  • have worked or can receive credit for 40 quarters of work;
  • refugees,
  • parolees,
  • asylees,
  • Amerasians,
  • victims of severe trafficking,
  • Cuban/Haitian entrants;
  • battered alien spouses of U.S. citizens or legal permanent residents,
  • children of battered aliens, and
  • parents of battered children if HHSC determines that the battery is substantially related to the need for benefits and the battered individual does not live with the batterer.

2. This policy does not apply to:

• • LPR’s whose sponsors receive TANF or SSI; or
  • the dependent child of a sponsor or sponsor’s wife.

3. Count the income of an LPR’s sponsor and spouse if the spouse also executed an affidavit of support. Consider all the sponsor’s gross countable income as available to the LPR’s household, minus only the following deductions:

The lesser of:

a. 20% of the total gross monthly earned income (including net self employment earned income); or 175

b. The total amount the sponsor pays to a claimed tax dependent  living outside the home

c. Total alimony or child support the sponsor pays to persons living outside the home