What Is MAGI?

MAGI (Modified Adjusted Gross Income) is the method for calculating your countable income for most Medicaid programs. Before MAGI, there were different rules in each state for calculating countable income to determine Medicaid eligibility. Following the passage of the Affordable Care Act (ACA), MAGI is the uniform calculation method that applies to most families. It is basically the same method used on a federal income tax return. It is also the same method that applies to other low-income health insurance programs like CHIP (Children’s Health Insurance Program) and ACA Marketplace (See GetCoveredNJ) premium subsidies.

Does MAGI apply to all people in determining Medicaid eligibility?

No. Some Medicaid programs still do not use the MAGI method, such as programs for people who are qualifying based on their age (65 and older) or disability. These programs continue to use the traditional NJ Medicaid rules for types of income counted and deducted.

How does MAGI work?

There are three steps to calculating your MAGI (see below for an explanation of each step): (1) determining your household size; (2) adding your MAGI income; and (3) subtracting expenses that qualify as deductions (adjustments) from your MAGI income. Your MAGI is therefore equal to your household MAGI countable income minus MAGI countable deductions. If you file a tax return, it will often be the same as your adjusted gross income line on thefederal income tax return (Form 1040).

(1) What is your MAGI household size?

Your household size depends on whether you are considered a tax filer, a tax dependent, or a non-filer.

• If you are a tax filer, your household size is yourself, your spouse (if you live together and/or file taxes jointly), and any dependents you claim—these are listed on page 1 of Form 1040 (and on an additional statement if you have more than four dependents).
• Most people claimed as tax dependents on a tax return are classified as having the same household size as the tax filer, but there are a few exceptions.
• Household size for adults who are non-filers in New Jersey includes yourself and, if living with you, your spouse and children (under age 19, or under age 21 and full-time students).

(2) What income is considered in calculating MAGI?

Your MAGI income includes any income from you or your household members that is taxable on a federal tax return. Certain types of income are not taxable to you and therefore not countable as MAGI income. Examples include:

• Child support received
• Supplemental Security Income (SSI)
• Workers compensation benefits

While MAGI countable income is generally the same as taxable income, there are a few exceptions—the most common is Social Security retirement or disability (SSDI) benefits, which are counted, even though they may not be taxed. However, when children are included as part of your household, their income is only counted if they would be required to file their own tax return. Therefore, children’s Social Security benefits are almost never counted as part of countable MAGI income because a child who receives them is almost never required to file a tax return.

(3) What items are subtracted in calculating MAGI?

Anything that is an adjustment to income on page 2 of Schedule 1 of Form 1040 is subtracted from your MAGI income to determine your total countable MAGI income. Examples include:

• Contribution to IRA or other retirement plan
• Student loan interest Alimony paid, but only for agreements finalized before January 1, 2019

What are MAGI eligibility levels?

Once your MAGI is calculated, you can compare it to Medicaid eligibility for your household size to determine whether you are eligible. For adults, if your MAGI is at or below 138% of the federal poverty level (FPL), as shown in the table found at NJ FamilyCare's Who is Eligible? page in the left hand column, and you meet the other eligibility requirements, then you qualify for Medicaid.

Note the following:

• Medicaid eligibility is generally based on current monthly income. However, if you have income that you can predict will change over the course of a year (for example, you work for a school system and are not paid in July and August), New Jersey Medicaid eligibility should be calculated based on your annual income.
• There are higher Medicaid MAGI eligibility levels for pregnant women and children, as shown on the table at NJ FamilyCare's Who is Eligible? page.
• Financial eligibility for these MAGI programs is based solely on income; your resources (assets) are not considered.
• If you are not eligible for Medicaid based on MAGI, you may still be eligible for other Medicaid programs based on disability or age. As mentioned above, these programs calculate financial eligibility on a basis different from MAGI. To learn more about these programs, visit the website explaining Aged, Blind, and Disabled programs (from the State of New Jersey Department of Human Services). Or you may be eligible based on MAGI for private health insurance subsidies on the state Marketplace (see GetCoveredNJ).

More MAGI information

For more information about how MAGI is calculated, visit one of the following websites:

• 42 CFR § 435.603 - Application of modified adjusted gross income (MAGI) (from the Cornell Law School Legal Information Institute)
• New Jersey Medicaid Communication No.14-12: Affordable Care Act Eligibility Information (from New Jersey Department of Human Services)
• Key Facts: Determining Household Size for Medicaid and the Children’s Health Insurance Program (from the Center on Budget and Policy Priorities)
• How to Count Income and Household Size: How to Estimate Your Income for the Marketplace (from HealthCare.gov)

This information last reviewed: Dec 24, 2024