MODIFIED ADJUSTED GROSS INCOME (MAGI) METHODOLOGY

Transcription

1 INCOME MODIFIED ADJUSTED GROSS INCOME (MAGI) METHODOLOGY The Patient Prtectin and Affrdable Care Act, enacted March 23, 2010, amended by the Health Care and Educatin Recnciliatin Act f 2010, enacted March 30, 2010, are tgether referred t as the Affrdable Care Act. The Affrdable Care Act required a new methdlgy fr determining hw incme is cunted and hw husehld cmpsitin and size are determined when establishing financial eligibility fr all three Insurance Affrdability Prgrams (IAP) - Medicaid, CHIP and Advance Premium Tax Credits (APTC) thrugh the Exchange. MAGI methdlgies apply t individuals whse eligibility fr Medicaid and is determined fr cverage effective n r after January 1, NOTE: West Virginia received an 1115 waiver t begin using MAGI methdlgies t determine eligibility fr ppulatins subject t MAGI beginning with applicatins submitted n r after Octber 1, 2013, and fr any retractive cverage mnths requested n applicatins submitted n r after Octber 1, MAGI methdlgies will nt be applied t current beneficiaries wh were determined eligible fr Medicaid r n r befre December 31, 2013 until March 31, 2014 r the next regularly-scheduled renewal, r a change is reprted f eligibility fr such individual, whichever is later. NOTE: West Virginia received a waiver under sectin 1902e(14)(A) f the Scial Security Act t allw the state t extend the renewal date 6 mnths fr current Medicaid and beneficiaries whse renewal is scheduled t ccur between Octber 1, 2013 and September 30, MAGI Methdlgy is used t determine financial eligibility fr and the fllwing Medicaid eligibility grups: Parents and Other Caretaker Relatives; Pregnant Wmen; Children Under 19; Adult Grup; 10/

2 A. BUDGETING METHOD The budgeting methd established in Sectin 10.6 is used t determine incme fr the certificatin perid. B. DETERMINE THE MAGI HOUSEHOLD SIZE FOR EACH APPLICANT T determine the MAGI husehld size the fllwing step-by-step methdlgy is used fr each applicant. Fr purpses f applying the MAGI methdlgy child means natural, adpted r step child; parent means natural, adpted r step parent; sibling means natural, adpted, half r step sibling. This methdlgy must be applied t each applicant in the MAGI husehld separately: STEP 1: IS THE APPLICANT A TAX FILER? IF NO: Mve t STEP 2. IF YES: The applicant s MAGI husehld includes themselves, each individual they expect t claim as a tax dependent, and their spuse if residing with the tax filer. This is knwn as the tax filer rule. STEP 2: IS THE APPLICANT CLAIMED AS A TAX DEPENDENT ON SOMEONE ELSE S TAXES? IF NO: Mve t STEP 3. IF YES: Test against the three exceptins belw. If the answer t any f these exceptins is yes, then the applicant s MAGI husehld size must be calculated using STEP The applicant is claimed as a dependent by smene ther than a spuse r parent. 2. The applicant is a child under 19 wh lives with bth parents, but bth parents d nt expect t file taxes jintly. 3. The applicant is a child under 19 wh is claimed as a tax dependent t a nn-custdial parent(s). 7/

3 NOTE: Fr the purpse f this exceptin, the custdial parent is established based n physical custdy specified in a curt rder r binding separatin, divrce, r custdy agreement; r, if there is nsuch rder r agreement, r in the event f a shared custdy agreement, based n with whm the child spends mre nights. If such an agreement is unavailable, the custdial parent is the ne with whm the applicant spends mst nights. If nne f these exceptins are true then the applicant s Medicaid husehld cnsists f the applicant, the tax filer claiming them as a dependent, this culd be tw peple filing jintly, any ther dependents in the tax filer s husehld, and the applicant s spuse if they reside tgether. This is knwn as the tax dependent rule. STEP 3: IF THE APPLICANT IS NOT A TAX FILER, IS NOT CLAIMED AS A TAX DEPENDENT OR MEETS ONE OF THE EXCEPTIONS IN STEP 2: The Medicaid husehld cnsists f the applicant and the fllwing individuals as lng as they reside with the applicant: 1. The applicant s spuse; 2. The applicant s children under age 19; 3. Fr applicants under 19, their parents, and their siblings wh are als under 19. This is knwn as the nn-filer rule. STEP 4: CASES WHERE APPLICANT CANNOT REASONABLY ESTABLISH TAX DEPENDENT STATUS If an applicant/tax filer cannt reasnably establish that reprted husehld members will be tax dependents f the applicant fr the tax year in which Medicaid is sught, the inclusin f such individual in the MAGI husehld f the tax filer is determined using rules in STEP 3. EXAMPLE: An applicant indicates she is currently separated and seeking a divrce. The living arrangements f the children are t be determined by family curt. She is uncertain if the children will remain in her husehld fr the tax year, r whether she will be able t claim them as tax dependents n next year s tax return. Because the tax dependency status f the children cannt be reasnably established n the date f applicatin, inclusin f the children in the applicant s MAGI husehld is determined using STEP 3. 7/

4 NOTE: In the case f married cuples wh reside tgether, each spuse must be included in the MAGI husehld f the ther spuse, regardless f whether they expect t file a jint tax return r whether ne spuse expects t be claimed as a tax dependent by the ther spuse. NOTE: Fr the MAGI husehld, a pregnant wman is cunted as herself, plus the number f unbrn children she is expected t deliver. EXAMPLES: (Same as Chapter 9) 1. Jhn and Samantha are married with 2 children, James, 7 and Ruth, 5. Jhn and Samantha file taxes jintly and claim bth children as dependents. Jhn is a tax filer. Using STEP 1 abve his husehld includes himself, each f his tax dependents and his spuse Jhn, Samantha, James and Ruth = 4. Samantha is a jint tax filer. Using STEP 1 abve, her husehld includes herself, each f her tax dependents and her spuse Jhn, Samantha, James and Ruth = 4. James is a tax dependent. Using STEP 2 he des nt meet any f the exceptins. James husehld includes himself, the tax filers and ther tax dependents Jhn, Samantha, James and Ruth = 4. Ruth is a tax dependent. Using STEP 2, she des nt meet any f the exceptins; therefre, her husehld includes herself, her tax filers and ther tax dependents in the husehld Jhn, Samantha, James and Ruth = Bb and Mary are nt married but have ne child tgether, Julie, 9 mnths. Bb is a tax filer and claims Julie as his dependent. Mary is als a tax filer. Bb is a tax filer. Using STEP 1 abve his husehld includes himself and his tax dependent Julie Bb and Julie = 2. Mary is a tax filer. Using STEP 1 her husehld includes herself nly Mary = 1. 7/

5 Julie is a tax dependent. Using STEP 2 Julie meets exceptin number 2; therefre her husehld is determined using STEP 3. Julie s husehld includes herself and her parents Julie, Bb and Mary = Frank is a tax filer and claims his 10-year-ld sn Pete as a tax dependent. Frank is the nn-custdial parent as Pete lives with his mther. Frank is a tax filer. Using STEP 1 his husehld includes himself and his tax dependent Pete Frank and Pete = 2. Pete is a tax dependent. Using STEP 2 he meets exceptin 3; therefre his husehld is determined using STEP 3. Pete s husehld includes himself and the parent and any siblings with whm he resides. Pete s Medicaid husehld cannt be determined based n an applicatin submitted by Frank. The parent with whm Pete resides must submit an applicatin n his behalf. 4. Susan is a tax filer wh lives with her 10 year ld sn Pete. Pete is claimed as a tax dependent by Frank frm the example abve, his nn-custdial parent. Susan is a tax filer. Using STEP 1 her husehld includes herself nly Susan = 1. Pete is a tax dependent. Using STEP 2 he meets exceptin 3; therefre, his husehld includes himself and his custdial parent Susan Pete and Susan = Tammy is a tax filer and claims her daughter Rse, 16 and her mther Edith, 76 as tax dependents. Neither Rse nr Edith is a tax filer. Tammy is a tax filer. Using STEP 1 her husehld includes herself and her tax dependents Rse and Edith Tammy, Rse and Edith = 3. Rse is a tax dependent. Using STEP 2 she des nt meet any exceptins; therefre her husehld includes herself, Tammy, the tax filer claiming her, and Edith the ther tax dependent Rse, Tammy and Edith = 3. Edith is a tax dependent. Using STEP 2 she meets exceptin 1; therefre her husehld is determined using STEP 3. Edith s husehld includes herself = Mary is a tax filer and claims her daughter Crynn, 20 and Crynn s daughter Nicle, 1 as tax dependents. Neither Crynn nr Nicle is a tax filer. 7/

6 Mary is a tax filer. Using STEP 1 her husehld includes herself and her tax dependents Crynn and Nicle Mary and Crynn and Nicle = 3. Crynn is a tax dependent. Using STEP 2 she des nt meet any exceptins; therefre her husehld includes herself, Mary, the tax filer claiming her, and Nicle, the ther tax dependent Crynn and Mary and Nicle = 3. Nicle is a tax dependent. Using STEP 2 she meets exceptin 1; therefre her husehld is determined using STEP 3. Nicle s husehld includes herself and her mther Crynn Nicle and Crynn = Alice is a tax filer and claims her 12 year ld grandsn Michael as a tax dependent. Alice is a tax filer. Using STEP 1 her husehld includes herself and her tax dependent Michael Alice and Michael = 2. Michael is a tax dependent. Using STEP 2 he meets exceptin 1; therefre his husehld is determined using STEP 3. Michaels husehld includes nly himself = Brad and Sarah are married and file taxes jintly. Sarah is pregnant. Brad is a tax filer. Using STEP 1 his husehld includes himself and his spuse Brad and Sarah = 2. Sarah is a tax filer. Using STEP 1 her husehld includes herself and her spuse Brad, because Sarah is pregnant her Medicaid husehld als includes the unbrn child Brad and Sarah and unbrn child = Jane and Jill are married and have an adpted child named Lilly. Jane and Jill file taxes jintly and they bth claim Lilly as a tax dependent. Jane is a tax filer. Using STEP 1, her husehld includes herself, each f her tax dependents and her spuse Jane, Jill and Lilly = 3. Jill is a jint tax filer. Using STEP 1, her husehld includes herself, each f her tax dependents and her spuse Jill, Jane and Lilly = 3. Lilly is a tax dependent. Using STEP 2, she des nt meet any f the exceptins. Lilly s husehld includes herself and the tax filers claiming her Jane, Jill, and Lilly = 3. 24

7 Lilly lives in the hme with bth f her parents and is claimed by them. Her AG wuld be Lilly + Jane + Lilly = Judith and Ethel are married but are n scial security and d nt file taxes. Judith s bilgical grandchildren, Suzie and Cindy live with them as Judith has custdy f them. Suzie and Cindy are first cusins; neither is claimed as a tax dependent by anyne. Judith is a nn-tax filer. Using STEP 3 abve, her husehld includes herself and her spuse Judith and Ethel = 2. Ethel is a nn-tax filer. Using STEP 3, her husehld includes herself and her spuse Ethel and Judith = 2. Suzie is neither a tax filer nr a tax dependent. Using STEP 3, her husehld includes herself nly Suzie = 1. Cindy is neither a tax filer nr a tax dependent. Using STEP 3, her husehld includes herself nly Cindy = Jhn and Ken are married and file taxes jintly. They have ne adpted child, Kevin; Jhn has a daughter named Phyllis; Ken has a daughter name Cnnie. All the children live with Jhn and Ken and are claimed as their tax dependents. Jhn is a tax filer. Using STEP 1, his husehld includes himself, each f his tax dependents and his spuse Jhn, Ken, Kevin, Phyllis, and Cnnie = 5. Ken is a jint tax filer. Using STEP 1, his husehld includes himself, each f his tax dependents and his spuse Jhn, Ken, Kevin, Phyllis, and Cnnie = 5. Kevin is a tax dependent. Using STEP 2 abve, he des nt meet any exceptins; therefre, his husehld includes himself, his tax filers and ther tax dependents in the husehld Kevin, Jhn, Ken, Phyllis, and Cnnie = 5. Phyllis is a tax dependent. Using STEP 2 abve, she des nt meet any exceptins; therefre, her husehld includes herself, her tax filers and ther tax dependents in the husehld Phyllis, Jhn, Ken, Kevin, and Cnnie = 5. Cnnie is a tax dependent. Using STEP 2 abve, she des nt meet any exceptins; therefre, her husehld includes herself, her tax filers and ther tax dependents in the husehld Cnnie, Jhn, Ken, Phyllis, and Kevin = 5. 24a

8 C. DETERMINE THE MAGI HOUSEHOLD INCOME FOR EACH HOUSEHOLD MAGI husehld incme is the sum f the MAGI-based incme f every individual included in the individual s MAGI husehld. The MAGI husehld is determined using the MAGI methdlgy established in Item B abve. Fr purpses f applying the MAGI methdlgy child means natural, adpted r step child; parent means natural, adpted r step parent; sibling means natural, adpted, half r step sibling. - INCOME OF EACH MEMBER OF THE INDIVIDUAL S MAGI HOUSEHOLD IS COUNTED. EXCEPTION: Incme f children, r ther tax dependents, wh are nt expected t be required t file an incme tax return is nt cunted, whether r nt the individual actually files a tax return. NOTE: A reasnable determinatin as t whether an individual will be required t file a tax return can be made based n the individual s current incme fr the applicable budget perid. Such a determinatin wuld be based n infrmatin available at the time f applicatin r renewal. Infrmatin regarding Wh Must File a tax return can be fund in IRS Publicatin 501. EXAMPLE: A child is 17 years ld with a part-time jb in the summer and earns $2,100 annually. He is expected t be claimed as a dependent n his parent s tax return. It is determined at applicatin that the child is nt expected t be required t file taxes the fllwing year because his incme des nt exceed the filing requirements established by the IRS. Therefre, the child s incme will NOT be included in the MAGI husehld nr cunt tward eligibility whether he actually files taxes r nt. EXAMPLE: A child is 18 years ld and wrks part-time thrugh the summer and after schl. He earns $7,200 fr the year. It is determined at applicatin that he is expected t be claimed as a dependent n his parent s tax return, and will be 12/ b

9 required t file an incme tax return fr the year in which Medicaid is being sught. Therefre, this child s incme WILL be included fr determining eligibility fr any MAGI husehld fr which he is a member. EXAMPLE: Hpe is 60 years ld and lives with her 40-year-ld daughter. Hpe will be claimed as a tax dependent n her daughter s taxes next year. Hpe receives $960 Scial Security incme per mnth, she has n ther incme. Because Hpe has n ther incme, her SS incme is nt taxable and she is nt required t file taxes. As her daughter s tax dependent, her incme des nt cunt tward her daughter s MAGI husehld. Hpe is als applying fr health cverage. Her MAGI husehld will include nly herself using nn-filer rules in STEP 3 belw. Because Hpe is neither a child nr a tax dependent in her wn MAGI husehld, her incme will cunt tward determining her MAGI eligibility. D. CALCULATING MAGI T calculate the MAGI determine the AGI (Adjusted Grss Incme) figure fr each member f the MAGI husehld whse incme will cunt, fr the current mnth. When applicable, the wrker will use the budgeting methd established in Sectin 10.6, part B, titled Budgeting Methd, t anticipate future incme amunts, cnsider past incme surces, and build mnthly incme amunts based upn the applicant s reprted incme. T calculate AGI, the wrker must add all f the individual s incme frm any f the incme surces listed in Sectin 10.3, Chart Exclusins frm AGI: The fllwing incme surces, which may r may nt be cnsidered taxable by the IRS, must be excluded frm the individual s incme: a. Child supprt incme b. Benefits issued thrugh the Department f Veterans Affairs c. Wrkers Cmpensatin Payments d. Schlarships, awards, r fellwship grants used fr educatin purpses and nt fr typical living expenses is excluded frm incme. Cllege Wrk Study prgram is cnsidered taxable incme under IRS rules and therefre cannt be excluded frm the MAGI calculatin. e. Incme surces specific t Native American and Alaskan Natives: 12/ c

10 Distributins frm Alaska Native Crpratins and Settlement Trusts; Distributins frm any prperty held in trust, subject t Federal restrictins, lcated within the mst recent bundaries f a prir Federal reservatin, r therwise under the supervisin f the Secretary f the Interir; Distributins and payments frm rents, leases, rights f way, ryalties, usage rights, r natural resurce extractin and harvest frm - Rights f wnership r pssessin in any lands described in paragraph (3)(b) f this sectin; r - Federally prtected rights regarding ff-reservatin hunting, fishing, gathering, r usage f natural resurces; f. Supplemental Security Incme (SSI) g. TANF assistance. h. Federal tax credits. 2. Adjustments t AGI: The fllwing items, which can be deducted frm taxes, are subtracted frm the individuals AGI. a. Educatr expenses b. Certain business expenses f reservists, perfrming artists, and fee-basis gvernment fficials c. Health savings accunt deductin d. Mving expenses e. Deductible part f self-emplyment tax f. Self-emplyed SEP, SIMPLE, and qualified plans g. Self-emplyed health insurance deductin 24d

11 h. Penalty n early withdrawal f savings i. Alimny paid j. IRA deductin k. Student lan interest deductin l. Tuitin and fees 3. Required Additins t AGI: T cmplete the calculatin f MAGI fr the individual, add the fllwing incme surces that may r may nt be cnsidered taxable by the Internal Revenue Service (IRS): a. Freign earned incme and husing cst as defined in 26 USC 911 b Any interest received that wuld nrmally be excluded frm taxes c. The prtin f the individual s Title II Scial Security benefits typically excluded frm taxatin, as described in 26 USC 86(d). d. Self-Emplyment/Farming incme, after accunting fr depreciatin and perating lsses. In cases where the business r farm perated at a lss, the wrker must subtract the amunt f the lss frm the incme calculatin. See the methdlgy established in 10.8,G,1 fr calculating self-emplyment incme. e. Cash Supprt if ver $50 per mnth. Fr individuals wh expect t be claimed as a tax dependent by a grandparent, anther relative, r anther individual wh is nt a parent r step-parent, their husehld incme includes cash supprt prvided by the persn claiming them as a tax dependent. f. Lump Sum Incme must be included, but it must nly be cunted in the mnth that it is received. E. MAGI INCOME DISREGARD The nly allwable incme disregard is an amunt equivalent t 5 percent f the applicable MAGI incme when cuntable incme exceeds the FPL limit fr WV CHIP eligibility. 24e

12 The 5% FPL disregard is nt applied t every MAGI eligibility determinatin and shuld nt be used t determine the MAGI cverage grup fr which an individual may be eligible. The 5% FPL disregard will be applied t the highest MAGI incme limit fr which an individual may be determined eligible. EXAMPLE: A applicant has MAGI husehld incme f 216% FPL. The 5% MAGI incme disregard will nt be applied because the highest incme limit f any enrllment grup fr which the child may be eligible is 300% FPL. If the applicant s incme is 305% FPL, then the 5% MAGI incme disregard wuld be applied t bring the child s husehld incme t belw 300% FPL. cverage is apprved. F. DETERMINING ELIGIBILITY The applicant s husehld incme must be at r belw the applicable mdified adjusted grss incme standard fr the MAGI cverage grups. Step 1: Step 2: Step 3: Step 4: Determine the MAGI-based grss mnthly incme fr each MAGI husehld incme grup. Cnvert the MAGI husehld s grss mnthly incme t a percentage f the Federal pverty level by dividing current mnthly incme by 100% FPL fr the husehld size. Cnvert the result t a percentage. Apply the 5% FPL disregard by subtracting 5 percentage pints frm the cnverted mnthly grss incme t determine the husehld incme if it affects the applicant s eligibility fr MAGI Medicaid r. After the 5% FPL incme disregard has been applied, the remaining percent f FPL is the final figure that will be cmpared against the applicable mdified adjusted grss incme standard fr the MAGI cverage grups. MAGI SCREENING Applicants with incme belw the MAGI standard and determined eligible fr cverage in a MAGI cverage grup, i.e., the Adult grup, Parents/Caretaker Relatives, Pregnant Wmen, Children Under Age 19 grup r, shuld be prmptly enrlled int the MAGI cverage grup. The client may als pursue eligibility fr nn-magi Medicaid cverage grups while enrlled in the MAGI grup. See Sectin 16.3,B. 24f

13 EXAMPLES: EXAMPLE 1: Erik and Hannah are married and live tgether with their sn Ben, age 6. Erik and Hannah file a jint tax return, with Ben claimed as a tax dependent. The family applies fr Medicaid fr all 3 family members. Erik wrks and earns $1,000 per mnth and Hannah receives SSA benefits in the amunt f $450 per mnth. Ben has n incme. 1. Determine the MAGI Husehld Size fr Each Applicant: Erik is a tax filer. Using STEP 1 in item B abve, his MAGI husehld cnsists f his spuse Hannah and tax dependent Ben, resulting in a MAGI husehld size f 3 Erik + Hannah + Ben Hannah is als a tax filer; therefre, bth spuse, Erik, and dependent, Ben, cunt in her MAGI husehld, resulting in a MAGI husehld size f 3 Erik + Hannah + Ben Ben is a tax dependent and des nt meet any f the exceptins in STEP 2; therefre, his MAGI husehld is the same as Erik, the tax filer claiming him as a dependent, resulting in a MAGI husehld size f 3 Erik + Hannah + Ben 2. Determine MAGI Husehld Incme fr each MAGI Husehld: Incme f each member f the applicant s MAGI husehld is cunted unless identified as nt being cunted in item D. abve. Neither Erik nr Hannah are the child r expected tax dependent f anther member f the MAGI husehld, therefre their incme will cunt. Ben is the child and expected tax dependent f anther member f the MAGI husehld. Hwever, he is nt expected t be required t file a tax return. Any incme f Ben s wuld nt be cunted. In this example, since each applicant s MAGI husehld is the same Erik + Hannah + Ben, each applicant has the same MAGI husehld incme. Erik, Hannah and Ben s ttal MAGI husehld incme = Erik and Hannah s incme = $1,000 + $450 = $1, Determining Eligibility: Erik, Hannah and Ben: 12/ Cnvert the grss mnthly incme fr each applicant s MAGI husehld t a percentage f the Federal pverty level. Since each applicant in this 24g

14 example has the same MAGI husehld, the same incme cnversin calculatin will apply t all three applicants. Each applicant s MAGI husehld s ttal grss mnthly incme equals $1,450. T cnvert husehld incme t a percentage f FPL and determine eligibility fllw these steps: Determine grss mnthly incme: $1,450 Determine MAGI husehld size: 3 Determine 100% FPL fr the husehld size f 3: $1,591 Divide grss mnthly incme by 100% f the FPL fr the husehld size: $1,450/$1,591 =.9113 Mve decimal pint tw places t the right:.9113 = 91.13% FPL. Cmpare 91.13% FPL t the incme threshld fr each cverage grup. The 5% FPL disregard is nt required since the applicants are eligible fr a MAGI Medicaid cverage grup. In this case Erik, Hannah and Ben all fall under an incme threshld fr Medicaid eligibility. Erik and Hannah qualify under the Adult Grup and Ben under the Children Under Age 19 grup. EXAMPLE 2: Derek and Jenny live tgether but they are nt married. They have ne child tgether named Kate, wh is 2 years ld. Derek is the custdial parent f his sn Kip, frm a prir marriage, wh lives with him full time. Derek and Jenny are bth tax filers and file taxes separately. Derek claims Kip and Kate as tax dependents. Derek earns $1,400 per mnth in wages. Jenny earns $1,300 per mnth in wages. Neither child has incme. 1. Determine the MAGI Husehld Size fr each applicant: Derek is a tax filer. Using STEP 1 in item B abve Derek s MAGI husehld size equals 3 Derek + his tax dependents Kip and Kate. Jenny is a tax filer. She has n tax dependents. Jenny s MAGI husehld size equals 1 - Jenny. 12/ h

15 Kate is a tax dependent. She meets an exceptin in STEP 2 abve because she is living with bth parents, but they will nt file a jint tax return; therefre, her MAGI husehld is determined by STEP 3. Kate s MAGI husehld size equals 4 Kate + her parents Derek and Jenny + sibling Kip. Kip is a tax dependent, but he des nt meet an exceptin in STEP 2. Therefre, his MAGI husehld is the same as Derek, the tax filer claiming him. Kip s MAGI husehld size is als 3 Kip + Derek + Kate. 2. Determine MAGI Husehld Incme fr each MAGI Husehld: Incme f each member f the applicant s MAGI husehld is cunted unless identified as nt being cunted in item C abve. Derek is nt the child r expected tax dependent f anther member f this MAGI husehld, therefre his incme will cunt. Kate and Kip are the child and/r expected tax dependent f anther member f the MAGI husehld. Hwever, neither is expected t be required t file a tax return. Any f their incme wuld nt be cunted. Derek and Kip s MAGI husehld incme = Derek s incme = $1,400. Jenny is neither the child nr expected tax dependent f anther member f her MAGI husehld; therefre, her incme will cunt. Jenny s MAGI husehld incme = $1,300. Kate s MAGI husehld includes bth f her parents, Derek and Jenny. Kate s MAGI husehld incme = Derek and Jenny s incme = $2, Determining Eligibility: Cnvert the grss mnthly incme fr each applicant s MAGI husehld t a percentage f the Federal pverty level. T cnvert MAGI husehld incme t a percentage f FPL and determine eligibility fllw these steps: 24i

16 Derek and Kip s MAGI husehld incme wuld be cnverted using the fllwing steps: Determine grss mnthly incme: $1,400 Determine MAGI husehld size: 3 Determine 100% FPL fr the husehld size f 3: $1,591 Divide grss mnthly incme by 100% f the FPL fr the husehld size: $1,400/$1,591 =.8799 Mve decimal pint tw places t the right:.8799 = 87.99% FPL. Cmpare 87.99% FPL t the incme threshld fr each cverage grup. The 5% FPL disregard is nt required since the applicants are eligible fr a MAGI Medicaid cverage grup. Derek and Kip s MAGI husehld incme is belw the Medicaid incme limit, therefre bth will be eligible fr Medicaid. Jenny s MAGI husehld incme wuld be cnverted using the fllwing steps: Determine grss mnthly incme: $1,300 Determine MAGI husehld size: 1 Determine 100% FPL fr the husehld size f 1: $931 Divide grss mnthly incme by 100% f the FPL fr the husehld size: $1,300/$931 = Mve decimal pint tw places t the right: = % FPL. Subtract 5% FPL disregard: % - 5% = % FPL. Cmpare % FPL t the incme threshld fr each cverage grup. 12/ j

17 Jenny s MAGI husehld incme exceeds the incme standard fr the Adult Grup. Her electrnic accunt will be referred t the Marketplace t be evaluated fr financial assistance with purchasing health insurance using APTC. Kate s MAGI husehld incme wuld be cnverted using the fllwing steps: Determine grss mnthly incme: $2,700 Determine MAGI husehld size: 4 Determine 100% FPL fr the husehld size f 4: $1,921 Divide grss mnthly incme by 100% f the FPL fr the husehld size: $2,700/$1,921 = Mve decimal pint tw places t the right: = % FPL. Cmpare % FPL t the incme threshld fr each cverage grup. The 5% FPL disregard is nt required since the applicant is eligible fr a MAGI Medicaid cverage grup. Kate s MAGI husehld incme is belw the MAGI incme standard children age 1 t 5. Therefre, Kate will be eligible fr. G. SPECIAL SITUATIONS 1. Self-Emplyment When a member f the MAGI husehld incme grup receives selfemplyment incme, the instructins belw must be used t arrive at the grss prfit which is used t calculate cuntable incme. This is determined by subtracting allwable business expenses frm the grss incme. a. Determining Grss Incme The methd used t determine mnthly grss incme frm selfemplyment varies with the nature f the enterprise. It is necessary t determine which f the fllwing types f self-emplyment 24k

18 applies t the client's situatin. Once the pattern f self-emplyment is determined, this is used t determine hw the incme is cunted. (1) Persns Receiving Regular Incme These persns receive incme n a mre r less regular schedule (weekly, mnthly, etc.), r receive a specific amunt frm the business each week r mnth and/r receive the balance f prfit frm the enterprise at the end f the business year. The incme f peple in this situatin is cnverted t a mnthly amunt accrding t the Budgeting Methd in Sectin Business expenses may be cmputed n a mnthly basis r prrated ver a 12-mnth perid, at the client's ptin. (2) Persns Receiving Irregular Incme Many persns derive incme frm shrt-term seasnal selfemplyment. This seasnal enterprise may be the majr surce f incme fr the year, r the incme may be nly fr the perid f time the persn is actually engaged in this enterprise, with ther surces f incme being available during the remainder f the year. Persns wh are seasnally self-emplyed include vendrs f seasnal cmmdities (prduce, Christmas trees, etc.), r ther seasnal farmers. Cash-crp farmers and ther persns similarly selfemplyed receive their annual incme frm self-emplyment in a shrt perid f time and budget their mney t meet their living expenses fr the next 12 mnths. Included in this categry are sme seasnal farmers, when the seasnal incme is the primary supprt fr the year. Since the incme is seasnal, it must be averaged ver the perid f time it is intended t cver, even if it is the majr surce f incme fr the year. Hwever, if the averaged amunt f past incme des nt accurately reflect the anticipated mnthly circumstances because f a substantial increase r decrease in business, the incme is calculated based n anticipated earnings. 24l

19 Business expenses may be cmputed n a mnthly basis r prrated ver a 12-mnth perid, at the client's ptin. (3) New Business AG s with a new business that has been in existence less than a year have their incme averaged ver the amunt f time the business has been in peratin. Frm this, the mnthly amunt is prjected fr the cming year. Hwever, if the averaged amunt f past incme des nt accurately reflect the anticipated mnthly circumstances because f a substantial increase r decrease in business, the incme is calculated based n anticipated earnings. Incurred business expenses are als averaged ver the amunt f time the business has been in peratin. Hwever, if the averaged amunt f past expenses des nt accurately reflect the anticipated mnthly circumstances because f a substantial increase r decrease in business, the expenses are calculated based n anticipated csts. b. Determining Grss Prfit Grss Prfit frm self-emplyment is the incme remaining after deducting any identifiable csts f ding business frm the grss incme. The instructins belw must be used t arrive at the grss prfit which is used t calculate cuntable incme. These instructins are based upn the IRS Frm Schedule C, used by self-emplyed individuals t file Federal taxes n their selfemplyment incme. Incme frm self-emplyment is calculated by ttaling the fllwing items, as described n the Schedule C: Add Merchant card and third party payments. Add Grss receipts r sales (separate frm items reprted abve). 24m

20 Add Incme that results frm Statutry Emplyee status. If an individual s incme results frm such a status, they wuld receive a W-2 fr the year which has the Statutry Emplyee bx checked. Add any ther frm f incme received by the business. Subtract returns, allwances, and ther adjustments. Subtract the cst f gds sld, calculated using the fllwing methdlgy: Add value f inventry at the beginning f the perid under cnsideratin. Add purchases (disregarding cst f items withdrawn fr persnal use) Add labr csts (disregarding amunts paid t neself). Add materials and supplies. Add ther csts. Subtract value f inventry at the end f the perid under cnsideratin. Subtract the expenses related t the business peratins. The fllwing expenses can be deducted: Advertising Car and truck expenses Cmmissins and Fees Cntract Labr Depletin Depreciatin and sectin 179 expense deductin Emplyee benefit prgrams 24n

21 Insurance (nt including health insurance) Interest (mrtgage and frm ther lans) Legal and prfessinal services Office expenses Pensin and prfit-sharing plans Rent r lease (Includes vehicles, machinery, equipment, and ther business prperty) Repairs and maintenance Supplies Taxes and licenses Travel, meals, and entertainment Utilities Wages Any ther business related expenses Subtract the business expenses frm its incme t arrive at the self-emplyment incme prfit r lss fr the individual. 2. Annual Cntract Emplyment This sectin applies t any persn emplyed under a yearly cntract, such as schl emplyees, including bus drivers, cks, janitrs, aids and prfessinal staff. These individuals have their annual incme prrated ver a 12-mnth perid. Additinal earnings, such as fr summer wrk, are added t the prrated amunt during the time additinal earnings are received. Althugh a persn may nt have signed a new annual cntract, he is still cnsidered emplyed under an annual cntract when the cntract is autmatically renewable, r when he has implied renewal rights. Implied renewal rights are mst cmmnly assciated with schl cntracts. 24

22 NOTE: This sectin des nt apply during strike and disaster situatins when the ther party t the cntract cannt fulfill it; r, when labr disputes interrupt the flw f earnings specified in the cntract. 3. Educatinal Incme All student financial assistance, funded in whle r in part under Title IV f the Higher Educatin Act r the Bureau f Indian Affairs, is excluded in its entirety. Treatment f educatinal incme and expenses depends upn the surce f incme and the intended use. a. Surces Which are Ttally Excluded Funds frm the fllwing surces are ttally excluded: - Federal Pell Grants - Federal Supplemental Educatinal Opprtunity Grants (FSEOG) - Guaranteed Student Lans, including William D. Frd Federal Direct Lan Prgram and Federal Direct PLUS lans and Supplemental Lans fr Students, Federal Family Educatin Lan (FFEL) Prgram - Leveraging Educatinal Assistance Partnership (LEAP) and Special Leveraging Educatinal Assistance Partnership (SLEAP) Prgrams, frmerly knwn as State Student Incentive Grants - Federal Perkins Lans - Federal Staffrd Lans - Federal Wrk-Study. See item b belw. - Rbert C. Byrd Hnrs Schlarship - Lans fr educatinal expenses which meet the definitin f a bna fide lan, as fund in Sectin 10.1, Definitins. 24p

23 b. Cllege Wrk Study (CWS) Prgram Incme received frm CWS Prgrams, funded in whle r in part under Title IV f the Higher Educatin Act, is excluded. Incme received frm CWS Prgrams nt funded under Title IV that is needed fr the educatinal prgram r curse f study is excluded. Any prtin specifically earmarked fr shelter, utilities, clthing r incidentals nt needed fr the educatinal prgram r the curse f study is incme. Because incme is usually paid t the student n the basis f wrk perfrmed, nt in ne lump sum, its treatment is different than that f ther educatinal benefits. Treatment f this incme depends upn whether r nt the amunt t be earned in ne semester is knwn at the beginning f the semester. (1) Earnings Knwn At Beginning f Semester When the amunt f the earnings, r maximum amunt which can be earned, is knwn at the beginning f the semester, the Wrker prrates any prtin, specifically earmarked fr shelter, utilities, fd, clthing r incidentals, nt needed fr the prgram r curse f study, ver the perid f time it is intended t cver. (2) Earnings Unknwn At Beginning f Semester c. Other Surces When the amunt f the earnings is nt knwn at the beginning f the semester, any prtin f the CWS incme specifically earmarked fr shelter, utilities, fd, clthing r incidentals, nt needed fr the prgram r curse f study, is treated as earned incme and cnverted t a mnthly amunt accrding t item A. All earned incme disregards and deductins apply. Educatinal funds frm any surce, ther than thse listed in items a and b abve, are ttally excluded as being earmarked fr educatinal purpses, unless any prtin f the funds is specifically earmarked fr shelter, utilities, fd, clthing r incidentals nt needed fr the prgram r curse f study. 24q

24 4. Deeming Any f the funds specifically earmarked fr shelter, utilities, fd, clthing r incidentals, nt needed fr the prgram r curse f study, are cunted as unearned incme and prrated ver the perid f time they are intended t cver. The MAGI methdlgy described in this sectin is used t determine the MAGI husehld and whse incme will be cunted. 5. Strikers The presence f a striker has n bearing n eligibility. 6. Irregular Incme Regardless f the surce, irregular incme is nt cunted because it cannt be anticipated. 7. Lump Sum Payments Lump sum payments are cunted as unearned incme nly in the mnth received. 8. Withheld Incme All withheld incme is cunted, unless an amunt is being withheld t repay incme that was previusly used t determine Medicaid eligibility. N ther earned incme is excluded just because it is withheld by the emplyer. 9. Funds Diverted T A PASS Funds diverted t a PASS accunt are treated as earned r unearned incme, depending n the surce. 10. Unstated Incme There is n prvisin that allws fr cunting unstated incme. 11. Spenddwn There is n spenddwn prvisin. 10/

25 12. Unavailable Incme Incme intended fr the client, but received by anther persn with whm he des nt live, when the individual receiving this incme refuses t make it available, is excluded. 13. Incme Received Fr A Nn-Incme Grup Member Incme received by a member f the Incme Grup, which is intended and used fr the care and maintenance f an individual whse incme is nt used in determining the eligibility f the payee's Medicaid husehld, is excluded as incme. 14. Incme Received Frm Military Persnnel Deplyed t a Designated Cmbat Zne There is n prvisin fr excluding incme received as a result f service in a designated cmbat zne. 15. Incme Belnging T r Fr the Benefit f a Child The surce f the incme must be knwn and Sectin 10.3 cnsulted fr hw the incme is treated. 10/