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MinnesotaCare

3.3.3 Income Methodology (Archive)

Income eligibility for MinnesotaCare is based on projected Modified Adjusted Gross Income (MAGI) as follows:

  • Household income includes:

    • The types of income included in Federal taxable income, minus Federal income tax adjustments

    • Nontaxable foreign earned income and housing cost of citizens or residents of the United States living abroad

    • Nontaxable interest income

    • Nontaxable Social Security and tier one railroad retirement benefits

Federal Taxable Income

Federal taxable income are the different types of income that appear on lines 7 through 21 on the Internal Revenue Service (IRS) form 1040, lines 7 through 15 on the IRS form 1040-A and line 6 on IRS form 1040-EZ. Only the taxable portions of these types of income are included in the adjusted gross income. See the appropriate IRS form instructions for examples of federal taxable income. The general types of taxable income include the following:

  • Wages, salary and tips

    • Payroll or pre-tax deductions for childcare, health insurance, retirement plans, transportation assistance and other employee benefits are not taxable and are not included in a person's adjusted gross income.

  • Interest

  • Dividends

  • Taxable refunds, credits or offsets of state and local income taxes

  • Alimony received

  • Business income

  • Capital gains

  • Other gains

  • Individual retirement account (IRA) distributions

  • Pension and annuity payments

  • Income from rental real estate, royalties, partnerships, S corporations, trusts, etc.

  • Farm income

  • Unemployment compensation

  • Social Security benefits

  • Other income

Federal Income Tax Adjustments

The types of adjustments that appear on lines 23 through 35 on the 1040 or lines 16 through 19 on the 1040-A are subtracted from gross income to calculate the adjusted gross income. Only specific types of adjustments are allowed. See the appropriate IRS form instructions for specific information about the types of adjustments.

The types of tax adjustments include:

  • Educator expenses

  • Certain business expenses of reservists, performing artists and fee-basis government officials

  • Health savings account

  • Moving expenses

  • Deductible portion of self-employment tax

  • Self-employed Simplified Employee Pension (SEP), Savings Incentive Match Plan for Employees (SIMPLE) and qualified plans

  • Self-employed health insurance

  • Penalty on early withdrawal of savings

  • Alimony paid (spousal support)

  • IRA deduction

  • Student loan interest

  • Tuition and fees

  • Domestic production activities

Legal Citations

Code of Federal Regulations, title 26, section 1.36B-1

Code of Federal Regulations, title 42, section 600.5

Code of Federal Regulations, title 42, section 600.330(b)

Minnesota Statues, section 256L.01

Published:   August 1, 2016

Archived:  December 22, 2016