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MinnesotaCare
3.3.3 Income Methodology (Archive)
Income eligibility for MinnesotaCare is based on projected annual income (PAI). PAI is the Modified Adjusted Gross Income (MAGI) that a person expects to have for a calendar year. PAI includes the MAGI a person has already received for the year as well as the MAGI the person expects to receive for the remaining months of the year. PAI also includes temporary income the person receives or expects to receive within the entire calendar year. When a person is requesting coverage for a future calendar year, PAI consists of the MAGI a person expects to receive for that future year.
An applicant or enrollee may attest to a PAI that is different from his or her current income. When a person reports a change in PAI, current income and adjustments may also change There may be inconsistent information when the PAI a person reports conflicts with other information or documentation provided by the person or in the case file.
MAGI includes:
The types of income included in Federal taxable income, including losses, 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 in the Income section of the Internal Revenue Service (IRS) form 1040, IRS form 1040-A or IRS form 1040-EZ. Only the taxable portions of these types of income are included in the adjusted gross income. The types of losses that would be reported on income tax returns can offset 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 or loss
Capital gains or losses
Other gains or losses
Individual retirement account (IRA) distributions
Pension and annuity payments
Income or loss from rental real estate, royalties, partnerships, S corporations, trusts, etc.
Farm income or loss
Unemployment compensation
Social Security benefits
Other income or loss
Net operating loss, including carryforward loss
Federal Income Tax Adjustments
The types of adjustments that would be listed in the Adjusted Gross Income section of the 1040 or 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