Medical Assistance for Families With Children and Adults Income Methodology

Income eligibility for Medical Assistance (MA) for Families with Children and Adults is determined based on the Modified Adjusted Gross Income (MAGI) income methodology. This  MAGI-based income methodology is similar to the MAGI income methodology, except for three distinct differences.

The new eligibility system gathers information to determine a person's adjusted gross income, three additional types of income, and three types of income that are subtracted from the MAGI income to determine the MAGI-based income that is used to determine eligibility for MA.

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

• 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 Deductions

Deductions 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 deductions are allowed. See the appropriate IRS form instructions for examples of types of deductions. The general types of tax deductions 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

Modified Adjusted Gross Income

MinnesotaCare and Advanced Premium Tax Credit (APTC) eligibility is determined using the MAGI income methodology. Household income calculated using the MAGI income methodology includes the types of income included in adjusted gross income with the following additions:

• 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

MAGI-Based Income

Eligibility for MA Families With Children and Adults is determined using the MAGI-based income methodology. This income methodology includes much of the same income types as the MAGI income methodology, but is different in the following ways:

• Lump sum income is counted in the month received.

• Scholarships, awards or fellowship grants used for education purposes and not for living expenses is excluded.

• Certain American Indian/Alaska Native income is excluded.

Lump Sum Income

Under MA for Families with Children and Adults, lump sum income is one-time income that is not predictable. Periodic reoccurring income is not lump sum income. Examples of lump sum income include, but are not limited to:

• Winnings (lottery, gambling)

• Insurance settlements

• Worker’s Compensation settlements

• Inheritances

• Retroactive Retirements, Survivors and Disability Insurance (RSDI), Veterans Administration (VA) and unemployment insurance benefits

Taxable lump sum income is counted in the month received when using the MAGI-based income methodology. Non-taxable lump sum income is not counted.

Scholarships, Awards or Fellowship Grants

Taxable scholarships, awards or grants used for education purposes and not for living expenses (room and board) are excluded income under the MAGI-based income methodology.

American Indian and Alaska Native Income

The following income is excluded when using the MAGI-based income methodology for American Indian and Alaska Native applicants:

• Distributions from Alaska Native Corporations and Settlement Trusts

• Distributions from any property held in trust, subject to federal restrictions, located within the most recent boundaries of a prior federal reservation, or otherwise under the supervision of the Secretary of the Interior

• Distributions and payments from rents, leases, rights of way, royalties, usage rights or natural resource extraction and harvest from:

  • rights of ownership or possession in properties held in trust under the supervision of the Secretary of the Interior; or

  • federally protected rights regarding off-reservation hunting, fishing, gathering or usage of natural resources

• Distributions resulting from real property ownership interests related to natural resources and improvements:

  • located on or near a reservation or within the most recent boundaries of a prior federal reservation, or

  • resulting from the exercise of federally protected rights relating to such real property ownership interests.

Related Links

Income Verification for Medical Assistance for Families With Children and Adults

Legal Citations

Minnesota Statues, section 256B.057

Minnesota Statues, section 256L.01

Code of Federal Regulations, title 42, section 155.305

Code of Federal Regulations, title 42, section 435.603