Medical Assistance for Families with Children and Adults

2.2.3.4 Income Methodology

Income eligibility for Medical Assistance for Families with Children and Adults (MA-FCA) is based on current monthly income and adjustments using the Modified Adjusted Gross Income (MAGI) methodology as follows:

Household income 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
Household income does not include:
- Scholarships, awards or fellowship grants used for education purposes and not for living expenses
- Certain American Indian/Alaska Native income
Lump sum income is counted in the month received, if it is from a type of income that is included in the calculation of modified adjusted gross income (MAGI). If the lump sum is from an income type that is not included in a person's modified adjusted gross income, it is not counted.

Refer to the MAGI Fact Sheet for a quick reference guide on MAGI.

Current income is the income a person actually receives in a current or past month, and expects to receive during each month of their 12-month certification period.

Current income is reported and counted based on how frequently a person receives it.

A person may receive income weekly, biweekly (every other week), semi-monthly (twice a month), monthly, quarterly, or in other frequencies.

Current monthly income is counted in the month received.

Income received less frequently than monthly is counted based on the average monthly income.
Income that varies month to month including, but is not limited to, seasonal income, temporary census income, and unemployment compensation are reported and counted based on the annual amount a person expects to receive during the 12-month certification period.

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 and 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 federal 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. These types of deductions must be subtracted from a person's gross wages when they appear on a paystub or wage record.
- Waiver payments and personal care services
  - Medicaid waiver payments received by a person who provides HCBS waiver services (personal care services, habilitation services, and other services) to an HCBS waiver eligible person living with them are not taxable and not included in a person’s adjusted gross income.
  - Medicaid waiver payments received by a person who provides HCBS waiver services not living with them, are taxable and are included in the person's adjusted gross income.
  - Wages received for providing personal care to someone without a Medicaid waiver, such as to individuals eligible under state plan Personal Care Assistance or Consumer Support Grant personal care services, may or many not be taxable income. The person receiving payments for providing personal care must attest to whether this type of income is taxable. If the person providing personal care services does not know whether their income is taxable, they should consult with a tax professional.
  For more information see the IRS website: Certain Medicaid Waiver Payments May Be Excludable From Income
Interest
Dividends
Taxable refunds, credits or offsets of state and local income taxes
Alimony received (spousal maintenance) based on a divorce decree or separation agreement executed before January 1, 2019.
- Alimony received based on a divorce decree or separation agreement dated on or after January 1, 2019, is not taxable income to the recipient. It does not need to be reported and is not countable income under the MAGI methodology.
- If the divorce decree or separation agreement is modified on or after January 1, 2019, and the modification expressly provides that the alimony tax law changes apply, then the alimony received on or after the date of modification is not considered countable income under the MAGI methodology.
- Applicants and enrollees must determine whether the alimony payments they receive are based on a divorce decree or separation agreement executed or modified on or after January 1, 2019, and report accordingly.
- Verification of the date of a divorce decree or separation agreement, or a modification to these, is not required.
Business income or loss (includes self-employment)
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

Generally, money a person receives through a fundraising or donation event is considered a personal gift if the money was given directly or indirectly without the expectation of receiving anything in return. Personal gifts are not included in a person's adjusted gross income.
Net operating loss, including a carryforward loss

Federal Income Tax Adjustments

The types of adjustments that appear 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.

Educator expenses
Certain business expenses of reservists, performing artists and fee-basis government officials
Health savings account
Moving expenses
- Through December 31, 2025, Moving expenses are permitted only for households that include active duty members of the military who move because of a military order and a permanent change in station.
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) based on a divorce decree or separation agreement executed before January 1, 2019.
- - Alimony paid based on a divorce decree or separation agreement executed on or after January 1, 2019, is not an allowable adjustment to income. It should not be reported as an adjustment to income and is not permitted as an adjustment under the MAGI methodology.
  - If the divorce decree or separation agreement is modified on or after January 1, 2019, and the modification expressly provides that the alimony tax law changes apply, then the alimony paid on and after the date of modification is not an allowable adjustment under the MAGI methodology.
  - Applicants and enrollees must determine whether the alimony they pay is based on a divorce decree or separation agreement executed or modified before January 1, 2019, and report accordingly.
  - Verification of the date of a divorce decree or separation agreement, or a modification to these, is not required.
IRA deduction
Student loan interest

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 MA-FCA income methodology.

American Indian and Alaska Native Income

The following income is excluded under the MA-FCA income methodology for American Indian and Alaska Native people:

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.
Payments resulting from ownership interests in or usage rights to items that have unique religious, spiritual, traditional, or cultural significance or rights that support subsistence or a traditional lifestyle according to applicable Tribal Law or custom
Student financial assistance provided under the Bureau of Indian Affairs education programs

Lump Sum Income

Under MA-FCA, lump sum income is one-time income that is not predictable. Periodic reoccurring income is not lump sum income. Lump sum income is only counted under MA-FCA if it is a type of income that is included in the calculation of modified adjusted gross income (MAGI).

Examples of lump sum income that is part of the MAGI calculation include, but are not limited to:

Winnings (lottery, gambling)
Alimony Settlements
Wage bonuses

Legal Citations

Code of Federal Regulations, title 42, section 435.603

Code of Federal Regulations, title 45, section 155.305

Minnesota Statutes, section 256B.057

Minnesota Statutes, section 256L.01