Policy Brief Explains New Rules for Determining Income under Medicaid in 2014

by Rebecca Farley on August 22, 2011

Under health reform, beginning in 2014, Medicaid will expand to cover all individuals with incomes below 133% of the federal poverty level – and major changes on how states determine income for eligibility purposes will go into effect.

A recent policy brief from the Kaiser Commission on Medicaid and the Uninsured describes these new income determination rules and notes the differences between the new rules and the current income counting rules used in Medicaid and CHIP. As the policy brief explains,

“The health reform law establishes a new definition of income — called Modified Adjusted Gross Income, or MAGI — that will be used in determining eligibility for premium credits.  MAGI is Adjusted Gross Income as determined under the federal income tax, plus any foreign income or tax-exempt interest that a taxpayer receives. Assets will not be considered in determining eligibility…

“Starting in 2014, eligibility for most Medicaid and CHIP beneficiaries under age 65 will also be determined using MAGI, and family size will also be based on the tax filing unit.  The family’s assets will not be considered in determining eligibility…”

Click here to keep reading for the key differences between MAGI and Medicaid’s current income counting methodologies, the key differences between the Medicaid and income tax definitions related to family size, the implications of the new rules for Medicaid and future policy considerations, and a comparison chart of the tax code and Medicaid’s treatment of income.


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