County of San Diego Health and Human Services Agency HHSA MediCal Program Guide MAGI MediCal Income Number Page 2104 1 of 6 Effective Date 02012023 BackgroundThe Affordable Care Act ACA of 2010 introduced Modified Adjusted Gross Income MAGI based MediCal which created a new household income counting methodology MAGI MediCal income methodology uses federal tax filing rules for determining MediCal eligibility The ACA also allows states to use three different budget periods to allow greater flexibility in how income can be counted to determine MAGI MediCal eligibility PurposeThis section provides guidance on how income is addressed under MAGI regulations PolicyCountable Income MAGI MediCal follows the Internal Revenue Services IRS tax rules when determining treatment of income with few exceptions MAGI income methodology requires the use of Adjusted Gross Income AGI which is federal taxable income minus any allowable deductions for eligibility determinations In addition to federal taxable income the following income types are also included as countable income for MAGI MediCal Nontaxable Title II Social Security benefits not included in the gross income such as Retirement Survivors andor Disability benefits Taxexempt interest Foreign earned income and housing for Americans living abroad Lump sum income onetime nonrecurring is counted only in the month of receipt Some income types such as scholarships awards educationbased fellowship grants and certain Native American IndianAlaska Native income may be taxable but are excluded from MAGI Refer to MediCal Desk Aid 56 MAGI Income and Deduction Types for more information Deductions When determining MAGI eligibility the same deductions an individual uses on the 1040 to reduce their overall taxable income are applied MAGI MediCal uses federal taxable income not gross income when determining the amount to use in the eligibility determination This means that certain pretax deductions are subtracted from the gross income by an employer or other income source outside of the MAGI determination The federal taxable portion of income minus any allowable deductions must be used to evaluate MAGI MediCal eligibility Whose Income Counts Eligibility for MAGI MediCal is determined on an individual basis When determining whose income counts in an individuals MAGI MediCal evaluation construct a MAGI MediCal household for each person on the case The MAGI household composition shows which individuals should be considered when determining whose income counts in an individuals eligibility determination The sum of the individuals countable MAGI income and the countable income of all other persons in their MAGI household must be included County of San Diego Health and Human Services Agency HHSA MediCal Program Guide MAGI MediCal Income Number Page 2104 2 of 6 To determine whose income counts in an individuals MAGI MediCal eligibility determination apply the following income counting rules for each person in each MAGI household composition Individual Income Counted Adults in tax household not claimed as a tax Count the MAGIbased income of the adult dependent Adults in tax household claimed as a tax Count the MAGIbased income of the taxdependent dependent adult when at least one of the following apply The tax filer claiming the adult is not included in the household composition under evaluation The adult is expected to be required to file a tax return Do not count the MAGIbased income for adults when The adult is a tax dependent the tax filer claiming them as a dependent is within their household composition and the adult is not expected to file taxes Children in the household under the age of Count the MAGIbased income of the child when 19 or under age 21 if a fulltime student one of the following apply The tax filer claiming the child is someone other than a parent and the childs parent natural adopted or step is not included in the childs household composition The child is expected to be required to file a tax return Do not count the MAGIbased income for children when The childs parents isare included in the household composition and the child is not expected to be required to file taxes Note Sometimes members of the same family have different MAGI household compositions This may result in a childs or tax dependents income counting for one household but not another Obtaining Household IncomeCustomers can report their households income at application annual renewal or report a change in circumstance to the county by mail in person via telephone online or on paper with the Single Streamlined Application SSApp SAWS2Plus or MC 216 County of San Diego Health and Human Services Agency HHSA MediCal Program Guide MAGI MediCal Income Number Page 2104 3 of 6 Income Budget PeriodsBudget periods offer different ways to utilize reported income over certain time periods They can affect what income and over what period the income is counted which may reduce some income for a specified timeframe California uses three budget period methodologies Current Monthly Income CMI Reasonably Projected Annual Income RPAI Projected Annual Income PAI beneficiaries only The amount of income for MAGI MediCal is determined based on the budget period with the lowest income calculation between CMI and RPAI PAI is only used when a beneficiary is not eligible using the other budget periods and the PAI is within the MAGI MediCal Federal Poverty Level FPL threshold Current Monthly Income CMI CMI is the amount of income a customer expects to receive in the month under evaluation for eligibility Use CMI for the MAGI MediCal eligibility determination when either A customer does not provide income information for a different budget period to be applied CMI is the budget period with the lowest income amount Reasonably Projected Annual Income RPAI RPAI is the total amount of income that a customer expects to receive in a twelvemonth period beginning with the month of application annual renewal or reported change in circumstance The RPAI budget period promotes continued coverage to those who would otherwise not qualify for MAGI MediCal because of their fluctuating income To be screened for the RPAI budget period a customer must report fluctuating income to the county Once fluctuating income is reported the Human Services Specialist HSS must determine if the income meets RPAI criteria by obtaining the following information What reasonably predictable future changes in income will occur during the next 12 months Why will the change in income occur Does the individual have other reasonably predictable income changes that will occur in the next 12 months Manual verification of RPAI is required if the selfattested income information is not reasonably compatible with the Federal Data Services Hub FDSH Some methods to verify fluctuating income include A signed contract for employment Clear proof of a history of predictable fluctuations in income Prior years tax return Written sworn statement Other clear documentation of predicted future changes in income such as the remaining balance of UIB if any The HSS must document all details of verifications used in the determination of income as RPAI Once RPAI is used as a budget period customers must still report any future changes in income The HSS will reevaluate the case based on any new income information provided County of San Diego Health and Human Services Agency HHSA MediCal Program Guide MAGI MediCal Income Number Page 2104 4 of 6 To calculate the monthly RPAI divide the provided income amount by twelve The HSS must compare the customers CMI amount to the RPAI amount and use whichever budget period has the lowest monthly income amount Projected Annual Income PAI PAI is a budget period for customers whose income increases during the calendar year and puts their CMI over the MAGI income limit but their calendar year income would allow them to be under the MAGI income limit PAI must not be used for individuals whose income will fluctuate PAI is only used when all of the following apply An individual is a current recipient An individuals CMI and RPAI are over the MAGI income limit An individuals PAI amount is under the MAGI MediCal income limit FPL Note Functionality for all budget periods will not be in place until after CalSAWS implementation Until further notice staff must continue with the current process of completing the PAI window for the applicable tax year along with the monthly income windows Verification of Income All income must be verified either electronically or manually If income is not everified ask for income verification following the current verification process Use the manual CMI verification for the PAI budget period when PAI cannot be everified EVerifications When evaluating eligibility for MAGI MediCal benefits electronic verification of selfattested income is required to determine if the income is reasonably compatible To determine reasonable compatibility the California Healthcare Eligibility Enrollment System CalHEERS compares the individuals selfattested MAGI MediCal household income to information received from the FDSH CalHEERS identifies income that passes the reasonable compatibility rules as electronically verified EVerified CalHEERS will evaluate the data returned from the following four sources for income IRS Franchise Tax Board FTB Employment Development Department EDD Social Security Administration SSA An individuals MAGI household income is reasonably compatible when both selfattested income and the FDSH verified information are below the FPL for the household size If the selfattested income is over the MAGI MediCal income limit the income will not be checked for reasonable compatibility through the FDSH for MAGI MediCal but will be used to determine eligibility for other Insurance Affordability Programs IAPs through Covered California Since everification for MAGI MediCal is determined on an individual basis the income of some household members may be reasonably compatible and others not Therefore even if a parents income is everified that verification status will not automatically transfer to the child and manual verifications may be needed to verify the childs income County of San Diego Health and Human Services Agency HHSA MediCal Program Guide MAGI MediCal Income Number Page 2104 5 of 6 Note Former Foster Youth FFY do not have an income eligibility requirement Reasonable compatibility of income does not apply to FFY Reasonably Compatible Income for Budget Periods Reasonable compatibility is determined on the individual basis using the households income and may be different for all three budget periods Since budget periods calculate income based on selfattested income for different periods of time the selfattested amount of income used in reasonable compatibility comparison will vary When an individuals income is reasonably compatible for at least one of the budget periods for themselves or another household member the HSS will not request additional verification of income If reasonable compatibility cannot be established for any budget period for an individual or their household member that their income applies to the HSS will request manual verification Manual Verification When selfattested income is not everified manual verification is required Verification of income for CMI RPAI and PAI may include but is not limited to Paystubs Letters from employers Tax statements If verification of income is requested and the beneficiary fails to provide documentation the individual whose income cannot be verified will be discontinued Verifying When No Income Is Reported When an individual reports zero income including when an individual selfattests to zero income because of income ending the HSS will only request additional verifications if the selfattested zero income is not reasonably compatible with the FDSH This applies to all individuals who selfattest to zero income including NonMAGI individuals who are included in the household composition Verifying Income with an Affidavit When all attempts to verify selfattested income are exhausted the HSS may obtain an affidavit signed under penalty of perjury from the individual as verification of income The signed statement must include the following information The name of the individual whose income is being verified by the affidavit The income details the amount frequency of pay and source of income A signature with a penalty of perjury statement The date that the statement was signed The following people may sign an affidavit on behalf of others A parent or caretaker relative may sign for a child An individual with power of attorney may sign for another individual A spouse can sign for their spouse An authorized representative may sign on behalf of a customer if they have been authorized to do so County of San Diego Health and Human Services Agency HHSA MediCal Program Guide MAGI MediCal Income Number Page 2104 6 of 6 Note The affidavit must be no more than 90 days old from the signature date of the document Retroactive Determinations When an individual requests retroactive eligibility for one to three months prior to the month of application the individual is considered an applicant and therefore PAI methodology cannot be used Soft Pause and Consumer Protection Programs The PAI budget period does not affect Consumer Protection Programs CPPs and cases that are in Soft Pause If at the mandatory end of the year PAI redetermination the customer no longer qualifies for MAGI MediCal but qualifies to be in a CPP the customer will remain enrolled in that CPP until the eligibility under that program has ended If a customer is over the income limit for MAGI MediCal and does not qualify for a CPP they must be evaluated for all MediCal programs before they are discontinued from MediCal benefits Program Impacts Staff must complete all appropriate fields in CalWIN to establish the correct level of benefits References ACWDL 2010 ACWDL 2104 MC Desk Aid 56 MAGI Income and Deduction Types MC Desk Aid 67 Determining Household Composition MC Desk Aid 68 MAGI HH Composition Examples MC Desk Aid 70 MAGI Individual Household Flow Chart MC Desk Aid 71 Whose Income Counts for MAGI Sunset Date This policy will be reviewed for continuance on or by 01312026 Approval for Release Rick Wanne Director SelfSufficiency Services