What is MAGI and Why Does It Matter?

June 23, 2011: The federal Affordable Care Act (ACA) introduces a new income definition—Modified Adjusted Gross Income or “MAGI”—for determining Medicaid income eligibility across the country.  Today, rules for counting income for Medicaid vary from state to state, with some states allowing disregards and deductions that are not allowed in others.   The adoption of MAGI, which is based on adjusted gross income as defined in the Internal Revenue Code §36B(d)(2),  will standardize the calculation of income across the nation.  Additionally, since income will be based on an income tax definition, family size and household income will be based on tax filing unit, which is a change from the current methodology used by Medicaid. 

Resources for Understanding MAGI

The Kaiser Family Foundation has released a policy brief explaining the new guidelines, challenges and benefits in determining income via MAGI under Medicaid in 2014: “Explaining health Reform: The New Rules for Determining Income under Medicaid in 2014.”  The brief details key differences between MAGI and Medicaid’s current income counting methodologies as well as key differences between the Medicaid and income tax definitions related to family size.

The SHARE webinar on MAGI, “Medicaid Eligibility Determination under the ACA: Challenges for States,”  is available online.  The webinar features Dr. John Czajka, a Senior Fellow at the Mathematica Research Policy Center, and Sharon Gibson, Director of Health Care Eligibility and Access at the Minnesota Department of Human Services.  Dr. Czajka discusses the eligibility challenges that states face under the ACA’s Medicaid provisions and suggests steps that states might take to prepare for MAGI implementation.  Ms. Gibson speaks about the experience of Minnesota, which has adopted an early Medicaid expansion for adults permitted under the ACA.

Dr. John Czajka is leading a SHARE-funded project to study the potential repercussions of the ACA provision to implement MAGI to determine income eligibility for Medicaid and other medical assistance plans.  Learn more about Dr. Czajka and his research.