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What is Counted as Income for Medicaid?
Marketplaces, Medicaid, and CHIP all use MAGI to determine a household’s income for eligibility. MAGI stands for Modified Adjusted Gross Income. The best way to figure it out is to work through the numbers backward.
Start with your gross income, which is your total taxable income. If you have multiple income streams, you add them all together to get your total income. Taxable income may include wages, salaries, bonuses, alimony, self-employment income, pensions, punitive damages, IRA distributions, jury duty fees, unemployment compensation, rents, royalties, severance pay, gambling winnings, interest, tips, and estate or trust income.
You may also be receiving income that is not considered taxable. You do not have to include this income when applying for Medicaid. Types of non-taxable include may include child support, gifts, veterans’ benefits, insurance proceeds, beneficiary payments, AFDC payments, injury payments, relocation pay, TANF payments, workers’ compensation, federal income tax refunds, and SSI payments.
Once you know your gross income, you can subtract IRS-approved deductions to get your adjusted gross income (AGI). For those that are self-employed, these deductions include any business related expenses. They also include alimony payments, IRA contributions, tuition and fees, student loan interest, and work-related moving expenses.
Finally, once you have your AGI, you can figure out your MAGI. For most people, your AGI and your MAGI will actually be the same amount. There are very specific items that are modified to create your MAGI, but they simply don’t apply to all people.
The first item is foreign earned income. If you earn money working overseas, it can often be excluded from your gross income when filing your income taxes. Foreign earned income needs to be added back into your gross income to calculate your MAGI.
The second factor is exempt interest. When you are filing your income taxes, some interest you may receive throughout the year is exempt from you having to pay taxes on it as part of your income. However, when determining your MAGI, that interest does count towards your gross income, so it needs to be added back in.
Finally, the third factor is any amount of money that is equal to the portion of your social security benefits that was not counted towards your gross income under Section 86 of your income taxes. Once again, this amount will need to be added to your gross income in order to calculate your MAGI.
Generally speaking, the higher your income, the less premium tax credits you receive. Your MAGI provides a truer look at how much money you actually bring in so that determining your eligibility for premium tax credits is fair and equitable.
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Medicaid: What Do I Count as “Income”
Marketplaces, Medicaid, and CHIP all use MAGI to determine a household’s income for eligibility. MAGI stands for Modified Adjusted Gross Income. The best way to figure it out is to work through the numbers backward.
Start with your gross income, which is your total taxable income. If you have multiple income streams, you add them all together to get your total income. Taxable income may include wages, salaries, bonuses, alimony, self-employment income, pensions, punitive damages, IRA distributions, jury duty fees, unemployment compensation, rents, royalties, severance pay, gambling winnings, interest, tips, and estate or trust income.
You may also be receiving income that is not considered taxable. You do not have to include this income when applying for Medicaid. Types of non-taxable include may include child support, gifts, veterans’ benefits, insurance proceeds, beneficiary payments, AFDC payments, injury payments, relocation pay, TANF payments, workers’ compensation, federal income tax refunds, and SSI payments.
Once you know your gross income, you can subtract IRS-approved deductions to get your adjusted gross income (AGI). For those that are self-employed, these deductions include any business related expenses. They also include alimony payments, IRA contributions, tuition and fees, student loan interest, and work-related moving expenses.
Finally, once you have your AGI, you can figure out your MAGI. For most people, your AGI and your MAGI will actually be the same amount. There are very specific items that are modified to create your MAGI, but they simply don’t apply to all people.
The first item is foreign earned income. If you earn money working overseas, it can often be excluded from your gross income when filing your income taxes. Foreign earned income needs to be added back into your gross income to calculate your MAGI.
The second factor is exempt interest. When you are filing your income taxes, some interest you may receive throughout the year is exempt from you having to pay taxes on it as part of your income. However, when determining your MAGI, that interest does count towards your gross income, so it needs to be added back in.
Finally, the third factor is any amount of money that is equal to the portion of your social security benefits that was not counted towards your gross income under Section 86 of your income taxes. Once again, this amount will need to be added to your gross income in order to calculate your MAGI.
Generally speaking, the higher your income, the less premium tax credits you receive. Your MAGI provides a truer look at how much money you actually bring in so that determining your eligibility for premium tax credits is fair and equitable.
do student loans count as income for medicaid
Student Loans & Medicaid
Student loans do not count as income for Medicaid. However, any refunds that you deposit into a checking or savings account could affect your eligibility depending on the rules in your home state – and your reason for seeking this form of government assistance.Table Of Contents
Full-Time Students
As a government-sponsored welfare program, only a minority of full-time college students can qualify for Medicaid. You must fit into at least one narrowly defined category and meet state income limits to be eligible.[iii]
- Not listed as a dependent on your parent’s tax return
- Pregnant
- Parent of at least one child dependent on you for support
- Disabled and receiving SSDI or SSI benefits
Full-time students who meet these criteria must also be careful about loan refunds from their college, as the money could trip asset limits.
Asset Limits
Any student loan refunds from your college could affect Medicaid eligibility if the money held in your bank account exceeds the asset limits. A school might issue you a refund if you borrowed above the cost of education to fund meals, transportation, or off-campus housing.
Each state and Medicaid program has unique rules for asset limits. For example, you might need to spend down resources by retiring debt to qualify. However, this rule does not apply evenly across the country.
You will need to do some homework on this point with your local county agency.
Health Insurance
Student loans do not count as income when applying for health insurance in the private marketplace. Plus, excess funding deposited in a bank account does not affect eligibility for subsidies.
Two types of subsidies make it more affordable to purchase (premiums) and utilize (cost-sharing) private healthcare plans for people who do not qualify for Medicaid.
Your household income (but not countable resources) determines eligibility for the two subsidies.
- Wages and salary from work
- Social security benefits (disability and retirement)
- Unemployment compensation
Keep in mind that the size of your financial aid package could take account of the premiums for health insurance. Your college will submit an estimated cost of attendance to the Department of Education, which includes paying for healthcare.
The account limit then determines the high-water mark of your minimum monthly payment. For example, an account with a $500 limit and balance might have a minimum amount due of $25 (3% to 5% of the obligation).
In other words, students with only modest incomes from part-time summer jobs can qualify for a credit card with a small limit, and tiny minimum payment.
We’ve reached the end of our article and I hope you’ve enjoyed reading about student loans and Medicaid.
Student loan debt is a growing problem for many Americans, including those who are disabled. If you’re in this situation and wondering if your student loans count as income for Medicaid, the answer is yes.
The good news is that there are several options available to help reduce your monthly payments and give you more breathing room each month. You can choose between Income-Driven Repayment Plans, Pay As You Earn Repayment Plan, or Revised Pay As You Earn Repayment Plan. These plans allow you to pay back your student loans based on how much money you make and how much money is left over after paying other bills (like rent). This can be a big help when it comes to qualifying for Medicaid!
If you have any questions about qualifying for Medicaid with student loan debt, please feel free to contact us at College Learners.
How Does Medicaid Treat Income?
The basic Medicaid rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. The deductions include a $60-a-month personal needs allowance (this amount may be somewhat higher or lower in your state), a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance for the spouse who continues to live at home if he or she needs income support. A deduction may also be allowed for a dependent child living at home.
In determining how a Medicaid applicant’s income affects his or her eligibility for nursing home coverage, most states use what is known as the “medically needy” or “spend-down” approach. These states allow the applicant to spend down their income on their care until they reach the state’s income standard for eligibility, at which point Medicaid will begin covering their care. In this way, those with incomes that exceed Medicaid’s thresholds can still qualify if they have high medical expenses, assuming they meet Medicaid’s other requirements.
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But some states set a hard limit on the income permissible to qualify for Medicaid — no spend-down is allowed. In these states, known as “income cap” states, eligibility for Medicaid benefits is barred if the nursing home resident’s income exceeds $2,523 a month (for 2022), unless the excess income above this amount is paid into a “(d)(4)(B)” or “Miller” trust. If you live in an income cap state, contact your attorney to set up a trust. To find an attorney near you, click here. The income cap states as of this writing are: Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Nevada, New Mexico, New Jersey, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, and Wyoming.
For Medicaid applicants who are married, the income of the healthy spouse living in the community (the “community spouse”) is not counted in determining the Medicaid applicant’s eligibility. Only income in the applicant’s name is counted in determining his or her eligibility. Thus, even if the community spouse is still working and earning, say, $5,000 a month, he or she will not have to contribute to the cost of caring for his or her spouse in a nursing home if the spouse is covered by Medicaid.
For information on Medicaid’s asset rules, click here.
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