Modified Adjusted Gross Income

HELP! I got cut off of Medicaid!

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ASK: Why did I get cut off Medicaid?

Remember that you can get cut off of Medicaid because your income has risen, because the number of dependents has changed, or because you didn’t fill out an annual renewal (redetermination) form.

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So first, figure out whether the cancellation was correct.

Should Medicaid Have Been Cancelled?

Let’s take a few examples:

  1. You failed to fill out an annual redetermination form, but nothing else in your life has changed. Medicaid is renewed annually, and sometimes people in a household are on different cycles, so you may need to fill out renewals more than once a year. If nothing has changed, you should still be eligible for Medicaid, and should reapply at MI Bridges.

  2. Your income and/or household size has changed. Even a small increase in hours or pay/hour (minimum wage is going up!) can make a big difference. Especially if there are multiple earners in a household, things can get complicated. Here’s how to figure out if your income is still eligible. Income limits for Medicaid.

    Your household size also may have changed. Perhaps a child has grown up and is now on their own; perhaps you got a divorce; perhaps someone in your family died; perhaps parents or grandparents have moved into your household. While you are looking at income, don’t forget to look at household size.

    Remember that eligibility is a combination of both household size and income. If you feel the determination was made incorrectly, you can reapply, or file a hearing (Part 1 and Part 2).

But What If the Determination Was Correct, And You’re Not Eligible For Medicaid?

Good News: You Qualify for a Special Enrollment Period

Employer Insurance

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If your employer offers affordable health insurance, you generally are required to enroll. When your Medicaid ends, it opens a Special Enrollment Period for you to enroll in your employer health care.

It could be that the employer insurance is offered to someone else in the household, but you are eligible. With a Medicaid denial letter, you can get on their employer insurance with a Special Enrollment Period.

For an employer special enrollment period, you only have 30 days to take advantage of the offer, so don’t delay!

Marketplace (Healthcare.gov)

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If your employer does not offer you insurance, you can apply on the Marketplace (healthcare.gov), and you will likely qualify for good tax credits. [If you don’t, please give us a call. You may have fallen into a “family glitch” or answered a question incorrectly.]

For the Marketplace, you have 60 days from the day your insurance ends for the special enrollment period. You will need to prove that you have lost your Medicaid insurance with a denial letter.

 

Questions? We Help People.

Call us at 734-544-3030

Walk in to our office at 555 Towner in Ypsilanti,

Monday-Friday 9 a.m. to 4 p.m.

 

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Deductions: "Modifying" Your Adjusted Gross Income Can Save You Money

The Gift Of "MAGI": What Is That?

Adjusted Gross Income is your annual income, as defined by the IRS. If you file taxes using the 1040, you will find it on Line 37. [It is line 4 on the 1040EZ and line 21 on a 1040A.]

For purposes of applying for health care--both Marketplace and Medicaid--and for assessing whether or not health coverage is affordable--the federal government uses "Modified" Adjusted Gross Income, fondly referred to by those of us in "the biz" as MAGI.

*Do you know the story of The Gift of the MAGI?   Pronunciation /ˈmeɪˌdʒaɪ/.

What Gets Modified In Order To Get To A Modified Adjusted Gross Income? Add Backs AND Deductions 

Income includes everything on the list below. More common items are in bold.

  • Wages, Salaries, tips, etc.
  • Taxable interest
  • Taxable amount of pension, annuity, or IRA distributions and social Security benefits
  • Business income, farm income capital gain, other gains (or loss)
  • Unemployment compensation
  • Ordinary dividends
  • Alimony received
  • Rental real estate, royalties, partnerships, S corporations, trusts, etc.
  • Taxable refunds, credits, or offsets of state and local income taxes
  • Other income

This list is from the UC Berkeley Labor Center MAGI handout.

Add Backs

There are a few things you need to "add back" as income--the most common of those is non-taxable social security benefits. Other possible add backs include tax-exempt interest and foreign earned income for Americans living abroad.

Deductions

If you do a Marketplace or Medicaid application, after you are asked about your income, you are asked if you have any deductions such as alimony or student loan interest. The actual list of potential deductions is quite a bit longer, and might make a difference for you. 

Here is the list. More common items are in bold.

  • Educator expenses
  • Certain business expenses of reservists, performing artists, and fee-basis government officials.
  • Health savings account deduction
  • Moving expenses
  • Deductible part of self-employment tax
  • Self-employed SEP, SIMPLE, and qualified plans
  • Self-employed health insurance deduction
  • Penalty on early withdrawal of savings
  • Alimony paid
  • IRA deduction
  • Student loan interest deduction
  • Tuition and fees
  • Domestic production activities deduction

What This Means

On the Marketplace, cost-sharing goes up to 250% of the poverty level (or $60,750 for a family of 4) and tax credit subsidies go up to 400% of the poverty level (or $97,200 for a family of 4). In some cases, putting money in an IRA, paying tuition, or setting up a health savings account can make your MODIFIED Adjusted Gross Income lower, and you could qualify for more benefits. [Note: Not all Marketplace plans allow the use of health savings accounts, but some of them do.]

Of course, we're not tax experts--so you might want to check with yours!

Resources:

UC Berkeley Labor Center MAGI handout

Advocate's Guide to MAGI from the National Health Law Program. 

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