MAGI eligibility: how Medicaid counts income
For most people applying for Medicaid today, income is counted using a method called MAGI, short for Modified Adjusted Gross Income. MAGI replaced a patchwork of older state income tests for children, pregnant women, parents, and expansion adults. It is deliberately close to the tax system: if you file a federal tax return, your starting point is a number you already know.
How MAGI is calculated
Start with your adjusted gross income (AGI), the figure at the bottom of the first page of your federal tax return. Then add back three things: non-taxable Social Security benefits, tax-exempt interest, and foreign earned income that you excluded from your return. That total is your MAGI. For most applicants, that is the whole calculation. Wages, self-employment income, unemployment benefits, and most other taxable income are already inside AGI, so they are already counted.
Two features of MAGI surprise people. First, there is no asset test for MAGI groups. Your savings account, your car, and your home do not count against you. That is a real break from the older Medicaid rules, and from the rules that still apply to older adults and people with disabilities, which do look at resources. Second, MAGI uses current monthly income in practice: your state looks at the income you are receiving now, not only at last year's tax return, and it must accept your reasonable explanation if your current income differs from what the return shows.
Who counts in your household?
MAGI household rules follow tax relationships more than they follow who shares a kitchen. The basic tracks are these:
| Your tax situation | Who counts in your household |
|---|---|
| You file taxes and no one claims you | You, your spouse if you file jointly, and everyone you expect to claim as a tax dependent |
| Someone else claims you as a dependent | Usually that taxpayer's household, with exceptions for children in certain family situations |
| You do not file and no one claims you | The family members who live with you: for an adult, a spouse living with you and children under 19; for a child, parents and siblings under 19 living in the home |
These rules matter because the income limit is a percentage of the federal poverty level for your household size. A larger household has a higher limit. Getting the household wrong is one of the commonest reasons an application comes back with the wrong answer, so answer the tax questions on the application carefully and, if your family situation is unusual, say so and ask the agency to check.
What MAGI does not count
Several kinds of money are not counted as MAGI income. Child support you receive is not counted. Gifts are generally not counted. Certain payments, such as some veterans' benefits and some kinds of disaster assistance, are excluded by law. Lump sums, such as an inheritance, count as income in the month you receive them if tax rules treat them as income, but because MAGI has no asset test, keeping the money afterwards does not by itself disqualify you, although interest it earns could count later.
A worked example, clearly labeled
Medicaid income limits are percentages of the federal poverty level (FPL), which the Department of Health and Human Services updates every year. In expansion states, the adult limit is effectively 138 percent of the FPL: the statute sets 133 percent, and a built-in 5 percentage point income disregard raises the effective line to 138 percent. Using the 2026 HHS poverty guidelines for the 48 contiguous states and the District of Columbia as a worked example only, 100 percent of the FPL is $15,960 a year for a single person and $33,000 for a household of four, so 138 percent works out to about $22,025 a year for one person and about $45,540 for four. Alaska and Hawaii use higher guidelines, so their dollar figures are higher, and your state applies the guidelines for the year in force when you apply. The percentage is the rule; the dollars are an example.
Who is not judged by MAGI?
MAGI does not apply to everyone. Older adults (aged 65 and older), people who are blind, and people with disabilities who qualify through the non-MAGI pathway are judged under older rules that look at both income and resources, with different disregards and, in some states, a spend-down. People needing long-term care are also judged under non-MAGI rules. If you are applying for yourself as an older adult or as a person with a disability, read the disability and long-term care guide alongside this one.
Sources: 42 C.F.R. section 435.603 (MAGI rules); Medicaid.gov, MAGI training materials; U.S. Department of Health and Human Services, ASPE, 2026 Poverty Guidelines; 26 U.S.C. section 36B.