Deep Dive: MAGI Refresher Jessica Annecchini

MA Consultant ~ VDSS Home Office

Agenda: • MAGI Methodology: Major Differences

• Definitions

• Household Rules

• Household Compositions

• Income

• Important Things to Remember

We will go through multiple examples throughout the presentation so prepare to interact!

MAGI Methodology: Major Differences

Modified Adjusted Gross Income (MAGI) is based on tax filing rules with a few changes.

Standard deductions are no longer allowed.

LIFC-VIEW parents no longer have a higher income limit.

Households are not broken into budget units; MARIS rules are not used.

Each individual may have a different household composition.

There is a 5% FPL income disregard.

M0410.100

Child: For a tax filing household, a child can be of any age. For a non filer household, a child is under 19 years of age.

Parent: Natural, biological or stepparent.

Reasonable Compatibility: Income attested by the applicant is within 10% of electronic source verification.

Tax Dependent: An individual whom another individual claims on their tax return.

Definitions M0420.100

MAGI Households

MAGI Refresher

Remember each individual’s MAGI household is determined separately!

General Rules

Married couples are always included in each other’s household even if filing separately.

Married couples that are separated and not living together but file jointly are not included in each other’s household.

Tax dependents that live outside of the home are included in the tax filer’s household.

When a tax dependent’s filer lives outside of the home, the filer is not included in the dependent’s household.

M0430

The tax filer’s household consists of the tax filer and all dependents who are expected to be claimed for the current year. The tax filer cannot expect to be claimed as a dependent by anyone else.

The household also consists of the spouse of the filer if spouse lives in the home and they do not already file taxes jointly.

The tax filer’s dependent(s) can live in or out of the home.

Tax Filer Household M0430

Tax Dependent Household

A dependent is expected to be claimed by a tax filer for the current taxable year. Their household will mirror the tax filer’s household.

If the dependent’s filer lives outside of the home, the dependent is in the filer’s household, but the filer is not in the dependent’s household.

If a tax dependent’s spouse is not in the tax filing household, they must also be included.

Tax dependents that file their own taxes must be part of the tax filer’s household if they live in the same home.

Tax dependent exceptions: the dependent’s tax filer is

not a parent the dependent’s tax filer is a

non-custodial parent the dependent’s parents

live in the same home and do not file jointly

M0430

Non filer rules are used when the individual does not file taxes nor is claimed as a tax dependent.

Non filer rules are used when a tax dependent meets an exception.

The household consists of the individual and their spouse, and for children under 19 their parents & siblings. All individuals in a non filer household must be living in the home.

Non Filer Household M0430

Step 1: Does the individual expect to file taxes?

If No - Continue to Step 2

If Yes - Does the individual expect to be claimed as a tax dependent by anyone else?

If No – The individual’s household is a tax filing household. STOP.

If Yes – Continue to Step 2

Step 2: Does the individual expect to be claimed as a dependent?

If No - Continue to Step 3

If Yes - Does the individual meet an exception?

If No – The individual’s household a tax dependent household. STOP.

If Yes – Continue to Step 3

Step 3: The individual’s household is a non filer household. STOP.

Determining Household Composition M0450.100

Test Your Knowledge: Household Composition

Applying: Nicole and Christopher (Mary is the applicant)

Application Information: Mary and Larry live together, are married, and file taxes jointly. Also living in the home is their daughter Nicole (19) who they claim as a tax dependent and Nicole’s husband Christopher (20) does not intend to file taxes. Nicole is pregnant with one child.

Households:

Nicole: 5 - Mary, Larry, Nicole, Christopher, and unborn child Christopher: 2 - Christopher and Nicole, however if Christopher did not name Mary as an authorized representative there is an invalid signature for his application.

Test Your Knowledge: Household Composition

Applying: Rachel (applicant), Todd, Scott, and Brian Household Information: Rachel and Todd live together, are married, and file taxes jointly. Also living in the home is their nephew Scott (4), and their son Brian (13) and they claim both boys on their taxes. Households: Rachel: 4- Rachel, Todd, Scott, and Brian Todd: 4 - Rachel, Todd, Scott, and Brian Scott: 1 - Scott Brian: 4 - Rachel, Todd, Scott, and Brian

Test Your Knowledge: Household Composition

Change: Rachel calls three months later and states that she and Todd have separated. Households: Rachel: 4- Rachel, Todd, Scott and Brian Todd: 4 - Rachel, Todd, Scott and Brian Scott: 1 - Scott Brian: 4 - Rachel, Todd, Scott and Brian Response: You have to determine if Todd still lives in the home. Then you have to determine if they are making a change to the tax filing status.

Income Rules MAGI Refresher

Income Rules

Income that is counted*:

Wages, salaries, tips, etc.

Self-employment income

Alimony

Foreign income and interest

Unemployment benefits

If it’s taxable, it’s almost always countable!

Income that is not counted*:

Child support

Workers compensation

Non-taxable veterans benefits

Proceeds from life insurance

A parsonage allowance

American Indian-Alaska Native Payments

*Including but not limited to…see M0440.100 D and M04 Appendix 7 for charts!

M0440

There are no earned income disregards. Depreciation and capital losses are deducted from self-

employment income and farming. If losses are higher than the self-employment income they offset other countable income.

Alimony paid is an allowable deduction. There are several deductions allowable that will only be on

tax forms such as student loan interest or moving expenses.

Social Security income of a child is not countable when they live in their parent’s home and are not required to file taxes.

Income Rules - Deductions M0440

Income of a tax dependent is always excluded if the tax dependent is not required to file taxes and they are in a tax filer/tax dependent household. If the individual is required to file taxes, their income counts in any household they are a part of.

Income of a child follows the rule above if they are a tax dependent.

Income of a child in a non filer household that is not required to file taxes is not countable if their parent is lives in the home.

Social Security income of a child in a non-filer household without a parent living in the home is countable toward the child.

Income Rules – Children and Tax Dependents

M0440

Step 1: Is any household member the child or expected tax dependent of another member of the household?

If yes, is the individual expected to file a tax return?

If yes, continue to Step 2 and include individual’s income in total household income.

If no, continue to Step 2, but do not include individual’s income in total household income.

Step 2: Determine MAGI countable income.

Step 3: Use the 5% disregard only if they are over the income limit for the covered group; the disregard can be applied at each covered group level.

Determining Countable Income M0450.100

Test Your Knowledge: Income Rules

Applying: Cathy (applicant), Billy, and Lucas Household Information: Cathy (non filer) lives with her boyfriend, Michael (tax filer). Their children Billy (17) and Lucas (14) live in the home and Michael claims both of them as tax dependents. Michael is self-employed and provided his tax return which shows a loss of $5000.00. Billy works part time at Target while in high school making $9.50 an hour working 10 hours a week (Monthly: $408.50). Households: Cathy: 3 – Cathy, Billy, and Lucas Billy: 4 – Cathy, Michael, Billy, and Lucas Lucas: 4 – Cathy, Michael, Billy, and Lucas Countable income for MAGI: Michael’s self employment

Test Your Knowledge: Income Rules

Applying: Sally (applicant) and Heather Household Information: Sally (tax filer) receives SSA retirement of $350 a month. Her granddaughter Heather (16) lives with her and receives SSA auxiliary benefits of $850 a month; Sally claims Heather as a tax dependent. Households: Sally: 2 – Sally, Heather Heather: 1 – Heather Countable income for MAGI: Sally’s SSA for her HH, Heather’s SSA for her HH.

Important Things to Remember

If the individual’s countable household income is over all MAGI covered groups, they may be eligible for MN which is a non-MAGI covered group.

Be sure to follow the IBP for MN evaluation within VaCMS.

At intake: Rely on electronic verification

sources before asking the customer for verification.

If the customer’s attestation is over the income limit you do not have to verify income before denial.

At renewal: All MAGI covered groups are

eligible for ex parte renewal. MAGI cases with income

verified in the last 12 months and $0 income cases are eligible for ex parte.

Test Your Knowledge: Final Review

Applying: Lisa, Tommy (applicant), Robert, Chloe, Elizabeth, and Lucas.

Application Information: Lisa and Tommy live together, are married, and file taxes jointly. Also living in the home are Lisa’s sons, Robert (17) and Chloe (13) that are claimed as tax dependents by their father Richard that lives in Ohio, and Lisa and Tommy’s children Elizabeth (10) and Lucas (7) that are claimed as tax dependents by Tommy. Tommy also claims his son Brandon (15) that lives with his mother in Maryland.

Households:

Lisa: 5 - Lisa, Tommy, Elizabeth, Lucas, and Brandon

Tommy: 5- Lisa, Tommy, Elizabeth, Lucas, and Brandon

Robert: 6- Lisa, Tommy, Robert, Chloe, Elizabeth, and Lucas

Chloe: 6- Lisa, Tommy, Robert, Chloe, Elizabeth, and Lucas

Elizabeth: 5- Lisa, Tommy, Elizabeth, Lucas, and Brandon

Lucas: 5- Lisa, Tommy, Elizabeth, Lucas, and Brandon

Test Your Knowledge: Final Review

Tommy works full time making $3600.00 a month. Lisa works part time making $800.00 a month. Brandon works part time making $600.00 a month.

Households:

Lisa: 5 - Lisa, Tommy, Elizabeth, Lucas, and Brandon

Tommy: 5- Lisa, Tommy, Elizabeth, Lucas, and Brandon

Robert: 6- Lisa, Tommy, Robert, Chloe, Elizabeth, and Lucas

Chloe: 6- Lisa, Tommy, Robert, Chloe, Elizabeth, and Lucas

Elizabeth: 5- Lisa, Tommy, Elizabeth, Lucas, and Brandon

Lucas: 5- Lisa, Tommy, Elizabeth, Lucas, and Brandon

Countable income: Tommy’s earnings, Lisa’s earnings, and Brandon’s earnings.

Q&A An issue was raised that if the agency starts the ex parte attempt but is unable to finish, they

cannot generate the packet. In these instances please submit a ticket and you can submit one ticket for multiple cases where this occurs.

Members asked for language to put on the manual notice when evaluating for MN per the IBP. Policy reference is M1510.200 B.1 which includes the language to be included on the notice, however others also asked for the language on the CoverVA notice which is below:

This letter tells you about the Medical Assistance benefits for the individuals listed below.

Medical Assistance coverage for the following persons(s) was Denied. For more information, please read this entire notice. The denial of coverage is for the dates listed below under "Benefit Period" and does not affect any other period.

Denial Reason: Over income limit - Spenddown. During the initial review of your application, you did not meet a Medical Assistance category. Your application is being referred to your local Department of Social Services (LDSS) for review of eligibility under Spenddown guidelines. If you have any questions, please contact your LDSS.

How can you tell which “door” the customer used on CommonHelp? If the customer goes through the Health Insurance only door, the PDF will show Medical Assistance under Programs Selected; if they go through the all programs door the PDF will show Health Care Coverage and Other Medicaid Programs under Programs Selected.

Q&A Reasonable Compatibility is used for all verification sources, including Work Number and VEC;

you must ensure that the information attested to on the application is reasonably compatible with your verification source to accept it as verified, and you will always enter the amount shown on the verification source. Use electronic source verification and reasonable compatibility for all covered groups (ABD and F&C) including the Hub.

Since losses can offset other types of income and VaCMS doesn’t handle this, you may have to enter the information in several different ways. If all the individuals are MAGI, offset the other types of income yourself (for example if the loss is $5000.00 and the earned income is $6000.00 enter the earned income as $1000.00). However, if there are mixed MAGI and non-MAGI individuals or other programs on the case, you will not be able to use this method; override or running programs separately will have to be completed.

The main thing to remember when looking at MAGI methodology you have to look at each applicant separately. Every applicant can have a different HH size and countable income. Also be sure to enter all information on the application even if it ends up not countable for MAGI so if future changes impact eligibility, all data is preserved from the original application.

Determining Household Composition

Each individual’s MAGI household is determined separately!

Step 1: Does the individual expect to file taxes?

If No - Continue to Step 2

If Yes - Does the individual expect to be claimed as a tax

dependent by anyone else?

If No – The individual’s household is a tax filing

household. STOP.

If Yes – Continue to Step 2

Step 2: Does the individual expect to be claimed as a

dependent?

If No - Continue to Step 3

If Yes - Does the individual meet an exception?

If No – The individual’s household a tax dependent

household. STOP.

If Yes – Continue to Step 3

Step 3: The individual’s household is a non filer household.

STOP.

Determining Household Income

Each MAGI household’s income is determined separately!

Step 1: Is any household member the child or expected tax

dependent of another member of the household?

If No - Continue to Step 2.

If Yes - Is the individual expected to file a tax return?

If Yes - Continue to Step 2 and include individual’s

income in total household income.

If No - Continue to Step 2, but do not include

individual’s income in total household income.

Step 2: Determine MAGI countable income.

Step 3: Use the 5% disregard only if they are over the income

limit for the covered group; the disregard can be applied

against MAGI at each covered group level (for example once at

FAMIS Plus evaluation and once at FAMIS evaluation).

Handout

Thank you so much for you time and attention – enjoy the rest of the conference!