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What exactly is “MAGI”?

We’ve been throwing around the term “MAGI” quite a bit lately when talking about eligibility determinations in 2014. My shorthand explanation has been, “MAGI is a simplified way of calculating income.” Thanks to a recently released report from Families USA, I can offer a more elaborate explanation of MAGI.

In 2014, all individuals below 133% of the Federal Poverty Level (FPL) will be eligible for Medi-Cal. Those between 133% and 400% FPL will be eligible for tax credits through the Exchange. Individuals who earn under 200% FPL and are ineligible for Medi-Cal could be eligible for a Basic Health Program (SB 703, which would create a BHP, will be voted on next year). California is one of 27 states that has Medi-Cal eligibility asset tests for parents. Parents must earn less than 100% FPL ($22,356/year for a family of four) and not have more than $3,150 in assets in order to be eligible. In 2014, eligibility for expanded Medi-Cal, Exchange premium credits and BHP will be determined based on a person’s MAGI.

MAGI, or Modified Adjusted Gross Income, is the household income a reported on federal tax forms. When determining eligibility, states will need to eliminate asset tests so that a person is not disqualified for having a savings account, owning a car, etc. To eliminate complicated disregards that vary from state-to-state, all states must also implement a 5% income disregard so that eligibility for Medi-Cal is actually expanded to 138% of income.

According to Families USA, MAGI will help prevent gaps in coverage, reduce paperwork burden on applicants, and ease transitions between programs.

For more information, see KFF’s report on eligibility and Family USA’s paper on MAGI.

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