401-2 Tax Filer's MAGI Household

Effective Date: November 1, 2021

Previous Policy (234-1 was renumbered to 401-2 as of November 1, 2021)

A. Definitions

The following definitions apply for MAGI households.

1. "Child" means a biological, adopted or step-child.

2. “Dependents” are people for whom a tax filer generally provides support; they may be children or other relatives. The tax filer may be able to claim tax credits for certain dependents.

3. "MAGI household" means the household size and composition for someone whose Medicaid eligibility is determined using the MAGI methodology.

4. "Parent" means a biological, adoptive or step-parent.

5. "Sibling" means a biological, adoptive, half-sibling, or step-sibling who meets the age limits, and school attendance requirement, if applicable.

6. "Tax Household" means the number of individuals included on a tax filer's tax return whom the tax filer can claim as dependents.

B. Tax household rules

The MAGI household uses tax rules about who is part of a tax filer's household with some exceptions.

The following information defines who can be counted in a tax filer's tax household. This is to help establish an understanding of the tax rules about households, which will be the basis for how to build the MAGI household for Medicaid.

1. The tax filer. This is the individual who is applying for Medicaid, states an intent to file a tax return, and is not being claimed as a dependent by another tax filer.

2. The spouse of a tax filer is included in the tax household if the couple files a joint return. In essence, they are both filers. (NOTE: Spouses living together are always included in each other's MAGI household for Medicaid even if the couple does not file a joint return, which is discussed in section C. Unmarried couples are not allowed to file a joint tax return. (See common-law marriage policy in C.2.)

3. Dependents include the following:

a. Child. To be a qualifying child for the purpose of claiming a tax credit, the child must:

· Be under age 19, or age 19 through 23 and enrolled in school full-time, or be a child of any age who is totally and permanently disabled. If the individual says he can claim the disabled child, accept the client's statement.

· Not have provided 50% of his own support. The child may be claimed by the parent he lives with, or in some cases by the non-custodial parent.

· Be the tax filer's son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendent of any of them. An adopted child is treated as the tax filer's child, including a child placed for adoption with the tax filer, as tax law makes no distinction between children who are adopted and those who are still in the adoption process.

· Be younger than either the tax filer or the tax filer's spouse.

· Live with the tax filer more than half of the year (some exceptions apply for temporary absence, children who were born or who died during the year, and when parents are divorced.)

b. Others who live with the tax filer the whole year and is someone who must meet the following criteria:

· Is a relative of the filer or the filer's spouse, or is an unrelated person; and

· Cannot be the tax filer's child or a child of another taxpayer, (so a child who does not meet the criteria to be a qualifying child may be claimed as a dependent relative); and

· Is not expected to have income in excess of the income limit for dependents see table VII ; and

· The tax filer expects to provide more than 50% of the person's support.

c. Other relatives who do not live with the tax filer and is someone who must meet the following criteria:

· Is one of the listed relatives of the filer or the filer's spouse;

o child or descendant of child, including a foster child;

o brother or sister;

o parent or grandparent including step parent, but not a foster parent;

o niece or nephew;

o aunt or uncle;

o in-laws: son, daughter, mother, father, brother or sister. and

· Cannot be the tax filer's child or a child of another taxpayer, (so a child who does not meet the criteria to be a qualifying child may be claimed as a dependent relative); and

· Is not expected to have income in excess of the income limit for dependents see table VII ; and

· The tax filer expects to provide more than 50% of the person's support.

Note: Death or divorce does not change relationships that were established by marriage.

C. MAGI Medicaid household ("MAGI Household") for tax filers

The MAGI household for a tax filer is determined by following tax rules about household composition with some modifications specifically for Medicaid.

A tax filer's household can include individuals who are not typically included in a Medicaid household, such as children age 19-23. That is because the MAGI household follows tax rules about who is included in the MAGI household size. Therefore, it is possible for the MAGI household to include a foster child, an adult child, or a dependent person who is not the spouse or child of the tax filer. In addition, dependents claimed by a tax filer may not always live with the tax filer.

1. MAGI Household size for a tax filer.

a. To determine the MAGI household size for an applicant or recipient who expects to file a federal tax return and cannot be claimed as a dependent by another tax filer, use his tax household (Section B.) with the following additions. (If the filer is a child who lives with parents who will not file a tax return, see 401-3.)

i. Include a spouse living with the tax filer who is not part of the tax household because the spouse is filing a separate return or is not filing a return.

· If the couple files a joint return, the spouse is already counted in the tax household and therefore is counted in the MAGI household.

· Married couples that are permanently separated, not living together, and filing a joint tax return, will be treated as non-tax filers. The MAGI household will not include the absent spouse.

ii. Include the expected number of unborn children of anyone counted in the tax filer's MAGI household who is pregnant at the time of application or renewal.

Example 1: John, age 23, attends the university full time. He lives with his mother, Jessica, and his 17-year-old sister, Chris. John works 15 hours per week, earning minimum wage. His mother provides more than 50% of his support. She claims John and Chris as qualifying children on her taxes. Chris is pregnant. Jessica's MAGI household includes herself, John, Chris and Chris' unborn child. Jessica is able to claim them as dependents for the purposes of determining her Medicaid household.

Example 2: Mary is applying for Medicaid. She has three children: Vanessa, a 19-year-old full-time college student, Trudy age 15 and Miriam age 17. Vanessa works 20 hours per week, earning minimum wage. Her mother states she provides 50% of Vanessa's support. Mary can claim Vanessa as her dependent. Mary's MAGI household includes herself, Vanessa, Trudy and Miriam. Due to the amount that she earns, Vanessa will be expected to be required to file a tax return. Her income will count as part of the household income.

b. Accept the client's statement about filing a tax return.

c. Accept the client's statement about a pregnancy and the expected number of unborn children.

d. Accept the client's statement about dependents he expects to claim unless the agency has information that conflicts with the client's statement.

i. If the agency has information that is not reasonably compatible with the client's statement about claiming someone as a dependent, ask the tax filer for information supporting their statement.

ii. If the tax filer cannot establish a reasonable explanation of why someone can be claimed as a dependent, do not count that person in the tax filer's MAGI household. For example, if the tax filer claims an unrelated person as a dependent, but that person's income exceeds (or is expected to exceed) the limit for a dependent, do not count that person in the tax filer's MAGI household.

2. MAGI Household size for the spouse of a tax filer.

a. Joint filers who live together.

If a married couple files a joint tax return, the MAGI household for the tax filer's spouse is the same as the MAGI household for the tax filer. (They are actually both considered filers.)

b. Separate filers who live together.

i. The MAGI household for a spouse who files a separate tax return includes:

· Both spouses who are living together but are filing separate returns;

· The number of dependents the individual expects to claim as exemptions on his own return; and

· The expected number of unborn children of anyone included in his MAGI household.

ii. If a spouse is living with his parent who is claiming him as a dependent child, follow rules for children of a tax filer.

iii. If a spouse will not be claimed on a joint return with his spouse, will not be claimed as a dependent by another tax filer, and will not file a return himself, follow the rules for non-filers to determine his MAGI household (401-3).

iv. Utah does not recognize common-law marriages unless they have received a certificate from a court, in which case, they are married.

v. An unmarried couple who states they are filing taxes jointly (as in the case of a self-stated common law marriage), will be treated as non-tax filers.

· Utah will allow a couple to file a joint tax return if they entered into a common-law marriage in a state that recognizes such relationships and who later moved to Utah.

· Take the client's statement unless the agency has conflicting information.

3. MAGI household of children of a tax filer

Build the household separately for each child living with the applicant tax filer based on the situation for each child. Children in the same household may have different MAGI household sizes.

When divorced or separated parents have joint custody, see 401-4 to determine the child's residence. The child's MAGI household will be determined based on where the child lives and the following rules.

a. If the child meets the criteria of being a child and lives with only two parents who file a joint return and claim an exemption for the child, the child's MAGI household size is the same as the parents' MAGI household size with one addition:

· If the child is married and also lives with his spouse, include the child's spouse in the child's MAGI household size.

b. If the child meets the criteria of being a child and lives with only one parent who claims the child on her tax return, the child's MAGI household is the same as the parent's MAGI household size with one addition:

· If the child is married and also lives with his spouse, include the child's spouse in the child's MAGI household size.

c. If the child meets the criteria of a being a qualifying child and lives with two parents, but the parents will not file a joint tax return, then the MAGI household size of that child does not follow the tax filer's household size. The household size follows non-tax-filer rules (401-3).

d. A child could live with two biological (or adoptive) parents and a step-parent (someone married to one of the biological parents). In this case, the biological parents will not be filing a joint return, so determine the child's MAGI household following non-tax filer rules.

e. If the child meets the criteria of a being a child and lives with one parent, but a non-custodial parent will claim the child on his or her tax return, the MAGI household size of the child does not follow the tax filer's household size. Use non-tax-filer rules (401-3).

4. Child applying on her own

A child who meets the age criteria to be a child of a tax filer may apply for Medicaid on her own if she does not live with her parents. If she expects to be permanently absent from her parents' home, the agency will not consider her as her parents' tax dependent to determine her eligibility.

· Decide if she expects to file her own return and use the applicable rules to build her MAGI household. (Tax filer rules if she expects to file; non-tax filer rules if she does not expect to file (401-3).

· Count only her income and that of anyone who is included in her household, if applicable.

5. MAGI household for other dependents of a tax filer

Use the non-tax filer rules to determine the household size for the following tax dependents (401-3):

· An “other relative” claimed as a dependent of a tax filer who is not the spouse or dependent child of the filer (defined in B.3.b and c);

· A “child” who is not the tax filer's child (defined in B.3.a);

· A child placed for adoption before the adoption is finalized.

o Tax law allows a tax filer to claim the prospective adopted child as a child. However, Utah Code does not recognize the adopting parent as a legal parent until the process is complete.