How is My Income Calculated for New Jersey Medicaid?

We have written at length on the importance of Medicaid when looking for affordable healthcare coverage in the Garden State. One key component of determining Medicaid eligibility is income. However, depending on the program you are applying for, there are different Medicaid income levels and different methods of calculating income.

Typically, income requirements are defined in relation to the federal poverty level (FPL). But, how that income is calculated before comparing to the FPL can vary. Some programs, such as ACA Medicaid, utilize what is known as a “MAGI formula.” Other programs, such as Medicaid for the Aged, Blind and Disabled (ABD Medicaid), NJ WorkAbility, and Managed Long Term Services and Supports (MLTSS) calculate income differently.

This article will walk you through the MAGI formula and how income is calculated for other Medicaid programs.

Understanding “MAGI” for NJ FamilyCare

Your Modified Adjusted Gross Income, “MAGI” for short, is the method used by ACA Medicaid (administered by NJ FamilyCare) and the Federally-Facilitated Marketplace to calculate your income. All in all, the MAGI method considers three factors: 

1. Your household size
2. The income for each person in the household
3. The total household income as compared to the federal poverty level (FPL) of your household size.

Determining Household Size

Figuring out your household size is not as intuitive as it seems. Two people in the same household can have a different “household size” for the purposes of MAGI. Thus, each person applying for Medicaid benefits must independently consider how large their household is. 

Each person applying falls into one of three categories: tax filers, tax dependents, and non-filers.

A tax filer is someone claiming a personal exemption and isn’t claimed as a dependent by anybody else. The tax filer’s “household” consists of the tax filers and dependents that they live with.

Tax dependents are those who are claimed as dependents by others. Their household consists of themselves, the tax filer(s), and the tax filer’s other dependents. But, there are a number of exceptions within the tax dependent category, so it is best to work with an attorney to ensure that you are consistent with the relevant regulations.

Finally, non-filers are those who don’t file taxes and aren’t claimed as anybody else’s dependent. A non-filer’s household generally consists of themselves, their spouse, and their children. Non-filing children may also include their siblings and parents if they are living together. However, exceptions apply depending on the individual non-filer’s personal circumstances. Your attorney will make sure that you are aware of and consistent with these exceptions. It is worth noting that, in the marketplace, non-filers do not have a “household” for MAGI purposes.

Determining Household Income

Under federal law, MAGI consists of your adjusted gross income plus excluded foreign income, tax exempt interest, and non-taxable social security. Additional deductions apply for ACA Medicaid (but not for the marketplace).

Finally, once you’ve figured out the MAGI for each member of your household, you can add them up to get your total household income. The total household income is then compared to the federal poverty level for your household to determine if you financially qualify for Medicaid.

Do ABD Medicaid, WorkAbility, & MLTSS Use the MAGI Formula?

Other New Jersey Medicaid programs—ABD Medicaid, WorkAbility, and MLTSS—do not use MAGI to determine if you are within the Medicaid income level. These programs generally consider only your own income, and sometimes that of your spouse.

These programs categorize your income sources as “earned” income and “unearned” income. Earned income generally includes wages, salaries, and self-employment earnings. Unearned income, may include alimony, SSDI, unemployment, investment income, trust payments, and more. 

Further, these programs contain a scheme of “disregards,” where certain amounts of income sources are not counted, or “disregarded”, towards your calculated income.

Qualified Income Trust

Particularly relevant to this point are Qualified Income Trusts, a topic that we’ve written about before. Qualified Income Trusts are useful if you require long-term care but your income exceeds the income limit.

In sum, a Qualified Income Trust allows you to deposit excess income into a trust, and that excess income won’t be counted towards your monthly income for Medicaid eligibility purposes. 

While form Qualified Income Trusts exist online, working with an attorney is preferable since everybody’s individual circumstances are different.

Conclusion

If there is one key takeaway here, it is that calculating income for Medicaid purposes requires consideration of many factors. Given the complex state and federal regulatory scheme of Medicaid, it is normal to feel overwhelmed by the Medicaid application process.

The seasoned attorneys at The Chamberlain Law Firm are experts at MLTSS applications and are here to help you. Give us a call today at (201) 273-9763 to set up a consultation. And for more Medicaid tips, be sure to check out our Insight Articles.

This article is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with a lawyer about the specifics of your case, contact The Chamberlain Law Firm at (201) 273-9763 to schedule a consultation.