MAGI-based income is based on federal tax rules for determining adjusted gross income with some modifications.
16500.1Counted Income - Below are the common but not exclusive list of included income items per the Internal Revenue Service (IRS) for calculating MAGI. Please visit https://www.irs.gov/publications/p525 to find the entire list of items on the list.* | Wages, salaries, tips, etc. |
* | Interest - both taxable and tax-exempt amounts. |
* | Taxable refunds, credits, or offsets of state and local income taxes. |
* | Alimony - for individuals with alimony agreements finalized on or before December 31, 2018, alimony continues to be included in the income of the recipient for the duration of the agreement unless or until the agreement is modified. Alimony payments under separation or divorce agreements finalized after December 31, 2018, or pre-existing agreements modified after December 31, 2018, are not included in the income of the recipient. |
* | Business income or (loss). |
* | Other gains or (losses). |
* | Pensions and annuities - taxable amount. |
* | Rental real estate, royalties, partnerships, S corporations, trusts, etc. |
* | Unemployment compensation. |
* | Social Security benefits - both taxable and tax-exempt amounts. |
* | Lump sum payment - a non-recurring lump sum payment (such as back pay, a retroactive benefit payment, State tax refund, or an insurance settlement) is counted as taxable income only in the month received. |
* | Gambling winnings less than $80,000 are counted in the month received; Winnings of $80,000 but less than $90,000 are counted as income over two months, with an equal amount counted in each month. For every additional $10,000 one month is added to the period over which total winnings are divided, in equal installments, and counted as income. The maximum period of time over which winning may be counted is 120 months. |
1. Under section 53103(b)(2) of the BBA of 2018 the requirement to count qualified lottery and gambling winnings in household income over multiple months applies only to the individuals receiving the winnings. The determination of household income for other members of the individual's household are not affected. For example: the total amount of qualified lottery or gambling winnings of a spouse or parent continues to count only in the month received in determining the eligibility of the other spouse and children.
2. Affected individuals are notified of the date on which the lottery or gambling winnings no longer will be counted for the purpose of Medicaid or CHIP eligibility. DMMA will also notify affected individuals of the hardship exemption. 16500.2Excluded Income- Below are the common but not exclusive list of excluded income items per the Internal Revenue Service (IRS) for calculating MAGI. Please visit https://www.irs.gov/publications/p525 to find the entire list of items on the list.* | Scholarships, awards, or fellowship grants used for education purposes and not for living expenses; |
* | American Indian/Alaska Native income as defined in 42 CFR 435.603(e); |
* | Supplemental Security Income (SSI); |
* | Temporary Assistance to Needy Families (TANF) and other government cash assistance; |
* | Worker's Compensation payments; |
* | Other Non-Taxable Income. |
21 DE Reg. 572 (01/01/18)
16500.3Deductions* | Certain business expenses of reservists, performing artists, and fee-basis government officials; |
* | Health savings account deduction; |
* | Deductible part of self-employment tax; |
* | Self-employed SEP, SIMPLE, and qualified plans; |
* | Self-employed health insurance deduction; |
* | Penalty on early withdrawal of savings; |
* | Student loan interest deduction; |
* | Domestic production activities deduction. |
16500.4Special income counting rules for children claimed by a parentA child's MAGI based income is excluded from total household income if:
* | The child is either under age 19 or is an adult child claimed by a parent as a tax dependent; and |
* | The child and parent are both included in the MAGI-based household; and |
* | The child's income is below the tax filing threshold (i.e., the child is not expected to be required to file a tax return for the current tax year). |
This rule applies to a child or children living with a parent whether household composition is based on the rules for tax filers or the non-filer rules.
It does not matter whether the child actually files a tax return.
16500.5Special income counting rules for children or dependents claimed by someone other than a parentThe special income counting rule for tax dependents applies in the case of tax dependents who are claimed by someone other than a parent.
When a dependent is claimed by someone other than a parent, the tax dependent's income is excluded from total household income if:
* | The tax dependent and the tax filer who expects to claim the individual are both included in the household; and |
* | The tax dependent's income is below the tax filing threshold (i.e., the tax dependent is not expected to be required to file a tax return for the current tax year); it does not matter whether the dependent actually files a tax return. |
When determining the total household income of a dependent who is claimed by someone other than a parent, the MAGI-based income is always counted in determining the child or dependent's eligibility, even if the income is below the tax filing threshold.
Such a tax dependent's household would not include the claiming tax filer due to the exception at 42 CFR 435.603(f)(2)(i). This means that the tax dependent's MAGI based income would not be excluded from his or her own household income.
Exception:
If a tax dependent's household is established using the non-filer rules described at 435.603(f)(3) and includes the tax dependent's parent, the tax dependent's income should be excluded from his or her own household income.
16500.6Applying the tax filing threshold for tax dependentsWhether a dependent has to file a return generally depends on the amount of the dependent's earned or unearned income.
Single dependents (under age 65) are required to file a tax return if the dependent has earned or unearned income that is more than the limits, or tax thresholds, announced by the IRS annually. IRS Publication 929 Tax Rules for Children and Dependents describes how to determine if a dependent is required to file a return and the applicable tax thresholds.
To determine the tax thresholds that apply, we use all of the dependent's MAGI based counted income with the exception of the dependent's Social Security Benefits (SSB).
Only the taxable portion of the dependent's SSB may be applied toward the tax filing threshold. If no portion of the SSB is taxable, none of those benefits will be applied toward the tax filing threshold.
Except in rare cases, such as receipt of a lump sum payment, a child or tax dependent's SSB will not be taxable unless the tax dependent has other income which itself exceeds the tax filing threshold.
If a child or tax dependent's MAGI based income counts toward the total household income, then all of the dependent's SSB counts.
16 Del. Admin. Code § 16000-16500
21 DE Reg. 572(1/1/2018)
22 DE Reg. 668(2/1/2019)
24 DE Reg. 1072( 6/1/2021) (Final)