Feb 4, 2015

Last calendar week, nosotros released a primer on the basics of MAGI – how rules for counting household size and income to determine eligibility for Medicaid and CHIP have been aligned with Market subsidies. The move to MAGI has brought about a number of changes in Medicaid and Scrap, simply to further complicate things, at that place are some differences that apply only to Medicaid and CHIP. Today, nosotros're going to drill down on ane of the more disruptive aspects of MAGI: when does Social Security income count.

Social Security income includes retirement, survivor benefits, and disability payments. For the well-nigh part, only taxable sources of income count in determining household MAGI-based income. Even so, all Social Security income of tax filers is counted, regardless of whether it is taxable or not. On the other manus, Social Security income is Only counted for tax dependents – those individuals claimed as a revenue enhancement exemption on someone else'southward taxation render – if they are required to file taxes. Social Security disability (SSDI) is oftentimes confused with some other type of income – Supplemental Security Income (SSI). SSI is not counted under any circumstances toward a household's MAGI. So permit'due south start there.

  • Social Security Disability Income (SSDI) versus Supplemental Security Income (SSI). SSDI is paid from the Social Security Trust Fund to totally disabled individuals who have worked long enough and paid Social Security taxes. Dependent children may too receive SSDI if a parent receives it. On the other hand, SSI is not a Social Security benefit; it is a supplemental income program designed to assist the elderly, the blind, or people with disabilities who have piddling or no income. Like TANF payments, SSI is always excluded from MAGI-based income. Like other sources of Social Security income, SSDI is included in MAGI-based income for tax filers. Information technology only counts for children and tax dependents if they are required to file taxes, as discussed below.
  • Counting Social Security income of revenue enhancement filers. All types of Social Security income, whether taxable or not, received by a tax filer counts toward household income for eligibility purposes for both Medicaid and Marketplace financial help. Past including not-taxable Social Security income in MAGI income, some individuals who are not required to file taxes may exist denied Medicaid for too much income. In order to qualify for Market financial assistance in these circumstances, the individuals must attest that they will file taxes for the applicable coverage year. Information technology does non matter that they have not previously filed.
  • Counting Social Security income of children and tax dependents. For children and taxation dependents, Social Security income but counts toward the full household income if the individual is required to file a federal income tax return. For case, a child's survivor benefits or SSDI, even if the check is fabricated out to the parent or guardian, only count if the kid is required to file taxes. In 2015, the taxation-filing threshold for children is $6,300 in earned income or $one,000 in unearned income, and $3,950 for other tax dependents.

This rule is confusing because Social Security income is considered "unearned income," simply in most cases, information technology is not counted when determining if the child or tax dependent is required to file taxes. Under IRS rules, only taxable Social Security is used to determine if an individual meets the taxation-filing threshold. A single private has taxable Social Security income just if half of the Social Security income plus other income exceeds $25,000. Therefore, if a child or tax dependent'southward merely income is Social Security benefits, it is unlikely that the private would be required to file a federal income taxation render, and the Social Security benefits volition not be included in the total household income. However, if the dependent is required to file income taxes (for example, due to earnings from a summer job), then all of the dependent'south income, including the non-taxable Social Security benefits, volition exist included in the full household income.

There is one exclusion to the rule: Social Security income is counted for individuals who are claimed as a tax dependent by someone other than a parent or a spouse, regardless of whether they are required to file taxes (See Medicaid/CHIP Exception #1). In these circumstances, all of the individual'due south income, including all Social Security benefits, counts toward his eligibility regardless of whether he meets the tax-filing threshold.

Examples of these situations are included in the longer brief, and may exist helpful in understanding how Social Security benefits are counted. Stay tuned for tomorrow'southward web log when we characteristic other confusing aspects of MAGI. A special thanks to the Robert Wood Johnson Foundation for its support of "Getting MAGI Correct: A Primer on the Differences that Apply to Medicaid and CHIP" and this weblog series.