What Is MAGI for Medicaid? The Income That Actually Counts (2026)
Open your state's page on this site and you'll see a Medicaid income limit — say, $22,025 a year for one person in New Mexico. Then you look at your own pay stubs, add them up, and they land above that line. So you assume you don't qualify.
You might be wrong. That $22,025 isn't measured against your paycheck. It's measured against a specific, adjusted figure called MAGI — and several kinds of money you assume count toward it don't, while one you assume doesn't, does. Getting the math right is the difference between applying and walking away from coverage you're entitled to.
MAGI is not your paycheck — here's what it actually is
MAGI stands for Modified Adjusted Gross Income. It's the income yardstick the Affordable Care Act put in place for both marketplace subsidies and most Medicaid eligibility. It starts not from your gross salary but from your Adjusted Gross Income (AGI) — the same number on line 11 of your federal tax return — and then adds a few items back.
The formula, in plain terms:
Why this matters: AGI is already your gross income minus a set of "above-the-line" deductions. Money you route into a traditional 401(k), a health savings account (HSA), deductible self-employment expenses, or student-loan interest all comes out before you reach AGI. That means those pre-tax dollars lower your MAGI. Two people earning the identical gross salary can land on opposite sides of a Medicaid line purely because one contributes to a retirement plan and the other doesn't. If you want the deliberate version of that lever, we cover it in how to lower your MAGI for a bigger subsidy — the same mechanics apply to Medicaid's income test.
The income that doesn't count at all
This is where most people miscount. A surprising amount of money that hits your bank account is invisible to MAGI. If you've been adding these to your "income," take them back out:
| Does NOT count toward MAGI | Note |
|---|---|
| Child support received | Never counted, regardless of amount |
| Supplemental Security Income (SSI) | The needs-based benefit — distinct from Social Security (see below) |
| Veterans' (VA) benefits | Disability and pension payments excluded |
| Workers' compensation | Excluded |
| TANF and other needs-based cash aid | Excluded |
| Gifts and inheritances | The lump sum itself doesn't count as income |
| Certain American Indian / Alaska Native income | Specific tribal payments are excluded |
Because these are excluded, a household living largely on child support, VA disability, or workers' comp can have a real budget well above the "limit" and still qualify — the countable MAGI figure is far lower than the money actually coming in.
The Social Security trap
Social Security is where the counting goes exactly backwards from what people expect, so read this twice.
Social Security retirement, survivor, and disability (SSDI) benefits count in full toward MAGI — even the part that isn't taxed gets added back in. Supplemental Security Income (SSI) does not count at all. They sound similar and are constantly confused, but for Medicaid they behave in opposite directions.
The reason is buried in the formula. For most retirees, only part of their Social Security check is taxable, so only that part is in AGI. MAGI then adds the non-taxable portion back — which means the entire gross benefit ends up counted. SSI, by contrast, is a separate needs-based program for people with very low income and assets; it's excluded outright. So a retiree drawing $1,800 a month in Social Security counts all of it, while someone on SSI counts none of theirs.
The 5% disregard — and the mistake of subtracting it twice
Federal rules include a built-in cushion: a 5-percentage-point-of-FPL income disregard. When your MAGI lands just over a threshold, the state effectively shaves 5 points of the Federal Poverty Level off your income — but only when doing so is the difference between qualifying and not.
Don't apply the 5% twice. For the adult expansion group, the disregard is already baked into the "138% of FPL" figure you see on a state page. The statute sets that limit at 133%, and the 5% cushion is what turns it into 138%. If you subtract another 5% on your own, you'll wrongly talk yourself out of qualifying.
The number is your income now — not last year's tax return
MAGI-based Medicaid looks at your current and reasonably-expected income going forward, not the annual figure frozen on your last return. This is the single most important thing for anyone whose situation just changed.
If you lost a job, dropped hours, or closed a business this month, your forward-looking income may put you under the line right now — even if the calendar-year total still looks high. Marketplace subsidies work off projected annual income; Medicaid is more willing to meet you where you are today. The practical takeaway: if your income recently fell, apply. Don't self-reject on last year's number. The agency evaluates your circumstances as they actually stand.
One more structural point in your favor: MAGI-based Medicaid has no asset test. Your savings, your car, your home don't factor in — only income does. (That's different from the aged, blind, and disabled pathways, which do count assets; if that's you, start with how Medicaid counts your savings.)
So: run your number, then check your state
Put it together and the self-check is straightforward:
- Start with your AGI (or your expected gross income minus pre-tax 401(k)/HSA contributions if you're estimating).
- Add any non-taxable Social Security (retirement/SSDI) and tax-exempt interest.
- Leave out child support, SSI, VA benefits, workers' comp, and gifts entirely.
- Compare that figure to your state's limit for your household size — remembering the 5% cushion is already in the expansion number.
That last step matters because the limit is not one national number. The 138% of FPL figure applies to non-elderly, non-pregnant adults in the roughly 40 states (plus DC) that expanded Medicaid. Children qualify at higher income levels through Medicaid and CHIP; pregnant applicants get higher limits too; and in non-expansion states, low-income adults without dependent children often can't get Medicaid at any income. The exact threshold for your household and category lives on your state's page. HHS ASPE sets the 2026 poverty guidelines those percentages are built on — $15,960 for a household of one in the 48 contiguous states, with higher figures in Alaska ($19,950) and Hawaii ($18,360).
A caveat worth stating plainly: your Medicaid household usually mirrors your tax household, but not always — there are specific rules for tax dependents, non-filers, and children living with a parent who doesn't claim them. If your household is complicated, treat your own estimate as a starting point and let the application do the precise math.
Find your state's exact 2026 limit
Every state sets its own MAGI thresholds by household size and category. Look up yours, then confirm with an application.
Check your state →If your number lands above the Medicaid line, you're not out of options — that's precisely the income band where marketplace subsidies take over. See Medicaid vs. marketplace insurance to find which door you're standing in, and Medicaid income limits by state for the full 2026 table.
Frequently asked questions
Is Medicaid based on gross or net income?
Neither, exactly. It's based on MAGI, which starts from your adjusted gross income (already your gross minus pre-tax items like 401(k) and HSA) and then adds back tax-exempt interest and non-taxable Social Security. It's lower than gross pay but not the same as take-home.
Does Social Security count as income for Medicaid?
Yes — retirement, survivor, and SSDI benefits count in full, including the non-taxable portion. The exception is SSI (Supplemental Security Income), which never counts toward MAGI.
Does a one-time tax refund or a gift count?
No. Tax refunds, gifts, and inheritances aren't counted as MAGI income. (Interest those funds later earn in an account is a different story, but the lump sum itself is invisible to the income test.)
My income changed mid-year. Which figure applies?
Your current, forward-looking income. Medicaid assesses what you reasonably expect to earn going forward, so a recent job loss can qualify you now even if your year-to-date total is higher. Apply rather than assuming.
I'm a few dollars over my state's limit — is there any give?
The 5% FPL disregard exists exactly for that margin, applied when it decides eligibility. But for the adult expansion group it's already inside the 138% figure, so don't count on stacking a second 5% on top.
Sources
HHS ASPE — 2026 Poverty Guidelines · HealthCare.gov — What to include as income (MAGI) · Medicaid.gov — Eligibility & MAGI methodology · KFF — Medicaid policy tracking
This guide is general information, not eligibility advice. MAGI rules and household composition can vary by situation and state; your Medicaid application is the authoritative determination. Edited by The SubsidyCalc Editorial Team.