MAGI Medicaid – Household Size

• whose income is counted against the applicant, and
• the applicant household’s federal poverty level threshold.

This article describes how the household is constructed for MAGI Medicaid applicants only.  For other Medicaid eligibility categories, household composition rules may be different.  The household composition rules for advanced premium tax credits (APTCs) may also be different in some cases (see APTC & CSR Eligibility – Income and Household Size).

Determining household composition in Medicaid involves a person-by-person assessment.  It is possible for a member within a family to have a different household size from others in the family.

General Case

In the general case of applicants who expect to file taxes, the MAGI Medicaid household is made up the applicant and all other members of the applicant’s tax filing family. Basically, the household is the “tax family,” just as in the context of APTCs and CSRs (see APTC & CSR Eligibility – Income and Household Size).

There are two important additions to this general rule:

• married couples living together are always considered part of each other’s household, even if they file taxes separately[note] Note that this rule for married couples filing separately does not exist in the context of APTCs and CSRs. Generally, married couples must file jointly to be eligible for those programs. See 26 C.F.R. § 1.36B-2T(b)(2) (outlining requirement and exceptions for cases of domestic abuse and abandonment).[/note]; and
• a pregnant woman is counted as herself, plus the number of children she is expecting to deliver.

Example 1
John and Jessica are married a file jointly, and they claim their daughter Melissa as a tax dependent.
→ John, Jessica, and Melissa each have a MAGI Medicaid household size of 3.

Example 2
Donald and Erica are married but file separate tax returns. Neither has any children or claims any tax dependents.
→ Donald and Erica each have of a MAGI Medicaid household of 2.

Example 3
Same as example 1, but now Jessica is pregnant expecting twins.
→ John, Jessica, and Melissa each have a MAGI Medicaid household of 5.

But there are several important exceptions to this general rule.

Exceptions

In some situations, alternative “relationship-based” household composition rules (instead of tax household rules) are used.  Under relationship-based rules, the applicant’s household includes the applicant, plus the following people if living with the applicant:

• The applicant’s spouse;
• The applicant’s children (natural, adopted, or step); and
• For children (under 19), the applicant’s parents (natural, adopted, or step) and siblings under 19 (natural, adopted, half, or step).

Relationship-based household rules must be used in the following four situations:

• The applicant is not a tax filer and is not expected to be claimed as a dependent by any other tax filer;

Example 4
David and Stephanie are married with one son, Michael, who lives with them. Their income is below the tax filing threshold and they do not expect to file a tax return for the relevant year.
→ The relationship-based rules will apply to each of David, Stephanie and Michael because none of them is filing a tax return or being claimed as a dependent on another tax return.  David, Stephanie, and Michael each has a Medicaid household size of 3.

• The applicant is expected to be claimed as a tax dependent by someone other than her spouse or parent (biological, adopted, or step)

Example 5
Shawn is a child claimed as a tax dependent by his grandmother.  He doesn’t live with his parents or any siblings.  His grandmother claims no other tax dependents.
→ The relationship-based rules will apply to Shawn’s household buildup because he is being claimed as a tax dependent of someone who is not his parent.  His Medicaid household size is 1.  (But Shawn’s grandmother would be considered as a tax filer with one dependent, so she would have a Medicaid household size of 2.) 

• When the applicant is a child (under 19) living with both parents (natural, adopted, or step), but those parents do not expect to file taxes jointly, and the child is expected to be claimed as a tax dependent by only one parent;

Example 6 
Stephen and Meredith live together and have a son, David, but they are not married.
→ The relationship-based rules will apply to David’s household construction because his parents both live with him and are not married, so they cannot file taxes jointly.  His Medicaid household size is 3.  (But ordinary tax household buildup rules might apply to Stephen and Meredith).

• When the applicant is a child (under 19) and is expected to be claimed as a tax dependent by a non-custodial parent.[note] For this purposes, “custody” is determined by the provisions for physical custody in a court order, binding separation, divorce, or custody agreement.  If no such agreement exists, or in the case of shared custody, the custodial parent is the one with whom the child spends most nights.[/note]

Example 7
Tina and John are divorced and have one child, Richard. Tina has custody of Richard and they live together.  But John claims Richard as a dependent on his tax return.
→ The relationship-based rules will apply to Richard because he is being claimed as a tax dependent by his non-custodial parent.  (But ordinary tax household building rules may apply to Tina and to John).

Below are some more examples of how the relationship-based rules work.

Example 8
Consider example 4 above.
→ Relationship-based rules apply to everyone, as discussed above.  David’s MAGI Medicaid household size will be 3 (himself, his spouse, and his child). Stephanie’s household will also be 3 (herself, her spouse, and her child). Michael’s household size will also be 3 (himself and his parents).

Example 9
Joanna is 54 years old and has two children, Audrey (age 24), and Rick (age 16). Audrey has a son, Nate. But Audrey lives out-of-state in a rehab facility and Joanna takes care of her grandson Nate (and claims him as a tax dependent). Rick also lives with Joanna.
→ Nate’s MAGI Medicaid household size is 1 (himself). He is claimed as a tax dependent by someone other than his parents, and he does not live with his parents or any siblings. (This means that only Nate’s income will count on his application, making him very likely eligible for Medicaid.)
→ Rick’s MAGI Medicaid household size is 3. He is claimed as a tax dependent by his mother, so the relationship-based rules do not apply to him. His “tax family” includes both his mother (Joanna) and all of her tax dependents (including Nate).
→ Joanna’s MAGI Medicaid household size is also 3. Same explanation as for Rick. The tax household rules apply to her.

Example 10
Stacy is 10 years old and lives with her mother Rebecca and her step-father Peter. Rebecca and Peter file taxes separately. Peter claims Stacy as a tax dependent.
→ Stacy’s MAGI Medicaid household size is 3. The relationship-based rules apply because she lives with both parents but they do not file jointly and only one parent will claim her as a dependent. Under those rules, the household includes Stacy and her two parents (including a step parent) who live with her.
→ Peter’s MAGI Medicaid household size is 3. The tax household rules apply. He files taxes and claims Stacy. And his wife is also counted in the household, even though she not is not on his tax return.
→ Rebecca’s MAGI Medicaid household size is 2. The tax household rules apply. She files and claims no dependents. But her spouse Peter always counts as part of her household.

More resources:

• 45 C.F.R. § 435.603(f)
• EOHHS Regulations, Section 1307
• NHeLP’s Advocates Guide to MAGI (2018 Updated Edition)

Author: Sam Salganik
Date Drafted: March 31, 2015
Updated: