Understanding Modified Adjusted Gross Income (MAGI) and the Affordable Care Act (ACA)


The Affordable Care Act (ACA) has brought about significant changes to the way health insurance is regulated and subsidized in the United States. One of the key concepts under the ACA is Modified Adjusted Gross Income (MAGI), which is used to determine an individual’s eligibility for various healthcare benefits, including subsidies for ACA health insurance plans.

MAGI and ACA Eligibility

MAGI is a measure of income used to calculate eligibility for government-funded health coverage programs such as Medicaid and the Children’s Health Insurance Program (CHIP). It is also used to determine the amount of premium tax credits and cost-sharing subsidies available to individuals and families who purchase health insurance through the Health Insurance Marketplace.

MAGI is calculated by taking an individual’s or family’s adjusted gross income (AGI) and adding back certain deductions and exclusions, including:

Alimony paid
Tax-exempt interest
Foreign income and taxes
Certain other adjustments

MAGI and Medicaid Expansion

Medicaid expansion is a provision of the ACA that allows states to expand their Medicaid programs to cover low-income adults who were previously ineligible for Medicaid. In states that have expanded Medicaid, individuals with incomes below 138% of the Federal Poverty Level (FPL) are eligible for Medicaid coverage.

MAGI is used to determine eligibility for Medicaid expansion. Individuals with incomes below 138% of the FPL based on their MAGI are eligible for Medicaid. In states that have not expanded Medicaid, individuals with incomes below this level may still be eligible for Medicaid if they meet other criteria, such as having a disability or being pregnant.

MAGI and Premium Tax Credits

Premium tax credits are subsidies that help individuals and families afford health insurance through the Health Insurance Marketplace. The amount of premium tax credits an individual or family is eligible for is based on their MAGI. Individuals with incomes above 400% of the FPL are not eligible for premium tax credits.


MAGI is a key factor in determining eligibility for various healthcare benefits under the ACA. It is important to understand how MAGI is calculated and how it affects eligibility for Medicaid expansion and premium tax credits. If you have questions about your MAGI or eligibility for ACA benefits, it is recommended to consult with a licensed health insurance agent or visit HealthCare.gov.

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