How Medicaid counts income and household size

By the MedicaidCalc Editorial Team · Published October 5, 2026 · Updated October 5, 2026

Almost every Medicaid and CHIP decision for people under 65 runs on one formula: your household’s current monthly income, compared with a percentage of the poverty line for your household’s size. Both halves have precise federal definitions in 42 CFR 435.603, and getting either wrong is the most common reason an online estimate and a state decision disagree.^[1]

1. Which income counts: MAGI

Medicaid uses “MAGI-based income” — the same modified adjusted gross income used for Marketplace tax credits, with three Medicaid-specific exceptions written into the regulation:^[1]

• A lump sum counts only in the month you receive it.
• Scholarships, awards and fellowship grants used for education, not living expenses, do not count.
• Certain American Indian and Alaska Native income — distributions from Alaska Native corporations and settlement trusts, and payments tied to trust lands, natural resources and culturally significant items — does not count.

In practice that means wages and self-employment profit before tax, unemployment benefits, pensions and taxable retirement withdrawals count; child support you receive, gifts and SSI do not. Pre-tax deductions taken out of a paycheck (such as 401(k) contributions) lower countable income, which is why the calculator asks for income before taxes but not before those deductions.

2. Current monthly income

For a new application the state must use your current monthly income, not last year’s tax return.^[1] If your hours just dropped, the new lower month is what counts. Once enrolled, a state may switch you to projected annual income for the rest of the year. Enter a yearly figure in the calculator and it divides by 12.

3. Who is in your household

Medicaid builds the household from the tax return you expect to file:^[1]

• Tax filers count themselves, a spouse filing jointly, and everyone they will claim as a dependent.
• Tax dependents generally use the household of the person who claims them — with exceptions for dependents who are not a spouse or child, children living with both unmarried parents, and children claimed by a non-custodial parent.
• Non-filers count themselves, a spouse, and their own children (and, for a minor, parents and siblings) who live with them.
• Pregnancy adds the expected baby or babies to the pregnant person’s household; Mississippi’s chart, for example, says so explicitly.^[5]

Children’s income is left out when the child is not required to file a tax return, which covers most part-time jobs.^[1] Two people in the same home can therefore have different household sizes for Medicaid.

4. The 5% disregard

Federal rules subtract an amount equal to 5 percentage points of the poverty line from your income, but only to decide eligibility in the group with the highest income standard you could qualify for in that program — not to move you between groups.^[1] The effect is to add 5 points to the top limit: the expansion group’s 133% becomes 138%.^[2] For a family of three in 2026 the disregard is worth $114 a month (Texas lists $113.85).^[3]

Some state charts already include it (Alabama, Mississippi, Kansas and Georgia’s “Plus 5%” columns do); others, like Texas’s parent table and most percentage tables, do not.^[6] This site stores every standard without the disregard, adds it once, and says which convention each state’s source uses. Where a child’s income sits between a Medicaid standard and that standard plus 5 points, and CHIP covers the range above, states differ on whether the child lands in Medicaid or CHIP; the calculator says “Medicaid or CHIP” rather than picking one.

5. Groups that do not use MAGI

People who qualify because they are 65 or older, blind or disabled — and people in long-term care — are judged under SSI-style rules with different income disregards and an asset test. See Medicaid for 65+ and disability.

Check your numbers

With the household size and monthly income decided, the rest is arithmetic: income ÷ (annual poverty line ÷ 12) × 100 gives your percentage. A family of three earning $3,000 a month is at 131.8% of the 2026 poverty line ($27,320 a year).^[4] The calculator does this for every person you select and applies your state’s standards.