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Level 15
posted Jan 1, 2024 8:47:55 PM

Lowering MAGI for Medicaid with an IRA?

Bob and Betty have two kids. Bob works two part-time jobs and has a small amount of self-employment income. Betty works one part-time job. They have previously been on Medicaid and their kids are covered by CHiP.  Their MAGI is slightly too high to maintain their Medicaid qualification.

1. Can they make a tax deductible contribution to a pretax IRA, and reduce their AGI. Is that an add-back to the Medicaid MAGI? I think not, but I want to double check.

2. I believe that 401(k) contributions are never an add-back even to IRS MAGI, or Medicaid MAGI.  What are the requirements, broadly speaking, for Bob to have a self-employed 401(k)?

 

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1 Replies
Level 15
Jan 2, 2024 5:30:30 AM

How does Medicaid determine Magi?
 
MAGI is adjusted gross income (AGI) plus these, if any: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.