Eligibility Online Manual

M905 Income Disregards/Deductions

Purpose: This section will provide information on Income Disregards and Deductions.

Current Policy Effective Date: January 1, 2019

Date Last Reviewed: August 22, 2019

Previous Policy: May 1, 2017


1. Allow A 5% FPL Income Disregard For MAGI Programs When It Would Make A Difference In Eligibility.

2. Allow Tax Deductible Adjustments To Income For MAGI Programs

Deductions and adjustments include:

    • Alimony paid to someone else for agreements finalized on or before December 31, 2018.

    • Student loan interest paid

    • Certain educator expenses

    • Most contributions to individual retirement arrangements (IRAs)

    • Penalties on the early withdrawal of savings

    • Certain tuition and fees

    • Health savings account contributions

    • Certain business expenses not included in net income

    • Net operating loss

    • Other adjustments to gross income on IRS 1040 form lines 23-35

    • Moving expenses for Active Duty Military members that are ordered to move or change duty stations.

3. Do Not Include Credits And Deductions Listed On Page 2 Of IRS Form 1040 For MAGI Programs:

    • The standard deduction

    • Itemized deductions detailed in Schedule A

    • Child tax credit

4. Some Business Expenses May Be Deducted From Gross Self-Employment Income

Refer to M902 for Treatment of Self-Employment Income.

5. Allow The Following Deductions For The Medicare Savings Programs And Supplement Security Income (SSI) Program When Calculating Income:

    • $20 unearned income deduction per assistance unit

    • $65 plus one-half of the remaining earned income is deducted for each working individual.

    • Blind or impairment related work deduction for items or services directly related to assuring the blind/disabled individual can work.

    • Dependent deduction for each ineligible child. Refer to Medicaid Table 1A, for the dependent deduction.

    • Support payment deduction when there is a court order or state agreement under Title IV-D, and the payment is made by the ineligible spouse, ineligible parent, or ineligible child. Deduct either:

      • The amount specified in the court order or agreement.

      • The actual amount paid when less.


      • The actual amount paid when more if the excess amount is for averages.


Defining Requirement: 20 CFR 416, Subpart K

42 CFR 435, Subpart

Clarifying Information:

Worker Responsibilities:

Deductions should not be entered into WES for MAGI programs if they do not make a difference in eligibility.