What Counts as Income in Texas: MAGI, Household, and the Wrong Denials

The income Texas measures you against is not the number at the top of your pay stub: medical program eligibility is assessed on a modified adjusted gross income calculation, and the gap between gross pay and the countable figure is where a large share of wrong Texas denials begins. HHSC applies its own income policy from the Texas Works Handbook¹, then compares the result against a percentage of the federal poverty guideline for your household size, which in 2026 starts at $15,960 a year for one person² (checked 30 July 2026).

I do this arithmetic several times a week as a Certified Application Counselor, and the appointment I remember best from this spring happened at a kitchen table rather than at my desk. A man who does mobile welding had a coffee tin of fuel receipts, a phone full of invoices, and a figure in his head: what his customers had paid him across the year. On that figure he had already decided his household was over the line and applying was pointless. It took an hour, invoices on one side of the table and costs on the other, to establish that he had never actually known his own countable income, and that the number he was ruling himself out on was the wrong one. I cannot tell you how his case came out, because I do not decide it. I can tell you he applied.

Nothing here is an eligibility determination. Only HHSC can determine a Medicaid, CHIP or Healthy Texas Women case and only the Marketplace can determine a premium tax credit. What follows is how the counting works, where it goes wrong, and how to check your own figure before you accept a no.

What counts as income for a Texas medical program?

A MAGI based figure, built from taxable income and applied by HHSC under its published income policy, not the gross figure on a pay stub and not household spending money. The Texas Works Handbook devotes an entire chapter to income, which tells you something about how many edge cases exist¹.

Three points decide most cases before any arithmetic starts.

• Some money is not counted at all. Not every dollar arriving in a household is countable income for a medical program, and assuming otherwise is the commonest way somebody self screens out.
• Whose income counts depends on who is in the household, which is a separate determination from how much anybody earns, and the section most likely to change your answer.
• The Marketplace runs its own version of the same idea. HealthCare.gov publishes its own list of what to include as income for a premium tax credit³ (checked 30 July 2026), which overlaps heavily with the Medicaid calculation without being identical to it.

This site does not reproduce either agency’s inclusion list item by item, because the useful thing is not a list you half remember at a kitchen table. It is knowing that the countable figure is calculated, and that you can see the figure HHSC used and check it. See applying through YourTexasBenefits for how the evidence goes in.

The 2026 poverty guidelines, and how a percentage becomes a monthly dollar figure

Every Texas medical program limit is a percentage of the federal poverty guideline for your household size, so the guideline table is the base of the whole calculation. These are the 2026 annual guidelines for the 48 contiguous states, with 2025 alongside them because both years are in use at once for different purposes² (checked 30 July 2026).

Household size	2026	2025
1	$15,960	$15,650
2	$21,640	$21,150
3	$27,320	$26,650
4	$33,000	$32,150
5	$38,680	$37,650
6	$44,360	$43,150
7	$50,040	$48,650
8	$55,720	$54,150
each additional person	add $5,680	add $5,500

The conversion is one line of arithmetic: multiply the annual guideline for your household size by the program’s percentage, then divide by twelve. HHSC works an example on its own chart, and it is worth copying the method rather than the answer: a single person at 133% of the federal poverty level must have income “not exceeding $1,769” a month⁴ (chart effective 1 April 2026, checked 30 July 2026). Check it yourself: 133% of $15,960 is $21,226.80, divided by twelve is $1,768.90.

That worked figure tells you something beyond the number: HHSC’s chart is computed against the 2026 guidelines, the year Medicaid and CHIP use. The percentages themselves, 198% for infants, 144% for ages 1 to 5, 133% for ages 6 to 18, 201% for CHIP, 202% for CHIP Perinatal, 198% for Medicaid for Pregnant Women and 204.2% for Healthy Texas Women, are stable across the year⁴, and four are independently matched by the federal eligibility standards table⁵. The dollars underneath them move every January.

The five percentage point disregard, and why the real line sits a little higher

HHSC’s chart carries a “Standard MAGI Income Disregard: Five Percentage Points of FPL” as a separate line, worth $66.50 a month for one person plus $23.70 for each additional household member at the 2026 guidelines⁴ (checked 30 July 2026). It applies alongside the published limits rather than being baked into them.

The consequence is the most useful sentence on this page, and the reason to apply rather than self screen: the income a household can actually have runs a little above the stated limit. A gross figure a few dollars over a published line is not a reason to skip the application.

It also explains a discrepancy readers hit constantly. KFF and MACPAC print every Texas limit exactly five points higher than HHSC does, 203% for infants, 149% for ages 1 to 5, 138% for ages 6 to 18, 206% for separate CHIP, because they fold the disregard into the headline while HHSC lists it separately. Neither is wrong. This site publishes HHSC’s percentage, because HHSC decides and its number is the one that appears on a Texas notice. Never mix the conventions inside one calculation, and never split the difference. The same point from the eligibility side is in Texas Medicaid eligibility.

Household composition: the question that moves the line more than a raise does

How many people are counted decides which poverty guideline you are measured against, so getting the count wrong shifts the threshold by thousands of dollars a year, which is more than most pay changes do. Look at the table above: the step from a household of two to a household of three is $5,680 of annual guideline in 2026². A raise rarely moves anybody that far. A miscounted household member does it instantly.

And the count is frequently not what people assume, because MAGI household composition is built on tax relationships rather than on who sleeps in the house. The questions that decide it are things like who files a tax return with whom, who is claimed as a dependent, and who is expected to be claimed for the coverage year. Two consequences follow that surprise people at the desk:

• Different people on the same application can be measured against different household sizes, which is one of the mechanical reasons a household gets a split result.
• A person living in the house is not automatically in the household, and a person not living in the house is not automatically out of it.

Because the count is determined rather than self reported, do not guess. Answer the household questions accurately, then read the notice to see the household size HHSC actually used. If that figure is wrong it is a factual error, which is exactly what a fair hearing exists to correct. It also interacts with the narrowest category in Texas: parents and caretaker relatives qualify only up to about 15% of the federal poverty level, the lowest parent threshold in the nation⁶ (KFF, as of January 2026), so who counts as a caretaker relative is not academic. Children’s eligibility is far broader: CHIP and Children’s Medicaid in Texas.

Self-employment: the figure is net, and this is where wrong numbers enter

A self-employed applicant reports business income after allowable business expenses, not the total customers paid, and this is the single most common place a wrong figure enters a Texas application. It is also, almost always, wrong in the direction that costs the household something: the gross is higher than the net, so reporting the gross measures you against a limit you may never have exceeded.

Two things make the error easy to fall into. Self-employed people know their gross by heart, because it is what they invoice and what they bank. And the net figure often does not exist anywhere until somebody sits down and produces it, which is the job the welder and I were doing at that kitchen table. If your accounting is a coffee tin, the countable number cannot be looked up. It has to be worked out.

This page publishes no specific deduction rule and no expense figure, because none has been read off an HHSC source and dated for this site. The gap is deliberate: a half remembered expense rule from a national article produces a figure wrong in either direction, and one wrong in the strict direction never gets corrected, because the household simply does not apply. Bring the raw material instead, the invoices and the business costs, and let HHSC or a free assister apply the current rules to it. Both are listed at localhelp.healthcare.gov⁷ and through 2-1-1 Texas⁸ (checked 30 July 2026).

Two correct sources, two different answers

A household can get two different eligibility answers from two entirely correct offices, and there are two reasons for it that have nothing to do with anyone making a mistake.

The lag rule. Marketplace eligibility for a plan year is assessed against the prior year’s poverty guidelines, while Medicaid and CHIP use the current year’s² (checked 30 July 2026). The table above makes the gap visible: $15,960 against $15,650 for a household of one, $27,320 against $26,650 for a household of three. Two agencies measuring the same income against two different base tables will not always agree, and neither is wrong. The subsidy side is worked through in how Marketplace subsidies work and Marketplace plans in Texas.

HHSC’s two vintages. This one is sharper, because it lives inside one agency’s website. As at 30 July 2026, HHSC is publishing two poverty guideline vintages at once: its pregnancy program page computes against the 2026 guidelines while the Children’s Medicaid dollar table on its consumer site is still on the 2025 ones, and both look equally current. So never copy a dollar table off an HHSC consumer page and assume it is this year’s. Take the percentage from the handbook chart⁴, apply the guideline year you can name, and say which year you used. That is why this site states percentages first and dollars second. For pregnancy, see Medicaid for pregnant women in Texas.

How to check your own figure before you accept a denial

Work the calculation in the same order HHSC does, then compare each step against what the notice says. Five steps, and each one is a place a mistake can hide.

1. Household size. Establish the number HHSC used, from the notice. Then find the guideline for that size in the 2026 column above.
2. The program and its percentage. Every person on the application is tested against their own program’s percentage, so a child aged four and a child aged nine are measured against 144% and 133% respectively⁴.
3. The monthly threshold. Guideline multiplied by percentage, divided by twelve, exactly as HHSC does for its $1,769 example.
4. Your countable income, not your gross, and net rather than gross for any self-employment.
5. The disregard. Remember that five percentage points sits alongside the limit, so the real line is a little above the one printed.

If your arithmetic and the notice disagree, that is a factual dispute rather than a policy dispute, and it is the strongest kind of appeal there is. You have 90 days from the effective date of the HHSC action, orally or in writing⁹ (checked 30 July 2026), and the full route is in appealing a denial in Texas. If the two agree and the answer is still no, the question changes shape: see the Texas coverage gap and then getting care without insurance in Texas.

What this page does not publish, and why

No deduction rule, no expense figure, and no dollar table lifted off a consumer page. The only disregard figure here is the five percentage point standard MAGI disregard from HHSC’s own chart, with its date attached, and the only dollar table is the federal poverty guidelines from HealthCare.gov, with the year named.

The reason is specific to income pages. Somebody reading one is usually deciding whether applying is worth their time, and a figure wrong in the strict direction does not send them to the wrong office. It stops them going at all, and there is no correction mechanism for a person who never applied. An empty slot with a named office beside it beats a filled one with a plausible number in it.

Where a number is needed, the offices that hold it are HHSC through your YourTexasBenefits account¹⁰, a free Certified Application Counselor or Navigator through localhelp.healthcare.gov⁷, and 2-1-1 Texas for a local organization⁸. All three apply the current rule to your actual paperwork, which is the only version of this calculation that binds anybody.

Where the figure is actually decided

On your notice, by HHSC, against your household’s own evidence. Everything above is method: it lets you check the arithmetic and spot an error worth appealing. It is not a determination and cannot become one.

Two dates govern the numbers here. The federal poverty guidelines are reissued every January and every dollar figure on this page moves with them, so nothing here should carry a prior year guideline past 31 January. HHSC’s chart carries an effective date of 1 April 2026, and everything here was checked on 30 July 2026. For where the income test sits in the wider picture, see health coverage in Texas and the program by program list in Texas health programs.

Texas Care Map is published independently. It is not connected to the State of Texas, the Texas Health and Human Services Commission, the Texas Department of Insurance, or the Centers for Medicare and Medicaid Services, and it has no role in calculating or deciding anybody’s income eligibility.