Medi-Cal deductions and expenses fall into two very different systems depending on who you are. If you’re under 65 and applying as an adult, child, or pregnant person, California uses the same adjustments to income that appear on your federal tax return. If you’re 65 or older, blind, or disabled, the state applies a separate set of exclusions built on Supplemental Security Income rules, plus deductions for health premiums and disability-related work costs. And if your income lands above the free-coverage line, a third category comes into play: the medical expenses you can apply each month to meet a Share of Cost.
Knowing which subtractions apply to your situation can be the difference between qualifying and being turned away. For most adults, the income ceiling is 138% of the federal poverty level, roughly $1,800 per month for a single person in 2026. Deductions and expenses lower the income the state counts against that ceiling.
MAGI Deductions for Adults Under 65, Children, and Pregnant Applicants
The Modified Adjusted Gross Income track uses the same methodology as your federal income tax return. The deductions that reduce your countable income are the “adjustments to income” listed on Schedule 1.
Common adjustments include:
- Student loan interest
- Educator expenses of up to $300 for classroom supplies
- Contributions to a traditional IRA
- Alimony paid under a divorce agreement finalized before 2019
- Qualifying moving expenses for active-duty military members
- The deductible half of self-employment tax
- Self-employed health insurance premiums
- Contributions to self-employed retirement plans like a SEP-IRA or SIMPLE IRA
Self-employment income deserves extra attention because the state counts only the taxable portion of your business income, meaning your net profit after ordinary business expenses reported on Schedule C. Supplies, business insurance, and other legitimate operating costs are already subtracted before the state sees the number. The adjustments above then reduce it further.
The 2026 annual income limits at 138% of the federal poverty level are roughly $21,597 for a single person, $29,187 for a household of two, and $44,367 for a family of four. That 138% figure reflects a base limit of 133% plus a built-in 5-percentage-point disregard the state applies automatically. You don’t need to calculate it, but it explains why you sometimes see both numbers referenced.
One boundary to know: MAGI Medi-Cal has no asset test. What you own doesn’t affect eligibility on this track.
Non-MAGI Deductions for Applicants 65 or Older, Blind, or Disabled
If you’re on the Non-MAGI path, the calculation looks nothing like a tax return. The state starts by applying specific income exclusions and deductions drawn from the SSI framework.
The first subtraction is a $20 general income exclusion applied to any income the household receives, regardless of source. Health insurance premiums come off next, including the monthly Medicare Part B premium, which is $202.90 for most enrollees in 2026. Court-ordered child support and spousal maintenance payments are also subtracted, since the applicant is legally required to pay that money to someone else.
Impairment-Related Work Expenses
If you’re blind or disabled and working, you can deduct expenses you incur specifically because of your disability in order to hold a job. Qualifying items include:
- Vehicle modifications for commuting
- Service animals, including their food, training, and veterinary care
- Prosthetic devices
- Specialized transportation services
An expense can qualify even if you also use the item outside of work, as long as you need it to perform your job.
After deductions, the state checks whether your remaining income falls within the limit for the Aged and Disabled Federal Poverty Level program. For an individual, that limit was $1,801 per month in 2025. If your income exceeds this ceiling even after deductions, Share of Cost may still open the door.
Medical Expenses That Count Toward Share of Cost
When your income is too high for free Medi-Cal but not high enough to disqualify you entirely, you may be placed in the Share of Cost program. Your Share of Cost works like a monthly deductible: you must incur that amount in medical expenses each month before Medi-Cal begins covering the rest. The state calculates it by subtracting a maintenance need allowance and applicable deductions from your countable income. For a single adult, the maintenance need level is $600 per month, with higher amounts for larger households.
A wide range of medical expenses can be applied toward meeting your Share of Cost each month:
- Doctor visits and lab work, including office visits, diagnostic tests, specialist consultations, and hospital services
- Prescription drugs not covered by other insurance
- Dental and vision care, including cleanings, fillings, eyeglasses, and contact lenses
- Mental health services, including therapy sessions and psychiatric care
- Medical equipment such as wheelchairs and hearing aids
- Transportation to medical appointments, including bus fare, mileage, or specialized van services
- Home care services you pay for to remain safely at home, including costs beyond what In-Home Supportive Services covers
Both paid and unpaid bills can count. If you have unpaid bills from previous months that no other insurance or program has covered and the provider is still seeking payment, submit those to your county worker to apply against your current Share of Cost.
The cycle resets every month. If you have a month with no medical spending, Medi-Cal doesn’t kick in that month. This is where many people stumble.
Documentation You Need for Each Deduction
Claiming a deduction requires proof, not just a number on a form. Before applying or renewing, gather documents that back up each subtraction:
- For MAGI adjustments: your most recent federal tax return showing Schedule 1 adjustments, student loan interest statements (Form 1098-E), and receipts for educator expenses
- For Non-MAGI premiums: billing statements showing your monthly Medicare Part B or other health insurance payments
- For Share of Cost expenses: medical invoices showing dates of service, provider name, and amounts owed or paid, plus receipts for prescriptions and transportation
- For impairment-related work expenses: receipts for specialized equipment, service animal costs, or modified transportation
For Share of Cost specifically, your provider fills out Form MC 177S, which lists the health services provided and the amounts that remain unpaid by Medicare, other coverage, or any other party. You submit this form to your county worker along with any additional receipts for out-of-pocket expenses.
If the County Denies a Deduction
If the county denies your application, calculates your Share of Cost higher than you expected, or refuses to apply a deduction you claimed, you can request a fair hearing. File within 90 days of receiving the Notice of Action that explains the decision. The state may accept a late request if you have a good reason, such as illness or a disability that prevented you from responding.
To start, contact the California Department of Health Care Services and state what you’re contesting and why. Include a copy of the Notice of Action and any supporting documents the county may not have considered, such as bank statements, medical bills, or insurance records. During the hearing, an officer reviews the evidence and listens to your explanation. If the dispute is about a deduction or expense that was improperly excluded, bringing the underlying receipts and the relevant form, such as your MC 177S or tax return, makes for a straightforward case.
If you request the hearing before your benefits are actually reduced or terminated, you may be able to keep your existing coverage in place while the appeal is pending. That matters most for people already enrolled who face a change in Share of Cost or a loss of eligibility at renewal.