Count dependents' MAGI in ACA and Medicaid household income only when they must file

[MaxGhenis]

WIP. Local YAML batches, microsims (2025 and 2026), invariant tests, Axiom parity and an independent review are still to come.

What's wrong on main

Both the premium tax credit and Medicaid count another family member's modified AGI only if that member is required to file:

• 26 CFR 1.36B-1(e)(1)(ii).
• 42 CFR 435.603(d)(2).
• Form 8962 instructions (2025), Worksheet 1-2: "Only include your dependents who are required to file an income tax return because their income meets the income tax return filing threshold."

On main:

• medicaid_magi (which aca_magi adds) is tax-unit AGI plus add(tax_unit, modification). That adds every member's tax_exempt_interest_income and tax_exempt_social_security, and the latter includes all of a dependent's Social Security. It never adds a dependent's AGI. So a child's survivor benefits or tax-exempt interest raise household income, and a teen who must file because of wages adds nothing.
• medicaid_magi_person gives the tax unit's tax_exempt_social_security, the child's benefits included, to the head and spouse. So Medicaid household income (medicaid_household_income) puts a child's benefits in the parent's MAGI even when 435.603(d)(2)(i) excludes the child's income.

Fix

• tax_exempt_social_security_person (new): each person's own benefits that section 86 leaves out of gross income. For the head and spouse it is their share of their return's taxable amount. A dependent's benefits are taxed on the dependent's own return (Pub. 915 (2025), "Who is taxed"). It replaces tax_exempt_social_security in gov.hhs.medicaid.income.modification.
• medicaid_magi: the head's and spouse's MAGI, with person-level additions summed over them only, plus the whole MAGI of each tax unit dependent with medicaid_person_is_required_to_file, floored at zero. The helper magi_household_income(tax_unit, period, parameters, counted_dependents) returns the unfloored sum. Keep a filer who can be claimed as a dependent out of the premium tax credit family, and apply each state premium program's rule #10041 can then pass required_to_file & is_aca_tax_family_member rather than subtract after the floor.
• medicaid_magi_person: classifies additions by entity, so each person keeps their own benefits.
• medicaid_irs_gross_income: adds dependent_taxable_social_security. A dependent's Social Security counts toward the filing threshold only to the extent it is taxable (Pub. 501 (2025), Table 2).

Examples (2025, parent with $40,000 of wages)

Dependent	Must file?	medicaid_magi on main	branch
Child, $12,000 survivor benefits	no	52,000	40,000
Child, $20,000 survivor benefits	no (none taxable)	60,000	40,000
Child, $12,000 survivor benefits + $2,000 interest	yes	52,000	54,000
Child, $20,000 tax-exempt interest	no	60,000	40,000
Teen, $16,000 wages	yes	40,000	56,000
Disabled adult child, $15,000 wages + $36,000 benefits ($4,000 taxable)	yes	76,000	91,000

Coordination

• Net household members' Medicaid MAGI before the zero floor, and give each spouse their own deductions #9860 rewrites medicaid_magi_person and the Medicaid household income files. Its entity-based loop already handles a person-level Social Security addition. Whichever lands second takes Net household members' Medicaid MAGI before the zero floor, and give each spouse their own deductions #9860's medicaid_magi_person.
• Keep a filer who can be claimed as a dependent out of the premium tax credit family, and apply each state premium program's rule #10041 (draft) subtracts out-of-family dependents' tax-exempt interest and Social Security from medicaid_magi. After this PR, medicaid_magi adds those amounts only for dependents who must file. Its own test, which expects aca_magi: 40_000 for a child with $20,000 of tax-exempt interest, becomes 20,000 under this rule.

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