What Income Is Considered For Health Care Subsidy? (Solution)

Are health insurance benefits considered income by the IRS?

  • While traditional health insurance benefits are usually not considered taxable income, you may pay tax on related benefits your employer pays for, like financial or disability benefits. If your benefits do nothing but pay for doctor bills, prescriptions and hospital stays, then don’t worry – those payments are not taxable.

What income is considered for healthcare subsidy?

According to Covered California income guidelines and salary restrictions, if an individual makes less than $47,520 per year or if a family of four earns wages less than $97,200 per year, then they qualify for government assistance based on their income.

Is healthcare subsidy based on gross income?

Under the Affordable Care Act, eligibility for Medicaid, premium subsidies, and cost-sharing reductions is based on modified adjusted gross income (MAGI). For most enrollees, it’s the same as their adjusted gross income (AGI) from Form 1040.

What income is Obamacare subsidy based on?

The Heath Insurance Marketplace uses an income figure called Modified Adjusted Gross Income (MAGI) to determine the programs and savings you qualify for. For most people, it’s identical or very close to Adjusted Gross Income (AGI). MAGI is not a line on your federal tax return.

What happens if I underestimate my income for Obamacare 2020?

The Affordable Care Act virtually ensures that you won’t have an accurate subsidy. It’s normal for most people to overestimate or underestimate their ACA premium tax credit by a small amount. There’s no added penalty for taking extra subsidies. The difference will be reflected in your tax payment or refund.

What is counted as income for Medicaid?

How is Income Verified? Medicaid applicants generally have to provide documentation of their monthly income (earned and unearned) with their Medicaid application. Examples include copies of dividend checks, social security check or award letter, pay stubs, alimony checks, and VA benefits check or award letter.

Does Social Security count as income for Obamacare?

Non-taxable Social Security benefits are counted as income for the Affordable Care Act and affect tax credits. This means that when calculating your eligibility for a subsidy your social security income is used to determine your eligibility and may affect the amount you qualify for. 6

What is the income limit for Obamacare 2022?

This means an eligible single person can earn from $12,880 to $51,520 and qualify for the tax credit. A family of three would qualify with income from $21,960 to $87,840. The range would be $26,500 to $106,000 for a family of four.

Is an inheritance considered income for Obamacare?

The premium tax credits that people receive to buy health plans on the marketplaces are based on annual household income. An inheritance, such as your sister received, is considered nontaxable income, says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities.

Does household income mean gross or net?

To calculate the household income for a single home, total the gross income of each person living in the home who is 15 years old or older, regardless of whether they are related or not. Household income is usually calculated as a gross amount rather than net figure, before deducting taxes or withholdings.

What are the income limits for premium tax credit 2020?

Premium tax credits are available to people who buy Marketplace coverage and whose income is at least as high as the federal poverty level. For an individual, that means an income of at least $12,880 in 2022. For a family of four, that means an income of at least $26,500 in 2022.

Is ACA based on adjusted gross income?

Under the Affordable Care Act, eligibility for income-based Medicaid and subsidized health insurance through the Marketplaces is calculated using a household’s Modified Adjusted Gross Income (MAGI). For most individuals who apply for health coverage under the Affordable Care Act, MAGI is equal to Adjusted Gross Income.

2022 Obamacare Subsidy Chart and Calculator

The most recent revision was made on October 27th, 2021. What resources are available to assist you in paying for health insurance and health coverage? It all depends on how much money you make. The cost of the “benchmark plan” (the second-lowest-cost silver plan on the exchange) exceeds a certain percentage of your income in 2022, with a maximum of 8.5 percent if you are eligible for Obamacare subsidies. The income cut-off criterion grows on a sliding basis based on your household’s net worth.

Health plans for 2022 are evaluated in relation to your predicted income for 2022 as well as the benchmark plan cost.

New participants will pay around $30 less per person per month in premiums in 2021, a 25 percent decrease from the previous year.

If you have previously registered in an ACA plan and received a subsidy, you may be able to switch plans and get the additional savings until August 15th in the majority of states.

For the first eight months of the year, those enrolled in health coverage through the federal exchange will have their additional subsidies automatically deducted from their premium due amount.

Next Steps

The bottom conclusion is that it pays to double-check your qualifying levels, regardless of your income level. You may use sites such as HealthCareInsider.com or the calculator above to find out your subsidy rate or to determine whether or not switching is the best option for your circumstances.

Learn More About Obamacare Subsidies

In order to calculate your 2022 Obamacare subsidy, you must first determine how much you will get. Subsidies, also known as premium tax credits, are calculated based on three factors: your income, the list price of the benchmark plan, and the amount of money you are required to contribute toward your health insurance under the Affordable Care Act. The real subsidy is the difference between the benchmark plan and the amount of your planned contribution to the program. Due to the fact that you often apply for coverage before the year begins, you’ll need to generate a solid estimate of how much money you’ll make in advance.

Prior to 2021, you were supposed to contribute anything from 2 percent to 9.83 percent of your gross income, depending on your position.

Prior to 2021, you may earn up to 400 percent of the federal poverty line in order to qualify for government assistance and subsidies (also known as the subsidy cliff). For a family of four, that amounted to $104,800 in annual earnings.

Previous 2021 Total Household Income for Maximum ACA Subsidy

Household Size Household Income
1 person $51,040
2 people $68,960
3 people $86,880
4 people $104,800
5 people $122,720
6 people $140,640
7 people $158,560
8 people $176,480

Alaska and Hawaii are the only two states that have greater income restrictions, and you can find them here. What Will Be Different About Obamacare Subsidies in 2022? The American Rescue Plan completely transformed the year 2022. (with the possibility of this change being made permanent in the near future). The American Rescue Plan Act (ARP) of 2021 made the Affordable Care Act (ACA) more affordable for more Americans (ACA). How? There are three basic ways to do this: First and foremost, the Federal Poverty Level (FPL) income ceiling requirement was eliminated by this legislation.

  • Under the ARP, the standard Silver plan will not cost you more than 8.5 percent of your yearly family income, regardless of how much money you make or how much you earn.
  • Second, it doubled the amount of subsidies that those earning less than 400 percent of the federal poverty level (FPL) are eligible for.
  • For the past two years, the range has been reduced to 0 percent to 8.5 percent.
  • As part of its rescue efforts, the American Rescue Plan has created a Special Enrollment Period on the federal Health Insurance Exchange.
  • Even if you’ve previously enrolled in a health plan, you can change your mind and enroll in a new plan in most states (or reenroll in the same one).
  • What You Pay for a Benchmark Silver Plan and What You Can Expect
Income (by federal poverty level) % of Your Income (before 2021) % of Your Income (in 2021)
100% – 138% 2.07% 0%
138% – 150% 3.10% – 4.14% 0%
150% – 200% 4.14% – 6.52% 0.0% – 2.0%
200% – 250% 6.52% – 8.33% 2.0% – 4.0%
250% – 300% 8.33% – 9.83% 4.0% – 6.0%
300% – 400% 9.83% 6.0% – 8.5%
Over 400% Not eligible 8.50%

Internal Revenue Service, 26 CFR 601.105, irs.gov. Original source: Internal Revenue Service. Congress of the United States of America, accessed March 20, 2021. H.R. 1319 may be found at congress.gov. This page was last updated on March 20, 2021. Households with more than 8 persons will need to contribute $4,480 per person to their budget. What If Medicaid Were Used Instead of Subsidies? In most states, those who earn up to 138 percent of the federal poverty threshold are eligible for Medicaid benefits rather than ACA exchange subsidies, according to the Centers for Medicare and Medicaid Services.

  • Alaska and Hawaii are the only two states with greater income restrictions, and you can find them right here.
  • During the year 2022, this information – as well as certain household income numbers – are applicable to health insurance policies that will cover you and your family.
  • Approximately once a year, in January, the federal poverty level income levels are updated.
  • They are also employed in November, when the Affordable Care Act’s Open Enrollment Period commences.
  • Your modified adjusted gross income, often known as MAGI, is the correct amount of income to submit (basically, the annual income you report on your tax return,with a few tweaks).
  • No of how much money you make every year, you may still ” qualify for Obamacare.” If you earn more than the income limit, you will simply not be eligible for monthly premium assistance benefits.

Medicaid, on the other hand, is likely to be available in the majority of states. For further information, it’s critical to submit an application directly to your state’s Medicaid program.

2021 Total Household Income for Minimum ACA Subsidy

Household Size Household Income
1 person $12,880
2 people $17,420
3 people $21,960
4 people $26,500
5 people $31,040
6 people $35,580
7 people $40,120
8 people $44,660

If You Do Not Qualify: If your household earns too much to qualify for a subsidy, you may want to investigate purchasing insurance outside of the marketplace. These plans are essentially comparable to subsidy-eligible plans in terms of design, pricing, and adherence to Affordable Care Act regulations. There are certain places where you may buy off-exchange Silver plans that are similar to their on-exchange counterparts but have a lower unsubsidized price, thanks to an insurance pricing method known as “Silver Loading,” which lowers the cost of coverage for those who don’t qualify for subsidies.

  • According on your location, you may also discover that various insurers sell plans outside of the exchange, providing you with a greater variety of possibilities from which to pick.
  • According to the 2021 American Rescue Plan, persons earning up to 150 percent of the federal poverty level (FPL) can enroll in a Silver benchmark plan for $0, with significantly lower deductibles and other out-of-pocket expenditures.
  • If you received unemployment benefits or were accepted for them at any point during the year 2021, you may also be eligible for the enhanced subsidies available through the federal Health Insurance Marketplace, which was launched in 2014.
  • Individuals earning more than the income threshold were previously unable to qualify and were required to pay full price, whether they purchased on or off the exchange.
See also:  How To Find 2016 Tax Return?

What’s included as income

It will be necessary for you to estimate your family income for the purpose of filling out a Marketplace application for the first time this year.

  • The discounts you receive via the marketplace are calculated based on your predicted household income for the year in which you seek coverage, not your income from the previous year. You must create the most accurate estimate possible in order to qualify for the appropriate amount of savings. You will be asked about your current monthly income, followed by a question about your annual income.

Whose income to include in your estimate

Households are typically comprised of the tax filer, their spouse (if they have one), and their tax dependents, which may include individuals who do not require coverage. The Marketplace takes into account the expected income of all members of the household. Learn more about who is counted as a member of a Marketplace family.

What income is counted

When determining whether or not a person is eligible for savings, the Marketplace employs a statistic known as modified adjusted gross income (MAGI). It is not a line item on your income tax form. The chart below illustrates the most prevalent forms of income and whether or not they are included in MAGI. If you anticipate income categories that are not included or if you have more questions, consult the IRS’s definition of what constitutes income.

Income type Include as income? Notes
Federal Taxable Wages (from your job) Yes If your pay stub lists “federal taxable wages,” use that. If not, use “gross income” and subtract the amounts your employer takes out of your pay for child care, health insurance, and retirement plans.
Tips Yes
Self-employment income Yes Include “net self-employment income” you expect — what you’ll make from your business minus business expenses.Note:You’ll be asked to describe the type of work you do. If you have farming or fishing income, enter it as either “farming or fishing” income or “self-employment,” but not both.
Unemployment compensation Yes Include all unemployment compensation that you receive from your state. VisitCareerOneStop’s Unemployment Benefits Finderfor more information about unemployment in your state.
Social Security Yes Include both taxable and non-taxable Social Security income. Enter the full amount before any deductions.
Social Security Disability Income (SSDI) Yes Butdo notinclude Supplemental Security Income (SSI).
Retirement or pension Income Yes Include most IRA and 401k withdrawals. (See details on retirement income inthe instructions for IRS publication 1040).Note:Don’t include qualified distributions from a designated Roth account as income.
Alimony Depends Divorces and separations finalizedbeforeJanuary 1, 2019:Includeas income. Divorces and separations finalizedon or afterJanuary 1, 2019:Don’t includeas income.
Child support No
Capital gains Yes
Investment income Yes Include expected interest and dividends earned on investments, including tax-exempt interest.
Rental and royalty income Yes Use net rental and royalty income.
Excluded (untaxed) foreign income Yes
Gifts No
Supplemental Security Income (SSI) No Butdo includeSocial Security Disability Income (SSDI).
Veterans’ disability payments No
Worker’s Compensation No
Proceeds from loans (like student loans, home equity loans, or bank loans) No
Child Tax Credit checks or deposits (from the IRS) No

For the purpose of determining eligibility for savings, the Marketplace utilizes a statistic known as modified adjusted gross income (MAGI). It is not a line item on your tax return, though.

Common sources of income are depicted in the figure below, along with their inclusion or exclusion from gross monthly income (MAGI). Seeded facts on what the IRS considers to be income if you anticipate income categories that are not included or have more inquiries.

Report income changes to the Marketplace

Once you obtain Marketplace health insurance, it is critical that you notify the Marketplace of any changes in your income as quickly as possible. In the event that you fail to record these changes, you may lose out on potential savings or be forced to pay money back when you submit your federal tax return for the year. How to submit an update to the Marketplace is covered in this tutorial.

Low Cost Marketplace Health Care, Qualifying Income Levels

Check to see if you qualify for Medicaid or the Children’s Health Insurance Program (CHIP) depending on your income and whether you may save money on your Marketplace rates. Alternatively, find out who should be included in your family and how to assess your income before you ask for assistance. You’ll be able to view the specific plan rates as well as how much money you’ll save by completing a Marketplace application. Decide on your state. Include yourself, your spouse if you are married, and anybody else who will be claimed as a tax dependant in 2022 — even if they do not require coverage.

Select the anticipated income range for each person in your family who has been included in this calculation.

More help before you apply

  • Creating an estimate of your estimated household income in 2022
  • You may most likely start with your household’sadjusted gross income and modify it as necessary to account for anticipated changes. (Savings are based on your income estimate for the year in which you seek coverage, not your income estimate for the previous year.) Make the most accurate estimate of your salary possible by using our income calculator. Learn more about calculating income and what to include in your calculations.
  • Take into account yourself, your spouse if you’re married, as well as everyone else you’ll claim as a tax dependant, even if they don’t require coverage
  • And Find out more about who should be included in your home.

Understanding Obamacare Subsidies and Eligibility

Middle- and low-income families are frequently concerned about how they will pay for health insurance in the future. Obamacare, commonly known as the Affordable Care Act (ACA), offers subsidies to eligible people and families in order to make health insurance coverage more affordable for them.

What are ACA tax credit subsidies?

A common source of concern for middle- and lower-income families is how they will pay for health insurance. Obamacare, commonly known as the Accessible Care Act (ACA), offers subsidies to eligible people and families in order to make health insurance coverage more affordable for everyone.

Obamacare Subsidy Eligibility

A common source of concern for middle- and lower-income families is how they will afford health insurance. Obamacare, commonly known as the Affordable Care Act (ACA), offers subsidies to qualified people and families in order to make health insurance more affordable.

  • For a Silver plan on the Marketplace, no citizen or lawfully present noncitizen who does not have access to other affordable insurance (such as through an employer, Medicaid, or Medicare) would have to pay more than 8.5 percent of their income. The vast majority of persons who get at least one week of unemployment compensation at any point in 2021 will be eligible to enroll in a Silver plan with no premiums and cost-sharing reductions. In order to qualify for some cost-sharing reductions of Marketplace plans accessible to persons with lower incomes, individuals must earn at least 500 percent of the federal poverty level (FPL) and have no other affordable health insurance options available to them.

It is possible that you will qualify for Medicaid based on your income if your income is less than 138 percent of the federal poverty level (FPL) and your state has extended Medicaid coverage to more people. In the event that your income falls below the federal poverty level, you may be ineligible for subsidies, but you are more likely to be eligible for Medicaid. Medicaid is a federally funded health-care program for low-income people and families in the United States. In order to be eligible for Obamacare subsidies, you must satisfy the following requirements:

  • You are presently a resident of the United States of America. You are a citizen or legal resident of the United States
  • You are not currently imprisoned
  • Nonetheless, Your income does not exceed 400 percent (or 500 percent in 2021 and 2022) of the federal poverty level.

According to the Federal Register, the FPL for an individual in 2021 will be $12,8800.25 per year. In your family, the FPL changes depending on the number of people that live there.

Alaska and Hawaii have significantly different degrees of poverty. The Obamacare household income table is updated on an annual basis since poverty rates are updated to account for inflation each year. The following are the federal poverty criteria for the year 2021:

Household size 100% of Federal Poverty level (2021) 400% of Federal Poverty Level (2021)
1 $12,880 $51,520
2 $17,420 $69,680
3 $21,960 $87,840
4 $26,500 $106,000
5 $31,040 $124,160
6 $35,580 $142,320
7 $40,120 $160,480
8 $44,660 $178,640

Source:Healthcare.gov Levels of Poverty in the United States In order to determine if you are eligible for a premium cost reduction through the Obamacare tax credit if you purchase Marketplace insurance for 2022 coverage, you must use the federal poverty requirements for 2021. If you purchase Marketplace insurance for the year 2021, check the second and last columns of the table above to discover if you are eligible for an Obamacare tax credit under the Affordable Care Act.

How Obamacare subsidies work

Subsidies under the Affordable Care Act come in two varieties. The most prevalent type is referred to as “Advanced Premium Credits,” which may be used to help pay for health insurance premiums obtained through the Marketplace under the Affordable Care Act throughout the year. If you meet the requirements based on your predicted income for the current year, you can choose between the following options:

  1. Consider taking the tax credit throughout the year, which will be given directly to your health insurance to offset the cost of your coverage premiums, or paying the premium in full each month and receiving your tax credit when you submit your income tax return.

If you accept the advance tax credit each month (as described in Option 1 above) and understate your real household income, you will be required to repay a portion of the money you received in advance at the end of the year. If you overestimate your income, on the other hand, you will receive an adjusted tax credit refund when you complete your income tax return. In order to avoid this problem, you should report changes to your income by updating your Marketplace application online or by calling the Marketplace customer service center.

ACA-compliant plans marketed outside of the Marketplace, catastrophic coverage plans, short-term health insurance, stand-alone prescription drug plans, and insurance supplements for services such as dentistry, vision and critical illness are not eligible for these credits.

In the Affordable Care Act, a second type of subsidy is referred to as a “Cost-Sharing Reduction (CSR) Subsidy.” The cost-sharing reduction (CSR) subsidy can lower your out-of-pocket costs for covered treatments if you are qualified by covering a portion of your deductible, copayment, or coinsurance.

See also:  How Much Income To Qualify For Obamacare Subsidy? (TOP 5 Tips)

Things to know about Obamacare subsidies

Anyone who is wondering about their eligibility for Obamacare subsidies should be aware of the following information:

  • This year’s tax return does not count against your eligibility for subsidies since your income during the year in which you are covered by your health insurance plan does not count toward your eligibility for subsidies. This implies that when asking for subsidies, you must make an educated guess about your income. It is possible that you will be obliged to repay part or all of the subsidy monies that were allocated on your behalf to your monthly health insurance payments if you earn more than you anticipated throughout the course of the year. It is possible that you could be entitled to further subsidy support if your earnings are lower than projected throughout the year
  • This assistance will be applied when you complete your taxes for the year.

Applying for Obamacare subsidies

Applicants can submit an application for Obamacare subsidies through their state’s government-run health insurance Marketplace, as well as qualified licensed brokers and private online Marketplaces that work in conjunction with the government-run marketplace. eHealth is a wonderful resource for satisfying all of your insurance coverage requirements. We provide you with online tools to assist you in determining whether or not you are qualified for Obamacare subsidies and Marketplace plans that are available in your area.

With assistance accessible 24 hours a day, seven days a week and a large number of plans to choose from, you can be confident that eHealth is here to assist you in finding and maintaining the best insurance for you and your family.

While you may browse for a health plan through eHealth, the subsidy is provided through a government-run marketplace, not eHealth. Consider all of your individual and family health insurance alternatives available to you through eHealth if you are ready to begin comparing plans.

They’re millionaires, and they get Obamacare subsidies

Even wealthy individuals may benefit from this one bizarre method, which allows them to purchase Obamacare at a much reduced cost. Really. A number of wealthy individuals, some of whom were “disgusted” with Obamacare when it first went into effect, are now taking advantage of federal financial assistance available under that health-care law to help them significantly reduce their monthly insurance premiums, despite their initial reservations. Photograph by Jose Luis Pelaez for Getty Images Carolyn McClanahan, a financial advisor and medical doctor based in Jacksonville, Florida, told CNBC that she has guided at least five such clients, whose individual net worths range between $1 million and $3 million, toward purchasing Obamacare health plans because of the federal subsidies available to them because of their taxable income levels.

  • On top of that, McClanahan explained, those consumers are receiving additional financial assistance to meet their out-of-pocket medical expenditures — such as copayments, coinsurance, and deductibles — that are not covered by their insurance plan.
  • “Everyone was asking, ‘Are you sure this is going to work?'” says the author.
  • “And I’m thinking to myself, ‘Yes, I’m confident it’ll work.'” In addition, it is legal, thanks to the way the Affordable Care Act determines eligibility for Obamacare assistance based on income rather than net value.
  • The Affordable Care Act (ACA) permitted the federal government to provide tax credits, often known as subsidies, to persons with low or moderate incomes who purchase healthinsurance via the government-run Obamacare marketplaces.
  • Clients of McClanahan’s Obamacare business were all retirees under the age of 65 who had ceased working before becoming eligible for benefits.
  • Those individuals, although having relatively high net worths as a result of investments and real estate, were also in a position to have taxable incomes that were low enough to qualify for Obamacare subsidies, despite their relatively high net worths.
  • If their salaries went below that level, they would be ineligible for the subsidies to assist them in purchasing commercial insurance plans.

McClanahan stated that she assisted the customers in structuring their revenue stream — as well as the taxable component of it — “absolutely perfectly.” “The first thing you have to figure out is how much money they require to support themselves,” she explained.

The usage of bond ladders by the customers, which provided them with consistent income as the bonds matured over time and also allowed them to spin off interest payments from the bonds’ coupons, contributed to the success of this approach.

“For the majority of folks, we’re shooting for something like $18,000 to $19,000 in taxable income,” she added.

Customers’ medical expenditures are covered to a maximum of 70 percent by silver plans without cost-sharing reductions, with the remaining 30 percent paid out of pocket by the consumer.

When Obamacare originally went into force, some of Lieb’s clients “were quite upset with the subsidies and how it all worked,” according to Lieb.

“I believe they were thinking more along the lines of ‘If I can’t defeat them, join them.'” After helping McClanahan’s customers sign up for health insurance through HealthCare.gov and choose their plans, Lieb said that when they realized how much money they would be receiving in subsidies to cut their rates, “they were typically fairly delighted and excited.” One customer qualified for a $423-per-month subsidy, which dropped the cost of their plan from $663 per month to $240 per month, according to her.

On the lower end of the pricing spectrum, she added.

And, according to Lieb, “with the cost-sharing cut, I believe people were really pleased.” According to the author, “It reminds individuals of how health insurance looked 25 years ago, when they had a $10 copay and no deductible.” Lieb and McClanahan both mentioned that their customers’ applications for government subsidies were scrutinized by the government because of their financial situation, which they said was a concern for them.

Customers must provide information about how much money they plan to make in the upcoming year in order to qualify for such subsidies.

A significant amount of supporting paperwork was required, McClanahan explained.

Individuals who earn more than they anticipated when applying for their subsidies may find themselves paying some or all of the subsidy back when they submit their tax returns the following year, depending on the circumstances.

Modified Adjusted Gross Income under the Affordable Care Act – UPDATED WITH INFORMATION FOR COVID-19 POLICIES

Part of the Labor Center’sCovid-19 Series: Resources, Data, and Analysis for California, this publication is available for purchase. Originally published in July 2014; most recent revision in March 2021 Eligibility for income-based Medicaid and subsidized health insurance through the Healthcare Marketplaces is determined by a household’s Modified Adjusted Gross Income, which is computed under the Affordable Care Act (MAGI). The definition of MAGI under the Affordable Care Act, as well as the Internal Revenue Code and federal Medicaid rules, is presented in the table below.

This publication is a summary of applicable federal rules; it does not provide customized tax or legal advice.

Modified Adjusted Gross Income (MAGI) =

Line 11 on Form 1040See below for clarificationsrelated to common benefits or sources of assistance provided during the COVID-19 pandemic
Include:
  • Wages, salaries, tips, and so forth
  • Interest that is taxable
  • Pension, annuity, or IRA distributions, as well as Social Security income, are subject to taxation. Profit from a business, agricultural profit, capital gain, and other profits (or losses)
  • Compensation for unemployment
  • Dividends on a regular basis
  • Alimony received as a result of agreements reached before to 2019
  • Rental real estate, royalties, partnerships, S-corporations, trusts, and other types of investments are available. Refunds, credits, or offsets of state and local income taxes that are deductible
  • Other sources of income
  • Self-employment costs
  • Student loan interest deduction
  • IRA deduction (traditional IRAs)
  • And other deductions Moving fees for military personnel who are currently on active duty
  • Early withdrawal of money is subject to a penalty. Deduction for health savings accounts
  • Alimony received as a result of agreements reached before to 2019
  • Reserve members, performing artists, and government employees who work on a fee-basis are exempt from some business expenditures. Expenses for educators

Please go to the IRS website for further information on the specific requirements for each of the income and deduction categories listed above. Do not include any disability benefits from the Veterans Administration, workers’ compensation, or child support received. When calculating AGI, pre-tax contributions are not included because they are already subtracted from W-2 wages and salaries. Examples of pre-tax contributions include those for child care, commuting, employer-sponsored health insurance, flexible spending accounts, and retirement plans such as 401(k) and 403(b).

+

  • Foreign earned incomehousing expenditures for Americans living abroad (Form 2555)
  • Social Security payments that are not taxable (Line 6a minus Line 6b of Form 1040)
  • Tax-exempt interest (Line 2a of Form 1040)
  • Non-taxable Social Security benefits (Line 6a minus Line 6b of Form 1040)

  • Income earned by American Indians and Alaska Natives via dividends, payments, ownership interests, real property usage rights, and student financial help, among other sources

Modified Adjusted Gross Income and COVID-19 relief policies

The following common benefits or sources of assistance offered during the COVID-19 pandemic are considered in the calculation of MAGI for the purpose of assessing eligibility for health insurance program coverage. On March 19, 2021, the benefits and sources of help that are most often used will be included in this table, along with specific elements of government laws adopted in response to the COVID-19 epidemic. This paper does not constitute individual tax or legal advice. If you need help figuring your MAGI, you can turn to the Health Insurance Marketplace in your state, your state Medicaid agency, or a legal or tax consultant.

Endnotes

The following common benefits or sources of assistance granted during the COVID-19 pandemic are considered in the calculation of MAGI for the purpose of evaluating eligibility for health insurance programs. On March 19, 2021, the benefits and sources of help that are most commonly used will be included in this table, along with some elements of government laws adopted in reaction to the COVID-19 epidemic. Neither tax nor legal advice is provided in this booklet. If you need assistance figuring your MAGI, you can turn to the Health Insurance Marketplace in your state, your state Medicaid agency, or a legal or tax consultant.

Adult Income Chart

Adults:If you are an adult, the table below will help you determine where you should begin your search for health insurance coverage under the Affordable Care Act (ACA). A family income of roughly 138 percent of the federal poverty level or less is required for adults applying via the state of Indiana at the state application. Adults with household earnings between about 138 percent and 400 percent of the federal poverty level (FPL) may be eligible for subsidized health insurance through the federal health exchange and should submit an application through the federal application process.

Call 800-318-2596 if you need assistance. To find out what health insurance benefits you may be eligible for, select the income range that corresponds to your household size from the drop-down menu.

Household Size Family Income *
1 $17,780.40 or less $17,780.41 – $51,520.00 $51,520.01 or more
2 $24,043.20 or less $24,043.21 – $69,680.00 $69,680.01 or more
3 $30,306.00 or less $30,306.01 – $87,840.00 $87,840.01 or more
4 $36,581.40 or less $36,581.41 – $106,000.00 $106,000.01 or more
5 $42,844.20 or less $42,844.21 – $124,160.00 $124,160.01 or more
6 $49,107.00 or less $49,107.01 – $142,320.00 $142,320.01 or more
7 $55,370.40 or less $55,370.41 – $160,480.00 $160,480.01 or more
8 $61,633.20 or less $61,633.21 – $178,640.00 $178,640.01 or more

Application for Indiana’s Health Insurance Programs (Legislation) Applicant’s projected 2021 gross household income (not take-home pay); the incomes mentioned are based on the federal poverty line in 2021. *Applicant’s projected 2021 gross household income (not take-home pay). To download a printed version of this document, please click here.

Income Definitions for Marketplace and Medicaid Coverage

Updated on August of 2020. Modified adjusted gross income (MAGI) is a tax-based measure of income that is used to establish financial eligibility for the premium tax credit, most categories of Medicaid, and the Children’s Health Insurance Program (CHIP) (MAGI). The accompanying Q A outlines what types of income are covered in MAGI. Download the PDF version here.

How do marketplaces, Medicaid, and CHIP measure a person’s income?

Updated on August 1, 2020 – Modified adjusted gross income (MAGI) is a tax-based measure of income that is used to establish financial eligibility for the premium tax credit, most categories of Medicaid, and the Children’s Health Insurance Program (CHIP) (MAGI). Download the PDF version of this Q A to learn more about what types of income are included in MAGI:

FIGURE 1:Formula for Calculating Modified Adjusted Gross Income
What is adjusted gross income?

Updated on August 1, 2020 – Modified adjusted gross income (MAGI) is a tax-based measure of income that is used to evaluate financial eligibility for the premium tax credit, most categories of Medicaid, and the Children’s Health Insurance Program (CHIP) among other programs (MAGI). The following Q and A discusses what types of income are included in MAGI.

What types of income count towards MAGI?

Unless it is explicitly exempted by law, all income is subject to taxation. Income does not just relate to monetary compensation. It might take the shape of money, property, or services that are provided to a person in exchange for their cooperation. Table 1 illustrates the difference between taxable and nontaxable income. The Internal Revenue Service’s Publication 525 provides a thorough examination of several types of income and discusses whether or not they are subject to taxes.

TABLE 1:Examples of Taxable Income and Non-Taxable Income(see IRS Publication 525 for details and exceptions)
Examples of Taxable Income
Wages, salaries, bonuses, commissions IRA distributions
Annuities Jury duty fees
Awards Military pay
Back pay Military pensions
Breach of contract Notary fees
Business income/Self-employment income Partnership, estate, and S-corporation income
Compensation for personal services Pensions
Debts forgiven Prizes
Director’s fees Punitive damages
Disability benefits (employer-funded) Unemployment compensation
Discounts Railroad retirement—Tier I (portion may be taxable)
Dividends Railroad retirement—Tier II
Employee awards Refund of state taxes
Employee bonuses Rents (gross rent)
Estate and trust income Rewards
Farm income Royalties
Fees Severance pay
Gains from sale of property or securities Self-employment
Gambling winnings Non-employee compensation
Hobby income Social Security benefits (portion may be taxable)
Interest Supplemental unemployment benefits
Interest on life insurance dividends Taxable scholarships and grants
Tips and gratuities
Examples of Non-Taxable Income
Aid to Families with Dependent Children (AFDC) Meals and lodging for the employer’s convenience
Child support received Payments to the beneficiary of a deceased employee
Damages for physical injury (other than punitive) Payments in lieu of worker’s compensation
Death payments Relocation payments
Dividends on life insurance Rental allowance of clergyman
Federal Employees’ Compensation Act payments Sickness and injury payments
Federal income tax refunds Social Security benefits (portion may be taxable)
Gifts Supplemental Security Income (SSI)
Inheritance or bequest Temporary Assistance for Needy Families (TANF)
Insurance proceeds (accident, casualty, health, life) Veterans’ benefits
Interest on tax-free securities Welfare payments (including TANF) and food stamps
Interest on EE/I bonds redeemed for qualified higher education expenses Workers’ compensation and similar payments
Is income subtracted from workers’ paychecks as a pre-tax deduction counted in MAGI?

No. Health insurance premiums, retirement plan payments, and flexible spending accounts are all examples of pre-tax deductions that are taken out of employees’ paychecks by their employers. Due to the fact that this income is not taxed, it does not contribute towards a household’s modified adjusted gross income (MAGI). If any pre-tax benefits are already included in the earnings reported in Box 1 of Form W-2, they will not appear on the tax return as income or deductions.

Does MAGI count any income sources that are not taxed?

Yes. MAGI includes several sources of income that are either nontaxable or or partially taxable, and this has implications for financial eligibility for premium tax credits and Medicaid. Specifically:

  • Yes. MAGI includes some types of income that are either nontaxable or or partially taxable, and this might influence financial eligibility for premium tax credits and Medicaid. Specifically:
Whose income is included in household income?

Household income is equal to the combined MAGI of the tax filer and his or her spouse, as well as the combined MAGI of any dependents who are obliged to file an income tax return. The income of a dependant is only included if they are legally obligated to submit taxes; if they file taxes for some other reason but were not legally required to do so, their income is not included in the calculation.

Is a tax dependent’s income ever included in household income?

If a dependant is required to file taxes, his or her modified adjusted gross income (MAGI) is included in family income. To be eligible for an exemption from filing a tax return for 2020, a dependent must have received at least $12,400 in earned income and $1100 in unearned income in the previous year, or if the combined earned and unearned income exceeds the greater of $1,100 or earned income up to $12,050 plus $350 in the previous year. In general, unearned income is defined as income from investments; Supplemental Security Income (SSI) and Social Security payments are not taken into consideration when assessing whether a dependant is required to file taxes on their own behalf.

A dependant’s income would not be included in the household’s income if the dependent does not have a filing requirement but files nevertheless — for example, to receive a refund of taxes withheld from their salary.

What time frame is used to determine household income?

In order to be eligible for the premium tax credit and Medicaid, you must have earned enough money within a designated “budget period.” If you are claiming the premium tax credit, the budget period is defined as the calendar year in which you get the advance premium tax credit. When evaluating whether or not an application is eligible for an advance premium tax credit, the applicant predicts their household income for the whole fiscal year. Medicaid eligibility, on the other hand, is often determined by a person’s current monthly income.

For example, if a seasonal worker is employed at the time of application, their monthly income may put them over the income limit; but, if their annual income (which includes the months when they are jobless) is taken into account, they may fall under the income restriction.

Thus, people will not be judged ineligible for the Marketplace based on their annual income and ineligible for Medicaid based on their monthly income, as has happened in the past.

How does MAGI differ from Medicaid’s former rules for counting household income?

The approach for assessing income under the MAGI program is notably different from the methodology used under prior Medicaid standards. Some sources of income that Medicaid previously considered to be part of a household’s income are no longer considered to be so, including child support received, veterans’ benefits, workers’ compensation, gifts and inheritances, and Temporary Assistance for Needy Families (TANF) and Supplemental Security Income (SSI) payments, among others. The changes between the previous Medicaid regulations and the new MAGI rules are summarized in Table 2 below.

There are also modifications to who is considered a member of a household and, as a result, who has their income counted.

TABLE 2:Differences in Counting Income Sources Between Former Medicaid Rules and MAGI Medicaid Rules
Income Source Former Medicaid Rules MAGI Medicaid Rules
Self-employment income Counted with deductions for some, but not all, business expenses Counted with deductions for most expenses, depreciation, and business losses
Salary deferrals (flexible spending, cafeteria, and 401(k) plans) Counted Not counted
Child support received Counted Not counted
Alimony paid Not deducted from income Deducted from income (subject to new rules in 2019)
Veterans’ benefits Counted Not counted
Workers’ compensation Counted Not counted
Gifts and inheritances Counted as lump sum income in month received Not counted
TANFSSI Counted Not counted

View all of the important information

Am I eligible for a health insurance subsidy?

Everyone is required to obtain health insurance under the Affordable Care Act, with a few exceptions. You are covered if you have health insurance via your employment or are qualified for government programs such as Medicare or Medicaid. If you don’t have health insurance, you’ll have to get it on your own. If you don’t, you’ll be subject to a penalty.

Do you already cover the cost of your own health insurance? Do you want to go shopping for the first time? In any case, the good news is that you may be eligible for financial assistance in the form of individual health insurance. A subsidy is the term used to describe this type of assistance.

What’s a subsidy?

A subsidy is a form of financial aid that is used to assist you in paying for something. It is not a loan, and you are not required to repay it. Individual health insurance plans are eligible for two types of federal subsidies, both of which are provided by the federal government.

  • It is possible to decrease your monthly health insurance payment, or premium, with the Advanced Premium Tax Credit. The Cost Sharing Reduction program lowers the amount of money you have to pay out of pocket for health care services you get during a policy period (typically a year). It contains your deductible, coinsurance, and copays, all of which add up to your out-of-pocket limit
  • It also includes your copayments.

When you purchase your health insurance plan, you will be required to complete an application for a subsidy.

Can I get a subsidy?

It is dependent on the following factors:

  • What your income looks like in relation to the Federal Poverty Level
  • The number of people in your family
  • What your health insurance premiums are where you reside

Your money is the most important element. If your household income is up to four times the Federal Poverty Level, you may be eligible for a subsidy. That equates to around $47,000 for an individual and $97,000 for a household of four people. If you’re an individual with a household income of around $29,000 or less, or a family of four with a household income of approximately $60,000 or less, you may be eligible for both subsidies. It is your responsibility to record any subsidies received when you file your tax returns.

When you’re searching for insurance, you may check to see whether you qualify for cheaper premiums or discounts.

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