With few exceptions, all income is taken into consideration when determining whether or not you qualify for a subsidy. In fact, certain non-taxable income may need to be included when determining whether or not you qualify for Advance Premium Tax Credits (a subsidy).
The term for the dollar amount used is Modified Adjusted Gross Income. You will not find your MAGI on your tax return. However, for most people their adjusted gross income is the number used since most people’s AGI (Adjusted Gross Income) is the same as their MAGI (Modified Adjusted Gross Income) since modifications are usually not required.
If your spouse has income his or her income must be included in the calculation. Also, if you are married you must file jointly with your spouse in order to get a subsidy.
What Year’s income?
The tax year for the income in question needs to match the policy year for the policy in question. In another words, if you want to buy a policy to cover you during the year 2016, you will have to estimate how much money you will make in 2016. Remember the tax return that most people will file in 2016 is for tax year 2015. You will need to estimate what your income will be on the tax return you will likely file in 2017.
What is Considered Income for Obamacare?
For most of my clients their MAGI is the total of:
- Wages, salaries and tips
- Self-employment income after expenses
- Rental Income
- Social Security income including SSDI
- Unemployment Income
Just in case your situation isn’t typical, the best way to estimate your Modified Adjusted Gross Income is to start with a blank 1040 tax form (Having your most recently filed return available may be helpful). Fill out the first page and determine what your Adjusted Gross Income is likely to be (line 37). If you have non-taxable Social Security Benefits, add the non-taxable portion to your AGI. If you have tax-exempt income, add that as well. Finally, if you have foreign earned income and housing expenses for Americans living abroad, complete form 2555 and include that income as well.
Income that should not be included:
- Workers Compensation
- Child Support
- Supplemental Security Income
- Private disability income if the premiums were paid with post-tax dollars
Questions I’ve heard from clients:
Does Social Security income count on Obamacare?
Yes. Social security income is part of the calculation to determine your Adjusted Gross Income and your Modified Adjusted Gross Income. Non-taxable Social Security Income is not includable in Adjusted Gross Income, but is includable in Modified Adjusted Gross income.
Supplemental Security Income is not includable in MAGI and therefore has no bearing on the amount of subsidy you might qualify for.
Does Social Security Disability Income Count Towards Obamacare?
For More Information
Give us a call. We can help you calculate how much you are likely to pay and answer questions for you about how the different policies will work for you.
If you want more information about how subsidies are calculated before calling us please visit Healthcare.gov