Determining Your Income for Affordable Care Act (ACA) Purposes

As you navigate the complexities of health insurance under the Affordable Care Act (ACA), it’s crucial to understand how your income impacts your coverage options. In this blog, we will explore the concept of Modified Adjusted Gross Income (MAGI) and how it determines your eligibility for ACA subsidies and other programs.

Understanding Modified Adjusted Gross Income (MAGI)

MAGI is a modified version of your Gross Income and is used to determine your eligibility for certain government programs, such as health insurance subsidies. It is calculated differently than your taxable income, and thus, you’ll calculate MAGI using a different equation.

To calculate your MAGI, you start with your Adjusted Gross Income (AGI), which is your Gross Income after applying certain deductions and adjustments. Then, you add:

Tax-exempt interest
Nontaxable Social Security Benefits
Adoption assistance payments
Foreign income excluded from AGI

After adding these amounts, if you made contributions to a Health Savings Account (HSA) or Archer Medical Savings Account (MSA), you can deduct those contributions.

Example: Suppose your AGI is $38,000. You also received $2,000 in tax-exempt interest and contributed $6,000 to an HSA. Your MAGI would be:

MAGI AGI + Tax-exempt interest – HSA contribution
MAGI $38,000 + $2,000 – $6,000
MAGI $34,000

MAGI and ACA Subsidies

Your MAGI plays a significant role in determining your eligibility for ACA subsidies. These subsidies help lower the cost of your health insurance premiums and make coverage more affordable. The amount of subsidy you receive is based on a sliding scale, with higher subsidies available to those with lower MAGIs.

To qualify for subsidies, your MAGI must fall within certain income limits. For 2023, the MAGI limits are as follows:

For individuals: Up to 150% of the Federal Poverty Level (FPL)
For families of four: Up to 400% of the FPL

You can find the FPL levels for your state at the following link: [Federal Poverty Level](

Other Programs that Use MAGI

In addition to ACA subsidies, MAGI is also used to determine eligibility for other government programs, including:

Supplemental Nutrition Assistance Program (SNAP)
Temporary Assistance for Needy Families (TANF)

Knowing your MAGI will help you access the healthcare coverage and financial assistance that you and your family may be eligible for. If you are unsure of your MAGI or need assistance calculating it, reach out to one of our licensed agents for guidance.

Remember, understanding MAGI is essential for navigating the healthcare landscape under the ACA. By calculating your MAGI accurately, you can ensure that you’re getting the most out of your health insurance coverage and accessing all the benefits you qualify for.

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