How Does the ACA Determine My Income for Insurance Affordability?
The Affordable Care Act (ACA), also known as Obamacare, was created to make health insurance more accessible and affordable for Americans. One of the key components of the ACA is the income-based subsidies that help lower the cost of health insurance for people with lower incomes.
To determine your eligibility for these subsidies, the ACA uses a measure of income called Modified Adjusted Gross Income (MAGI). MAGI is similar to your regular Adjusted Gross Income (AGI) on your tax return, but it includes some additional types of income that are not included in AGI.
What is included in MAGI?
MAGI includes all of your taxable income, plus the following types of income:
Tax-exempt interest income
Alimony received
Non-taxable Social Security benefits
Non-taxable veteran’s benefits
Foreign earned income exclusion
What is not included in MAGI?
MAGI does not include the following types of income:
Non-taxable portions of pensions
401(k) and IRA contributions
Health Savings Account (HSA) contributions
How is MAGI used to determine my eligibility for ACA subsidies?
Your MAGI is used to determine your eligibility for ACA subsidies based on the poverty level.
For 2024, the poverty level for a single person is
$13,590, and for a family of four is $ 27.750
If your MAGI is below 138% of the poverty level, you may be eligible for a premium tax credit to help lower the cost of your health insurance. If your MAGI is between 138% and 400% of the poverty level, you may be eligible for cost-sharing reductions to help lower the cost of your out-of-pocket costs.
How can I find out my MAGI?
You can find your MAGI on your federal income tax return (Form 1040). Your MAGI is located on line 37 of the Form 1040.
If you are not sure how to calculate your MAGI, you can use the MAGI calculator on the HealthCare.gov website. Please consult with a licensed agent to help ensure accuracy of calculation of your MAGI.
What if my income changes?
If your income changes during the year, you may need to update your MAGI with the Marketplace. You can do this by logging into your HealthCare.gov account.
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