QUESTION

What income is counted in determining my eligibility for premium tax credits?

Individuals with no coverage | Eligibility for Premium Tax Credits and Cost-Sharing Reductions
ANSWER

Eligibility for premium tax credits is based on your expected household income for the year in which you are applying for coverage. For example, if you are applying for coverage to start in January 2021, you should estimate your projected income for 2021, not report your income from 2020.

The Marketplace assesses your Modified Adjusted Gross Income, or MAGI, to determine your eligibility for premium tax credits. When you file a federal income tax return, you must report your adjusted gross income (which includes wages and salaries, interest and dividends, unemployment benefits,* and several other sources of income). MAGI modifies your adjusted gross income by adding to it any non-taxable Social Security benefits you receive, any tax-exempt interest you earn, and any foreign income you earned that was excluded from your income for tax purposes.

To learn more about what details to include in your household income estimate, see HealthCare.gov’s table on what to include in your income estimate.

Note that eligibility for Medicaid and CHIP is also based on MAGI,* although some additional modifications may be made in determining eligibility for these programs. Contact your marketplace or your state Medicaid program for more information. (26 C.F.R. § 1.36B-1; IRS, Questions and Answers on the Premium Tax Credit).

*In August of 2020, federal funds became available to supplement unemployment insurance payments. Consumers in almost every state filing for unemployment insurance due to the COVID-19 pandemic were eligible to receive an increase of $300 per week to unemployment benefits (possibly up to an additional $400 in some states) for a limited time period. While the federal government hasn’t provided clear guidance on how this will be counted for purposes of determining marketplace subsidy eligibility, federal guidance indicates the additional $300 is not included in assessments for Medicaid and CHIP eligibility (treatment of the additional $100, if available, has yet to be determined for either subsidy or Medicaid eligibility determinations).

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