How to calculate your income | MAGI

How to calculate your income | Modified Adjusted Gross Income - MAGI.

premium subsidies tax credit, benefit tennessee nashville Starting in 2014, massive tax credits are available to help those who qualify buy individual health insurance through your states Health Insurance Marketplace. The tax credits will only be available if you enroll through the Marketplace website, you can buy insurance directly from the insurance companies but you will not receive subsidies or tax credits. Subsidies are based on your age, income and where you live.. If you are eligible for these health insurance tax credits, they will cap your cost of health insurance at 2% - 9.5% of your household income.

How do I know if I am eligible for tax credits?

Advance premium tax credits are available for individuals and families who meet certain income requirements and do not have access to affordable health insurance through their employer or another government program. Eligibility for tax credits is based on a standard, called the "federal poverty level," that looks at your household income and the number of people in the household. The size of the tax credit is based on a sliding scale with those who make less money getting a larger financial support to lower the cost of their insurance coverage. Individuals and families who make between 138 percent and 400 percent of the federal poverty level may be eligible for a tax credit. This means that an individual making up to $45,960 and a family of four earning up to $94,200 may be eligible for a tax credit.

What is considered income when calculating your subsidy?

The amount of the tax subsidy depends on household income and the family size of eligible individuals. It is important to use the right Modified Adjusted Gross Income (MAGI) when calculating your subsidy. Dowload a list of What's included in MAGI? This list will tell you what is or is not considered eligible income when determining your subsidy amount. If you underestimate your income when applying you could have to pay back money when you file your taxes. Be sure to use an accurate number and if your income changes during the year, you MUST update the information at 

How much is your subsidy? Find out here 

Here are some quick facts about the Health Insurance Tax Credits:

1.  Tax credits reduce the amount of the premium you will pay for insurance.

2. Tax credits help low-income and middle-income individuals and families.

3. Tax credits are available to individuals and families who meet certain income requirements.

4. Tax credits can be applied to the cost of your health plan when you enroll “ you do not need to wait until you file a tax return at the end of the year.

5. Tax credits are only available through the Health Insurance Marketplaces. You must enroll in a health plan through Covered California if you want to use your tax credits.

6. Tax credits are paid directly to your health plan. These tax credits are paid by the Health Insurance Marketplace to your health plan to keep your out-of-pocket costs low.

7. Tax credits will be adjusted at the end of the year based on your actual income. At the end of the year, the tax credits may be adjusted if your income is different than you anticipated. This means you will want to notify the Health Insurance Marketplace if your income changes. 

How much will the Health Insurance Tax Credit help me?

The amount of the tax credit depends on your household income and family size. Starting in October 2013, the Health Insurance Marketplaces will make available the exact premium and plan choices so you can know exactly what your insurance will cost. The tax credits are available when you buy insurance so you do not have to pay all of the premium costs up front and wait for reimbursement.  

What if my income changes?

Any eligible employee without insurance can shop through Health Insurance Marketplaces for coverage, regardless of income. Your income level determines your eligibility for the tax credit to help pay your premium. If your income changes over the year, your tax credit will be adjusted accordingly. If your income increases, you will have to pay the difference at tax filing time. It will be important that you stay on top of any income changes so you have an idea of how much you will owe at tax time.

Ready to sign up for health insurance? Click here

Back to top


tax credits, subsidies, premium, cost, MAGI, benefits, deductible

The Health Insurance Marketplace Explained

How subsidies work when buying an insurance policy