As you may or may not know, the price you are expected to pay for health insurance coverage is based on both your household income and the size of your household (the number of dependents). It may not matter if you are unemployed, you are facing financial hardship, or you have other financial obligations that you think are more important – these factors won’t necessarily be the basis for your contribution when it comes to health insurance through the marketplace (although certain exemptions or allowances may apply depending on your particular situation and set circumstances, such as pregnancy, disability, and so on). So many individuals and families are asking this question: what counts as income?
There are several different types of income that could be included when calculating estimated costs for health insurance coverage. First off, you should know who counts as an income earner in your household, and this includes any family members or dependents that are included on your annual income tax return. If, for example, you claim minor children as dependents, and those children have jobs, you would include their income in your calculations. This can get a little complicated if you have adult dependents like siblings or parents living in your home, but if they are employed and filing their own income tax returns, you probably won’t claim them as dependents and therefore won’t have an issue.
Now, what type of income counts toward the estimate for your health insurance costs? Any income you (and other income earners in your household) earn from employment (wages, salary, tips, and other compensation) will obviously count. If you own and operate your own business, any income you claim on your tax return will apply. Other earnings that may qualify as income include alimony, prizes and winnings, royalties, pensions, rent (from rental properties), annuities, and more. Examples of income that will not count toward the estimate for your health insurance costs include child support, death payments, gifts, and more. A portion of Social Security benefits may or may not apply. The list of qualifying and non-qualifying income sources is long, so you need to look it over so that you understand which of your income sources will count toward your expected payment for health coverage.
The entirety of income that counts is referred to as MAGI, which stands for Modified Adjusted Gross Income. This includes Adjusted Gross Income (AGI), or your total taxable household income minus qualifying deductions, as well as modifications to this number, including some Social Security benefits, tax-exempt interest, and excluded foreign income (which is likely taxed elsewhere). In other words, the more complex your stream of household income, the more you’ll need to understand about which types of income are included in estimates and which are not. With a little research and help from a licensed insurance agent you can make sure that your quoted health insurance rate is based on an accurate income determination.
Submit your questions below or start a conversation in the comments!