MAGI and the Affordable Care Act
The Affordable Care Act subsidy eligibility is determined by your household’s Modified Adjusted Gross Income, more commonly known as MAGI. But that seems real complicated, so what does it mean? Don’t worry we’ve got you covered. First thing to know is the new plans are called the ACA metal plans: Bronze, Silver, Gold, and Platinum. The rest you’ll learn from the easy to understand chart below.
MAGI Easy to Read Chart
For most people their MAGI will be the same as their adjusted gross income. See the chart below for details.
| What You Need to Include | What You Don’t Include (Subtract this) |
| Wages, salaries, tips, etc. | Some self-employed expenses |
| Taxable interest | Student loan interest |
| Taxable amount of pension, annuity, IRA distributions, Social Security benefits | Tuition and fees |
| Business income, farm income, capital gain, other gains/losses | Educator expenses |
| Unemployment wages | IRA deduction |
| Dividends | Moving Expenses |
| Alimony Received | Penalty on early withdrawal of savings/CD |
| Profits from rental property and royalties | HSA deduction |
| S Corp, Partnership, Trust profits | Alimony paid |
| Taxable refunds, credits, or offsets of state and local income taxes | Moving Expenses |
| Trust Profits | Certain business expenses of reservists, performing artists, and fee-basis government officials |
| Other income | Domestic production activities deduction |
*Remember to always check with your tax person about your specific MAGI details. As there are a few things that you add back after all this is done like tax-exempt interest, and if to qualify for Medicaid you don’t include things like scholarships.
You Can Avoid All the MAGI Trouble With an Off-Exchange Plan
If you know there is no way you qualify for either an ACA premium subsidy or federal cost-sharing subsidy then you can purchase a plan off the Exchange and avoid rounding up all this paperwork. Agents can help you learn if you qualify for subsidies by asking a few questions and lead you to either a Health Insurance Marketplace plan or an off-Exchange plan.
For further questions about your eligibility call 800-930-7956 or contact Medicoverage.
Comments and Questions
Click to leave a CommentComment from al perry on February 05, 2016
my wife is getting insurance through the exchange. As the law dictates we need to file married jointly but we cannot use the MAGI for my ss and ira income. Was advised the AGI is only for self employed spouse.
Is this correct?
MEDICOVERAGE AGENT RESPONSE
Al,
For all tax related questions we suggest you contact your personal tax expert.
-Chris from http://www.medicoverage.com/
Comment from Russ on February 01, 2016
Would proceeds from the sale of a home in 2013 that reside in a savings account be considered as MAGI if used in 2016.
MEDICOVERAGE AGENT RESPONSE
Russ,
We need to stress we are not tax experts nor can give tax advice. According to our research, both capital gains and interest are included. Again, you would need to speak to your tax person to see how the impact on your MAGI.
-Amy from http://www.medicoverage.com/
Comment from john gosen on November 20, 2015
I retired in June at60 and since my company didn’t offer retiree health benefits==I opted for COBRA—which was cheaper than going on my own. I currently have no income and for the 2016 year I will have no income—except for the small interest off of my bank accounts—-If I pull some out of my IRA—maybe $20000—-would I qualify for the California covered subsidy?
MEDICOVERAGE AGENT RESPONSE
Josh,
If your income is between $16,242 and $47,080, you may qualify for subsidies. If you make less than $16,242, you may qualify for Medi-Cal. Please let us know if you need any help with your application.
-Amy from http://www.medicoverage.com/
Comment from Jim on June 10, 2015
Is the income Ireceive from a Roth IRA includeable as far as qualifying for subsidy under the Affordable Care Act?
MEDICOVERAGE AGENT RESPONSE
Jim,
Thank you for your question. We always suggest with specific questions such as this that you consult your tax professional. Sorry we couldn’t be more helpful.
-Chris from www.medicoverage.com
Comment from Sharon on April 12, 2014
What does this mean? Taxable refunds, credits, or offsets of state and local income taxes.
I will be retiring this year from county government and the retirement I have taken out is subtracted from my gross salary on my W-2 at the end of the year. Would I have to add the retirement amount back to my gross salary for the MAGI?
Thank you.
MEDICOVERAGE AGENT RESPONSE
Sharon,
Thanks for your questions. Remember if you make more than $46,000 you don’t have to worry about your MAGI because you wouldn’t qualify for subsidies. For specific MAGI questions you should speak with your tax expert as they are best qualified to answer your tax related question. For any questions about Exchange plans call us at 800-930-7956.
-Michelle from Medicoverage.com
Comment from Harrison S Miller on March 25, 2014
I have interest income accruing in a certificate of deposit in a traditional IRA. If I don’t withdraw any money from the IRA do I include the interest earned during the year in my MAGI. Erica Pichardo at Healthcare.gov told me that if I don’t take the money out it is not included. Is the money earned on a CD in a IRA tax deferred but not tax exempt so that it doesn’t need be included in MAGI? If the CD is in a ROTH IRA would the interest be included in MAGI if it is not withdrawn during the year?
MEDICOVERAGE AGENT RESPONSE
Harrison,
Thanks for your questions. As far as we know you don’t include your IRA contributions, however we highly suggest that you consult your tax expert before making a decision.
Michelle from Medicoverage.oom
Comment from Sam on December 12, 2013
Are dividends earned by investments in IRA accounts included in MAGI? Am I correct in assuming that because these dividends remain in the IRA account, they are not taxable (unless you take a distribution from a traditional IRA) and are therefore not included in AGI or MAGI?
Thank you for your help.
MEDICOVERAGE AGENT RESPONSE
Sam,
Thank you for your questions. Determining your MAGI is only necessary if you are seeking federal subsidies. If you believe you qualify, we suggest contacting your tax expert about any specific MAGI questions.
-Michelle at www.medicoverage.com
Comment from TOM C. on December 09, 2013
I converted a certain amount of my Traditional IRA to a Roth IRA. Technically this is not an IRA distribution because the money remains in an IRA and I cannot use it unless I withdraw it. Now the IRA conversion is taxable income, in this case non-cash taxable income. Can I exclude this amount fro MAGI?
MEDICOVERAGE AGENT RESPONSE
Tom,
Thank you for your question. We suggest specific tax questions about the Affordable Care Act are addressed with your tax consultant.
-Eric at www.medicoverage.com
Comment from Glenda K. Oliver on December 04, 2013
My husband & I have health insurance through Arizona State Retirement System from my former employer. Would we be eligible for a subsidy to help pay our premium?
MEDICOVERAGE AGENT RESPONSE
Glenda,
Thank you for your question. Subsidies cannot be used on a plan purchased outside of the exchange, so a plan through your employer wouldn’t work. You may qualify for subsidies, however, if you purchase a plan on the exchange. You would typically have to be under 65 and not eligible for employer sponsored coverage.
-Chris from www.medicoverage.com