Covered California has released a table of sources of income and whether they are countable toward the Modified Adjusted Gross Income (MAGI) for the monthly health insurance subsidy. The foundation for the table is the federal 1040 income tax return. The Countable Sources of Income table includes income for the monthly subsidy and whether the income is considered for MAGI Medi-Cal.
Which sources of income are countable for Covered California?
The Countable Sources of Income table was created for Certified Enrollment Counselors and Certified Insurance Agents with assisting families with enrollment in health insurance through Covered California. Unfortunately, it assumes a level of familiarity with the IRS 1040 form that most people, excluding tax-preparers, don’t have. The first column addresses the first page of the Form 1040 U.S. Individual Income Tax Return 2015. It is on the first page, lines 7 – 37, that the Adjusted Gross Income (AGI) is calculated.
Table of countable sources of income for Covered California subsidy or Medi-Cal
|Date:||September 25, 2016|
Note: line 13 Capital Gain or Loss indicates Schedule E as the reference document. IRS 1040 references using Schedule D to determine the dollar amount.
The Modified Adjusted Gross Income (MAGI) is the AGI plus some Social Security benefits and tax-exempt interest. The MAGI is used to determine eligibility for the Advance Premium Tax Credits and the monthly subsidy amount.
The table is comprised of four columns-
- 1040 Line Number
- 1040 Type of Income
- MAGI M/C Modified Adjusted Gross Income for Medi-Cal eligibility
- APTC/CSR Income for Advance Premium Tax Credit and Cost-Sharing Reductions
The last two columns indicate if the income is counted and what portion is counted toward either eligibility for MAGI Medi-Cal or APTC subsidy. CSR or Cost-Sharing Reductions are the Enhanced Silver Plans (73, 87, 94) that are awarded based on the household income. When the table indicates “Count Gross” it means to add the total amount of the line number. When the cell reads “Count Taxable Portion”, it means add the gross income less any taxes withheld or owed.
One revelation from previous explanations of MAGI is that the income counted for Medi-Cal is different than the income counted for the APTC. Insurance agents had always been told by Covered California that the income types were the same. There are many forms of income, according to the Countable Sources of Income table that are not counted toward determining Medi-Cal eligibility. This has the effect of subtracting income and flipping individuals, children, and families into to Medi-Cal at a higher rate.
One of the biggest confusions for household is the type of other income that is usually listed on Line 21. The table has a whole list of unique types of income from accelerated death benefits to work training program credits. Unfortunately, the table is reduced to 3 columns when it gets into one-time lump sum payments and deductions. What we learn from the one-time lump sum payments is that for Medi-Cal they are reported in the month they are received. For APTC, they should be reported as annual income. When a one-time lump sum is reported as annual income the Covered California system breaks it up into 12 equal monthly amounts.
The one-time lump sum deductions are actually associated with 1040 line numbers not indicated on the table. But this section on page 5 is from 1040 lines 23 through 36. The final section deals with income specific to American Indians and Alaska Natives.