ACA Wants MAGI, Not AGI
Open Enrollment means a lot of different things depending on your status in life. If you’re someone who will be looking for health insurance under the Affordable Care Act (ACA) Marketplace and you are looking for a subsidy then pay attention to this. It’s not Adjusted Gross Income (AGI) that is used to qualify or disqualify you from a subsidy, it’s Modified Adjusted Gross Income (MAGI).
Here’s a chart I made up from information on the healthcare.gov website. When looking for health insurance in the Marketplace be sure to include all household income for anyone on the tax return or might file a tax return (a child, for example).
Once you have Marketplace insurance, don’t forget you need to report changes as soon as they become applicable. If you don’t report changes you can miss out on more savings or must pay some or all the subsidy back on your next tax return.
If this is your first time looking for health insurance in the Marketplace here’s what we recommend:
- Go to HealthCare.gov
- Click on Get Coverage
- Pick your current state residence in the drop-down menu
- Click on the “Visit Your State” button
- Full speed ahead or click on the “Need Assistance” button
- You can also access local brokers for assistance too. Click on that button.
There are many ways to lower your AGI and MAGI. The easiest and most beneficial are retirement account contributions in your 401k/403b, SEP or similar income reduction before income taxes. At this time of year, you must act fast to have any effect on this or next year’s income.
If you do enroll in a Marketplace plan for the first time, be sure to look over IRS form 8962. You can find instructions at https://www.irs.gov/instructions/i8962. If you’re already enrolled, look for the 1095-A statement. You should also have received two re-enrollment letters. One comes from your insurance company and one from the Marketplace.
Health insurance is a tool to reduce your financial risk of owing hospitals and health care practitioners large amounts of money. It’s costly and complicated, but in your best interest to stay informed.
Look for good, reliable information from HealthCare.gov and AARP.org Both do a good job supplying information, alternatives, and help you make cost-effective decisions regarding health insurance in the ACA Marketplace.