Covered California and ACA related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the ACA and Covered California knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

What is MAGI?

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Question: Regarding individual insurance subsidies,is there more information on how Modified adjusted gross income will be calculated? For instance will rental income be included?

Answer: All taxable income contributes to your Adjusted Gross Income (AGI). You will find that number on line 37 of your last Form 1040. Modified AGI or MAGI will always be the same or higher that AGI because it adds back onto the AGI certain deductions you may have taken. These deductions include:

  1. Student loan interest
  2. One-half of self-employment tax
  3. Qualified tuition expenses
  4. Tuition and fees deduction
  5. Passive loss or passive income
  6. IRA contributions, taxable social security payments
  7. The exclusion for income from U.S. savings bonds
  8. The exclusion under 137 for adoption expenses
  9. Rental losses
  10. Any overall loss from a publicly traded partnership


I was reading the draft instructions for people when they file their taxes in spring 2015. It asks for their premium but also asks for the premium for the 2nd lowest cost Silver plan. Many clients pick a plan that is NOT the 2nd lowest cost Silver plan. Will Covered CA be calculating this figure and giving it to the client so they can complete their tax return. If not, how are they to get it? Will the 2014 calculator still be available in spring 2015 or will just the 2015 rates/plans be available? I am anticipating this to be a big mess unless you guys send it to the client and A LOT of phone calls to Covered CA in spring 2015 to get this information unless it is automatically sent to them.

MAGI is more than this for PPACA purposes. “Household MAGI” includes the income of all persons in the same household who are required to file a tax return. That includes children who work, whether or not they are claimed as a dependent on a parent’s tax return. Now that “child” includes a person up to age 26, the potential for MAGI to be significantly affected is greatly increased.

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