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Covered California and Obamacare 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 Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

Use Net Income or Gross Income for Subsidy Eligibility

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Question: I am a self employed individual. How do I calculate my income - on gross income or on net income after expenses/taxes?

Answer: Use your net, pre-tax income. More specifically it’s the adjusted gross income (AGI) that shows up on line 37 of your Federal Form 1040 . Keep in mind that this number is only a benchmark. If your income has changed since last year you will have the opportunity to make the adjustment when checking your eligibility for advance tax credits (premium subsidies).


Jon, the income that counts is your adjusted gross income (AGI) on Line 31 of your tax return.

I am a business owner. On paper, it says I make over $200,000 a year. But like most business owners, that is the companies money. I pay myself about $80,000 (Gross take home). I have a stay at home wife and 3 kids at home. Am I eligible for this or does my company income throw me out

mix of social security income for year I turned 62 mid year and salary at low wage job. change for following year full year social security monthly net. earned income gross amount instead of after taxes net paycheck amount? for new year estimate what money I expect to earn . mix of two sources net (social security) and gross from hourly. I wondered if it was done correctly ?

I am still so confused about what income do I state for Covered California subsidy. Do I start with line 37 on my tax return, the AGI, or do I use the income as stated on my W2?

https://www.coveredca.com/ShopAndCompare/2015/#&ui-state=dialog Covered California Annual Household Income Enter your projected income for the year in which this health plan will be effective. Self-employed individuals should include all taxable income and subtract any allowable self-employed expenses that they plan to deduct from their taxes.

Hi. Could someone in-the-know please post a link to a gov or Cov CA resource that verifies the same? Thanks!

the question of income related to obama care will take years to finalize, agi and income are two different animals…w9 income is easy but 1099 income rental income biz income net or gross etc etc it will take the IRS years to finalize and 20000 pages of mumble jumble


Yes. Covered California requests that ypu use gross income. This is fairly close to AGI for most salaried people. But the IRS is what counts and they use AGI, so no people who used their AGI will not pay more on their taxes. Nobody is “billed”.

I just went on the website, it specifically tells you to put in your GROSS income, BEFORE TAXES or any deductions Which is it? There is about a $900 difference in the premium. I heard people that put their AGI in last year are going to be billed this year for all the substities they got in 2013!

Nancy, Please read “MAGI - What It Is and What It Isn’t” at https://www.cahba.com/blog/2013/11/magi.html

I need help understanding what is modified adjusted gross income for my Covered California/Obamacare. Is it line 37 on my federal tax return? Specifically I need to know how rental income, deductions, depreciation come into play. My rental results in a negative number on line 17 of my federal tax return. Do I need to add anything from my rental income back into line 37 (agi)?

exactly. What is the correct answer to this question?? Gross Income, as stated on W-2’s? Net income, after taxes and deductions?

“Net” income is what you’re left with after taxes and other deductions are taken from your “gross” income, so the answer “use your net - pre-tax income”, makes no sense?

What is the correct answer?

This is still confusing to me. A self-employed AGI can be significantly reduced—from qualifying for a subsidy at 170% of poverty, to not even being eligible for Covered Ca. at all—by the allowable reduction for health care premiums—over $7000+/yr. I have not found any listing of health care premiums being added back in to the AGI to result in the MAGI. I do realize that the resulting qualification is then for Medicaid, but would prefer to have the plan choices.

Might it be possible that this will be addressed in the application? It would seem counter-intuitive for the currant health insurance costs to prevent a self-employed person from qualifying for the insurance that the ACA seems designed to help.

I did ask about this in Feb, and got a prompt reply from Phil. I’ve been waiting to see if this would be an issue brought up by others.

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