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MAGI and the Affordable Care Act

September 20, 2013

By Katie Banks+

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 of´Čücials
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.

The next open enrollment for new health coverage begins October 15, 2015. Applications must be submitted before December 7, 2015 to start a plan in 2016. If you are looking to get covered in 2015 you still have a few options. See link below:

Click here to learn how to get covered in 2015 if you missed the Obamacare 2/15 deadline.

Comments for MAGI and the Affordable Care Act

By 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.

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

By 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 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?

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

By 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.


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

By 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?


Thank you for your question. We suggest specific tax questions about the Affordable Care Act are addressed with your tax consultant.
-Eric at

By 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?


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

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