Generally, the income section on your Covered California application should match your Adjusted Gross Income (line 37 of the 1040, Line 21 of the 1040A, or line 4 of the 1040EZ) from your most recent Federal Tax Return. This is the recommended method if your annual income stays at a constant level from year to year. If your current income level has drastically changed from your most recent Tax Return, then you should use your most current pay stubs, profit & loss statements (if self-employed), or any current documentation (i.e. bank statements) that can prove your current income level. Keep in mind that the annual income listed on your Covered California application is a projection for the same tax year you will have the Health insurance coverage. So if you complete the Covered California Health Insurance application in January, you should calculate your annual income for the remainder of the year based on your current monthly income. For example, if you earned $2,000 in January, you would simply multiply $2,000 by 12 months for an estimated annual income of $24,000. The good news is that you can change the annual income estimate listed on your Covered California application anytime throughout the year. Actually, it is highly recommended that you report any income changes of 10% or more to Covered California within 30 days of the event that caused your income to change (i.e. laid off, fired, raise, or new job). Reporting income changes as they occur will reduce the risk of owing back any financial assistance to the IRS due to underestimating your annual income.
Please feel free to contact us at (818) 350-2675 with any further questions or if you would like free assistance in completing the income portion of your Covered California Health Insurance application properly. Below is a very useful chart that explains what types of income you should include on your Covered California Health Insurance application. The chart below also lists several qualified income deductions and highlights which line on your Federal Tax Return to reference in order to locate these deductions and various types of income.
|Type of Income||Covered CA Eligible||Medi-Cal Eligible||Where to find on IRS Tax Return|
Count as Income?
|Wages, salaries, tips||Yes||Yes||Line 7 - 1040|
|Government benefits (CalWORKs, adoption/foster cre assistance, disaster belief, relocation assistance)||No||No|
|Self-employment income||Yes||Yes||Line 12/21 - 1040; Schedule C|
|Unemployment Insurance Benefits||Yes||Yes||Line 19 - 1040|
|State Disability Income (SDI)||No1||No1|
|SS Retirement, Survivors or Disability Benefits (Title II)||Yes2||Yes2||Line 20a - 1040|
|Social Security Income (SSI)||No||No|
|Child Support Received||No||No|
|Alimony Received||Yes||Yes||Line 11 - 1040|
|Interest (Taxable & Tax Exempt)||Yes||Yes||Line 8a/8b/21 - 1040; Form 2555|
|Veteran’s service-related disability benefits, pension, annuity||No||No||IRS Pub. 525|
|Rental Income||Yes||Yes||Line 17 - 1040; Schedule C|
|Capital gains/loss||Yes||Yes||Line 13 - 1040; Schedule D|
|Dividends||Yes||Yes||Line 9 - 1040|
|Tax refunds||Yes||Yes||Line 10 - 1040|
|Gifts and Inheritances||No||No|
|Lump Sums Received (e.g., lottery winnings)||Yes||Yes||Line 21 - 1040|
|Retroactive SS benefits||Yes||Yes||Line 20a - 1040|
|Scholarships, fellowship grants and awards used for education purposes||No||No||See IRS Pub. 970; 45 CFR 233.30|
|Work Study Income||Yes||No|
|Veterans' education benefits||No||No|
|Taxable amount of pension, annuity or IRS distributions (incl non-service related veteran’s benefits)||Yes||Yes||Line 15b/16b - 1040|
|American Indian and Alaska Native (AI/AN) income||No||No||42 CFR §436.603(e)(3)|
|Farm Income||Yes||Yes||Line 18 - 1040/Schedule F|
Deduct from Income?
|Child Support Paid||No||No|
|Alimony Paid||Yes||Yes||Line 31a - 1040|
|Student loan interest paid||Yes||Yes||Line 33 - 1040|
|IRA deduction||Yes||Yes||Line 32 - 1040|
|Health Savings Acct (HSA)||Yes||Yes||Line 25 - 1040 Form 8889|
|Health insurance premiums (self- employed)||Yes||Yes||Line 29 - 1040|
|Moving expenses||Yes||Yes||Line 26 - 1040 3903|
|Tuition/fees expenses||Yes||Yes||Line 34 - 1040 Form 8917|
|Educator expenses||Yes||Yes||Line 23 - 1040|
|Renter’s credit (CA tax return)||No||No||CA 540 - Line 46|
|Business expenses for artists||Yes||Yes||Line 24 - 1040 Form 2106; 2061EZ|
|Penalty on early savings withdrawal||Yes||Yes||Line 30 - 1040|
|Self-employment tax, Simplified Employee Pension (SEP), SIMPLE contributions||Yes||Yes||Line 27, 28 - 1040 Form SE|
Period of Income Deducted
|Applicants||Projected Annual||Current Month OR "Reasonably Predictable Annual Income"|
|Beneficiaries/Enrollees||Projected Annual||Current Month OR "Projected Annual"|
1 SDI is usually not taxable, thus not counted for MAGI (Modified Adjusted Gross Income), unless it is a substitute for unemployment compensation (which occurs when an individual begins receiving unemployment benefits and then becomes no longer eligible because he/she becomes disabled).
2 Please reference the question below regarding Social Security Retirement Benefits because only a certain portion is included in your adjusted gross income.
Yes, the following types of income should be added to the Adjusted Gross Income (line 37 of the 1040, Line 21 of the 1040A, or line 4 of the 1040EZ) listed on your Tax Return in order to determine your Modified Adjusted Gross Income (MAGI) for Covered California.