Covered CA Application FAQs

What Income should I Include on my Covered California Health Insurance Application?

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.

What's countable income for Covered CA? What to Count, Not Count and Deduct

Type of Income Covered CA Eligible Medi-Cal Eligible Where to find on the 2017 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
Workers’ Compensation No No  
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  
In-kind income No No  
Veterans' education benefits No No  
Loans 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.

Are Social Security Retirement Benefits included as part of my household income for Covered California? 

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.

  • Non-taxable Social Security benefits (Line 20a minus 20b on Form 1040)
  • Tax-exempt interest (Line 8b on Form 1040)
  • Foreign earned income && housing expenses for Americans living abroad (Form 2555)

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Phone: (818) 350-2675
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