Q & A
How is income divided in the calculation of subsidies on the insurance exchanges?
Full Question: My wife will be exploring insurance options on the federal exchange in November. In regard to subsidies, we file jointly and most of our income comes from dividends derived from jointly owned assets. I am assuming that her share of that income would be precisely half of the annual total income (in addition to her earned income from part-time work.) Is this a fair assumption?
Answer: No, it’s not. Premium tax credits are available on the health insurance marketplace to people with incomes between 100 and 400 percent of the federal poverty level (in November that will be $15,730 to $62,920 for a couple). Eligibility is based on household income, not her income alone.
If the modified adjusted gross income (MAGI) for the two of you falls within those limits, she could be eligible for a subsidy. Under the health law, MAGI would include your wife’s wages and your dividend income, as well as tax-exempt Social Security benefits, tax-exempt interest and tax-exempt foreign income, says Mark Luscombe, a federal tax analyst at Wolters Kluwer’s CCH, a tax and accounting information publisher.
Source: Michelle Andrews, Seattle/LocalHealthGuide – 8/12/2014
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