How to count income & household members

How to estimate your expected 2016 income

When you fill out a health insurance application and use some tools on this website, you’ll need to estimate your expected income for 2016. Two important things to know:

  • Marketplace savings are based on your expected household income for 2016, not last year’s income.
  • Income is counted for you, your spouse if married, and everyone you’ll claim as a tax dependent on your 2016 federal tax return who’s required to file a tax return. Include their income even if they don’t need health coverage. See details on who to include in your household.

How to make an estimate of your expected 2016 income

Step 1. Start with your household’s adjusted gross income (AGI) from your most recent federal income tax return.

Where to find your AGI on IRS tax forms:
  • Form 1040: Line 37
  • Form 1040 EZ: Line 4
  • Form 1040 A: Line 21

Don’t have recent AGI? See another way to estimate your income.

Step 2. Add the following kinds of income, if you have any, to your AGI:

  • Tax-exempt foreign income
  • Tax-exempt Social Security benefits (including tier 1 railroad retirement benefits)
  • Tax-exempt interest

Don’t include Supplemental Security Income (SSI).

Step 3. Adjust your estimate for any changes you expect for 2016.

Consider things like these for all members of your household:

  • Expected raises
  • New jobs or other employment changes, including changes to work schedule or self-employment income
  • Changes to income from other sources, like Social Security, alimony, or investments
  • Changes in your household, like gaining or losing dependents. Gaining or losing a dependent can have a big impact on your savings.

Now you have an estimate of your expected income for 2016. Use this figure when asked to estimate your expected income for 2016.

More details on reporting income and household members

Estimating unpredictable income

It’s hard to predict your income if you’re unemployed, self-employed, on commission, or on a work schedule that changes regularly.

If your income for 2016 is hard to predict, base your estimate on your past experience, recent trends, what you know about possible changes at your workplace, and similar information. If the job is new to you, ask people in the same field or in the same company about their experiences.

Just do your best to make a realistic estimate for 2016 — and be prepared to update it when it changes.

Learn more about how to estimate your expected income if you’re:

Make your best estimate and update when things change

After finding out your final income when you file your 2016 tax return, you’ll compare (or "reconcile") any difference between the premium tax credit you used to reduce your monthly costs during the year and what you actually qualify for based on your final 2016 income.

  • If your final 2016 income is higher than your estimate: You probably used more tax credits than you qualified for. You’ll have to pay back the difference with your 2016 tax return.
  • If your final 2016 income is lower than your estimate: You probably used less tax credits than you qualified for. You’ll get the difference back when you file your 2016 tax return.

You can reduce the chance of a big tax bill (or big refund of money you could have used all year) by updating your application as soon as your income changes.

IMPORTANT Update your Marketplace application as soon as possible when your income or household members change during the year. Learn how to update your information during the year.

More answers: Income & household size

How do I upload documents to verify my income for the Marketplace?

If the Marketplace tells you to provide pay stubs, self-employment records, or other information to verify your income, follow these directions to upload documents.

What is "MAGI," and do I need to use it for anything?

The Heath Insurance Marketplace uses an income figure called Modified Adjusted Gross Income (MAGI) to determine the programs and savings you qualify for. For most people, it’s identical or very close to Adjusted Gross Income (AGI). MAGI is not a line on your federal tax return.

The estimate instructions above are based on MAGI, but it’s not a term you need to know in order to apply or use tools on this site.
What if I don’t know my household’s recent Adjusted Gross Income?

Start with “federal taxable wages” for each income earner in your household.

Why do I need to include people in my household who don’t need insurance?

Marketplace savings are based on income for all household members, not just the ones who need insurance.

If anyone in your household has coverage through a job-based plan, a plan they bought themselves, a public program like Medicaid, CHIP, or Medicare, or another source, include them and their income on your application.
When you apply you’ll say which household members need coverage.
What if my household income changes during the year?

Report income and household changes on your Marketplace insurance application as soon as possible. If you don’t, you could wind up with the wrong amount of savings or even the wrong insurance plan. Learn how to update your income during the year.

Are income and household rules the same for Marketplace insurance plans and Medicaid coverage?

There are some differences, depending on your state and other factors. The Marketplace application may ask you specific questions to see if you’re eligible for Medicaid. If it looks like anyone in your household qualifies for Medicaid or the Children’s Health Insurance Program (CHIP), we’ll send your application to your state agency. They may ask you for more information. If it turns out you’re eligible, they’ll help you enroll.