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Covered California Application FAQs

Everything you need to know about income reporting, MAGI calculations, and application requirements for Covered California.

What income do I report on my Covered California application?

Generally, the projected annual income on your Covered California application should match your Adjusted Gross Income (line 11 of Form 1040) 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.

When to Use Different Calculations

There are a few instances where using the Adjusted Gross Income listed on your most recent Tax Return will not be accurate:

Add Non-Taxable Income

If you receive:

  • Social Security benefits
  • Foreign Earned Income
  • Tax Exempt Interest

Add the non-taxable portion to calculate your MAGI.

Income Changes

Use current documentation if:

  • Income significantly changed
  • New job or job loss
  • Business income fluctuations

Use pay stubs, P&L statements, or bank statements.

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 what you earned last year should not be used unless you expect to earn approximately the same amount.

Need help? 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.

Download Income Guidelines Chart to see if you qualify for financial assistance.

Complete Income Table - What's countable income for Covered CA?

Below is a comprehensive guide showing what to count, not count, and deduct for your Modified Adjusted Gross Income (MAGI) for Covered California eligibility. The chart also lists where to find these items on your Federal Tax Return.

Type of Income Covered CA Medi-Cal Tax Return 2020 Tax Return 2019
COUNT AS INCOME
Wages, salaries, tips Yes Yes Line 1 - 1040 Line 1 - 1040
Self-employment income Yes Yes Line 3 - Schedule 1 Line 3 - Schedule 1
Unemployment Insurance Benefits Yes Yes Line 7 - Schedule 1 Line 7 - Schedule 1
SS Retirement, Survivors or Disability Benefits (Title II) Yes² Yes² Line 6a - 1040 Line 5a - 1040
Alimony Received (divorce before 2019) Yes Yes Line 2a - Schedule 1 Line 2a - Schedule 1
Interest (Taxable & Tax Exempt) Yes Yes Line 2a & 2b - 1040 Line 2a & 2b - 1040
Rental Income Yes Yes Line 5 - Schedule 1 Line 5 - Schedule 1
Capital gains/loss Yes Yes Line 7 - 1040 Line 6 - 1040
Dividends Yes Yes Line 3b - 1040 Line 3b - 1040
Tax refunds Yes Yes Line 1 - Schedule 1 Line 1 - Schedule 1
Lump Sums (lottery, gambling) Yes Yes Line 8 - Schedule 1 Line 8 - Schedule 1
Retroactive SS benefits Yes Yes Included in Line 6a - 1040 Included in Line 5a - 1040
Work Study Income Yes No
Taxable pension, annuity, IRA distributions Yes Yes Line 4b & 5b - 1040 Line 4b & 4d - 1040
Farm Income Yes Yes Line 6 - Schedule 1 Line 6 - Schedule 1
Foreign Earned Income (taxable and non-taxable) Yes Yes Lines 45 and 50 of Form 2555 Lines 45 and 50 of Form 2555
DO NOT COUNT AS INCOME
Government benefits (CalWORKs, TANF, adoption/foster care assistance) No No
Workers' Compensation No No
State Disability Income (SDI) No¹ No¹
Supplemental Security Income (SSI) No No
Child Support Received No No
Veteran's service-related disability benefits No No IRS Pub. 525 IRS Pub. 525
Gifts and Inheritances No No
Scholarships/grants for education No No See IRS Pub. 970 See IRS Pub. 970
In-kind income No No
Veterans' education benefits No No
Loans No No
American Indian and Alaska Native (AI/AN) income No No 42 CFR §436.603(e)(3) 42 CFR §436.603(e)(3)
DEDUCT FROM INCOME
Child Support Paid No No
Alimony Paid (divorce before 2019) Yes Yes Line 18a - Schedule 1 Line 18a - Schedule 1
Student loan interest paid Yes Yes Line 20 - Schedule 1 Line 20 - Schedule 1
IRA deduction Yes Yes Line 19 - Schedule 1 Line 19 - Schedule 1
Health Savings Acct (HSA) Yes Yes Line 12 - Schedule 1
Form 8889		 Line 12 - Schedule 1
Form 8889
Health insurance premiums (self-employed) Yes Yes Line 16 - Schedule 1 Line 16 - Schedule 1
Moving expenses (Armed Forces) Yes Yes Line 13 - Schedule 1
Form 3903		 Line 13 - Schedule 1
Form 3903
Tuition/fees expenses Yes Yes Line 21 - Schedule 1
Form 8917		 Line 21 - Schedule 1
Form 8917
Educator expenses Yes Yes Line 10 - Schedule 1 Line 10 - Schedule 1
Renter's credit (CA tax return) No No Form 540 - Line 46 Form 540 - Line 46
Business expenses for artists Yes Yes Line 11 - Schedule 1
Form 2106		 Line 11 - Schedule 1
Form 2106
Penalty on early savings withdrawal Yes Yes Line 17 - Schedule 1 Line 17 - Schedule 1
Deductible part of Self-Employment Tax Yes Yes Line 14 - Schedule 1
Form SE		 Line 14 - Schedule 1
Form SE
Self-employed SEP, SIMPLE, qualified plans Yes Yes Line 15 - Schedule 1 Line 15 - Schedule 1

Footnotes:

¹ SDI is usually not taxable, thus not counted for MAGI, 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?

Yes, the following types of income should be added to the Adjusted Gross Income (line 11 on Form 1040) listed on your Tax Return in order to determine your Modified Adjusted Gross Income (MAGI) for Covered California:

  • Non-taxable Social Security benefits, which can be determined by subtracting line 6b from line 6a on the 1040.
  • Tax-exempt interest (Line 2a on Form 1040)
  • Foreign earned income & housing Deduction for Americans living abroad (Lines 45 & 50 on Form 2555)

How to Calculate MAGI:

For most individuals, your Adjusted Gross Income (line 11 on Form 1040) is the same as your Modified Adjusted Gross Income (MAGI) unless you are receiving Social Security, Foreign Earned Income or Tax Exempt Interest.

If you are receiving any these types of income, use this calculation:

  1. Start with your Adjusted Gross Income (line 11 on Form 1040)
  2. Add any Tax-Exempt Interest (Line 2a on Form 1040)
  3. Add any Foreign Income & Housing Deduction amounts (lines 45 and 50 on Form 2555)
  4. Add the Non-taxable Social Security benefits (line 6a minus line 6b on Form 1040)

Do I need to add my dependent's income to my MAGI?

Yes, but only if your dependent is required to file a Tax Return because their income meets the Income Tax Return Filing Threshold.

2020 Income Tax Return Filing Threshold
  • $1,100 for unearned income (e.g. interest & dividends)
  • $12,400 for earned income (e.g. Wages, salaries & tips)

You do not include the income of any dependents who are filing a Tax Return only to claim a refund of tax withheld or estimated tax.

If your dependent's income meets the Income Tax Return Filing Threshold, then you would add their MAGI to yours in order to determine the household MAGI that should be used for Covered California.

Can I claim dependents with an ITIN?

Only if you are able to prove U.S. residency for those dependents. The Tax Cuts and Jobs Act of 2017 (aka Trump Tax Reform bill) added this requirement.

For tax years beginning after 2017, ITIN applicants claimed as dependents must also prove U.S. residency unless the applicant is a dependent of U.S. military personnel stationed overseas. A passport that doesn't have a date of entry won't be accepted as a stand-alone identification document for dependents.

Required Documentation by Age

In addition to the passport, you must submit at least one of the following original documents to prove U.S. residency:

A U.S. medical record that lists the applicant's name and U.S. address.

A U.S. school record that lists the applicant's name and U.S. address.

  • U.S. school record
  • Rental statement from a U.S. property
  • Utility bill for a U.S. property
  • Bank statement that lists the applicant's name and U.S. address

Get Help Right Now!

Have questions about completing your Covered California application or need help calculating your income? Our certified enrollment counselors are here to assist you at no cost.

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