Why Income Effects Your Health Insurance Subsidy

Re-posted on 4/1/20
Updated on 3/13/19

This Fall, when you figure your Household Income for an Obamacare plan government subsidy, please note: Everyone in the household’s income is factored into the health insurance premium.  So if you have a 21 year old adult child that is going to be on their parents plan, you must include their income as part of the “Household income” whether they live at home or not to figure out the Advanced Premium Tax Credit.

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Read below: “All other individuals who were taken into account in determining the taxpayers family size.”  (See below)  Remember this, it is important, because at the end of the year, when you settle up with the IRS while doing your taxes, your “Advanced Premium Tax Credits” you received cannot be greater than your allowances, or you will owe the IRS money back.
IMPORTANT!  Household Income is defined in 26 US Code 36B(d)(2)(A):

The term “household income” means, with respect to any taxpayer, an amount equal to the sum of

♦ the modified adjusted gross income of the taxpayer, plus

♦ the aggregate modified adjusted gross incomes of all other individuals who

♦ were taken into account in determining the taxpayer’s family size under paragraph (1), and

♦ were required to file a return of tax imposed by section 1 for the taxable year

2021 Health Insurance Subsidy Chart

by household size and income

The chart below lists the income numbers the IRS will use for “subsidy” eligibility for tax year 2021.

2021 Health Insurance Federal Poverty Level - chart

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