Household income is crucial in obtaining affordable health insurance coverage in California. However, calculating household income for insurance purposes can be confusing. As the Covered California open enrollment period ends soon, it is essential to calculate your household income properly to avoid penalties. Here’s how Skyline Benefit Experise can help you with the necessary information to calculate household income for Covered California properly.

What counts as my income?

 The Modified Adjusted Gross Income (MAGI) is the basis for calculating income under the Affordable Care Act (ACA). Your Adjusted Gross Income from your most recent Federal Tax Return should correspond to the projected annual income on your Covered California application. You would add your dependent’s MAGI to your own to get the household MAGI that should be used for Covered California if their income is above the Income Tax Return Filing Threshold.

What is Household Income?

Household income is the total income of all household members, including yourself, your spouse or domestic partner, and any dependents. This includes all sources of income, such as wages, salaries, tips, commissions, bonuses, rental income, interest income, dividends, capital gains, pensions, Social Security benefits, unemployment benefits, alimony, child support, and any other sources of income. Covered California determines whether you get financial help by how much your household earns.

Social Security Retirement Benefits such as Tax-exempt interest, Foreign earned income & housing Deduction for Americans living abroad, and Non-taxable Social Security benefits can be included as part of your household income for Covered California.

In 2024, remember that the annual income you provide on your Covered California application is a projection for the same tax year during which you’ll have health insurance coverage. So what you earned last year, 2023, should only be used if you expect to earn approximately the same amount.

 How do you properly calculate household income for Covered California?

1. Determine who is in your household: As mentioned earlier, your household includes yourself, your spouse or domestic partner, and any dependents. Dependents are usually children under the age of 19 or full-time students under the age of 24 who are financially dependent on you.

2.  Add up all sources of income for all household members: This includes all sources of income mentioned above. If you file taxes jointly with your spouse or domestic partner, you should also include their income. Note that one can claim dependents living outside the United States using their ITIN (Individual Taxpayer Identification Number) to increase the eligibility for Tax Credits only if you can provide evidence of U.S. residency for those dependents. 

3. Calculate your Modified Adjusted Gross Income (MAGI): MAGI is your household income minus deductions and exemptions. This is the income figure that Covered California uses to determine your eligibility for financial assistance and the amount of that assistance.

4. Determine your eligibility for financial assistance: If your MAGI falls within certain income brackets, you may be eligible for financial assistance through premium tax credits and cost-sharing reductions. These subsidies can help lower your monthly premiums and out-of-pocket costs.

What happens if I don’t calculate my household income correctly

Accurate reporting of your household income when filing your taxes is essential to ensure you receive the appropriate tax credits. Reporting changes in your income is crucial when it comes to maintaining accurate financial assistance for your healthcare plan. Whether you make more or less than your reported income, any changes should be reported as soon as possible to avoid any unexpected bills down the road.

You have 30 days to report any changes in your income to Covered California; doing so can ensure that your monthly premiums are accurate and that you’re paying for your health insurance.


Calculating household income for Covered California can be complex, but it’s important to determine your eligibility for health insurance coverage and financial assistance. By following the steps outlined above, you can ensure that you’re accurately calculating your household income for Covered California. If you have any questions or need help with the enrollment process, you can contact Covered California directly or our Skyline Benefit Expertise.


Looking for Assistance with Covered California?

Skyline Benefit is a certified insurance agency with Covered California. Act now and get the premium subsidy and coverage that you deserve.

Our agents can review your medical needs and budget, and tailor your health insurance options during Covered California Open Enrollment.

Call us now at (714) 888-5112

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