Because the marketplace application requires an estimated income for the year you want insurance coverage, it can be quite stressful predicting and figuring out your adjusted gross income. Unbelievably enough, many refrain from purchasing health insurance because they believe their gross income will not qualify for saving when in reality, their income might not be modified to qualify for savings. In this article, we are going to inform you what Modified Adjusted Gross Income (MAGI) is and how this can affect to qualify for savings on your health insurance.
What is Modified Adjusted Gross Income (MAGI)?
Modified Adjusted Gross Income (MAGI) is a modification of your adjusted gross income. Since the insurance marketplace requires an adjusted gross income to become eligible for savings, people who are closer to the income bracket that disqualify them for savings, they’ll need to modify their Adjusted Gross Income (AGI) is necessary. This modification of your existing adjusted gross income will potentially get you to qualify for savings. MAGI excludes high-income earners from certain tax credits, deductions, and subsidies. If you are a higher-income earner, you could adjust your income down to a smaller amount and potentially qualify for saving on your insurance.
How to estimate MAGI
The way MAGI is estimated is to first, figure out what your gross income of the year is, then calculate your Adjusted Gross Income (AGI), once you have calculated your AGI then you will add back deductions to get your Modified Adjusted Gross Income (MAGI).
How is Modified Adjusted income different than Adjusted Gross Income?
AGI is important for tax purposes. Basically, it’s your gross income minus deductions. Gross income includes; wages, dividends, capital gains, business income, retirement distributions, and any additional income. Once you have subtracted these reductions, you are left with your AGI (adjusted gross income). MAGI, however, are additional deductions that you can add to your adjusted gross income for further deductions.
How is MAGI important in calculating your health insurance savings?
If you are very close in the income brackets, you will need to focus on your AGI because it has a direct impact on your MAGI (modified adjusted gross income). Here is a link to help you estimate if your income qualifies for savings on your insurance.
Due to the amount of information available, it can be difficult to know the ways to save. For this reason, we encourage citizens to work with an agent to receive professional guidance when purchasing health insurance. Make sure to talk to your insurance agent to see if your income qualifies for savings. Our insurance agents keep you up to date about all the changes happenings now and in the future. Call Compass Insurance Advisors to get free advice about your insurance needs, (801) 901-3519.
