05 Aug Is stimulus payment income under Obamacare?

Q. Does the federal stimulus count as income when applying for health insurance through the Obamacare marketplace? I recently became unemployed.
— Needing insurance

A. It’s a great question.

Your portion of the premium is determined by your income and is ultimately determined when you file your tax return for the year in question.

When applying for the insurance, you must provide an estimate of your expected household income and your premium savings, or Advance Premium Tax Credit, is based on that estimate, said Laurie Wolfe, a certified financial planner and certified public accountant with Lassus Wherley, a subsidiary of Peapack-Gladstone Bank, in New Providence.

Then, when you file your tax return, the actual income determines the final premium tax credit, she said.

“If you estimated your income too low, then you will owe any difference when you file your tax return,” Wolfe said. “If you estimated your income higher than what you ultimately make, then you may see a return of premiums paid. In the end it is all reconciled right on your tax return.”

The answer to your question about whether the stimulus payment is counted as income can be found on the healthcare.gov website. 

There is a chart which goes through different types of income and whether they are includable in income, Wolfe said.

The starting point for income is called Modified Adjusted Gross Income, or MAGI, something that’s not a line on your tax return, she said.

“Included in this number may be such items as tax-exempt interest and non-taxable Social Security income, but not Supplemental Social Security, or SSI,” she said. “Listed on the charts is a line for `Economic Impact/Stimulus Payments (come from the IRS as a result of the COVID-19 emergency).’ The chart indicates that this payment is not included in the MAGI calculation.”

Lastly, you will see that the website instructs you to report any income changes to the marketplace so that your Advance Premium Tax Credit can be adjusted to correctly state your share, Wolfe said.

Wolfe said because your income has changed, you should report the changes.

Importantly, the chart says MAGI includes unemployment compensation, including federal pandemic unemployment compensation.

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This story was originally published on Aug. 5, 2020.

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