What income sources are included in MAGI for ACA purposes?

1. What MAGI is and why it matters for ACA programs

MAGI is the tax‑based income measure the Marketplace and most state Medicaid programs use to decide eligibility for premium subsidies and many Medicaid/CHIP pathways; the Marketplace explicitly uses “modified adjusted gross income (MAGI)” to calculate who qualifies for savings, and MAGI is the figure referenced throughout ACA eligibility rules ^{[1] [3] [4]}.

2. The simple MAGI formula: AGI plus three add‑backs

For ACA purposes, the starting point is AGI as reported on Form 1040, then add any untaxed foreign income, non‑taxable Social Security benefits (this includes many SSDI amounts but excludes SSI), and tax‑exempt interest to arrive at MAGI—HealthCare.gov and related federal guidance present this as AGI plus those three categories ^{[1] [2] [5]}.

3. What’s normally included in AGI (the bulk of counted income)

Adjusted Gross Income itself captures most income sources that taxpayers report: wages, salaries, tips, taxable interest and dividends, self‑employment income, rental and business income, S‑corporation and trust distributions, and other gross income items that remain after above‑the‑line adjustments; because for most applicants MAGI equals AGI, these routine income streams determine eligibility in practice ^{[6] [7] [8]}.

4. Specific inclusions and noteworthy exclusions

Federal guidance clarifies exclusions: Supplemental Security Income (SSI), veterans’ disability payments, and workers’ compensation are not counted in ACA MAGI ^{[5] [6]}. Certain American Indian and Alaska Native income may be treated differently for Medicaid under MAGI rules, which federal materials flag as an exception states must apply ^{[3] [9]}.

5. How uncommon items and timing rules work

Some income that taxpayers think is “non‑taxable” is still an add‑back: for instance, tax‑exempt interest is specifically added, and untaxed foreign income (which can be excluded from AGI for tax purposes under Form 2555 rules) is added back into MAGI for ACA eligibility ^{[1] [10]}. Lump‑sum payments can be treated differently across programs: Medicaid may count a lump sum only in the month received, whereas Marketplace subsidy calculations typically consider annual income—sources note that rules for lump sums, lottery or gambling winnings, and how to annualize income can vary by program ^{[11] [3]}.

6. Why MAGI often equals AGI and where nuances matter

Because the ACA’s MAGI definition only adds a narrow set of items to AGI, for most people MAGI will be identical or very close to AGI, which explains why HealthCare.gov and UC Berkeley guidance stress that most applicants’ MAGI equals their AGI; yet for taxpayers with tax‑exempt interest, untaxed foreign earnings, or non‑taxed Social Security benefits the MAGI will exceed AGI ^{[2] [5]}.

7. Practical implications and points of caution

The practical effect is straightforward: small changes in reporting (e.g., receiving tax‑exempt interest or claiming foreign income exclusions) can move a household across subsidy thresholds, and state agencies must follow federal MAGI rules though program‑specific exceptions exist—therefore individuals with complex income or benefits should consult Marketplace guidance or a tax/benefits advisor because public summaries are general and not personalized legal or tax advice ^{[3] [5]}.

8. Sources, limits, and alternative definitions

Primary sources for this summary are HealthCare.gov’s MAGI guidance and federal program summaries; other uses of “MAGI” exist in IRS and Medicare rules with different add‑backs, so care is required when interpreting MAGI outside ACA contexts—congressional and IRS materials document these alternate definitions and program‑specific variations ^{[1] [10] [9]}.