Health insurance can be confusing. Here's something many people don't realize: the amount you earn isn't always the amount used to determine whether you qualify for help paying for coverage.
Understanding a few details about your finances could make a difference when comparing health insurance plans.
1. Your income is more than your paycheck
When you apply through the Health Insurance Marketplace, financial assistance is generally based on your tax household's expected modified adjusted gross income (MAGI) for the coverage year. MAGI isn't necessarily the same as gross salary or taxable income.
AGI, or adjusted gross income, is income after certain allowed adjustments. Marketplace MAGI starts with AGI and adds back certain income, if applicable. The important question is whether you're estimating the right household income.
2. Self-employed? Your business expenses may matter
Money coming into a business isn't necessarily the money its owner earns. Legitimate ordinary and necessary business expenses can reduce net business profit, which generally affects the household income estimate used for Marketplace coverage.
Ask yourself: Have you accounted for legitimate business expenses when estimating your net self-employment income?
Always report income accurately. A qualified tax professional can help determine which expenses are deductible.
3. Family size can change the picture
A household of five and a household of two can have different eligibility for financial assistance even with the same income. Marketplace calculations consider household size and income. The relevant household is generally your tax household, not simply everyone living at your address.
Ask yourself: Are the correct household members included in your application?
4. Retirement contributions and other adjustments may matter
Some eligible retirement contributions and other income adjustments may affect Marketplace MAGI. The details depend on the type of contribution and your circumstances. Not every expense or tax deduction reduces Marketplace income.
Ask yourself: Do you understand which adjustments actually apply to your situation?
5. Maryland residents should check all available help
For 2027, eligible Maryland residents may receive Maryland Premium Assistance in addition to federal premium tax credits through Maryland Health Connection. The state program may help households with incomes up to 400% of the federal poverty level. The amount varies by income, family size, and ZIP code. Don't assume you qualify—or that you don't—without checking your current options.
Prepare before comparing plans
Gather your expected household income for the coverage year, estimated net self-employment earnings (if applicable), relevant income adjustments, tax household information, and your doctors and prescriptions.
Financial assistance is only one part of choosing coverage. Compare provider networks, deductibles, copays, and maximum out-of-pocket costs too. If your income changes during the year, update your Marketplace application to help avoid surprises when advance premium tax credits are reconciled at tax time.
You don't have to figure it out alone
At H&H Insure (Health & Harmony Insurance Agency), we help individuals, families, and self-employed professionals understand coverage options and compare available plans.
Have questions about your health insurance options? Schedule a conversation with H&H Insure. We're here to help you understand your choices.
H&H Insure provides insurance guidance, not individualized tax or legal advice. Financial assistance depends on applicable rules, household circumstances, income, and available coverage. Consult a qualified tax professional regarding deductions and income calculations.