The new health insurance law means you have to enroll in a health plan. If you haven't paid for insurance before, it can be a bit tricky to fit its costs into your budget. Here are simple tips to get started.
Figure Out Your Gross Income
The government uses something called “modified adjusted gross income” to figure out how much financial help you can get to pay for health insurance. That’s why your income is often the first question you have to answer when you apply for insurance on a Marketplace, also known as an Exchange.
For most taxpayers, modified adjusted gross income will be the same as their “adjusted gross income.” You can find your adjusted gross income on your tax return. Here’s where to find it on different tax forms:
Form 1040 EZ -- line 4
Form 1040 -- line 22
Form 1040 – line 38
When you know your adjusted gross income, you can find out whether you qualify for:
- Tax credits, which are also called subsidies, that can help lower your monthly premium when you enroll in a health plan through your state's Marketplace
- Free or low-cost health care through Medicaid
- Help paying for health care through any available state programs
If you have a spouse, be sure to include both of your annual incomes to determine your total family income. You also need to include the income of any children if you claim them as a dependent and he or she files a tax return.
Figure Out Your Monthly Net Income
Net income is how much money you have earned after taxes and social security have been taken out. This is often called your take-home pay.You need to know net income so that you can figure out how much money you have every month to pay for health insurance.
If you are paid each week:
- Multiply the amount you take home by the number of weeks in a year, 52, and divide by the number of months in a year, 12. The answer is your monthly income.
If you are paid every two weeks:
- Multiply the amount you take home by 26 weeks and divide by 12. The answer is your monthly income.
If you are paid twice a month:
- Multiply the amount you take home by 24 weeks and divide by 12. This is your monthly income.
If you have automatic payments taken from your paycheck:
Your employer may take insurance premium payments out of your paycheck before you get it. To set a budget, add the amount of any payments back into your net income.
Again, if you have a spouse, be sure to include both of your monthly net incomes to determine how much you have to work with every month.