What Counts as Income for Covered California?
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When you apply for health insurance through Covered California, the income you report can affect whether you qualify for Medi-Cal, a Covered California health plan, and financial help that lowers the cost of your coverage.
But not every type of money you receive is treated as income. Wages, self-employment profits, Social Security benefits and investment income may count, while certain other payments do not.
Quick answer: Covered California generally uses your household's expected annual income for the coverage year. This includes income from members of your tax household, such as wages, net self-employment income, unemployment benefits, Social Security benefits, pensions and investment income. Certain sources, including child support, Supplemental Security Income (SSI) and some other payments, generally do not count.
For a broader overview of plans, costs, eligibility, financial help and enrollment, see our complete guide to Covered California health insurance.
What Income Does Covered California Count?
Covered California uses household income to determine eligibility for health coverage programs and financial assistance. The income calculation is generally based on Modified Adjusted Gross Income, commonly called MAGI.
Common types of income that may count include:
- Wages and salary
- Tips and bonuses
- Net self-employment income
- Unemployment benefits
- Social Security benefits
- Social Security Disability Insurance (SSDI)
- Retirement and pension income
- Interest and dividend income
- Other taxable investment income
The exact treatment of income can depend on the type of income and your circumstances, so it is important to report your information accurately.
What Income Does Not Count for Covered California?
Not every payment or source of money is included when determining household income.
Examples that generally do not count include:
- Child support received
- Gifts
- Veterans disability payments
- Supplemental Security Income (SSI)
- Workers' compensation
- Money received from loans, such as student loans or home equity loans
- Child Tax Credit payments
Because there can be exceptions and special circumstances, a payment should not automatically be excluded simply because it does not look like traditional wages.
Does Covered California Use Gross or Net Income?
The answer depends on the type of income.
If you are an employee, Covered California generally asks for employment income before taxes, including wages, salary, tips and bonuses.
If you are self-employed, the calculation is different. Covered California generally uses net self-employment income, meaning business income after allowable business expenses rather than simply using total business revenue.
This distinction can be especially important for independent contractors, freelancers and business owners.
For more information, see our guide to Covered California for self-employed Californians.
Whose Income Is Included?
Covered California generally looks at your tax household, not only the income of the person applying for insurance.
Your tax household commonly includes you, your spouse and people you claim as tax dependents. Income from household members may need to be reported even when a particular household member is not applying for health coverage.
Household composition can affect both your household income and the Federal Poverty Level used to determine eligibility.
See our 2027 Covered California income limits to see how household size and income work together.
How Does Self-Employment Income Work?
For self-employed applicants, Covered California generally looks at net income from the business rather than gross sales or revenue.
For example, if your business receives $80,000 during the year but has allowable business expenses, the entire $80,000 would not necessarily be treated as self-employment income. The relevant amount is generally the profit remaining after allowable business expenses.
Self-employed income can fluctuate, so estimating annual income may require looking at current earnings, expected business activity and anticipated expenses for the rest of the year.
Read our full guide to Covered California and self-employment income for more information.
Does Social Security Count as Income?
Social Security benefits can count when determining household income for Covered California. This can include Social Security retirement benefits and Social Security Disability Insurance (SSDI).
Supplemental Security Income, commonly called SSI, is treated differently and generally does not count as income for Covered California financial assistance calculations.
Because Social Security programs have similar names but different income treatment, it is important to identify the type of benefit you receive.
Does Unemployment Count as Income?
Yes. Unemployment benefits generally count as income when applying for Covered California.
If you recently lost a job, your expected annual income may be very different from what you earned in the previous year. Covered California generally looks at what your household expects to earn during the coverage year rather than simply using last year's income.
Losing employer-sponsored health insurance may also create an opportunity to enroll outside the annual Open Enrollment period. Learn more about Covered California Special Enrollment and qualifying life events.
How Is Annual Income Estimated?
Financial help through Covered California is generally based on what your tax household expects to earn during the current coverage year.
Your most recent federal tax return can provide a useful starting point, but it may not accurately represent the year ahead if your circumstances have changed.
Examples include:
- Starting or losing a job
- Receiving a raise or reduction in hours
- Becoming self-employed
- Retiring during the year
- Beginning or ending unemployment benefits
- Changes in business income
- Changes in household size
When income is unpredictable, estimate it as accurately as possible using the information available to you.
Why Does Your Income Matter?
Your reported household income can affect several parts of your health coverage eligibility.
Depending on your circumstances, it may determine whether you qualify for Medi-Cal or Covered California and how much financial assistance you may receive toward a Covered California plan.
Learn more about Covered California subsidies and financial help and the differences between Covered California and Medi-Cal.
What If My Income Changes During the Year?
If your income changes after you enroll, update your Covered California account rather than waiting until the next Open Enrollment period.
A change in income may increase or decrease your financial assistance. A significant change can also affect whether someone in your household qualifies for Covered California or Medi-Cal.
Keeping your information current is especially important because advance financial assistance is reconciled when you file your federal tax return.
What Documents Can Be Used to Verify Income?
Covered California may ask you to provide documentation if the income on your application cannot be verified electronically.
Depending on your income source, examples of documents that may be accepted include:
- Recent pay stubs
- Federal income tax returns
- W-2 or applicable 1099 forms
- Employer statements
- Profit and loss statements or self-employment ledgers
- Social Security benefit statements
- Unemployment benefit statements
- Pension, interest or investment income statements
The document needed depends on the type of income being verified.
Frequently Asked Questions
Does Covered California look at last year's income?
Covered California generally uses the income your household expects to earn during the coverage year. Your previous tax return can help you estimate income, but changes in employment, self-employment or other circumstances should be taken into account.
Does 1099 income count for Covered California?
Yes. Income from freelance, contract or other self-employed work can count. For self-employment, Covered California generally considers net income after allowable business expenses rather than simply using gross business revenue.
Does Social Security count toward Covered California income?
Social Security benefits can count, including Social Security retirement and SSDI. SSI generally does not count.
Does child support count as income for Covered California?
Child support received generally does not count as household income for Covered California financial assistance purposes.
Does unemployment count as income?
Yes. Unemployment benefits generally count when estimating household income for Covered California.
What happens if I estimate my income incorrectly?
Your financial assistance is ultimately compared with your actual income when you file your federal tax return. If your income changes during the year, updating Covered California can help keep your financial assistance aligned with your circumstances.
Need Help Estimating Your Covered California Income?
Income can become more complicated when you are self-employed, have several sources of income, experience a job change or have household members with different types of earnings.
California Benefits Insurance Center can help you understand what information to report and navigate your Covered California health insurance options.
Call 800-341-1165 or email health@californiainsurancecenter.com for assistance.
This article is for general informational purposes and is not tax or legal advice. Income and eligibility rules can vary based on individual circumstances. Covered California and applicable government agencies make final eligibility determinations.