Health Care Credits

[brianc0610]

When applying for health care in California, if the person received  a disability retirement and their pension is 50% tax free, is the adjusted income after the tax free income is reduced the figure that is used for Obama Care or the Gross income?

[DaveF1006]

According to the following IRS site, Your Social Security including disability payments may be taxed if you earn income from other sources and your MAGI exceeds the base amount for your filing status. To determine this, take 50% of the Social Security benefits you received and add that to all your other income. If your total is greater than the following base amount, your Social Security benefits may be taxable:

• $32,000 for married filing jointly
• $25,000 for single, married filing separately (who lived apart during the entire year), head of household, and qualifying widow(er) with dependent child
• $0 for married filing separately (who lived together during the year)

in answer to your question, Magi is the total of your income + 1/2 of your disability payments + deductions that are added back to your income amount. Those deductions are listed in that link. Magi is the income that is used in Obamacare calculations.

[brianc0610]

Thanks for the reply, i do not get social security. I receive a CALPERS pension that is 50% tax free. So my question is, is the tax credit based on the adjusted income or my entire pension prior to the deduction? Thank You 

[ReneeM7122]

The tax credit of a CalPERS pension is based on your income, not the pension itself. 

If you have after-tax contributions on your account when you retire, a portion of your annual income will be tax-free. CalPERS uses the Simplified Method tables in Internal Revenue Service Publication 575 to determine and report the tax-free portion of your retirement allowance.