What income should I include?

When you apply for financial help with health coverage through Maryland Health Connection, you’ll need to estimate your income for the year you want health coverage to see if you qualify for lower costs.

It is important to enter your household income information correctly to make sure you’re receiving the right amount of financial help (such as a tax credit you can receive in advance to lower your monthly premium). If you receive more tax credit than you were eligible to receive, you will owe it back when you file your federal taxes for that year.

Calculate Your Household Income

Start by adding up the following items for:

  • You and your spouse, if you are married and will file a joint tax return
  • Any dependents who make enough money to be required to file a tax return. It’s important to include income information for everyone in your household, even if not all those people are applying for coverage.

Whose income should you include?

Include these sources of income:

  • Wages, salaries, and tips
  • Net income from any self-employment or business (generally the amount of money you take in from your business minus your business expenses)
  • Unemployment compensation
  • Social Security benefits, including Social Security disability (even if the payments are not taxed by the IRS), retirement (including railroad retirement), or survivors benefits each month. These do not include Supplemental Security income (SSI).
  • Retirement income, including veterans retirement payments
  • Investment income
  • Pension income
  • Net rental income (gross rental income minus IRS-allowed expenses)
  • Other taxable income such as prizes and awards
  • Gambling winnings (gambling losses are an itemized deduction and do not reduce the winnings)
  • Cancellation of debt such as credit card debt, with some exceptions; note that beginning tax year 2018, student loan debt cancelled due to death or permanent and total disability of student is NOT income
  • Some legal settlements if they are not for physical injury, sickness, or emotional distress
  • Some disability insurance benefits
  • Inherited individual retirement account (IRA) distributions
  • Conventional IRA and/or retirement income distributions
  • Sale and/or abandonment of rental property
  • 401K loan balance after leaving employer and not paying the loan
  • Distributions from tax-deferred annuities (calculated by the financial institution)
  • Airbnb income if space is used more than 15 days per year
  • Scholarships and grants in excess of the cost of tuition, fees, books, and supplies.
  • One-time lump sums received in a given month are counted toward monthly income in the month received. Lottery winnings of $80,000 or more in a single payout are spread over 2 or more months. If the lump sums are repeated based on more than one withdrawal from an existing account (such as a retirement or savings account), all withdrawals in a calendar year should be totaled and then divided by 12 to determine the amount counted toward monthly income. When calculating annual income, all lump-sum amounts or withdrawals should be included if they would otherwise be included as income.

Don't include these:

  • Child support
  • Gifts
  • Supplemental Security Income (SSI)
  • Veterans’ disability payments
  • Workers’ compensation
  • Proceeds from loans (like student loans, home equity loans, or bank loans)
  • Scholarship and fellowship payments for tuition and fees and course-related expenses required of all students

Income deductions you may claim:

You also may subtract these deductions from your household income, if they are not already subtracted from the amount you list as income. (There may be limits on the amount you can claim.):

  • Student loan interest you pay (as reflected on the 1098-E Student Loan Interest Statement).
  • Educator expenses if you’re a teacher and pay for supplies out-of-pocket
  • Contributions to your individual retirement account if you don’t have a retirement account through a job

For more information on reporting your income, see IRS Publication 525.