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How do freelancers estimate income for health insurance subsidies?

Published: September 16, 2013

Q: I work as a freelancer. My normal income is well into the range that would qualify for subsidies under the Affordable Care Act. However, in 2012, which I assume is the baseline for calculating income, I had a one-time spike in income that put me over the subsidy limit. (No, I did not hit the lottery or clean up on “Wheel of Fortune.”) In 2013, I’m back to my more-or-less-normal income level. Will I have to use the 2012 level, or the projected 2013 level, or some sort of average? — Mike from Lutz

A: Your up-and-down annual income is common among people who depend on contract work. And while you are correct that annual income is used to determine if you qualify for subsidies, you’re looking in the wrong direction.

Applicants for the Healthcare Marketplace use their 2013 income and an estimate of 2014 income to determine eligibility. In general, it’s the same information you use when filing federal income taxes.

I checked out the details on - the online marketplace where eligible Floridians will apply. It says you can use your household “adjusted gross income” for all the people in your household. Or you can estimate 2014 amounts in the following categories:

• Wages

• Salaries

• Tips

• Net income from any self-employment or business

• Unemployment compensation

• Social Security payments

• Also, any rental income, interest, dividends, capital gains, annuities, alimony, and some retirement and pensions.

These estimates will determine how much you may receive in subsidies to cover your monthly premiums. Several health insurance experts suggest that the estimate needs to be as accurate as possible, or made on the conservative side. If your final income is more than you had predicted, you will be responsible for repaying the government for the difference.