The add-backs, briefly, because they are not this page's subject. Section 36B(d)(2)(B) defines modified adjusted gross income as adjusted gross income increased by three things: any amount excluded from gross income under section 911, which is the foreign earned income exclusion; any tax-exempt interest received or accrued during the year; and the portion of Social Security benefits not included in gross income under section 86. That list is specific to this provision. Other parts of the tax code define modified adjusted gross income differently for their own purposes, which is the subject of the modified adjusted gross income page.
Whose income counts is the part nothing else explains, and it turns on two tests. First, the person has to be "taken into account in determining the taxpayer's family size" under 36B(d)(1), which ties family size to the individuals for whom the taxpayer is allowed a personal exemption deduction. In practice that is the taxpayer, a spouse on a joint return, and the dependents they claim. Someone living in the house who is not claimed, such as a roommate or an unmarried partner filing their own return, is not in the family size and contributes nothing however much they earn.
Second, and this is the test that catches people, the other person's income counts only if they "were required to file a return of tax imposed by section 1 for the taxable year." Required, not did. A dependent teenager who files a return purely to recover withheld tax, and who was not required to file, adds nothing to household income. A dependent whose earnings are large enough to require a return adds the whole of their modified adjusted gross income, not the part above the filing threshold. Filing thresholds move each year and differ for a dependent with earned income, unearned income, or both, so this is a question to answer against the current instructions rather than from memory.
The figure is annual, even though coverage is monthly. The premium tax credit is computed for each coverage month separately, but the income input is a single annual figure. That is why the Marketplace asks for a projection of the whole year at enrollment, and why a mid-year change in earnings changes the credit going forward once it is reported. The projection is settled against the real number when the return is filed, and the mechanics of that reconciliation belong to the premium tax credit page.
Which year's poverty line the figure is compared against is not the year you would guess. Section 36B(d)(3)(B) provides that "the poverty line used shall be the most recently published poverty line as of the 1st day of the regular enrollment period for coverage during such calendar year," and the Exchange regulation at 45 C.F.R. 155.300 says the same thing in its own definition. So a comparison for a coverage year runs on the guidelines that were current when that year's open enrollment began, which are the previous year's guidelines, not the ones published in January of the coverage year itself. The federal poverty level page owns this mechanic; it is stated here because a household income figure means nothing until you know what it is being measured against.
Medicaid asks a similar question and gets a different answer. A single Marketplace application can route a household to either program, and the two do not compute income the same way. The Medicaid rule at 42 C.F.R. 435.603 starts from the same section 36B definition of modified adjusted gross income but applies its own household composition rules, excludes the income of a child or tax dependent who is not expected to be required to file, and requires the state to subtract an amount equivalent to five percentage points of the federal poverty level when testing eligibility for the group with the highest income standard. A household near a boundary can therefore be told two different things by two programs reading the same application, and neither is wrong.
