What Is FPG Income and How Is It Calculated?

FPG Income, or Federal Poverty Guidelines Income, is a financial metric used by government programs to determine eligibility for various benefits and assistance across the United States. This standardized measure assesses an individual’s or family’s income relative to a poverty threshold established by the federal government.

Understanding FPG Income

FPG income is based on the Federal Poverty Guidelines (FPG), issued annually by the Department of Health and Human Services (HHS). These guidelines represent the minimum income a family needs for basic necessities like food, clothing, and shelter. HHS updates them each year, typically in January, to account for inflation.

FPG income is a modified version of Adjusted Gross Income (AGI), tailored for determining eligibility for health and financial assistance programs. Eligibility for many programs is often expressed as a percentage of these guidelines, such as 100% FPG or 138% FPG. The specific dollar amount of the FPG varies based on household size.

Calculating FPG Income

The calculation of FPG income begins with Modified Adjusted Gross Income (MAGI), a figure used for federal tax purposes. MAGI starts with a taxpayer’s Adjusted Gross Income (AGI) but includes additions not found in AGI. These additions include untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.

Income types included in FPG income are wages, salaries, tips, and net self-employment income. Investment income, such as taxable interest, capital gains, and net rental or royalty income, also contributes. Most IRA and 401k withdrawals are included as retirement or pension income.

Conversely, several income sources are excluded when determining FPG income. These exclusions include child support received, veterans’ disability payments, and workers’ compensation benefits. Gifts and proceeds from loans like student loans or home equity loans are not counted. Supplemental Security Income (SSI), non-taxable scholarships, and certain needs-based educational grants are also disregarded.

Household size is a fundamental component in determining the FPG threshold. For FPG purposes, a household includes the tax filer, their spouse, and any tax dependents. Larger households have higher poverty thresholds.

Key Applications of FPG Income

FPG income determines eligibility for many government assistance programs. A primary application is for health coverage programs, including Medicaid and the Children’s Health Insurance Program (CHIP). Eligibility thresholds are often set as a percentage of the FPG, such as 138% FPG for Medicaid expansion, ensuring access to affordable healthcare.

The Affordable Care Act (ACA) marketplace subsidies also rely on FPG income for financial assistance. This includes Premium Tax Credits, which reduce monthly health insurance premiums, and Cost-Sharing Reductions, which lower out-of-pocket expenses. Premium tax credit eligibility generally begins above 100% of the FPG.

Beyond healthcare, FPG income is a factor for other federal programs supporting low-income families. These include the Supplemental Nutrition Assistance Program (SNAP) for food assistance, and the Low Income Home Energy Assistance Program (LIHEAP) for heating and cooling costs. Certain housing assistance programs and the National School Lunch Program also use FPG income thresholds to determine eligibility.