Why Uber & Lyft Drivers Should Review Their Marketplace Health Coverage in 2025

Monday September 22, 2025, 9:00:00 AM

Many rideshare drivers rely on Marketplace health insurance to protect themselves and their families. But because Uber and Lyft report income differently than a typical W-2 job, your Modified Adjusted Gross Income (MAGI) — the number used to determine your eligibility for subsidies (APTC) or Medicaid — may look very different from what you actually take home.

And with the sunset of the 2017 Tax Cuts and Jobs Act (TCJA) in 2027 and the new OBBB Act, Marketplace eligibility and costs may shift even more for gig workers.

How Uber & Lyft Income Reporting Works

Both Uber and Lyft issue 1099 forms (not W-2s) to drivers. Here’s how the pay structure typically looks:

Key point: The IRS sees your gross pay before deductions. You then claim business expenses (like mileage) when filing taxes. This means your Marketplace application may show more income than the actual cash you receive after expenses.

Example: How This Impacts Marketplace Eligibility

A driver earns $30,000 gross from Uber.
After Uber fees, their net payout is about $16,000.
With 11,600 business miles, they can deduct around $7,700 (using IRS mileage rate).
On paper, their MAGI could be closer to $8,200 — not the $16,000 they actually received.

This matters because:

In expansion states, this income may fall into Medicaid instead of Marketplace.
In non-expansion states, drivers may fall into a coverage gap.
For some immigrants, this may affect eligibility depending on status.
If Marketplace coverage is still available, subsidies may shrink or disappear, increasing costs.

The Impact of TCJA Sunset in 2025

Right now, the 2017 TCJA provisions help reduce taxable income for many self-employed people. Once they expire in 2025 Uber and Lyft drivers may see the impact when filing taxes in 2027.

Higher taxable income reported to the IRS.
A higher MAGI, which reduces APTC eligibility.
Marketplace premiums that feel more expensive, especially if rideshare driving is the primary or only source of income.

The OBBB Act & Charitable Contributions

The OBBB Act also changes how some deductions work. For example, charitable contributions in cash may no longer reduce income as effectively for MAGI purposes.

That means a driver who donates to charity may still appear to earn more on paper, reducing subsidies or even pushing them out of eligibility.

What Drivers Should Do

Review your Marketplace coverage with a licensed broker each year during Open Enrollment (Nov 1 – Jan 15).
Track your mileage and expenses carefully so you understand the gap between gross income and MAGI.
Plan ahead for 2027 — TCJA sunset and OBBB changes may raise your reported income.
Consult a tax professional before filing — they can help you calculate MAGI accurately.

Disclaimer

This article is for educational purposes only and should not be considered tax or legal advice. Please consult a qualified tax professional about your specific financial situation.

Written by Rola Khwais, Licensed Broker at khwais Financial LLC

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