What Income Doesn't Count Toward Medicare Savings Program Eligibility in 2026

Not all income counts toward Medicare Savings Program (MSP) eligibility. Several income sources are excluded from the calculation entirely — including SNAP food assistance, most home energy assistance like LIHEAP, and federal tax refunds (including the EITC). Knowing which ones apply to you could be the difference between qualifying and being turned away.

Why This Matters

Many people considering whether to apply for a Medicare Savings Program add up every deposit in their bank account and conclude they make too much to qualify. That skips an important step: several common income sources aren't counted at all under the rules Medicaid programs use for MSP eligibility. Someone receiving SNAP benefits, an irregular one-time gift, or home heating assistance may be closer to qualifying than their gross income suggests. Correctly excluding these sources — instead of assuming everything counts — can be the difference between being denied and being approved for QMB, SLMB, or QI.

Income That Doesn't Count Toward MSP

The income sources below are excluded entirely from the MSP calculation — they're never added to your gross income in the first place, so no disregard needs to be applied to them. Because Medicaid programs for aged, blind, and disabled applicants (the category MSP falls under) generally apply the same income-counting methodology used for Supplemental Security Income (SSI), these exclusions are documented in the SSA's Program Operations Manual System (POMS):

• SNAP (food stamp) benefits. Federal law specifically bars counting SNAP benefits as income for any federal, state, or local assistance program, including Medicaid and MSP (7 U.S.C. § 2017(b); 7 C.F.R. § 272.1).
• Most home energy and utility assistance, such as LIHEAP. Cash or in-kind home energy assistance is excluded from countable income when the state agency certifies in writing that it's based on need and comes from a qualifying source, such as a heating oil/gas supplier or utility company (SSA POMS SI 00830.605 — the SSI-related income rules Medicaid generally follows for MSP).
• Infrequent or irregular small amounts of income. Income received only once in a calendar quarter from a single source, or income you can't reasonably expect to receive again, may be excluded — up to the first $30 per quarter of that kind of earned income and the first $60 per quarter of that kind of unearned income (SSA POMS SI 00810.410).
• Certain needs-based state or local assistance. Payments funded entirely by a state or local government (not combined with federal funds) that use income as a factor of eligibility — sometimes called "Assistance Based on Need" — are excluded from countable income (SSA POMS SI 00830.175).
• Income tax refunds, including the Earned Income Tax Credit (EITC). Federal tax refunds and refundable tax credits, including EITC payments received as an advance or a refund, are excluded from countable income entirely, regardless of tax year (SSA POMS SI 00830.060). This is separate from the resource rules: if you keep the money, it also doesn't count toward the resource limit for 12 months after the month you receive it (SSA POMS SI 01130.676).
• VA Aid & Attendance, Housebound allowances, and VA reimbursement for unreimbursed medical expenses (with a caveat). These specific add-on amounts are excluded from countable income (SSA POMS SI 00830.308; SI 00830.302). But the exclusion applies only to the A&A/Housebound/UME portion — the underlying base VA pension or compensation payment is still counted as unearned income. Because states administer MSP and can apply more generous rules, confirm the exact treatment with your state Medicaid agency.

How This Differs From the Standard Income Disregards

It's easy to conflate this list with the mandatory income disregards MSP applies. The difference matters: a disregard is a fixed amount subtracted from income that does count — Social Security, pensions, and wages are real countable income, and the $20 general and $65 earned disregards just discount a portion of them before comparing to the limit. An exclusion, by contrast, means the income never enters the calculation at all — not even the first dollar.

For the full mechanics of the $20 and $65 disregards, see our post on the income disregard rules for MSP eligibility.

Whether Social Security itself counts as income — and how much of it — is a related but separate question, covered in does Social Security count as income for the Medicare Savings Program. This post covers a different category: income sources that are fully invisible to the MSP calculation, no disregard math required.

What Counts as a Resource vs. Income

This article covers only income. Separately, most states also apply a resource (asset) test, and certain items — your home, one vehicle, personal belongings, and a limited amount of burial funds — are excluded from that count regardless of how your income is treated. For the current limits and the full list of excluded resources, see our guide to MSP asset limits.

If you assumed you made too much money to qualify because you added up every deposit in your bank account, it's worth running your real numbers. Our free eligibility checker takes about 90 seconds, requires no account, and applies these exclusions and the standard disregards automatically.

For a full breakdown of what QMB covers and how it compares to SLMB and QI, see our guide to the Qualified Medicare Beneficiary (QMB) program.

Income-counting rules can vary by state, and MSP guidance is updated over time. This article reflects federal SSI-related income rules that Medicaid programs generally follow for MSP eligibility as of 2026, but your state may apply additional or more generous exclusions. Before assuming you do or don't qualify based on anything above, confirm your specific situation with your state Medicaid agency or a free SHIP (State Health Insurance Assistance Program) counselor.