Income that Medicaid counts toward your limit

Medicaid counts money you receive regularly, whether or not you pay taxes on it. This includes wages from a job, self-employment income, Social Security, unemployment benefits, child support, alimony, pensions, and interest or dividends from savings. It also includes money from rental property, royalties, and some forms of assistance like TANF (Temporary Assistance for Needy Families) or SSI (Supplemental Security Income).

The exact income limit varies by state and by which Medicaid program you are looking at. Some states use the federal poverty level as their cutoff; others set it higher or lower. A few states have different limits depending on whether you are applying as an individual, a parent, a child, or a pregnant person. You need to check your specific state's rules because two people with identical income in different states may have different outcomes.

Most states also allow you to subtract certain costs before they count your income. These deductions might include medical expenses you pay out of pocket, child care costs, or work-related expenses. Again, what you can subtract depends on your state and which Medicaid category you fall into.

Key Takeaways

  • Medicaid counts regular income from any source — wages, benefits, pensions, rental income, and support payments all count toward your income limit.
  • Income limits vary significantly by state and by category (children, parents, elderly, disabled), so you must check your state's specific numbers.
  • Most states allow you to subtract certain costs like medical expenses or child care before they calculate whether you are over the limit.
  • Money in a bank account does not count as income, but it may count as a resource, and resource limits also vary by state and category.

Income sources Medicaid does not count

Medicaid ignores certain types of money. Gifts and loans do not count as income. Money you receive from selling an asset — like a car or house — does not count as income, though the money itself may count as a resource if you keep it in the bank. Lump-sum payments like tax refunds, insurance settlements, or inheritances are not income either.

Some states also exclude a portion of your earnings if you are working. For example, a state might allow you to earn a certain amount per month without counting all of it. The amount varies; some states disregard the first $65 to $90 of monthly earnings, or a percentage of your wages. This is called an earned income disregard, and it exists to encourage people to work without immediately losing Medicaid coverage.

How states calculate your countable income

When you report income on a Medicaid form, the state does not simply add up everything you earn. They follow rules about what counts, what does not, and what can be subtracted. For example, if you are self-employed, they may count your net profit (income minus business expenses) rather than your gross revenue. If you receive Social Security, they count the full benefit amount, but some states allow a small monthly disregard before subtracting it.

If you are married and applying for Medicaid in a state that counts household income, your spouse's income counts even if they are not applying. Some states treat spouses differently depending on whether you live together. If you have children, their income may or may not count depending on the program and the state.

The state will ask you to provide proof of income — recent pay stubs, tax returns, benefit award letters, or bank statements. If your income changes during the year, you are usually required to report it, and your coverage may change as a result.

Income limits by state and category

Federal law sets a minimum income limit for certain Medicaid categories. For example, states must cover children up to at least 133% of the federal poverty level. But states can set their own limits higher, and they often do. Some states cover parents at 100% of poverty; others cover them at 200% or more. A few states have not expanded Medicaid at all and cover only very specific groups like the elderly or disabled.

The federal poverty level changes each year. In 2024, the poverty level for a single person is approximately $15,000 per year, and for a family of four it is approximately $31,000 per year. But these numbers change annually, and Medicaid income limits are usually set as a percentage of poverty, so they change too. Your state's Medicaid office publishes current income limits, usually on their website or in a table you can request.

If your income is close to the limit, the difference between states is dramatic. A family of three earning $2,000 per month might be covered in one state and ineligible in another, depending on whether that state has expanded Medicaid and what percentage of poverty it uses as its cutoff.

What happens if your income changes

If you are already on Medicaid and your income increases, you must report the change. Most states require you to report within 10 to 30 days, though the exact deadline varies. If your new income exceeds the limit, your coverage will end, usually at the end of the month in which you reported the change or the following month.

If your income decreases — because you lost a job, had your hours cut, or stopped receiving a benefit — you should report that too. A lower income may make you newly may be able to access, or it may help you stay covered if you were close to the limit. Some states will backdate your coverage to the month your income actually dropped, not the month you reported it.

Many states have a process called continuous may be able to access for certain groups, usually children. This means that even if your income increases during the year, your child stays covered until the annual renewal date. This protects children from losing coverage mid-year due to a temporary income change.

Resources versus income

Income and resources are different things, and Medicaid counts both. Income is money you receive regularly. Resources are things you own — cash in a bank account, a car, a house, investments, or other property. Most Medicaid categories have a resource limit separate from an income limit. For example, you might have an income limit of $1,500 per month and a resource limit of $2,000.

Resource limits vary by state and category. Some states have removed resource limits entirely for certain groups. Others still enforce them strictly. If you own a home, most states do not count it as a resource. A car usually does not count either, though some states have a limit on the car's value. Retirement accounts like IRAs and 401(k)s are often excluded from the resource count.

If you are unsure whether something you own counts as a resource, ask your state's Medicaid office. The rules are specific and can affect whether you are found may be able to access.

Frequently Asked Questions

Does my spouse's income count if they are not applying for Medicaid?

It depends on your state and whether you live together. In most states, if you are married and living together, your spouse's income counts as household income even if they do not apply. Some states treat spouses differently if you are separated. Ask your state Medicaid office whether your spouse's income will be counted in your case.

If I get a one-time payment like a tax refund, does it affect my Medicaid?

A one-time payment does not count as income, so it will not make you ineligible based on income. However, if you keep the money in a bank account, it counts as a resource. If your resources exceed your state's limit, you could lose coverage. The impact depends on your state's resource limit and how much money you receive.

What if my income is seasonal or changes month to month?

States typically average your income over a period — often three months or the past 12 months — to determine your countable income. If you are self-employed or have seasonal work, bring documentation showing your average earnings. Some states will look at your expected income for the coming year rather than what you earned in the past.

Do I lose Medicaid immediately if my income goes over the limit?

No. You must report the income change, and your coverage usually ends at the end of the current month or the following month, depending on your state's rules. You do not lose coverage the day your income exceeds the limit. Some states also have a grace period or allow a small income buffer before terminating coverage.

Are there programs that help people keep Medicaid when they start working?

Yes. Many states have work incentive programs that let you earn more money without losing Medicaid immediately. These programs use earned income disregards, extended may be able to access periods, or other tools to help people transition to work. Ask your Medicaid caseworker whether your state has a work incentive program you can use.