Indiana Medicare Countable Income: What DFR Counts (and What It Doesn't)
Why the Number on Your Parent's Social Security Statement Isn't the Final Answer
If you've looked at your parent's Social Security check and assumed they make too much for Indiana's Medicare Savings Programs, there's a good chance the math works differently than you think. The Division of Family Resources uses gross income — before Part B premiums are withheld — but then applies several disregards that can bring the countable figure down substantially.
Indiana sets its MSP income limits well above the federal floor. For 2026, a single applicant can qualify for QMB with gross income up to $2,015 per month (150% FPL), SLMB up to $2,281 per month (170% FPL), and QI up to $2,481 per month (185% FPL). Most national websites still list the federal minimums of 100%, 120%, and 135% — those don't apply in Indiana.
How DFR Counts Income
DFR starts with gross unearned income. For Social Security, that means the benefit amount before the Part B premium deduction — not the deposit that hits the bank account. Pensions, most VA benefits, and annuities are counted at their gross amount; VA Aid and Attendance allowances and household adjustments are generally excluded under SSI-related rules.
Then the disregards kick in:
$20 general income disregard. DFR subtracts $20 from unearned income first. If there's no unearned income, this $20 applies to earned income instead.
Earned income disregards. If your parent still works, DFR first applies the $20 general disregard to unearned income, with any unused portion applied to earned income. It then excludes the first $65 of gross earnings and disregards half of what remains. If wages are the only income, a parent earning $800 per month would have $357.50 in countable earned income after these disregards.
State-plan disregard. Indiana uses Section 1902(r)(2) authority to apply an additional state-specific disregard that raises the effective income ceiling from the federal floor to the published Indiana limits. This is already built into the $2,015/$2,281/$2,481 figures, so you don't need to calculate it separately.
Resource Limits: What Counts and What Doesn't
For QMB, SLMB, and QI, the 2026 resource limit is $9,950 for a single applicant and $14,910 for a married couple. QDWI has a separate limit of $4,000 single and $6,000 couple. Several major assets are completely exempt:
- Primary residence — excluded regardless of value, as long as the applicant or spouse lives there or intends to return
- One vehicle — fully excluded regardless of market value
- Irrevocable burial contracts and prepaid funeral trusts — fully exempt
- Up to $1,500 set aside in a designated burial fund
- Term life insurance — excluded (no cash value to count)
Whole life insurance is exempt if total face value across all policies is $1,500 or less. Above that threshold, the cash surrender value becomes a countable resource.
Jointly held bank accounts get a harsh default: DFR presumes the entire balance belongs to the applicant. If your parent shares an account with a sibling or friend, DFR will count the full amount unless you can prove the other person deposited their own funds and exercised ownership over them.
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Spousal Deeming: How a Spouse's Income Affects Eligibility
When both spouses live together and only one has Medicare, DFR evaluates both incomes against the married couple limits ($2,725 per month for QMB). The non-applicant spouse's income is added to the total, with standardized deductions for the non-applying spouse's maintenance needs and any dependent children.
If spouses are separated or living apart continuously for non-medical reasons, DFR evaluates the applicant as a single individual using the single limits. The absent spouse's income isn't counted unless they send direct financial support.
This distinction matters. A married couple where one spouse has a pension pushing combined income above $2,725 might both benefit from living-arrangement documentation that shows continuous separation, if that's genuinely the case.
What This Means for Your Parent's Application
Run the numbers using gross income, not net deposits. Apply the $20 disregard and any earned income exclusions. Compare against Indiana's published limits — not the federal floor you'll find on Medicare.gov.
If the result is close to a threshold, the difference between QMB, SLMB, and QI coverage is significant. QMB covers premiums plus all cost-sharing. SLMB and QI cover only the Part B premium. Getting the income count right can determine which level of help your parent receives.
Our Indiana Medicare Savings Programs guide includes a step-by-step income calculation worksheet that walks through every disregard DFR applies, plus worked examples for common income combinations — Social Security plus pension, Social Security plus part-time wages, and married couples with asymmetric income.
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Download the Indiana — Medicare Savings Program Eligibility Checklist — a printable guide with checklists, scripts, and action plans you can start using today.