Kentucky Medicare Savings Program Income Limits: The $20 Disregard and How DCBS Counts Income

Why the Income Limit Isn't What You Think

Kentucky's Medicare Savings Program income limits get published as clean round numbers. QMB: $1,350/month for an individual in 2026. But the number that determines whether your parent qualifies isn't their Social Security check — it's their countable income after DCBS applies mandatory disregards.

This distinction matters because it's the gap where thousands of eligible Kentuckians fall through. They see their gross Social Security amount, compare it to the published limit, and never apply.

The $20 General Unearned Income Disregard

Kentucky applies a $20 per household general unearned income disregard to every MSP applicant under 907 KAR 20:020. This deduction comes off the top of gross unearned income — Social Security benefits, pensions, VA payments (excluding Aid and Attendance), annuity distributions, and civil service retirement.

Here's what that looks like in practice. A Kentucky senior receives $1,365 in monthly Social Security. The published QMB limit is $1,350. At first glance, they're $15 over. But after the $20 disregard: $1,365 - $20 = $1,345 countable income. That's under the QMB ceiling. They qualify.

DCBS calculates Social Security as the gross amount — before Medicare Part B premiums are deducted, before any voluntary tax withholding. If your parent's direct deposit is $1,162 but their gross benefit before Part B and tax deductions is $1,380, DCBS uses $1,380.

How Earned Income Gets Counted Differently

If the applicant or their spouse has earned income (wages, self-employment), Kentucky applies a more generous set of disregards:

1. Any remaining portion of the $20 general disregard (if unearned income was less than $20)
2. A $65 earned income exclusion
3. 50% of the remaining earned income after the $65 deduction
4. Impairment-Related Work Expenses for disabled beneficiaries

A QMB applicant with $900 in Social Security and $400 in part-time wages: Unearned income = $900 - $20 = $880. Earned income = $400 - $65 = $335, then halved = $167.50. Total countable income = $1,047.50 — well under the $1,350 QMB limit.

2026 Income Limits After the Disregard

These figures already incorporate the $20 disregard — compare your countable income (after applying the $20 deduction yourself) against these limits.

Spousal Income and Living Arrangements

When both spouses live together, DCBS evaluates their combined income against the couple limits. If only one spouse has Medicare, the non-applying spouse's income still counts toward the household total.

Legally separated spouses or those living continuously in separate residences are evaluated as individuals starting the month after separation. And an adult child living with an aging parent does not have their income counted — adult children's earnings are excluded from the parent's MSP determination.

In-kind support — a family member paying for groceries or housing — is excluded from countable income for MSP eligibility. If your parent's daughter pays their electric bill, that doesn't count against the income limit.

When You're Close to the Line

If your parent's income is within $50 of a tier limit, it's worth applying even if you're not sure. DCBS evaluates eligibility for all MSP tiers simultaneously. A denial for QMB might still result in SLMB or QI approval — both of which cover the full $202.90 monthly Part B premium.

The Kentucky Medicare Savings Programs & Extra Help Guide includes worked dollar examples for every MSP tier and a step-by-step income calculation worksheet that matches how DCBS caseworkers do the math.

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