Michigan Medicare Savings Program Income Deductions and Disregards

The income number that matters for Michigan's Medicare Savings Programs is not what lands in the bank account and not what the Social Security statement shows as the gross benefit. It's the figure after MDHHS applies a sequence of mandatory deductions — and those deductions are where families most often miscalculate, either disqualifying a parent who'd actually pass or misidentifying which tier applies.

The $20 Standard Unearned Income Disregard

Every MSP household gets a flat $20 monthly deduction from unearned income. This is applied once per household, not per person. For a single applicant receiving $1,365 in gross monthly Social Security, the countable income drops to $1,345 — under the $1,350 QMB ceiling.

If unearned income is less than $20, the leftover balance of the disregard carries over to earned income. It can't be split between household members — it's one $20 per household per month.

Earned Income Exclusions

For beneficiaries who work (including part-time), MDHHS applies a more generous exclusion sequence. The first $65 of gross monthly earned income is disregarded entirely, then 50% of the remainder.

A parent earning $400 per month from part-time work: subtract $65, leaving $335; subtract 50% of that ($167.50), leaving $167.50 in countable earned income. Impairment-Related Work Expenses (documented out-of-pocket costs a disabled beneficiary incurs to work) are deducted from earned income on top of the standard exclusion.

Gross Social Security, Not Net

MDHHS starts with the gross Social Security benefit — the amount before Part B premiums, federal tax withholdings, or garnishments are subtracted. The number on the annual Social Security benefit statement is usually gross, but the amount deposited each month is net (after Part B is deducted).

This matters because the gross figure is higher than what appears in the bank. A parent who sees $1,150 deposited and assumes they're well under the QMB limit is actually being evaluated at $1,150 plus $202.90 (the Part B premium), or $1,352.90 gross. After the $20 disregard, countable income is $1,332.90 — still under QMB's $1,350 ceiling, but closer than the bank deposit suggests.

How Couples Are Budgeted

When both spouses are Medicare-enrolled, their combined income is measured against the couple limits ($1,824 for QMB, $2,184 for SLMB, $2,455 for ALMB). The $20 disregard applies once for the household, not twice.

When only one spouse has Medicare, the non-Medicare spouse's income still counts toward the household total. If the Medicare spouse receives $1,700 in Social Security and the non-Medicare spouse receives $400 in pension, total unearned income is $2,100, reduced by $20 to $2,080 countable — under the SLMB couple limit of $2,184.

An adult child's income living in the same household is never deemed to the parent. A senior living with a child earning $80,000 is evaluated on the senior's own income alone.

The COLA Disregard Window

Each January, Social Security applies a cost-of-living adjustment that increases monthly benefits. But MDHHS doesn't update the federal poverty level thresholds until April 1. During January, February, and March, the COLA increase is disregarded for MSP budgeting, preventing a situation where a small raise pushes someone over the line before the new limits catch up.

This means a parent who received a January COLA increase shouldn't panic about losing coverage. The new limits, typically higher than the old ones, take effect April 1 and usually absorb the increase.

The Michigan Medicare Savings Programs & Extra Help Guide includes five worked household examples with dollar-by-dollar math showing how each deduction affects eligibility tier placement.

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