Tennessee Medicare Savings Program Income Disregards: How TennCare Calculates Eligibility

Your parent's gross Social Security check is $1,350 a month. The published QMB gross income limit for one person is $1,350. After TennCare applies the $20 unearned income disregard, countable income is $1,330, at 100% of the Federal Poverty Level. Assuming the other eligibility requirements are met, your parent is within QMB's income limit.

That $20 disregard is the difference between $2,434 a year in savings and nothing. And it's not the only disregard TennCare applies.

The $20 General Unearned Income Disregard

TennCare subtracts $20 per month from total unearned income before comparing it to the Federal Poverty Level thresholds. This applies to every MSP tier — QMB, SLMB, and QI.

Unearned income includes:

• Social Security retirement or disability benefits (gross amount, before the Part B premium deduction)
• Private pensions
• Fixed annuities
• Veterans Affairs benefits

The disregard is per household, not per person. A married couple gets one $20 deduction, not two.

The published gross monthly income limits for a single person already reflect the $20 disregard:

• QMB: $1,350
• SLMB: $1,616
• QI: $1,816

Earned Income Disregards

If your parent works part-time, TennCare applies additional deductions to earned income:

1. The first $65 of gross monthly wages is excluded
2. Half of the remaining gross wages is excluded
3. The $20 general disregard (applied once to total income, typically to unearned income first)

Example: A 67-year-old receives $1,100 in Social Security and earns $500/month from part-time work.

• Unearned income: $1,100 − $20 disregard = $1,080
• Earned income: $500 − $65 = $435; half of $435 = $217.50 countable
• Total countable income: $1,080 + $217.50 = $1,297.50

That's below the QMB single-person countable-income ceiling of $1,330. Without the disregards, gross income of $1,600 would appear to put them above QMB and into SLMB territory.

Married Couple Rules

When both spouses live together and one or both are on Medicare, TennCare evaluates combined household income and assets against the couple limits:

If only one spouse is on Medicare, only that spouse receives MSP coverage — but both spouses' income and assets count toward eligibility when they live together.

If spouses are legally separated or live in separate households continuously, TennCare evaluates only the applicant's individual income and resources against the single-person limits.

The COLA Disregard

Every January, Social Security adjusts benefits for cost-of-living. From January 1 (when the increase takes effect) until April 1 (when TennCare adopts the updated Federal Poverty Level thresholds), TennCare applies a COLA disregard — the dollar increase from the January adjustment is excluded from the income calculation.

This prevents a routine $30 or $50 COLA bump from pushing someone over the QMB or SLMB limit before the poverty guidelines catch up. The disregard is automatic; your parent doesn't need to request it.

What TennCare Counts as Gross Income

One point that trips families up: TennCare measures gross Social Security, not the net deposit. If Social Security withholds $202.90 for the Part B premium and your parent sees $1,147.10 deposited, TennCare uses $1,350.00 — the pre-deduction gross amount.

TennCare may ask for the Social Security Award Letter showing the gross benefit amount.

Running the Numbers

The Tennessee Medicare Savings Programs & Extra Help Guide includes worked income calculations for common Tennessee scenarios — Social Security only, pension plus Social Security, part-time work, and married couples with one spouse on Medicare. The eligibility worksheets apply every applicable disregard so you know the answer before submitting to TennCare.

See more Tennessee guides →