Texas Medicare Savings Program Income Disregard and COLA Protection

The $20 Monthly Disregard

Every MSP eligibility determination in Texas starts with a deduction that many families don't know about. HHSC applies a mandatory $20 monthly general income disregard, derived from SSI calculation rules, before comparing your parent's income to the program limits.

That means the published income limits are effectively $20 higher than they appear:

• QMB: the countable limit is $1,330/month individual, but gross income up to $1,350 qualifies after the $20 disregard
• SLMB: gross income below $1,616/month individual
• QI: gross income from $1,616 to below $1,816/month individual

For a senior right at the edge — say, $1,340/month in Social Security — the disregard is the difference between qualifying for QMB and being denied. If a denial notice shows countable income without the $20 subtraction, that's grounds for appeal.

The COLA Disregard: January Through March

Every January, Social Security checks increase with the annual Cost-of-Living Adjustment. But the Federal Poverty Level — which sets MSP income limits — doesn't update until April 1. That three-month gap could push current MSP recipients over the income threshold through no fault of their own.

Texas HHSC addresses this with a COLA disregard mandated by MEPD Handbook Section Q-1400. From January 1 through March 31, caseworkers must disregard the incremental dollar increase from the January COLA when evaluating MSP eligibility. On April 1, the new FPL limits take effect in the Texas Integrated Eligibility Redesign System (TIERS), and the disregard ends.

This applies to both current recipients at renewal and new applicants. If your parent applies in February and their Social Security just went up by $40, that $40 increase should be excluded from the income calculation.

When the Disregard Gets Applied Wrong

A denial or termination during January, February, or March that cites the COLA increase as the reason for exceeding income limits is a misapplication of Section Q-1400. This happens more often than it should — not every caseworker applies the disregard correctly, and automated systems sometimes miss it during the transition period.

If your parent receives a denial or termination notice in this window:

1. Check whether the income figure on Form H1009 includes the January COLA increase
2. Compare the pre-COLA Social Security amount against the MSP income limit
3. If your parent qualified before the COLA and the only change was the January increase, request a Fair Hearing within 13 days (to maintain existing benefits during the appeal) and cite MEPD Handbook Q-1400

Income Counting Beyond Social Security

Social Security retirement or SSDI is the primary income source for most MSP applicants, but HHSC evaluates all unearned income: pensions, annuities, rental income, and interest. The $20 disregard applies once to the household's total unearned income, not once per income source.

Earned income from employment gets a separate set of deductions under SSI-related rules, including the first $65 of earned income per month plus half the remainder. This matters mainly for the under-65 disabled population applying for MSPs or QDWI.

Income from adult children living in the household is never deemed to the parent. HHSC evaluates only the applicant and their spouse, if present. If your parent lives with you and you earn $80,000 a year, your income has zero effect on their MSP eligibility.

Our Texas Medicare Savings Programs & Extra Help Guide includes the complete income-counting methodology, a COLA disregard timeline, and worksheets for calculating countable income under both the standard disregard and the January–March COLA protection.

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