Does Medicaid count my tax refund?

Does Medicaid count my tax refund?

Short answer: No, a federal tax refund is not counted as income for Medicaid, and it is not counted as an asset for 12 months after it is received.

Figures change periodically. Double-check current amounts before relying on them.

Under federal law, federal income tax refunds (including refundable credits such as the Earned Income Tax Credit) may not be counted as income for any federally funded means-tested program, including Medicaid, in the month they are received. They also may not be counted as an asset for 12 months after receipt.

After those 12 months, any refund money still in the bank becomes part of the person’s countable assets, like any other savings. So a family that receives a refund while a parent is applying for Long-Term Care Medicaid does not need to spend it right away, but should plan how to use it within the year if the parent’s assets are near the limit.

State tax refunds are treated differently in some states. Many states follow the federal approach, but if you receive a state refund, keep the notice and tell the caseworker so it is handled correctly.

Practical tips

  • Keep the IRS notice or bank record showing the date and amount of the refund.
  • Track the 12-month date if the money stays in the account.
  • If the refund is deposited into an account that also holds other money, be ready to show which part came from the refund.

Getting help

Every situation is different, and small facts can change the answer. If this question affects a real decision, especially with a spouse at home, a home, gifts or a trust, a Certified Medicaid Planner can apply your state’s rules to your situation. As a rough guide, published fees for help with an application range from about $500 to $6,000, and hourly help from about $150 to $600.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.

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