Income That Does Not Count (Disregards)

Not every dollar a person receives counts against Long-Term Care Medicaid’s income rules. Federal and state rules let some income be ignored. These are called disregards, exclusions or deductions. They can make the difference between qualifying and not, especially for people whose income is close to a limit. This guide explains the common ones.

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

Disregards, exclusions and deductions

The terms are used loosely and often mean the same thing in practice:

An exclusion is income that is not counted at all (for example, SNAP benefits).
A disregard or deduction is an amount subtracted from income before comparing it with the limit (for example, the $20 general disregard).

Most states base their rules on the federal SSI program, then add their own. How disregards apply also depends on the stage:

Eligibility: deciding whether income is under the limit.
Post-eligibility: deciding how much the person pays toward care after approval. Different deductions apply here, such as the personal needs allowance and allowances for a spouse at home. See Patient liability.

Common federal (SSI-based) disregards

Disregard	What it does
$20 general income disregard	The first $20 of income each month is not counted. It applies to unearned income first, then to earned income
$65 earned income disregard	The first $65 of earned income each month is not counted (after any remaining part of the $20)
One-half of remaining earned income	After the $20 and $65, half of the remaining earned income is not counted
Small irregular income	Under SSI rules, up to $60 a calendar quarter of infrequent or irregular unearned income, and up to $30 a quarter of infrequent or irregular earned income
Impairment-related work expenses	Certain costs of working with a disability can be subtracted

Example: earned income

A person earns $500 a month from part-time work and has no unearned income.

$500 − $20 (general disregard) = $480
$480 − $65 (earned income disregard) = $415
$415 ÷ 2 = $207.50

Counted earned income: $207.50.

Important: Many states do not apply these disregards when checking the special income limit for nursing home care (the $2,982 cap in many states). Some states apply them only to certain programs. Each state guide explains the rules there.

Income that is excluded by law

Some types of money are not counted as income under federal law or common state rules:

SNAP (food stamp) benefits and other federal food assistance;
Home energy assistance (LIHEAP);
Tax refunds, including the Earned Income Tax Credit;
Loans that must be repaid;
Money that is not income, such as proceeds from selling your own property (that is a change in the form of an asset);
Reimbursements for medical expenses or other costs;
Certain payments to specific groups, such as some reparations and settlements specified by federal law;
AmeriCorps and certain volunteer stipends, in some cases;
Disaster assistance under federal law.

VA benefits

Veterans’ benefits have their own rules:

VA Aid and Attendance and Housebound allowances, and VA payments for unusual medical expenses, are generally excluded as income for Medicaid eligibility.
For a veteran or surviving spouse in a Medicaid nursing home with no dependents, the VA pension is generally reduced to $90 a month, and that $90 is protected for the person’s personal use. It is not counted toward patient liability.
Other VA pension and disability compensation amounts generally count.

See How VA benefits count for Medicaid.

Post-eligibility deductions

After someone is approved for nursing home Medicaid, the state figures how much of their income goes to the nursing home. Federal law requires these deductions, in this order:

Personal needs allowance for the resident (at least $30 under federal law; each state sets its own, from $30 to $200 a month in 2026). See Personal needs allowance.
Allowance for a spouse at home, if their income is below the minimum (at least $2,705 a month from July 1, 2026). See MMMNA.
Family allowance for certain dependents living with the spouse at home.
Health insurance premiums and certain medical expenses not covered by Medicaid, such as Medicare and supplement premiums.

Some states add others, such as a home maintenance allowance for a short nursing home stay.

Medically needy “spend-down”

In medically needy states, a person whose income is over a limit can still qualify by subtracting medical expenses from income. For a nursing home resident, the cost of care is usually large enough that income falls below the limit. This works like a large disregard for medical costs.

Why disregards matter

Disregards can help in two ways:

At the margin: a person whose income is a little over a limit might qualify after disregards (in programs where they apply).
After approval: the post-eligibility deductions decide how much the person keeps and how much goes to the spouse at home.

Because states apply disregards in different ways to different programs, it is easy to get the math wrong. A Certified Medicaid Planner (CMP) can help a family understand which disregards apply in their state and program.

Common questions

Does the $20 disregard help me qualify for nursing home care? In many states, not for the special income limit. It may help in other programs.

Is my VA Aid and Attendance counted? Generally not, for Medicaid eligibility.

Are SNAP benefits counted? No.

Is a tax refund income? No. It is excluded as income and, for a limited time, as an asset.

How disregards fit into the bigger picture

Think of income in three layers:

Excluded income is set aside completely. It never enters the calculation.
Countable income is what is left. Disregards may then be subtracted to decide eligibility in some programs.
Post-eligibility deductions are subtracted after approval to decide what the person keeps and what goes to the nursing home.

A person might have $3,100 of gross income, of which $100 is excluded VA Aid and Attendance. Their countable income of $3,000 is then compared with the limit. After approval, their personal needs allowance, any spouse’s allowance and health insurance premiums are subtracted to find their payment.

Questions to ask about your own income

Is any of my income excluded, such as VA Aid and Attendance or SNAP?
Does my state apply the $20 general disregard to the program I am applying for?
If I work, which earned income disregards apply?
Which health insurance premiums will be subtracted after approval?
Does my state allow a home maintenance allowance if I expect to return home?

Keeping records

Keep award letters and statements that show each type of income separately. If a VA payment includes both a pension and Aid and Attendance, the VA award letter showing the breakdown is important, because only part may be excluded. If medical expenses are being deducted, keep receipts and insurance statements.

Disregards and deductions are easy to overlook. A {L} can help make sure every allowed amount is counted, which can raise what the person or the spouse at home keeps each month.

Disregards in home care programs

People who get care at home through a waiver often keep a larger amount of income for their own living expenses, called a maintenance allowance. In some states, disregards such as the $20 general disregard or earned income disregards apply more fully in these programs than in nursing home Medicaid. Because the rules differ by program, it is worth checking the state guide for the exact program being applied for.

How the $20 and $65 disregards work, step by step

The SSI rules apply the general disregards in a set order:

Start with unearned income (Social Security, pensions and similar payments). Subtract the $20 general disregard.
If unearned income is less than $20, the unused part of the $20 is subtracted from earned income instead.
From earned income (wages), subtract $65.
Then subtract one-half of the earned income that remains.

Example. Grace has $900 a month in Social Security and earns $400 a month from a part-time job. Her counted unearned income is $900 − $20 = $880. Her counted earned income is $400 − $65 = $335, and half of that is $167.50. Her total counted income is $880 + $167.50 = $1,047.50.

Example with no unearned income. Hal earns $500 a month and has no other income. The whole $20 goes against his wages: $500 − $20 = $480; $480 − $65 = $415; half of $415 is $207.50 counted.

Where these disregards matter most

For people already in a nursing home, the post-eligibility calculation (the patient liability) usually uses gross income with its own deductions, such as the personal needs allowance, so the $20 and $65 disregards matter most at the eligibility step and in programs based on SSI-type rules. Each state guide describes how the state uses them.

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