Starting a new job or receiving a raise is an achievement, but for those on Medicaid, it often comes with a pressing question: at what point does your new income disqualify you from benefits?
Because Medicaid is a need-based program, your eligibility is tied directly to your monthly earnings. In 2026, staying informed about these thresholds is essential for maintaining your healthcare coverage across NC, SC, TN, AL, and MD.
2026 Income Limits and Thresholds
Medicaid income limits are not universal; they vary based on your state, your household size, and the specific program you are enrolled in.
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Standard Medicaid: For most adults in expansion states, eligibility is generally based on the Federal Poverty Level (FPL).
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Institutional and Waiver Programs: For long-term care and specific waiver programs, the individual income cap for 2026 is approximately $2,982 per month.
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Fluctuating Income: If your income varies month-to-month, Medicaid typically looks at your average monthly earnings to determine if you remain under the threshold.
What Counts as “Income” for Medicaid?
When calculating your eligibility, the state considers more than just your base salary. You must account for:
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Gross Wages: Your total pay before taxes or 401k deductions.
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Additional Compensation: This includes bonuses, commissions, and overtime pay.
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Other Sources: Social Security benefits, alimony, and certain investment income may also be counted depending on your program.
The 10-Day Reporting Rule
If your earnings change, you cannot wait until your annual renewal to notify the state. In our service areas—North Carolina, South Carolina, Tennessee, Alabama, and Maryland—you are generally required to report any income increase within 10 days of receiving your first paycheck.
Why reporting matters:
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Avoiding Overpayments: If you earn too much but continue using benefits, the state may issue a “notice of overpayment,” requiring you to pay back the cost of medical services.
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Strategic Planning: Reporting early allows you to explore legal options to maintain coverage even if you are slightly over the limit.
What If You Exceed the Limit?
Going over the income threshold does not always result in an immediate loss of insurance. There are several “safety net” options:
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Transitional Medical Assistance (TMA): TMA is a federally mandated program that provides up to 12 months of continued Medicaid coverage to families with children whose income rises above the eligibility threshold due to new or increased earnings. To qualify, the parent or caretaker relative must have received Medicaid in at least three of the six months immediately before losing eligibility (though states may reduce this to as few as one month), and ineligibility must be caused by new or increased earned income or hours of employment — which may be in combination with unearned income. Coverage is structured in two six-month periods: the first carries no income limit, while the second requires household income to remain at or below 185% of the Federal Poverty Level. TMA is designed to encourage workforce participation by removing the disincentive of an abrupt loss of healthcare coverage when earnings increase.
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Medicaid Spend-Down: In some states, you may remain eligible by “spending down” your excess income on qualifying medical bills.
Protecting Your Eligibility With Professional Advice
Navigating income thresholds requires precision. At Sawyer & Associates, LLC, we help families manage income fluctuations and implement asset protection strategies to ensure their professional success doesn’t jeopardize their healthcare.
Visit our website for more details on Medicaid compliance: sawyer-law.com
Call us 803-274-1095 to find out more about how your current earnings impact your Medicaid eligibility.
