Medicare Extra Help and the Asset Test: Which Savings and Property Count Against You (And Which Don't)

Medicare Extra Help Asset Limits: More People Qualify Than You Might Think

If you have Medicare and struggle to afford your prescription drugs, the Extra Help program could save you thousands of dollars every year. But many people assume they won't qualify because they have money in the bank, own their home, or have some savings set aside. The truth about Medicare Extra Help asset limits and what counts is far more encouraging than most people realize.

This article walks you through exactly how the asset test works, which financial holdings are excluded from the calculation, and which ones could affect your eligibility. Understanding this distinction could be the difference between getting help and leaving money on the table.

What Is Medicare Extra Help?

Medicare Extra Help — also called the Low Income Subsidy (LIS) — is a federal program that helps people with Medicare pay for their prescription drug costs under Part D. It can reduce your prescription copays to as little as $0 to $10 per medication and help cover Part D premiums and deductibles. Eligible enrollees can save up to $5,300 per year on drug costs.

To qualify, you must meet both an income limit and a resource (asset) limit. The income side gets most of the attention, but the asset test is what trips people up — often unnecessarily.

Understanding the Asset Test for Medicare Extra Help

The Social Security Administration reviews your countable resources when you apply for Extra Help. These are assets you own that could reasonably be converted to cash. The resource limits are updated annually, so always check the current year's thresholds at ssa.gov when you apply. Generally, the limits are modest, and a single person is allowed to have more resources than many people expect.

Here is the key point most people miss: many common assets are completely excluded from the count. You could own a home, have retirement accounts, and hold life insurance — and none of that may affect your eligibility at all.

Assets That Do NOT Count Against You

The following resources are excluded when Social Security calculates your assets for Extra Help eligibility:

• Your primary home: The house or condo you live in — including the land it sits on — is fully excluded. It does not matter how much it is worth. If it is your primary residence, it is not counted.
• One vehicle: Your car or truck is excluded from the asset test, regardless of its value.
• Retirement accounts: Money held in IRAs, 401(k)s, 403(b)s, pensions, and similar retirement accounts is not counted as a resource for Extra Help purposes. This surprises many applicants who assume their retirement savings will disqualify them.
• Life insurance policies: The face value of life insurance policies is generally not counted. This applies to whole life and term policies alike.
• Burial funds: Money set aside specifically for burial or funeral expenses — up to a certain amount — is excluded. This includes prepaid funeral contracts and designated burial accounts.
• Personal belongings and household items: Furniture, clothing, jewelry, and similar personal property are not counted.
• Property you cannot easily sell: If you own property that is not accessible or cannot be sold without significant difficulty, it may be excluded as well.

Many Medicare recipients are surprised to learn that their home and retirement accounts don't count toward the asset limit at all. These exclusions exist specifically so that people who planned ahead are not penalized for doing so.

Assets That DO Count Against You

Now for the assets that Social Security does count when evaluating Medicare Extra Help asset limits and what counts:

• Cash on hand: Any cash you keep at home counts toward your resource total.
• Bank accounts: Checking accounts, savings accounts, and money market accounts are all counted. This includes certificates of deposit (CDs).
• Stocks and bonds: Investments held outside of retirement accounts — including individual stocks, mutual funds outside of an IRA, and bonds — count as resources.
• Second properties: A vacation home, rental property, or any real estate other than your primary residence is counted.
• Additional vehicles: If you own more than one vehicle, any beyond the first one may be counted.

It is worth noting that the countable resource limits are updated each year, and separate limits apply for individuals and married couples. Always verify the current thresholds at ssa.gov before assuming you are over the limit.

What If You Think You Have Too Many Assets?

Do not give up before checking the numbers. Many people overestimate their countable assets because they include their home, car, and retirement savings in their mental tally — none of which count. Once you subtract those excluded items, your remaining countable resources may fall well within the allowable limit.

A few other things to keep in mind:

• If you are married, Social Security counts the combined resources of both spouses, but the limit for married couples is higher than for individuals.
• If your assets fluctuate — for example, if you spend down savings on medical care or living expenses — you may qualify in a future year even if you do not qualify today.
• Certain states have their own pharmaceutical assistance programs that may help bridge the gap if your assets are slightly above the federal limit.

Automatic Enrollment: You May Already Qualify

Some Medicare recipients are automatically enrolled in Extra Help without needing to apply. If you receive Medicaid, Supplemental Security Income (SSI), or get help from a Medicare Savings Program, you likely qualify for full Extra Help automatically. Social Security will notify you by letter if this applies to you.

If you are not automatically enrolled, you will need to apply — but the process is straightforward and free.

How to Apply for Medicare Extra Help

You can apply for Extra Help at any time of year. There is no open enrollment window for this benefit. Here is how to get started:

• Online: Visit ssa.gov to complete the application electronically. It takes about 15 to 30 minutes.
• By phone: Call Social Security at 1-800-772-1213 (TTY: 1-800-325-0778), Monday through Friday.
• In person: Visit your local Social Security office. You can find your nearest office at ssa.gov.
• Through your State Health Insurance Assistance Program (SHIP): Free, unbiased counselors can help you apply at no cost. Find your local SHIP at shiphelp.org.

Take the Next Step Today

If you have Medicare and pay more than you can comfortably afford for prescription drugs, do not let confusion about the asset test stop you from applying. Understanding Medicare Extra Help asset limits and what counts is the first step — and now you have a clearer picture than most applicants do when they walk in the door.

Visit ssa.gov to check the current income and resource limits for this year, use the online screening tool to estimate your eligibility, or start your application right now. It is free to apply, there is no penalty for being denied, and the potential savings of thousands of dollars per year make it well worth the effort.