One of the Social Security Administration’s own worked examples for the Medicaid buy-in takes a worker’s monthly earnings of $3,563.75, subtracts $85, and then counts only half of what remains. The result, $1,739.37 a month, is the figure SSA compares with a poverty-based limit. The arithmetic is short, but it shows the order in which SSA subtracts, and that order is where the confusion about countable income usually starts.
SSA’s example, line by line
The example sits in the Medicaid buy-in section of SSA’s 2026 SSI work-incentives page. It follows a worker named Joe Green, whose annual earnings are $42,765. Divided by twelve, that is $3,563.75 a month. SSA then prints the steps:
- $3,563.75 in monthly earnings
- minus $85.00, labeled the “general and earned income exclusion,” leaves $3,478.75
- minus $1,739.38, the exclusion of half the remaining earned income
- equals $1,739.37 in countable income a month, or $20,872.44 a year
The one-cent gap between the two halves is rounding. Half of $3,478.75 is $1,739.375, so SSA’s printed figures imply the excluded half was rounded up to $1,739.38, leaving $1,739.37 as countable. The page then sets the $20,872 annual figure against 250 percent of the federal poverty guideline, which it prints as $39,900, so the example’s countable amount sits under that figure.
The page says the earnings in the example are simply “earnings.” It does not describe them as gross or net, and the subtraction starts from the monthly figure as printed.
Where the $85 comes from
The $85 is two exclusions added together. SSA’s SSI income page lists a $20 general income exclusion that applies to income of any kind, and “the first $65 of earnings and one half of earnings over $65 received in a month.” The example’s $85 is the $20 plus the $65.
The two do not always stack. SSA’s actuarial page on income excluded for SSI purposes states the earned-income rule as “the first $65 per month and any unused portion of the $20 unearned income exclusion, plus one-half of the remainder.” The $20 is applied to unearned income first, such as a Social Security benefit, and only what is left of it carries over to wages. The example lists no unearned income for Joe Green, so the whole $20 is available and the exclusions total $85. A worker with a $300 Social Security benefit, as in SSA’s first printed SSI example, would use the $20 against that benefit and have only the $65 to subtract from wages.
Same subtraction, different test
The example answers a Medicaid question, not an SSI payment question. The same page describes the buy-in as a state option that lets states “provide Medicaid to these individuals by creating a new optional eligibility group,” and says eligibility turns on net income below 250 percent of the poverty guideline. The page’s own statement of the SSI rule is shorter: “We do not count the first $65 of earned income plus one-half of the amount over $65. Therefore, we reduce your SSI benefit only $1 for every $2 you earn over $65.”
Because the exclusions are the same, the SSI payment arithmetic can be followed with the same steps. On the SSI income page, SSA prints four examples. In the first, $300 in Social Security benefits leaves $280 countable after the $20 exclusion, for an SSI payment of $714. In the second, $317 in wages leaves $116 countable, for an SSI payment of $878. The wage case works out as $317 less $85 is $232, and half of $232 is $116. Both payments are measured against the 2026 federal payment standard of $994 for an eligible individual, which SSA’s payment standards table sets after a 2.8 percent increase that took effect in January 2026.
The other two examples add a $15 state supplement to the same two cases, for totals of $729 and $893. The figures show how much the order of subtraction matters: the same $20 and $65 produce a $280 countable amount in one case and $116 in the other, depending on whether the income is unearned or earned.
What the example does not decide
The example is an illustration with one earner and one income source. A household with several income types, a state supplement or work expenses that SSA excludes will land on different numbers, and the example prints only the single path from earnings to countable income.
The $85 therefore belongs to a specific case: earnings only, with no unearned income to absorb the $20. For that case, SSA’s own page shows the full path from $3,563.75 in monthly earnings to $1,739.37 in countable income.
Tracking earnings against SSI’s counting rules
SSA’s Medicaid buy-in example subtracts $85 from a month’s earnings and counts half of what is left, while the SSI rule treats the $20 differently when unearned income is present. The unfinished job for a worker with wages is keeping each month’s earnings and other income straight so the subtraction order is applied to the right numbers.
The SSI & Disability Action Kit is a 10-page kit with the rules for working without losing benefits, the 2026 SSI income and resource limits and an income and resource organizer.
Get the SSI working rules and income and resource organizer for tracking earnings →
This article was drafted with AI assistance; every figure and date in it was checked against the primary sources linked above.
