Medicaid medically needy: state income exclusions in place of SSI's $20 (Illinois $25 per spouse; Connecticut's HUSKY C disregard per member; Minnesota none) #10472

Problem

Three states depart from SSI's $20 general exclusion in the medically needy budget for aged, blind and disabled people. Illinois and Connecticut subtract more; Minnesota subtracts nothing. PolicyEngine's medically needy test (is_medically_needy_for_medicaid) uses ssi_countable_income, which applies only the SSI exclusions.

Illinois

Illinois's medically needy (AABD spenddown) budget exempts the first $25 of income other than SSI and contributions (alimony, child support and other income from outside the medical unit). When two people in the standard both apply and both have such income, each gets a $25 exemption. PolicyEngine's medically needy test (is_medically_needy_for_medicaid) uses ssi_countable_income, which applies SSI's $20 general exclusion once per couple.

• IL DHS PM 15-04-03-a, AABD Income Disregard (Community Cases): "If 2 persons in the standard are applying for or receiving AABD Medical, one $25 income exemption is allowed if only one person has income other than SSI or contributions. Two $25 income exemptions are allowed if both persons have income other than SSI or contributions."
• 89 Ill. Adm. Code 120.335(a)(1): "the first $25.00 of a client's earned or unearned income other than SSI income, or contributions from a spouse or other individual, is exempt from consideration in determining eligibility. A client is eligible for only one $25.00 exemption".

An Illinois person's countable income is $5 a month too high, and a couple's up to $30 a month too high. Near the 100% FPL standard, that flips eligibility or adds spend-down.

Connecticut

Connecticut's medically needy (MAABD) budget subtracts the unearned income disregard, $562 a month in 2026, from each unit member's own unearned income:

• UPM 5030.15 A: "unearned income disregards are subtracted from the unit member's total gross monthly unearned income". The section covers AABD and MAABD.
• DSS Program Standards Chart, as of 1/1/2026 gives the amount.

The medically needy test leaves the disregard out, so a Connecticut person's countable income is up to $542 a month too high (562 - 20), and the pathway shows Connecticut's limits without the disregard. The same per-member rule for the optional aged, blind and disabled pathway is issue #10458.

Minnesota

Minnesota allows no $20 general disregard at all:

• Minn. Stat. 256B.056, subd. 1b: "The $20 general income disregard allowed under the Supplemental Security Income program is included in the standard and shall not be allowed as a deduction from income for a person eligible under section 256B.055, subdivisions 7, 7a, and 12."

The medically needy test subtracts the SSI $20, so Minnesota's countable income is $20 a month too low. #10364 makes the same correction for the optional aged, blind and disabled pathway.

Why not in #10374

The fix needs a medically needy countable income that mirrors ssi_countable_income with a state exclusion:

• the couple computation and spousal and parental deeming;
• a $25 for each spouse with income in Illinois.

It also touches the lines that #10370 rewrites (the marital-unit sums).

Proposed fix

• Add a by-state medically needy general exclusion that replaces the SSI $20 (IL 25; CT the HUSKY C disregard, $562 in 2026, rising each January 1; MN 0) and a per-member flag (IL and CT true), capped at each member's own unearned income, as Apply state Medicare Savings Program asset limits and income exclusions (WA, CA, MN, IL, MS) #10360 does for the Medicare Savings Programs (state_general_exclusion, state_general_exclusion_per_spouse; Illinois also leaves contributions out, through state_general_exclusion_excludes_contributions and contribution_sources).
• Add medicaid_medically_needy_countable_income, which applies _apply_ssi_exclusions with that exclusion. Use it in is_medically_needy_for_medicaid after Count blind people and use the individual or couple in the Medicaid medically needy test #10370 lands.
• Add YAML cases:
  • an Illinois individual whose income after medical expenses is at the limit with $25 and over it with $20;
  • an Illinois couple with two incomes and with one;
  • an Illinois person whose only income is alimony (no $25);
  • a Connecticut individual and couple with the $562 disregard;
  • a Minnesota individual at the limit with no $20.

Related

• Update Medicaid medically needy limits and switch on AR, IA, IL, NJ and ND #10374, Count blind people and use the individual or couple in the Medicaid medically needy test #10370 and Apply state Medicare Savings Program asset limits and income exclusions (WA, CA, MN, IL, MS) #10360.
• Connecticut HUSKY C: subtract the unearned income disregard from each spouse's own income #10458 (Connecticut's per-member disregard in the optional aged, blind and disabled pathway).
• Illinois aged, blind and disabled Medicaid: give each applying spouse the $25 exemption and leave out contributions, as for the Medicare Savings Programs #10515 (Illinois's per-spouse $25 and contributions rule in the optional aged, blind and disabled pathway).