This month, AARP’s Public Policy Institute released a report examining the Medicare Savings Program (MSP)’s asset eligibility limits. The report notes that as many as 6 million people are likely eligible for but not enrolled in these programs.

MSPs Are Extremely Valuable

MSPs offer significant financial help in the form of at least $2,220 in Part B premium savings, additional cost sharing assistance for enrollees in the Qualified Medicare Beneficiary (QMB) program, plus savings on Part D premiums and costs through automatic enrollment in the Low income Subsidy (LIS/Extra Help).

Testing the Role Asset Limits Play

The report posits that one factor in this enrollment gap could be the administrative burden of proving eligibility, keeping eligible individuals from enrolling. Verifying assets can be particularly complicated and burdensome for both applicants and state eligibility workers.

Verifying assets can be particularly complicated for both applicants and state eligibility workers.

AARP and Mathematica analyzed the types and values of assets held by people whose income appeared eligible for the MSP and how those assets changed over time. They used this information to identify people impacted by the asset limit and assess how many individuals are barred based solely on their assets.

Asset Calculation Is Burdensome and Challenging

Asset limits for public programs are rules that determine the maximum amount a person can have in certain categories of resources. For MSP, countable resources generally include liquid resources like cash, checking and savings accounts, stocks and other investments, and certain retirement accounts, as well as non-liquid resources like real estate and personal property.

Some assets within these categories—a primary home and one personal vehicle and household goods—are excluded. Life insurance can be countable above a certain threshold value. 

In 2026, the federal asset limit for an MSP is $9,950 for an individual and $14,910 for a married couple. States may not have a more restrictive limit but are free to raise the limit or eliminate the asset test entirely. 

States are free to raise the limit or eliminate the asset test entirely. 

Applicants may find the rules and process around asset verification confusing and overwhelming, and reviewing submitted documentation and assessing whether it meets criteria can be burdensome and time consuming for state workers. Assets like bank accounts are relatively easy to verify. But others like life insurance and burial funds “can require time consuming manual work to verify.” Moreover, states may have to pay per inquiry for electronic verification services.

Costly, Ineffective, and Risky

Given that asset verification tests are not costless to states and may discourage applications from qualified beneficiaries, it is reasonable to ask whether they are having their intended effect.

The findings from this study suggest that they are not. The vast majority of people with income eligibility also have assets well below the eligibility threshold, with 80% percent of married individuals having total household assets of $9,260 or less. Additionally, 80% of unmarried individuals had total assets of $5,832 or less—over $2,000 below the asset limits for the programs. 

Building on Previous Research

These findings add to previous research to show that “rather than screening out individuals with substantial resources, asset tests overwhelmingly target people who already have limited savings. This creates bureaucratic costs without reducing program costs and discouraging participation among those the programs are designed to help.”

“[A]sset tests overwhelmingly target people who already have limited savings.”

The report spells out the mathematical limitation to the asset test’s effectiveness as a measure separate from income explicitly in the section dealing with interest and dividend income. Explaining the finding that 95% of married individuals had $60 or less in interest income and that unmarried individuals had $25 or less in interest income, the report notes that anyone “with substantial interest or dividend income” would have been removed from the study because that income would make them income ineligible for MSP benefits.

States at Risk of Losing Federal Funds

Complicated asset tests also increase the risk that the state agency will violate the Payment Error Rate Measurement (PERM) program, a federal program that audits state records to ensure all required documentation related to eligibility determinations is properly recorded. States that cannot demonstrate required documentation are at risk of losing federal funds if their error rates are above a certain rate. Federal laws related to recouping funds from states under PERM were tightened in the recently enacted HR 1 law, including limiting the Centers for Medicare & Medicaid Services’ discretion to waive the financial penalties for states beginning in June 2026. This makes it even more important for states to streamline eligibility rules to avoid the risk of federal recoupment.