A Medicare beneficiary who owns only the home they live in can qualify for the Part D low-income subsidy with resources up to $16,590 in 2026, or $33,100 married. A beneficiary who also owns a second house — a rental unit, an inherited home, a vacation cabin — faces a different outcome, because CMS counts that property as a resource under the same rule that counts checking accounts, stocks and bonds. CMS set the 2026 limits in an October 31, 2025 memo from Medicare official Jennifer R. Shapiro, and near the limit, a second property can turn drug costs near zero into costs that climb by thousands of dollars a year.
How CMS Defines a Countable Resource for Extra Help
The formal definition sits inside the Medicare regulations governing the low-income subsidy, commonly called Extra Help, which helps beneficiaries with limited savings cover Part D premiums, deductibles and copayments. The rule sets two tests every applicant must pass: an income test and a resource test, and it is the resource test that catches beneficiaries who look modest on paper but happen to hold a second piece of property. Resources, in the regulatory sense, are not the same as net worth or even cash on hand; they are a specific, narrowly defined list of holdings that CMS totals up on the date of application.
That list, codified at 42 CFR 423.772, names checking and savings accounts, stocks, bonds, and any other holding a beneficiary could convert to cash within 20 days as countable resources, then adds a category that surprises many applicants: real estate that is not the beneficiary’s primary residence or the land underneath it. Personal belongings, one vehicle, and the value of a life insurance policy stay off the list entirely, and none of those categories get the 20-day liquidity test that applies to bank accounts and securities — real estate is counted on its own terms, whether or not it could realistically sell within a month.
CMS restates that definition every year when it issues its annual resource-limit guidance, and the version governing the 2026 benefit year came from Jennifer R. Shapiro, Director of CMS’s Medicare Plan Payment Group, in an October 31, 2025 memo sent to every Part D plan sponsor. The memo does not change the underlying regulation; it recalculates the dollar ceiling the regulation is measured against, using inflation data the agency is required to apply each year under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
Inside the kit: 51 state Medicare cost-help packs, the new Part D out-of-pocket cap, the prior-authorization appeal steps and a medication and cost tracker. Open The Medicare Cost & Coverage Protection Kit.
The Second House, the Rental Unit and the Inherited Property
The distinction plays out in ordinary family situations that have nothing to do with wealth. A retired teacher who inherits a childhood home from a parent, cannot bring herself to sell it, and rents it out for a few hundred dollars a month now owns a second piece of real estate that counts dollar-for-dollar against the resource limit, even though the equity is tied up in a house that could take months to sell in a slow market. A beneficiary who keeps a vacation cabin used two weeks a year, or a duplex where a grown child lives rent-free, gets exactly the same treatment under the rule.
The primary-residence exclusion, by contrast, carries no dollar cap and no proportional test. A beneficiary who owns a home worth $700,000 outright, and holds nothing else of value, still qualifies for the full subsidy on the resource side, because the regulation exempts the one property where the applicant actually lives, regardless of its market value or how much equity sits inside it. What CMS is measuring is not housing wealth; it is whether a specific property is the beneficiary’s residence on the date the resource test is applied, and a second address fails that test no matter how the beneficiary uses it.
That asymmetry means two beneficiaries with identical net worth can land on opposite sides of the eligibility line. One owns a single expensive home and nothing else, and qualifies. The other owns a modest primary residence plus a small rental property worth a fraction of the first beneficiary’s home equity, and gets disqualified, because the rental property is real estate that is not a primary residence and the first beneficiary’s home is. Applicants rarely learn this until a Social Security caseworker asks them to list every property they hold, at which point the second address becomes the reason an application is denied or reduced.
What the 2026 Resource Limits Mean for a Subsidy Beneficiaries Can Lose
CMS recalculates the resource ceiling every year using the Consumer Price Index, and the 2026 adjustment factor came to 3.01 percent, based on the change between the September 2024 and September 2025 CPI readings from the Bureau of Labor Statistics. That pushed the full-subsidy resource limit from $16,100 in 2025 to $16,590 for a single beneficiary in 2026, and from $32,130 to $33,100 for a married couple living together. A beneficiary sitting a few thousand dollars below last year’s line can be pushed over this year’s, not because they added a new asset, but because the ceiling itself moved by a modest, government-set percentage.
Beneficiaries who notify the Social Security Administration in advance that a portion of their resources is set aside for burial expenses get a higher ceiling: $18,090 for a single beneficiary and $36,100 for a married couple in 2026, reflecting the $1,500-per-person burial-funds exclusion built into the resource test. That exclusion does not extend to real estate; a beneficiary cannot designate a rental property as a burial fund to shield it from the count, because the exclusion applies only to cash or liquid funds actually set aside for burial costs, not to property held for other purposes.
Losing the full subsidy over a second property does not mean losing Part D coverage; it means paying Part D’s standard cost-sharing instead of the deeply discounted copayments CMS sets for LIS-eligible enrollees, which run as low as $1.60 for a generic drug and $4.90 for a brand-name drug for the lowest-income tier in 2026. For a beneficiary managing several prescriptions a month, every month, the gap between the subsidized copayment and the standard cost-sharing amount can run into the thousands of dollars annually, turning a paperwork technicality about a second address into a real, recurring expense.
The Property That Counts and the One That Does Not
The CMS memo settles which property counts against the Extra Help resource limit, but it says nothing about what a beneficiary does next if a second property, a new medication, or a plan’s prior-authorization rule pushes Medicare costs higher than expected. Most beneficiaries never see a single document that lays out the state-specific programs, appeal steps and out-of-pocket caps that apply once the basic subsidy math changes.
The Medicare Cost & Coverage Protection Kit is a 10-page kit with the new Part D out-of-pocket cap and 51 state Medicare cost-help packs built in.
See the state-by-state cost-help breakdown in The Medicare Cost & Coverage Protection Kit.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
