Social Security counts as income for Medicaid, and it usually reduces the amount you can earn from other sources before you lose coverage

When you receive Social Security — whether it is retirement, disability (SSDI), or survivor benefits — that money counts toward your income limit for Medicaid. The exact effect depends on which Medicaid category you fall into and which state you live in, because states set their own income thresholds and have different rules about what counts.

The key practical point: if you are on Social Security and also working, or receiving other income, you need to report all of it together. Medicaid will add your Social Security check to your wages, pensions, or other money coming in, then compare the total to your state's limit. If the total exceeds the limit, you lose Medicaid coverage — unless you may have access to for a work incentive program that lets you keep some earnings without losing it.

The rules are different for SSI (Supplemental Security Income) recipients, which is why this matters: SSI itself is not Social Security, but many people receive both SSI and SSDI at the same time. If that is your situation, both payments count as income.

Key Takeaways

  • Social Security income counts toward your Medicaid income limit in every state, whether you receive retirement, disability, or survivor benefits.
  • Your state's income limit varies: some states use the federal poverty level, others use a percentage of it, and a few use higher thresholds for people over 65 or blind.
  • If you work and receive Social Security, you must report both your wages and your benefits together; Medicaid adds them to determine if you stay covered.
  • Work incentive programs like Impairment Related Work Expenses (IRWE) and Plans to Achieve Self-Support (PASS) can exclude certain earnings from the income calculation, letting you keep working without losing Medicaid.
  • If your Social Security increases — through a cost-of-living adjustment or a change in your benefit amount — you must report it to Medicaid, as it may push you over the income limit.

How states set income limits and what that means for you

Each state decides its own Medicaid income threshold. Most states use the federal poverty level as a starting point, but they apply it differently. Some cover everyone at or below 100% of the federal poverty level; others go up to 138% or higher. A few states have separate, higher limits for people aged 65 and over or for people who are blind.

For 2024, the federal poverty level for a single person is approximately $14,600 per year, but this changes annually. If your state covers people at 100% of poverty, your income limit would be around $14,600. If your state covers at 138%, the limit would be roughly $20,100. Your Social Security check counts fully toward that limit.

You can find your state's exact income limit by contacting your state Medicaid office or visiting its website. The limit may also differ depending on whether you are applying as an individual, part of a couple, or part of a household with children — Medicaid counts household income, not just your own.

What happens when your Social Security increases

Social Security benefits increase each year through a cost-of-living adjustment (COLA), usually announced in October and taking effect in January. If your benefit goes up and your total income now exceeds your state's Medicaid limit, you will lose coverage — unless you live in a state that has a Medicaid Buy-In program or you may have access to for a work incentive that protects your coverage.

You are responsible for reporting the increase to Medicaid. Some states will notify you automatically if they receive the change from Social Security, but do not assume that will happen. Contact your Medicaid office as soon as you know your benefit is increasing, or wait until you receive your new benefit letter from Social Security and report it within 10 days.

If the increase pushes you over the limit, you may have options: some states allow you to set aside income through a PASS plan, or you may be able to move to a different Medicaid category that has a higher income limit. A Medicaid caseworker can tell you what is available in your state.

Work incentive programs that protect your Medicaid coverage

If you receive SSDI and work, or if you receive SSI and work, federal law allows you to exclude certain earnings and expenses from the income calculation. These are called work incentives, and they exist specifically so you do not lose Medicaid the moment you earn money.

The most common are Impairment Related Work Expenses (IRWE) and Plans to Achieve Self-Support (PASS). IRWE lets you deduct the cost of items or services you need because of your disability — for example, a personal care attendant, medication, or transportation to work. PASS lets you set aside income and resources for a specific work goal, like training or education, so that money does not count against your income limit.

To use these programs, you must plan ahead and get approval from Social Security before you start working or earning the money. Simply spending money on disability-related costs does not automatically exclude it; you need a written plan. Contact your local Social Security office or ask your Medicaid caseworker for a referral to a work incentive planning specialist, who can help you set up a plan for free.

The difference between SSDI and SSI, and how each affects Medicaid

SSDI (Social Security Disability Insurance) is based on your work history and is not means-tested — you can have unlimited resources and still receive it. However, your SSDI benefit counts as income for Medicaid purposes. If you are on SSDI and your income exceeds your state's limit, you lose Medicaid coverage, even though you can keep your SSDI check.

SSI (Supplemental Security Income) is a needs-based program run by Social Security, and it is tied to Medicaid in most states. If you receive SSI, you automatically receive Medicaid in 42 states (called "1634 states"). In those states, as long as you remain on SSI, you keep Medicaid. If you lose SSI because your income rose, you lose Medicaid at the same time. In the remaining states, SSI and Medicaid are separate, and you must meet each program's income rules independently.

Many people receive both SSDI and SSI at the same time — this happens when your SSDI benefit is low. In that case, both payments count as income for Medicaid, and your total income is what matters for your coverage.

Reporting changes to Social Security and Medicaid

You must report any change in your Social Security benefit to Medicaid within the timeframe your state requires — usually 10 days. This includes increases from COLA adjustments, changes from a representative payee, or corrections to your benefit amount.

You can report changes by phone, mail, or online through your state's Medicaid portal. Have your Social Security benefit letter or statement ready, as Medicaid will ask for the new amount and the effective date. If you do not report the change and your income now exceeds the limit, Medicaid may terminate your coverage retroactively and ask you to repay benefits you received while ineligible.

If your Social Security decreases — for example, if you reach full retirement age and chose to delay benefits, or if a dependent's benefit ends — report that too. A decrease might bring you back under the income limit if you had lost coverage, or it might change how much you owe for premiums or cost-sharing.

Medicaid Buy-In programs and other pathways to keep coverage

Some states offer Medicaid Buy-In programs (also called Medicaid for Workers with Disabilities or similar names) that let people with disabilities keep Medicaid even if their income exceeds the regular limit. These programs are designed for people who work and want to stay on Medicaid instead of relying on employer insurance.

Buy-In programs usually have a higher income limit — sometimes 250% of the federal poverty level or more — and you may pay a small premium based on your income. If your Social Security plus work income would normally disqualify you, a Buy-In program might be your path to keep coverage. Not all states have one, and rules vary widely, so ask your Medicaid office whether your state offers this option.

Another option is Medicaid continuation coverage, which some states offer when you lose Medicaid due to income. You may be able to stay on Medicaid for a set period (often 12 months) while you work, even though your income exceeds the limit. This gives you time to find other insurance or plan your next step.

Frequently Asked Questions

If I get a Social Security raise, will I automatically lose Medicaid?

Not automatically, but you will lose it if your new total income exceeds your state's limit and you do not may have access to for a work incentive program or Buy-In. Report the increase to Medicaid right away so they can recalculate. If you will lose coverage, ask about PASS, IRWE, or Buy-In options before the increase takes effect.

Do I have to report my Social Security to Medicaid if I already told Social Security about it?

Yes. Social Security and Medicaid are separate programs and do not automatically share income information. You must report your Social Security benefit amount directly to Medicaid. Some states receive updates from Social Security, but do not rely on that — report it yourself to be safe.

What if I receive both SSDI and SSI — does Medicaid count both?

Yes, both payments count as income for Medicaid. Medicaid adds your SSDI and SSI together, then compares the total to your state's income limit. If you are in a state where SSI automatically qualifies you for Medicaid, you keep Medicaid as long as you stay on SSI, regardless of your SSDI amount.

Can I use a PASS plan to keep Medicaid if my Social Security is too high?

Yes, if you are on SSDI or SSI and have a work goal. A PASS plan lets you set aside income toward that goal, and the set-aside money does not count against your income limit. You must have a written plan approved by Social Security before you start setting money aside, so contact a work incentive planning specialist to get your free guide.

What if my state's income limit is lower than my Social Security check alone?

You will not may have access to for regular Medicaid based on income, but you may still have options. Ask your Medicaid office about Medicaid Buy-In programs, Medicaid continuation coverage, or whether you may have access to for a different Medicaid category (for example, based on age or disability status rather than income). Some states have pathways even when income is high.