Is Social Security Considered Income for Medicaid?

A frequent question for seniors and individuals with disabilities concerns the interplay between Social Security benefits and Medicaid. For applicants who rely on Social Security, understanding how it is counted is a primary step toward securing healthcare coverage. The interaction between these two federal programs has direct financial consequences for millions of Americans.

How Medicaid Counts Social Security Income

When applying for Medicaid, nearly all forms of income are evaluated, and Social Security benefits are included in this calculation. This encompasses retirement benefits, survivor benefits, and Social Security Disability Insurance (SSDI). Supplemental Security Income (SSI) is not counted as income for Medicaid eligibility; receiving SSI often automatically qualifies an individual for Medicaid.

Medicaid agencies use an applicant’s gross monthly Social Security benefit, which is the total amount awarded before any deductions are taken. The most common deduction is the premium for Medicare Part B. For example, if an individual’s gross benefit is $1,500, but they only receive $1,325 after the Medicare premium is withheld, Medicaid will use the $1,500 figure.

This rule applies to non-MAGI (Modified Adjusted Gross Income) Medicaid for individuals who qualify based on being 65 or older, blind, or disabled. Caseworkers may require an applicant to provide their annual Social Security benefit statement for verification.

Medicaid Income Limits

To qualify for Medicaid, an applicant’s countable monthly income must fall below a threshold set by their state. These income limits are not uniform across the country and are based on the Federal Poverty Level (FPL), a measure of income issued annually by the Department of Health and Human Services.

For many programs serving aged, blind, or disabled individuals, the income limit is tied to a percentage of the FPL. For instance, the 2025 FPL for an individual is $15,650 annually, which translates to a monthly income of $1,304. In some states, the limit for certain long-term care programs is set at 300% of the Federal Benefit Rate (FBR), which for an individual in 2025 was $2,901 per month.

Because these figures change annually and vary by state, an applicant must verify the current income limit for their specific situation. Falling even slightly above this limit can result in a denial of benefits.

Pathways to Qualify with Excess Income

Discovering that your income is over your state’s Medicaid limit does not automatically mean you cannot qualify. Several pathways exist to help individuals with excess income become eligible.

Medicaid Spend-Down

The most common pathway is a Medicaid Spend-Down. This program functions like an insurance deductible, allowing an applicant to subtract incurred medical expenses from their income to meet the eligibility threshold. Consider an individual with a monthly income of $1,700 in a state with a Medicaid income limit of $1,400. Their excess income is $300.

To qualify for Medicaid for that month, they must show proof of at least $300 in medical bills. These can include health insurance premiums, old unpaid medical bills, and pharmacy co-pays. Once they have met their $300 spend-down amount, Medicaid will cover subsequent approved medical costs for the remainder of that month.

Qualified Income Trust (QIT)

In some jurisdictions, known as “income cap” states, a traditional spend-down is not permitted. For residents in these states, the primary tool to overcome excess income is a Qualified Income Trust (QIT), also known as a Miller Trust. A QIT is a legal trust where the applicant deposits their income each month. A designated trustee then disburses funds for approved medical expenses, such as a nursing home patient’s liability or health insurance premiums.

The trust must be irrevocable, meaning it cannot be altered or canceled. It can only contain the income of the Medicaid applicant, and assets or a spouse’s income cannot be added. The trust document must also name the state’s Medicaid agency as the primary beneficiary upon the applicant’s death to reclaim funds up to the amount of benefits paid. Setting up a QIT requires legal assistance, with costs ranging from a few hundred to a couple of thousand dollars.