Does Inheritance Affect Social Security Disability?
Many people who are dependent on SSDI are concerned that an inheritance may leave them ineligible for benefits. Some even ask whether they may have to pay back disability benefits if they inherit money or property. The short answer is “no.” If you’re receiving SSDI benefits and you inherit money or property from a friend or family member, it should have no impact on your SSDI payments. That’s true no matter how much you receive in an inheritance.
Why Doesn’t an Inheritance Impact SSDI Eligibility?
In determining your eligibility for SSDI benefits, the Social Security Administration (SSA) looks at your ability to earn a living. That’s different from the amount of money and property you have. Eligibility for SSDI isn’t based on financial need like eligibility for many benefits are. You could be a millionaire and still receive SSDI if you had sufficient work credits and the SSA found that you were unable to engage in substantial gainful activity.
Unearned income–whether from an inheritance, a trust, investments, a friend or relative, lottery winnings, or something else–won’t impact your eligibility. Neither will assets.
What Types of Income Will Affect My Social Security Disability?
If you earn more than the substantial gainful activity (SGA) threshold, you won’t qualify for SSDI benefits. But, that won’t be because you have too much money. It will be because the SSA doesn’t consider you disabled if you’re able to engage in SGA.
This includes income you receive from a job, and also self-employment income. But, even if you do earn income from work that’s above the SGA cut-off, you won’t instantly lose your benefits. The SSA offers a trial work program that allows SSDI recipients to test their ability to work without losing benefits.
In 2025, the SGA cut-off is $1,620/month, unless the applicant is blind. For applicants who are statutorily blind, the SGA threshold is much higher–$2,700/month. These figures are updated annually.
Will an Inheritance Affect My Other Benefits?
An inheritance or other increase in income or assets will typically impact any need-based benefits. The information below offers an overview of how some common types of benefits may be impacted by inheritance, but the list is not complete, and there are often differences from state to state. Income and asset limits also differ from program to program, so you’ll have to check the specific eligibility requirements for each type of benefit you are receiving.
Medical Benefits
Medicare
SSDI recipients become eligible for Medicare after two years. Like SSDI, access to Medicare coverage is not need-based. That means inheriting money or property will not affect eligibility. Increased income may affect your Medicare premiums, but an inheritance is typically not considered income.
However, your inheritance may impact other types of medical coverage, particularly during the two-year waiting period for Medicare coverage.
Marketplace Subsidies
Marketplace subsidies are based on income, not assets. Most inheritances aren’t taxable income, and so won’t be counted as income for calculating Marketplace subsidies. However, there is one way in which an inheritance might impact your federal healthcare subsidies: if the inheritance generates income. For example, if you inherit an investment account, receiving the principal balance typically won’t affect your eligibility. But, if you maintain the investment account or reinvest the funds and generate interest income or dividends, those proceeds will be counted as income in determining your eligibility for subsidies. Similarly, if you inherit a house and live in it, your subsidies typically won’t be affected. But if you decide to rent it out, the rental profits will be counted as income.
Medicaid Eligibility
Medicaid is a need-based program. Standards vary somewhat from state to state, but generally, a Medicaid eligibility determination is based on both income and assets, and the asset cap is fairly low. In many states, you will not be eligible for Medicaid if you have more than $2,000 in assets. So, an inheritance may disqualify you from Medicaid coverage.
Many states have provisions for a special type of trust called a “special needs trust” in most states, which allows a family member to set aside money to help a disabled person with certain costs without disqualifying them from benefits like Medicaid. These special trusts are described in greater detail below.
Supplemental Security Income (SSI)
SSI is similar to Social Security disability in many ways, but there is one very important distinction: SSI is need-based. The program provides supplemental income to elderly or disabled people with very limited resources.
The eligibility cut-off is $2,000 for an individual and $3,000 for a married couple. However, it’s important to know that not all resources are counted. For example, if you own a home and live in it, the value of your home won’t be counted as an asset. Similarly, if you own a vehicle that you or someone in your household uses as transportation, it doesn’t count.
There are also exceptions for household goods like your furniture and appliances and for property you need to support yourself–for example, your computer if you do online work.
Those exceptions apply to assets you inherit as well as to those you’ve purchased or been gifted.
As you can see, these distinctions may determine whether or not an inheritance disqualifies you from receiving SSI.
Planning Can Protect Your Benefits
You won’t always have input into when or how you receive an inheritance. But, if you know that a friend or relative is planning to leave you money or property and you are dependent on benefits other than SSDI and Medicare, it’s worth exploring whether there is a way to insulate you from the impact of that inheritance. And, it’s best to take those steps early. If you have a legal right to inherit property, declining the inheritance generally won’t help you keep your benefits. Instead, the SSA will treat the assets as if you had received them and then given them away. That can result in disqualification for up to three years.
One option may be a special needs trust. The details differ somewhat from state to state, but a special needs trust can generally provide certain types of support to a disabled person without impacting eligibility for public benefits. However, the trust must be set up under specific strict conditions, including third party control of the assets in the trust and limitations on what the trust can pay for. In some circumstances, funds remaining after the death of the beneficiary are paid to a governmental entity to partially repay benefits paid during the beneficiary’s lifetime.
Another option may be the person who wants to leave you something passing property that isn’t countable as an asset. For example, receiving $100,000 in cash or investment accounts would disqualify the recipient from receiving SSI. However, if that recipient didn’t own a home, receiving a $100,000 home that they moved into would not trigger disqualification. Of course, the details will depend on the type and extent of the inheritance and on the benefits you receive or hope to receive.
A Knowledgeable Advocate Can Be Your Best Resource
The impact of inheritance, work, passive income, and other income and assets on SSDI and other related benefits is just one example of how complicated navigating the Social Security disability and/or Supplemental Security Income application process and benefit maintenance can be.
Disability Help Group was formed to help people in need of disability income put together complete, effective applications, and to help fight for your benefits every step of the way. Whether you’re just embarking on the application process and want to make sure you avoid missteps and omissions that could hurt your application or delay your benefits or are preparing to appeal a denial, we can help.
To learn more about our services and how we can help, 937-222-2222 or fill out the contact form on this site.