Social Security is a federal program that provides income to retirees, disabled individuals, and survivors of deceased workers. For health insurance purposes, Social Security matters in two key ways: it's a common income source that affects your Marketplace subsidy eligibility, and receiving Social Security Disability Insurance (SSDI) is a pathway to Medicare.
Social Security retirement and disability benefits count toward your Modified Adjusted Gross Income (MAGI) for Marketplace purposes. Specifically, MAGI includes non-taxable Social Security benefits, even the portion that isn't taxed by the IRS is added back for subsidy calculations. This is important because many retirees assume their non-taxable Social Security won't count, but it does.
For disability: if you receive SSDI benefits, you become eligible for Medicare after a 24-month waiting period from when you start receiving SSDI. During that waiting period, you can purchase Marketplace coverage with premium tax credits based on your income.
Supplemental Security Income (SSI), a different program, provides cash assistance to elderly, blind, or disabled individuals with very limited income and assets. SSI recipients in most states automatically qualify for Medicaid and would not typically use the Marketplace.
When estimating income for your Marketplace application, include all Social Security benefits you expect to receive during the year, both taxable and non-taxable portions. If you're unsure of your benefit amount, you can find it on your Social Security statement at ssa.gov.
Yes. Even the portion of your Social Security benefits that isn't subject to federal income tax is included in MAGI for Marketplace subsidy calculations. This is one of the key differences between AGI and MAGI.
If you're eligible for Medicare, you generally can't receive Marketplace premium tax credits. Once your Medicare eligibility begins, you should transition to Medicare. During the 24-month SSDI waiting period, you can use Marketplace coverage with subsidies.
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