SSDI and SSI are treated differently by the Marketplace

Social Security Disability Insurance (SSDI) counts as income for Marketplace insurance purposes. Supplemental Security Income (SSI) does not. This distinction matters because it affects whether you owe more for your monthly premium, whether you can claim tax credits to lower that premium, and how much you actually pay out of pocket.

The Marketplace — the health insurance exchange where you shop for plans under the Affordable Care Act — uses your Modified Adjusted Gross Income (MAGI) to calculate your subsidy. SSDI payments are included in that calculation. SSI payments are explicitly excluded. If you receive both, only the SSDI portion counts.

This rule applies whether you buy a plan through Healthcare.gov, your state's Marketplace, or a broker. It does not change based on your state or your age.

Key Takeaways

  • SSDI counts as taxable income on your federal tax return and is included in your Marketplace income calculation; SSI does not count either way.
  • Including SSDI in your income may reduce or eliminate your Marketplace subsidy, meaning you pay more for your premium each month.
  • You report your SSDI amount on your Marketplace process in the income section, using your most recent Social Security statement or benefit letter.
  • If your SSDI amount changes during the year, you can update your Marketplace process and your subsidy will adjust accordingly.
  • Medicare may be able to access (which begins 24 months after your SSDI award) may change your Marketplace options, because you cannot enroll in a Marketplace plan once Medicare begins.

Why SSDI counts but SSI does not

The Marketplace uses MAGI because it is the income figure the IRS already tracks. SSDI is taxable income — you receive a 1099-SSA form each year, and depending on your other income, you may owe federal income tax on part or all of your SSDI. The Marketplace straightforward uses the same income threshold the tax code uses.

SSI, by contrast, is a needs-based program. It is not taxable income, and the IRS does not count it. The Marketplace rule mirrors that: SSI is excluded from MAGI. This is one of the few places where SSI and SSDI are treated fundamentally differently, even though both are Social Security programs.

If you receive both SSDI and SSI — which is possible if your SSDI amount is very low — only the SSDI portion affects your Marketplace subsidy. Your SSI payment does not reduce it further.

How SSDI reduces your Marketplace subsidy

The Marketplace subsidy is a tax credit that lowers your monthly premium. The amount depends on your income and the cost of the second-lowest-cost Silver plan in your area. The higher your income, the smaller your subsidy.

If your SSDI is $1,400 per month, that $1,400 is counted as income. If you have no other income and live alone, your household income is $16,800 per year. The Marketplace then compares that to the federal poverty line for your household size. If the poverty line is lower, you may still receive a subsidy. If your income is above the poverty line, your subsidy shrinks as your income rises.

In 2024, for example, the federal poverty line for a single person is $14,580. If your SSDI is $1,400 per month ($16,800 per year), your income is above the poverty line, and your subsidy will be smaller than someone with no income. The exact amount depends on your state and the plans available to you.

Reporting SSDI on your Marketplace process

When you explore for Marketplace coverage, you will see a section asking for income. You report your SSDI there. Use your most recent benefit letter from Social Security, which shows your monthly payment amount. Multiply that by 12 to get your annual income, or report the monthly amount and let the Marketplace calculate it.

You do not need to submit the benefit letter with your process, but keep it handy. If the Marketplace asks you to verify your income — which happens randomly or if your reported income seems inconsistent with other data — you will send a copy of the letter or your Social Security statement online through your Marketplace account.

If you are explore before you receive your first SSDI payment, report $0 for that month and update your process once the payment begins. The Marketplace allows you to update your income information at any time.

What happens if your SSDI amount changes

Social Security adjusts SSDI payments each January for cost-of-living increases. If your payment goes up, your Marketplace income goes up, and your subsidy may shrink. If your payment goes down — which is rare but can happen if you return to work and your benefit is recalculated — your subsidy may increase.

You can update your Marketplace process whenever your SSDI changes. Log into your account, update your income, and your new subsidy will take effect on the first of the following month. You do not have to wait for open enrollment.

If you do not update your process and your SSDI increases, you may owe money back at tax time. The Marketplace assumes your income stays the same unless you tell it otherwise. If you received a larger subsidy than your actual income allowed, the IRS will ask you to repay the difference when you file your taxes.

SSDI, Medicare, and your Marketplace options

Twenty-four months after your SSDI begins, you become may be able to access for Medicare. Once Medicare starts, you cannot stay on a Marketplace plan. You must enroll in Medicare Part A and Part B, and you cannot use Marketplace subsidies.

This means your Marketplace coverage is temporary if you are on SSDI. Plan ahead: around month 22 or 23 of your SSDI award, Social Security will send you information about Medicare enrollment. You will have a limited time to enroll, and missing that window can result in permanent penalties on your Medicare premiums.

If you are also receiving SSI, Medicaid may be available to you during your Marketplace years. Some states allow you to have both Marketplace coverage and Medicaid. Others require you to use Medicaid if you are SSI-may be able to access. Check with your state Medicaid office to understand your options before you commit to a Marketplace plan.

Other income that affects your Marketplace subsidy

SSDI is not the only income the Marketplace counts. Wages, self-employment income, interest, dividends, rental income, and certain other Social Security benefits (like spousal or survivor benefits) all count. If you have a spouse or dependents, their income counts too.

If you are working while on SSDI, your wages are added to your SSDI when calculating your Marketplace income. This can significantly reduce your subsidy. Work incentives like the Student Earned Income Exclusion or the Plan to Achieve Self-Support (PASS) do not reduce your Marketplace income — they only affect your SSDI payment itself.

If you have questions about whether a specific type of income counts, contact your Marketplace directly. You can reach Healthcare.gov by phone at 1-800-318-2596, or your state Marketplace if you live in a state that runs its own exchange.

Frequently Asked Questions

Will I lose my Marketplace subsidy if my SSDI increases?

Not automatically. Your subsidy will recalculate based on your new income, and it may shrink, but you will not lose it entirely unless your income rises above the limit for your household size. Update your Marketplace process when your SSDI changes so your subsidy reflects your actual income.

Can I hide my SSDI income to get a bigger subsidy?

No. Failing to report income is fraud. The Marketplace can verify your SSDI through Social Security's records, and if you underreport, you will owe back the excess subsidy plus penalties. Report your actual SSDI amount.

Does my spouse's SSDI count toward my Marketplace subsidy?

Yes, if you file taxes together. Household income includes the income of everyone you claim as a dependent or who claims you as a dependent. If you are married and file jointly, your spouse's SSDI counts. If you file separately, it does not.

What if I receive SSDI and SSI at the same time?

Only your SSDI counts toward your Marketplace income. Your SSI payment is excluded. Report only the SSDI amount on your Marketplace process.

Will my Marketplace coverage end when I turn 65 and get Medicare?

Yes. Medicare may be able to access begins 24 months after your SSDI award, regardless of your age. Once Medicare starts, you must enroll and cannot use Marketplace coverage. Social Security will notify you before this happens.