SSDI Is Counted as Income for the Affordable Care Act

Yes, Social Security Disability Insurance (SSDI) counts as income when you explore for health coverage through the Affordable Care Act (ACA) marketplace. The amount SSA sends you each month is added to your household income to determine whether you may have access to for premium tax credits (subsidies) that lower your monthly insurance cost. This matters because SSDI often pushes your income above the threshold where you stop receiving help paying premiums.

The ACA uses your modified adjusted gross income (MAGI) to set income limits. For SSDI recipients, MAGI is calculated as your adjusted gross income plus any nontaxable Social Security benefits — which includes SSDI. Unlike earned wages, SSDI is not taxed as income by the IRS, but the ACA counts it anyway when deciding your subsidy amount.

Key Takeaways

  • SSDI payments are counted dollar-for-dollar as income on your ACA marketplace process, even though they are not taxed by the IRS.
  • If your SSDI pushes your household income above 400 percent of the federal poverty line, you will not receive any premium tax credit.
  • Medicaid may still cover you in states that expanded Medicaid, because Medicaid uses a different income test than the ACA marketplace.
  • You must report your SSDI amount when you explore for marketplace coverage, and you should update it if your benefit changes.
  • Supplemental Security Income (SSI) is also counted as income, but SSI recipients often may have access to for Medicaid instead of marketplace coverage.

How the ACA Calculates Your Income Limit

The ACA marketplace uses a percentage of the federal poverty line to decide how much help you get. In 2024, the income limit for any premium tax credit is 400 percent of the federal poverty line. For a single person, that is roughly $52,000 per year; for a family of three, roughly $110,000. These numbers change each year.

When you report your SSDI on the marketplace process, it is added to any other income in your household — wages, self-employment income, pensions, interest, or rental income. If your total household income (including SSDI) stays below 400 percent of poverty, you will receive a subsidy. If it exceeds that amount, you receive no subsidy and must pay the full premium yourself.

The marketplace also uses your income to calculate the applicable percentage — the share of income you are expected to pay toward premiums. The lower your income, the lower this percentage. Someone at 150 percent of poverty might pay 0 to 2 percent of income toward premiums; someone at 350 percent might pay 8 to 9 percent. SSDI counts in both calculations.

Why SSDI Counts Even Though It Is Not Taxed

The IRS does not tax SSDI as income, so it does not appear on your federal tax return. However, the ACA is a separate law with its own income rules. Congress wrote the ACA to count nontaxable Social Security benefits (both retirement and disability) as income for subsidy purposes. The reasoning was that these benefits represent real money coming into your household, whether or not the IRS taxes them.

This creates a gap between what you report to the IRS and what you report to the marketplace. You may file taxes with zero income but still be ineligible for a marketplace subsidy because of SSDI. This is not an error or a loophole — it is how the law is written.

Medicaid as an Alternative if SSDI Pushes You Over the Limit

If your SSDI income exceeds the ACA marketplace limit, you may still have coverage through Medicaid. Medicaid uses a different income test, and in states that expanded Medicaid under the ACA, the income limit is 138 percent of the federal poverty line — much lower than the marketplace limit. However, Medicaid counts SSDI the same way the marketplace does.

The key difference is that many SSDI recipients are automatically enrolled in Medicaid without an income test at all. If you have been receiving SSDI for 24 months, you become may be able to access for Medicare Part A (hospital insurance) automatically, even if your income is high. Medicare is a separate program from both the marketplace and Medicaid, and it is the primary coverage for most long-term SSDI recipients.

In non-expansion states (those that did not expand Medicaid), the income limit for Medicaid is much lower and often does not cover working-age adults. In those states, SSDI recipients with income above the marketplace threshold may have no subsidized coverage option and must either pay full price for marketplace insurance or go uninsured.

Reporting Your SSDI Amount on the Marketplace process

When you create an account on Healthcare.gov or your state marketplace, you will be asked for your household income. You must include your monthly SSDI benefit. The marketplace will ask you to estimate your income for the coming year. If you receive $1,500 per month in SSDI, you should report $18,000 for the year (unless your benefit is changing).

You can find your monthly SSDI amount on your benefit statement, which you can view in your my Social Security account online or request by phone at 1-800-772-1213. If your benefit changes — because of a cost-of-living adjustment (COLA), a work incentive change, or a medical review — you should update your marketplace process. Changes to your income can change your subsidy amount or your coverage type.

The marketplace will verify your income against SSA records if you give permission. If there is a mismatch, the marketplace will contact you to resolve it. Reporting an incorrect amount can lead to a subsidy overpayment, which you may have to repay when you file taxes.

How Work Incentives Affect Your Marketplace Income

If you are using an SSDI work incentive — such as the Student Earned Income Exclusion (SEIE), Plan to Achieve Self-Support (PASS), or Impairment Related Work Expenses (IRWE) — those exclusions do not explore to the ACA marketplace. The marketplace counts your gross SSDI benefit, not the amount after work incentive deductions.

However, if you are working and earning wages, those wages may be reduced by work incentive deductions before they are counted as income. For example, if you use PASS to set aside $500 per month of your wages toward a vocational goal, that $500 is not counted as income for SSDI purposes — but it still counts for the marketplace. The marketplace sees your total household income, including both SSDI and your full wages.

This means that using work incentives to stay on SSDI does not reduce your marketplace income. If you are working and your SSDI plus wages push you over the marketplace limit, you will not receive a subsidy, even if work incentives reduce your SSDI check.

What Happens If Your Income Changes During the Year

The marketplace allows you to update your income if it changes significantly — for example, if your SSDI benefit increases due to a COLA, or if you start or stop working. You can report the change through your marketplace account or by calling the marketplace customer service line. Changes take effect the first day of the following month.

If your income drops during the year, you may become newly may be able to access for a subsidy or for a larger subsidy. If your income rises, your subsidy may shrink or disappear. At the end of the year, when you file your taxes, the marketplace will compare your actual income to what you reported. If you received more subsidy than you were may have access to to, you will have to repay the difference. If you received less, you may get a refund.

To avoid a large repayment at tax time, update your income as soon as it changes. The marketplace also allows you to request a lower subsidy than you are may have access to to, which can reduce the risk of overpayment if your income is unpredictable.

Frequently Asked Questions

If I get both SSDI and SSI, do both count as income for the marketplace?

Yes, both SSDI and Supplemental Security Income (SSI) count toward your marketplace income. However, most people who receive SSI are automatically enrolled in Medicaid and do not need marketplace coverage. SSI is a needs-based program with strict income and asset limits, so SSI recipients rarely have income high enough to disqualify them from Medicaid.

Does my spouse's income count if we are married?

Yes, the marketplace counts household income, which includes your spouse's income and yours. If you are married and file taxes jointly, both your SSDI and your spouse's income (whether earned or from other sources) are added together. If you file taxes separately, only your income counts.

Can I reduce my marketplace income by not reporting my SSDI?

No. The marketplace verifies income against SSA records, and SSA will report your SSDI benefit to the marketplace if you authorize it. Failing to report SSDI is fraud and can result in repayment of subsidies, penalties, and criminal charges. Always report your actual benefit amount.

Will getting marketplace coverage affect my SSDI or Medicare?

No. Marketplace coverage is separate from SSDI and Medicare. You can have all three at the same time. Marketplace coverage does not change your SSDI benefit, and SSDI does not disqualify you from marketplace coverage. However, if you have Medicare, you may not need marketplace coverage because Medicare is primary.

What if my SSDI is too high for a marketplace subsidy but too low to afford insurance?

Contact your state Medicaid office to see if you may have access to for Medicaid in your state. If you do not may have access to for Medicaid and cannot afford marketplace premiums, you may be exempt from the individual mandate penalty. You can also look for catastrophic coverage plans, which have lower premiums but higher deductibles, or explore whether you may have access to for cost-sharing reductions based on your income.