SSDI counts as income for Marketplace insurance, but the way it counts is different from wages

When you explore for health insurance through the Marketplace (Healthcare.gov or your state's exchange), you must report your Modified Adjusted Gross Income (MAGI). For most people receiving SSDI, your MAGI is your SSDI benefit amount plus any other income you have — wages, interest, rental income, and so on. The Marketplace uses this number to decide whether you may have access to for a subsidy (a tax credit that lowers your monthly premium) and how large that subsidy is.

The key difference: SSDI itself is not taxed as ordinary income on your federal tax return, but the Marketplace treats it as income for subsidy purposes. This means your SSDI benefit reduces the subsidy you receive, even though you do not pay federal income tax on that benefit. If your SSDI is your only income, you will likely may have access to for a subsidy because SSDI amounts are usually low enough to fall below the income thresholds. But if you also work or have other income, the combination counts toward your total MAGI.

Key Takeaways

  • The Marketplace counts your full SSDI benefit as income when calculating subsidy amounts, even though SSDI is not taxed on your federal return.
  • If SSDI is your only income, you will almost certainly may have access to for a subsidy because SSDI amounts fall well below the Marketplace income limits.
  • If you work while receiving SSDI, your wages plus your SSDI benefit together determine your subsidy — the higher your total income, the smaller your subsidy.
  • You must report your expected SSDI for the year you are explore for coverage; if your benefit changes mid-year, you can update your Marketplace process.
  • Medicaid rules for counting SSDI income are different from Marketplace rules, so you may may have access to for Medicaid even if you do not may have access to for a Marketplace subsidy.

How the Marketplace calculates your subsidy when you receive SSDI

The Marketplace subsidy is based on your MAGI as a percentage of the Federal Poverty Level (FPL) for your household size. In 2024, for example, a single person qualifies for a subsidy if their MAGI is between 100% and 400% of the FPL. The FPL varies by year and household size, so the exact income threshold changes annually.

When you report SSDI on your Marketplace process, you enter your expected monthly or annual benefit. The Marketplace adds this to any other income — such as wages, self-employment income, or unearned income like interest — to calculate your total MAGI. The higher your MAGI, the smaller your subsidy. If your MAGI exceeds 400% of the FPL, you do not may have access to for a subsidy at all, though you can still buy an unsubsidized plan.

Because SSDI amounts are typically modest — the average benefit in 2024 is around $1,550 per month — most people receiving only SSDI will fall well below the subsidy income limits and will may have access to for substantial help paying their premiums. A single person with only SSDI income would need to be receiving an unusually high benefit to exceed the 400% FPL threshold.

What happens if you work while receiving SSDI

If you are working under SSDI's work incentives — such as the Trial Work Period or Extended may be able to access Period — your wages count as income on your Marketplace process along with your SSDI benefit. The Marketplace does not distinguish between earned and unearned income; it adds them together to calculate your MAGI.

This can significantly reduce your subsidy. For example, if you receive $1,500 in SSDI and earn $2,000 per month in wages, your MAGI is $3,500 per month. The Marketplace will use this combined figure to determine your subsidy amount. If your combined income pushes you above the subsidy threshold, you may lose your subsidy entirely or see it shrink substantially.

Some people in this situation find that buying an unsubsidized plan or using Medicaid (if they may have access to) is more affordable than a subsidized Marketplace plan. This is one reason why it is important to run the numbers on the Marketplace website before you enroll — you can see your estimated subsidy based on your reported income before you commit to a plan.

Reporting SSDI income on your Marketplace process

When you create a Marketplace account, you will be asked to report your household income for the year you are explore for coverage. For SSDI, you report your expected benefit for that calendar year. If you know your benefit amount, enter it. If you are unsure, you can find it on your Social Security statement, which you can access through your my Social Security account at ssa.gov, or by calling Social Security at 1-800-772-1213.

The Marketplace will use this income figure to calculate your subsidy. If your benefit changes during the year — for example, if you receive a cost-of-living adjustment (COLA) — you can update your Marketplace process to reflect the new amount. Changes to your income can affect your subsidy, so it is worth updating if your SSDI benefit increases or if you start or stop working.

When you renew your coverage each year, you will report your income again. The Marketplace will use your reported income to recalculate your subsidy for the new year. If your actual income turns out to be different from what you reported, you may owe money back when you file your taxes, or you may receive a refund — this is called reconciliation.

SSDI and Medicaid: different income rules

Medicaid has its own income rules, and they are not the same as the Marketplace rules. Most states use MAGI-based Medicaid, which counts income similarly to the Marketplace, but some states still use older income rules that count SSDI differently. In a few states, SSDI is not counted as income for Medicaid purposes at all, or is counted only partially.

This means you could be ineligible for a Marketplace subsidy but still may have access to for Medicaid, or vice versa. If you receive SSDI and are looking for health coverage, it is worth checking both the Marketplace and your state Medicaid office to see which program offers you the best coverage and cost. You can find your state Medicaid office through the Centers for Medicare & Medicaid Services (CMS) website at medicaid.gov.

If you may have access to for both Medicaid and a Marketplace plan, Medicaid is usually the better choice because it has no premiums and typically lower out-of-pocket costs. However, Medicaid availability and generosity vary widely by state, so your situation may differ.

How SSDI interacts with Medicare

If you have been receiving SSDI for 24 months, you automatically become may be able to access for Medicare, regardless of your age. Once you are on Medicare, you generally should not buy a Marketplace plan — Medicare is your primary coverage. However, you can buy a Marketplace plan to supplement your Medicare coverage if you want additional benefits, though this is uncommon and usually not cost-effective.

If you are under 65 and receiving SSDI but have not yet been on SSDI for 24 months, you are not yet on Medicare and should buy coverage through the Marketplace or Medicaid. Once you reach the 24-month mark, Social Security will automatically enroll you in Medicare Part A and Part B. At that point, you should stop using your Marketplace plan and switch to Medicare.

Your SSDI benefit amount does not change when you become may be able to access for Medicare, but your health coverage does. This is an important transition to plan for, because Marketplace subsidies end once you are on Medicare.

Frequently Asked Questions

If I receive SSDI and nothing else, will I definitely get a Marketplace subsidy?

Almost certainly yes. SSDI amounts are low enough that they fall well below the Marketplace income limits in all 50 states. The only exception would be if you have a very large household or if your state has different rules, which is rare. You can check your specific subsidy by entering your information on Healthcare.gov.

Do I have to report SSDI if I explore for Marketplace insurance?

Yes. The Marketplace asks for your household income, and SSDI counts as income for this purpose. Failing to report it could result in you receiving a larger subsidy than you are may have access to to, which you would have to repay when you file your taxes.

What if my SSDI benefit increases mid-year?

You can update your Marketplace process to report the new benefit amount. This may change your subsidy for the remainder of the year. Some people find their subsidy decreases when their benefit increases, but the increase in SSDI usually more than makes up for it.

Can I get both Medicaid and a Marketplace plan?

No. If you may have access to for Medicaid, you must enroll in Medicaid and cannot use a Marketplace plan. Medicaid is a government program, not a Marketplace plan. However, you can switch between them during the annual open enrollment period or if your income changes.

Does SSDI count as income for any other benefits I might receive?

Yes. SSDI counts as income for many means-tested programs, including SNAP (food information), housing information, and some state programs. Each program has its own rules for how it counts SSDI, so you may may have access to for some programs but not others even though you receive the same benefit.