If you are receiving Social Security disability and come into an inheritance, your continued participation in the program may be affected. If you are a participant in a needs-based Social Security program (such as Supplemental Security Income or Medicaid), an inheritance could result in an interruption of benefits. If you are receiving Social Security Disability Insurance, your benefits should continue as usual.
Social Security Disability Income (SSDI)
According to the Social Security Administration website, Social Security Disability Income (SSDI) benefits are paid to those who are totally disabled by a medical condition that is either fatal or that is expected to last at least a year. To be eligible for SSDI, you must have been employed and paying into Social Security for a specific amount of time, based on your age, prior to becoming disabled. While there are limits on the amount of money you can earn through work while receiving SSDI benefits, you are not rendered ineligible based on your assets or any non-work income, such as an inheritance or an insurance settlement.
Supplemental Security Income (SSI)
Supplemental Security Income (SSI) is a program that provides cash assistance to the disabled and elderly who are very poor and have little or no assets or income. Eligibility for SSI is based on a person's age or disability as well as financial situation. The Social Security Administration's website states that if you receive an inheritance while on SSI, you may become ineligible for benefits in the month you receive the inheritance. If you have not spent the inheritance in that month, the money is considered a "resource" that can make you ineligible for benefits.
Tomasz Stasiuk, a Colorado lawyer who specializes in Social Security disability claims, noted in an October 1, 2008 article, "SSI, Settlements/Inheritance, and Special Needs Trusts," that an inheritance can also affect an SSI recipient's eligibility for Medicaid. If your Medicaid eligibility is based on receiving SSI benefits, you may lose your Medicaid if you also lose your SSI. Keep in mind, though, that the rules for qualifying for Medicaid varies from state- to state: You may be able to remain eligible for Medicaid after receiving an inheritance, even if you lose your SSI.
Special Needs Trusts
A special needs trust is a fund set up to pay third parties for providing goods and services to someone with a disability. The assets in special needs trusts are not considered "resources" that would disqualify a disabled person from receiving SSI or Medicaid. Attorney Tomasz Stasiuk notes that these trusts can be very difficult to set up and advises seeking out a lawyer who specializes in setting up special needs trusts to avoid problems in the future.
If someone on SSI receives an inheritance, it is crucial that they contact Social Security at once to report the income. Failure to do so can result in a denial of benefits, being required to pay back benefits and even criminal charges.
- Social Security Administration: Supplemental Security Benefits
- Centers for Medicare and Medicaid Services: Medicid Eligibility
- Social Security Disability Blog: Does Inheritance Affect Disability Benefits?
- Social Security Administration: Effects of Inheritance on SSI Benefits
- Colorado Social Security Law: Colorado Social Security Law Rotating Header Image SSI, Settlements/Inheritance, and Special Needs Trusts
- Smith Baird LLC: A Special Child Needs a Special Plan
- Work World: Inheritances