Does the Medicaid Assisted Living Waiver Affect Social Security?

Social Security is a government insurance program that provides benefits to eligible retirees, people with disabilities, their spouses and their dependents. For seniors, retirement benefits are based on contributions made via payroll taxes while employed, so amounts vary among recipients. To claim Social Security, individuals must accrue at least 10 years of contributions and be at least 62. However, claiming early before the full retirement age — which varies depending on a person’s birth year — reduces payments. Conversely, waiting until the full retirement age to claim results in higher Social Security payments.

Although rules differ between states, most Medicaid waiver programs apply strict financial criteria that consider an applicant’s income and assets, and Social Security payments count as income for Medicaid purposes. Earning more than the income threshold disqualifies seniors from receiving Medicaid waiver funding for assisted living. However, individuals may reapply if their financial circumstances change.

Additionally, some states have spend-down programs, where seniors can reduce their income or assets to qualify for Medicaid or waiver services. Strict rules apply regarding how individuals spend their excess income; for example, simply gifting it to family and friends breaks eligibility rules and leads to penalties or disqualification. Instead, seniors can spend surplus income on medical expenses, such as physician visits, outstanding bills, health insurance premiums and medications. After deducting such costs, if an individual’s income is lower than the limit, they can qualify for Medicaid and waivers for their state’s spend-down period.