When a loved one passes away, you may have questions about how to move forward with handling an inheritance. Will the funds affect any benefits you or a family member receives? Keep reading to feel prepared and know what to expect regarding Social Security, Social Security Disability Income (SSDI), Supplemental Security Income (SSI) and Medicaid funds.
Does Inheritance Affect Your Social Security and Social Security Disability Income?
Social Security and SSDI are contribution-based programs, meaning paying into them gives you eligibility for their benefits. Typically, an inheritance won’t affect the benefits you receive from Social Security and SSDI.
However, income from another source, such as working at a job, could affect the amount you receive or your eligibility.
Will Inheriting Impact Your Supplemental Security Income?
SSI can provide benefits to citizens in the United States who are over age 65, disabled, blind or who have limited income and resources. The Social Security Administration supports SSI through the general federal tax revenues instead of Social Security taxes.
Because SSI is means-based and intended to help those with limited income and resources, a change in your assets or income from an inheritance could reduce or eliminate your SSI benefits.
Do SSI Recipients Have to Report an Inheritance?
If you’re an SSI recipient and receive an inheritance, you must report the inheritance to Social Security within 10 days after the end of the month you received it. Even if you don’t accept the inheritance, you must report it.
Failing to report an accepted or rejected inheritance of any amount could result in potential penalties. For example, Social Security may reduce your benefits by $25 to $100 for each late or failed report. Knowingly failing to report an important change like an inheritance may result in suspended payments for six months or up to three years for repeated offenses.
Is There a Way to Have Inheritance and SSI Benefits?
In specific cases, you may be able to accept an inheritance without risking the loss of SSI benefits. Those who have a loved one with a disability or chronic illness of some kind can set up a special needs trust. Depositing the inheritance into the special needs fund allows a beneficiary to continue receiving SSI funds while benefiting from the inheritance.
A trustee, such as a parent or family member, must oversee the special needs fund. In addition to inheritance, the trust can include donations from family members, proceeds of life insurance policies or awards from lawsuits.
The trustee can use the special needs fund to pay for various costs, including personal care, medical expenses, dental expenses, education or leisure activities like vacations.
Does an Inheritance Affect Your Medicaid Benefits?
Medicaid is a means-based program intended to provide health coverage to low-income adults, pregnant people, people with disabilities and older adults. Because the program has strict rules about income, anyone who receives an inheritance could potentially lose their Medicaid coverage.
Contact Inheritance Funding to Learn More Today
Since 1992, Inheritance Funding has provided a way for heirs to receive their funds through a simple, quick process. If you’d like to learn more about your inheritance options, please fill out a contact form today!
1-800-944-2072 
