How Obamacare Affects Social Security and People With Disabilities

Obamacare has made health insurance more accessible to people with disabilities, but Social Security benefits do count as income when determining whether you qualify.

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Before the Affordable Care Act (ACA) was passed, people with disabilities had a hard time getting health insurance. A big reason was that plans could deny people benefits due to pre-existing conditions—something that the ACA (also known as Obamacare) changed. One way to get health insurance before Obamacare was to apply for Social Security Disability Insurance (SSDI), since Medicare coverage comes with disability benefits.

But since Obamacare fully went into effect in 2014, the number of disabled people without health insurance has dropped by half. And at the same time, annual applications for SSDI have dropped by about one-third.

Elimination of Preexisting Condition Exclusions

One way that Obama's health care reform helped make health insurance accessible to more people is by eliminating preexisting condition exclusions. This was a big benefit to those with disabilities, because many are now able to purchase their own insurance. Having more people eligible for private health insurance also has had an effect on Social Security, Medicare, and Medicaid.

Due to the Affordable Care Act, insurance companies can no longer deny coverage to individuals with preexisting conditions, including chronic or disabling illnesses. An insurance company also can't charge you more if you have a preexisting condition.

Access to Inexpensive Health Insurance

At the same time, individuals without group health insurance are now allowed to purchase insurance through the Health Insurance Marketplace. Those with low income (less than 400% of the federal poverty level) are eligible for lower premiums, and those with even lower income (250% of the federal poverty level) can qualify for lower out-of-pocket costs like deductibles and copays. (See Nolo's federal poverty guidelines for exact figures.)

How the ACA Kept People Off Public Benefits

These two provisions of the Affordable Care Act lowered the number of people on Medicare and Social Security disability. Why? Historically, many folks with preexisting conditions who lost their prior work-based health coverage applied for disability benefits just so they could get health care benefits. They knew that an approval for Social Security disability meant they can either qualify early for Medicare, or, if they have very low income (or somewhat low income and very high medical expenses), they could be eligible for Medicaid.

Some of these folks were able to get health insurance through the marketplaces, despite their preexisting conditions, and decided not to file for disability benefits since they no longer needed a disability approval to get health care.

Not only that, but now that more persons with disabilities or chronic medical conditions have good health care and access to reasonable priced medications, more may be able to work despite having physical or mental impairments, leading to fewer of them needing to apply for disability benefits.

What's more, those who can't work for a while due to a temporary disability will be less likely to need to be off work indefinitely, thanks to better health care and access to medications. In fact, fewer people may now qualify for Social Security disability since only those whose medical conditions prevent them from working for at least 12 months are eligible for SSDI disability benefits. Now, some disability applicants who would have been eligible to receive Social Security while they recuperate from injuries, surgeries, or mental illnesses may recover sooner because of regular doctors' visits plus the proper medication.

How the ACA Can Help People With Disabilities Get SSDI Benefits

On the other hand, some other folks who would have previously been denied disability benefits or Medicaid benefits are now more likely to be approved. Often disability applicants are denied because they haven't been seeing a doctor for treatment and don't have test results to prove their disability.

Now that health care is more accessible, more people who apply for disability will have been seeing doctors regularly and have the proper diagnoses, lab results, and x-rays in their records. This preparation helps eliminate the need for Social Security to send applicants to consultative medical exams and might reduce the number of disability appeals. With the proper medical records, fewer claims will be incorrectly denied disability benefits in the first place. This represents significant potential cost savings for Social Security.

Can You Get Obamacare if You're on Social Security?

Yes, nothing prevents you from getting health insurance through the Obamacare marketplace if you're receiving Social Security disability, retirement, dependent, or survivors benefits. But your income from those sources does have to fit under the income limits for Obamacare (see below).

That said, if you're approved for SSDI benefits, you'll be enrolled in Medicare once you've received two years of SSDI payments, so at that point, you won't need a marketplace plan. (Find out the details here.)

And if you're receiving SSI (Supplemental Security Income), you'll automatically be enrolled in Medicaid right away, so you won't need to sign up for a plan through the marketplace.

Does Social Security Count as Income for Obamacare?

Yes, Social Security disability and retirement benefits do count as income when determining whether you qualify for Obamacare and the premium tax credits. When you calculate your "modified adjusted gross income" (MAGI), you include even the non-taxable portion of Social Security benefits.

But SSI (Supplemental Security Income) does not count toward your MAGI, so if you receive SSI, do not include that in your estimate. You also don't have to include child support, veterans disability payments, or workers' compensation benefits in your income. For more information on calculating your MAGI, go to www.healthcare.gov/income-and-household-information/how-to-report.

Updated February 3, 2023

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