Inheritance & SSDI
Understanding Your Earned Benefits
The Core Difference: Earned vs. Needs-Based
Unlike SSI, Social Security Disability Insurance (SSDI) is an **earned benefit**. It is not based on your current income or resources. You earned it by working and paying FICA taxes. This is the most important factor when considering an inheritance.
An inheritance is considered unearned income and does not count against your SSDI eligibility.
How You Qualify for SSDI
Your Work History
You worked and earned credits.
FICA Taxes Paid
You contributed to Social Security.
Insured Status
You are vested in the program.
SSDI Benefits
You receive your earned benefits.
Notice that your current assets or unearned income are not part of the eligibility equation.
Income That Matters vs. Income That Doesn't
Earned Income (This IS Limited)
This is money you make from working a job. The Social Security Administration (SSA) has strict limits on how much you can earn while receiving SSDI, known as Substantial Gainful Activity (SGA).
- Wages from an employer
- Net earnings from self-employment
Unearned Income (This is NOT Limited)
This is passive income or assets you receive that are not from work activity. An inheritance falls into this category and does not affect your SSDI payments.
- Inheritances (cash, property, etc.)
- Investments or interest
- Gifts from family or friends
⚠️ Important Caveat: Other Benefits May Be Affected!
While your SSDI is safe, an inheritance can impact other needs-based benefits you might be receiving alongside SSDI. These programs have strict resource limits, similar to SSI.
Be cautious if you also receive:
- Medicaid
- Supplemental Nutrition Assistance Program (SNAP)
- Housing Assistance (Section 8)
For these programs, you may need to use strategies like a Special Needs Trust or an ABLE account.