Does Medicaid Difficulty of Care income affect Social Security survivor benefits earnings limit?
My sister just lost her husband last month and is now receiving survivor benefits from Social Security based on his work record. She's 62, so under full retirement age, but her husband was 67 when he passed. Here's my question - she also gets paid through Medicaid to care for their disabled adult son (who has cerebral palsy) under what I think is called the 'Difficulty of Care' provision. Her case worker mentioned this income isn't subject to federal taxes, but we're confused about whether it counts toward the earnings limit for Social Security survivor benefits. She's worried about having to pay back benefits if she exceeds the limit, but really needs both income sources right now. Does anyone know if these Medicaid payments count toward the SS earnings limit? She makes about $1,750/month from the caregiving payments.
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Emma Thompson
This is an excellent question about a complex situation. The earnings limit for survivor benefits in 2025 for someone under FRA is $22,320 annually (or $1,860 monthly). The good news is that Difficulty of Care payments that are excluded from income taxes under IRC Section 131 generally do NOT count toward the Social Security earnings test limit. These payments are considered qualified Medicaid waiver payments rather than wages or self-employment income for this purpose. Your sister should keep documentation from her Medicaid program confirming these are Difficulty of Care payments, just to be safe.
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Javier Cruz
AuthorThank you so much! That's a huge relief. Do you know if there's anything specific she needs to tell Social Security about these payments? Should she report them somewhere even if they don't count?
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Malik Jackson
my mom had same situation back in 2020, the medicade payments didnt count for the earnings test but make sure your sister keeps ALL the paperwork they give her!! my mom almost had big problems when ssa wanted proof later
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Isabella Costa
THIS!!! The SSA is notorious for coming back YEARS later asking for documentation. I got hit with an overpayment notice 3 years after my husband died because they suddenly wanted proof of something I thought was already settled. Keep EVERYTHING!
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StarSurfer
I think the previous replies have good information but I want to add something important - this is one of those situations where it's probably worth your sister's time to actually speak directly with an SSA representative to get this confirmed for her specific case. They can make a note in her file that these payments were reviewed and determined not to count toward the earnings test. It's VERY difficult to get through to SSA on the phone these days though - I recently discovered a service called Claimyr that can help with that. You can check them out at claimyr.com - they basically wait on hold with SSA for you and call you when an agent comes on the line. There's a demo video at https://youtu.be/Z-BRbJw3puU that shows how it works. I used it when dealing with my own survivor benefits questions and it saved me literally hours of hold time.
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Javier Cruz
AuthorThat's a really helpful suggestion. She's tried calling SSA twice and got disconnected both times after waiting over an hour. I'll let her know about this service - anything to help her get through right now is worth it.
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Ravi Malhotra
just wondering, does your sister live in the same house with her son? i think that matters for the difficulty of care payment rules, but not sure if it affects how SS looks at it
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Javier Cruz
AuthorYes, she lives with him - has been his full-time caregiver since he was born. He's 31 now.
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Freya Christensen
THIS IS EXACTLY WHY THE SYSTEM IS SO FRUSTRATING!!!! All these complicated rules and no clear answers anywhere on SSA website. I had to figure it all out myself when my husband died. Called SSA 9 TIMES and got 4 DIFFERENT answers about income limits. They should make this clearer for people already dealing with grief!!!!!!
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Omar Hassan
I feel your frustration. The disconnect between Medicaid programs and Social Security is especially problematic. When my mother was in a similar situation, we actually requested a formal written determination from SSA regarding her Difficulty of Care payments. It took about 6 weeks to get the letter, but having that official documentation prevented problems later. I suggest the original poster's sister do the same thing - request a formal written determination that specifically addresses the Medicaid waiver payments.
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Ravi Malhotra
i forgot to mention my cousin gets SSI not survivors benefits and for SSI they DO count those payments against you. so make sure your situation is different.
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Emma Thompson
This is an important distinction! You're absolutely right - for SSI (Supplemental Security Income), which is a needs-based program, the Difficulty of Care payments would typically count as income and could reduce benefits. But for Social Security survivor benefits, which are insurance benefits based on the deceased worker's record, the earnings test works differently and excludes these payments. This is why it's so important to be specific about which benefit type we're discussing.
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Javier Cruz
I really appreciate everyone's replies. I just talked to my sister and she's going to try to get through to SSA to get something in writing. She said her Medicaid case manager also offered to provide a letter specifically stating these are Difficulty of Care payments under Section 131. It sounds like keeping good documentation is the key here. Thank you all for helping during this difficult time.
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StarSurfer
That sounds like a solid plan. Having documentation from both sides (Medicaid and SSA) is the safest approach. One more tip - when your sister does speak with SSA, she should ask them to document the conversation in her file with specific notes about the Difficulty of Care payments not counting toward the earnings test. Each call to SSA is supposed to be logged with notes, and this can help if questions come up in the future.
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Callum Savage
I'm so sorry for your sister's loss. This is indeed a complex situation, but I want to reinforce what others have said - you're on the right track getting documentation from both sides. One thing I'd add is that when she calls SSA (or uses that Claimyr service someone mentioned), she should specifically ask them to reference POMS DI 10505.010 which covers the earnings test exclusions. This is the internal SSA manual section that addresses Medicaid waiver payments like Difficulty of Care. Having that specific reference might help the representative give her a more definitive answer and ensure proper documentation in her file. Also, since she's caring for an adult disabled child, she may want to ask about potential auxiliary benefits on her late husband's record for their son if he hasn't already been evaluated for that.
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Annette M
can someone please explain to me how you accomplished this with the earnings test? I have called Social Security at least 10x and get a different answer every time. My husband passed and I am receiving difficulty of care payments from a home and community based service through a Medicaid waiver myself for the care I provide for my adult disabled daughter at home. The program does not take taxes from me, but yet half of the reps say it disqualifies me from the in care benefits because it is considered earned income. HOW can it be earned income when I am not able to pay FICA on the monies, not able to earn my own work credits, not able to invest in a 401k, and not able to add to my own Medicare. I would be completely reliant on my deceased husband's record. This makes no sense. I do earn way above the yearly amount to determine my in care benefits, BUT I essentially have no way to prepare myself for my own retirement due to needing to fill out 2014-7 irs form because the program does not take taxes due to me providing care for her in my home. How did anyone get this letter of determination? I fear losing the benefits and being punished for taking care of my medically fragile adult daughter.
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