Don't Let Social Security Disabled Adult Children's Benefits Interfere with Medicaid Benefits

A child with a special need whose parent has become disabled, retired, or died, may be entitled to Social Security Disability Insurance benefits based on the parent's work record. While these benefits, called Social Security Disabled Adult Children's Benefits (DAC), are a great option for many children with special needs, recipients need to be careful that they do not lose their Medicaid benefits.

DAC benefits are available to individuals who have had a special need since before turning 22 years of age. The amount of DAC is calculated based upon the parent's work records. Once the parent's Social Security benefits are determined, the child generally will receive a percentage of such benefits.

If the individual receiving DAC benefits also receives SSI and Medicaid benefits, he or she will need to monitor the benefits closely to ensure he or she does not lose Medicaid benefits. DAC benefits are often much higher than the SSI benefits that the individual is also receiving. As a result, receiving DAC benefits could cause the individual to lose his or her SSI benefits. A loss of SSI benefits may in turn cause a loss of Medicaid benefits. The loss of these benefits affects individuals who need the medical benefits more than the cash that DAC benefits provide.

Congress passed a law to ensure that Medicaid benefits were not lost. Individuals who receive DAC benefits that are high enough to cause a loss in SSI benefits may be able to retain their Medicaid benefits if they:

• are unmarried or married to another beneficiary who is receiving DAC benefits;
• lost benefits for SSI after July 1, 1987, because of the increase in DAC benefits;
• had a special need before the age of 22; and
• would be currently eligible for SSI benefits if it wasn't for the DAC benefit.