Getting an inheritance, such as a life insurance payment, will not affect your Medicare benefits or coverage, but it can affect your Medicare premiums.
When a Medicaid recipient receives an inheritance, it is counted as income in the month that it is received. This means, more likely than not, a Medicaid recipient will be over the income limit for the month, and they will not be Medicaid-eligible for that month. See income limits by state and program.
We use the most recent federal tax return the IRS provides to us. If you must pay higher premiums, we use a sliding scale to calculate the adjustments. This is based on your "modified adjusted gross income" (MAGI). Your MAGI is your total adjusted gross income and tax-exempt interest income.
Immediately after receiving an inheritance, you should notify your local Social Security office.
If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income. Example: You inherit and deposit cash that earns interest income. Include only the interest earned in your gross income, not the inherited cash.
If your total savings (including the inheritance) exceed certain thresholds, you may lose eligibility for means-tested benefits.
eligibility for Medi-Cal. For new Medi-Cal applications only, current asset limits are $130,000 for one person and $65,000 for each additional household member, up to 10. Starting on January 1, 2024, Medi-Cal applications will no longer ask for asset information.
The non-taxable wages are deductions appearing on the pay stub under 'Before-Tax Deductions. ' These include medical, vision, and dental insurance premiums, Flexible Spending Account Health Care, and Flexible Spending Account Dependent Care. Employers are required to withhold Medicare tax on employees' Medicare wages.
MAGI is adjusted gross income (AGI) plus these, if any: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.
However, receiving an inheritance won't affect Social Security and SSDI benefits. SSI is a federal program that pays benefits to U.S. citizens who are over age 65, blind or disabled and who have limited income and resources.
Other states, such as California and Texas, prohibit Estate Recovery after the surviving spouse dies. The only exception is if the surviving spouse was also a Medicaid recipient.
California stands apart from the other states. In CA, Medicaid (Medi-Cal) recipients can gift inheritance, which is considered “income”, the month in which it is received. Furthermore, Medi-Cal recipients have no asset limit, and therefore, can have unlimited assets and still be eligible for long-term care benefits.
In general, any inheritance you receive does not need to be reported to the IRS. You typically don't need to report inheritance money to the IRS because inheritances aren't considered taxable income by the federal government. That said, earnings made off of the inheritance may need to be reported.
Therefore, inheritances do not impact eligibility, and no reporting requirements exist for inheritances or assets received. Before assuming an inheritance will forfeit your benefits, check which program you receive—SSI or SSDI.
For the earnings limits, we don't count income such as other government benefits, investment earnings, interest, pensions, annuities, and capital gains.
The Office of the Inspector General's (OIG) List of Excluded Individuals/Entities (LEIE) provides information to the health care industry, patients and the public regarding individuals and entities currently excluded from participation in Medicare, Medicaid and all other Federal health care programs.
The amount you pay depends on your modified adjusted gross income from your most recent federal tax return. To determine your 2025 income-related premium, Social Security will use information from your tax return filed in 2023 for tax year 2022.
Medicare examines your bank accounts and other assets when you seek financial help with Medicare costs. However, eligibility criteria and verification procedures differ by state of residence. In certain states, there are no asset limits for Medicare savings programs.
The 2025 Medicare income limit is $106,000 for individuals and $212,000 for couples. Those numbers are based on your income on your 2023 tax return. If you earned more than the Medicare income limit, you'll pay more for Medicare Part B (medical coverage) and Part D (prescription coverage).
Most people pay no premiums for Part A. For Medicare Part B in 2025, most beneficiaries will pay $185 per month. Certain factors may require you to pay more or less than the standard Medicare Part B premium in 2025.
This is done by the person dealing with the estate (called the 'executor', if there's a will). Your beneficiaries (the people who inherit your estate) do not normally pay tax on things they inherit. They may have related taxes to pay, for example if they get rental income from a house left to them in a will.
Many states assess an inheritance tax. That means that you, as the beneficiary, will have to pay taxes when you receive an inheritance. How much you'll be assessed depends on the state you live in, the size of your inheritance, the types of assets included, and your relationship with the deceased.