What happens to Social Security disability when you turn 65?

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Q. My sister has been collecting Social Security disability and has been on Medicare since she had a stroke seven years ago. She is turning 65 on Dec. 30. WIll Social Security automatically convert her disability into retirement payments? Also, will she now be eligible for Medicaid along with Medicare?
— Sister

A. We’re glad you’re trying to help your sister.

These federal benefits can be confusing, so let’s go through it.

There are two types of federal disability benefits: Social Security Disability Insurance, or SSDI, and Supplemental Security Income, or SSI.

SSDI is paid by the Social Security Administration and provides payments to those who qualify medically, have amassed the necessary work history within a recent time frame and paid Social Security taxes on their earnings, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

SSI is a program managed by Social Security, but supported by U.S. Treasury funds, Mott said.

Those who meet the same disability qualifications but fall below certain thresholds for income and assets may qualify to receive payments through SSI, she said.

“For those receiving SSDI, the benefit will convert to regular Social Security benefit payments when the recipient reaches full retirement age (FRA),” Mott said. “As your sister will be turning 65 as of Dec. 30, it would mean she was born in 1955. Her FRA is 66 and 2 months. When she attains that age, her SSDI converts to a retirement benefit.”

Medicare generally becomes available to qualifying U.S. citizens and permanent residents in the month they reach age 65, Mott said. But it can also be obtained by those under age 65 who are disabled.

Medicaid, by comparison, is a program that is overseen by each individual state in conjunction with the federal government. Eligibility for Medicaid is typically based on an individual’s Modified Adjusted Gross Income, Mott said. Those who are blind, disabled or overage 65 may qualify for Medicaid based on their state’s guidelines, she said.

“In New Jersey, an individual who is not receiving SSI will qualify for Medicaid if their gross monthly income is no more than $1,064 per month and have financial resources of less than $4,000,” she said. “The Medicare Savings Program is available to disabled individuals with income of less than $17,232 and no more than $7,860 in assets. This service helps cover the cost of the Part B premium up to $1,700.”

There is also a program for low-income residents that will assist with Medicare Part D, she said.

“Whether your sister will qualify for Medicaid benefits along with her Medicare is dependent on her income,” she said.

The best course of action would be to call New Jersey Medicaid at (800) 356-1561 or to call her county welfare agency.

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This story was originally published on Dec. 16, 2020.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.