Disabled Adult Child (DAC) Passalong of Medicaid Coverage

Disabled adult child (DAC) benefits are a type of Social Security auxiliary benefit that is paid to eligible adults aged 18 or older who have qualifying disabilities that began before they turned age 22. Supplemental Security Income (SSI) is a means-tested federal program that makes monthly cash payments to adults and children with qualifying disabilities and to adults aged 65 or older, regardless of their disability status. In most states, SSI recipients are automatically eligible for Medicaid, a means-tested program jointly financed by federal and state governments that pays for the delivery of health and long-term services and supports (LTSS) to certain low-income populations.

DAC benefits reduce SSI benefits on a dollar-for-dollar basis (after certain exclusions are applied). Thus, entitlement to DAC benefits may cause some individuals to become ineligible for SSI. Under current law, states are generally required to continue providing Medicaid coverage to individuals who lose SSI eligibility because they become entitled to or have an increase in their DAC benefits. This Medicaid eligibility pathway is sometimes referred to as the DAC passalong.

By keeping their Medicaid coverage, individuals under the DAC passalong can retain access to Medicaid-covered services such as LTSS, which are typically not covered by other payers, including Medicare. Some policymakers have expressed interest in expanding the DAC passalong to DAC recipients who were not enrolled in SSI prior to receiving DAC benefits but would otherwise be eligible for SSI.

Overview of Disabled Adult Child Benefits and Supplemental Security Income

Adults aged 18 or older with qualifying disabilities that began before they turned age 22 can receive DAC benefits (also referred to as childhood disability benefits [CDB]) based on the work record of a parent who (1) is receiving Social Security retirement or disability benefits, or (2) is deceased and met minimum insured status requirements under Social Security at the time of his or her death. In May 2026, there were about 1.2 million DAC beneficiaries (representing 1.7% of all Social Security beneficiaries), and the average DAC benefit was $1,105 per month. DAC beneficiaries generally receive health care coverage under Medicare after a 24-month waiting period.

To qualify for SSI, individuals must have income and resources that are within limits set in federal law. In general, the higher an individual's countable income, the lower the individual's monthly SSI payment (in 2026, the maximum monthly SSI payment is $994 per month for an individual). Countable income is subtracted from the maximum monthly payment, dollar for dollar, in determining an individual's SSI eligibility and monthly payment amount (if any). SSI counts most types of income (with certain exclusions), including earned income, such as wages, and unearned income, such as Social Security DAC benefits. Individuals must also have countable resources at or below $2,000 to be eligible for SSI. In general, SSI counts only the income and resources of the individual. However, SSI may deem (i.e., attribute to the individual) a portion of the income and resources of an SSI-ineligible spouse or parent who lives in the same household in determining an individual's eligibility and payment amount. SSI recipients in most states automatically qualify for health care coverage under Medicaid. As a means-tested program of last resort, SSI requires individuals to apply for certain other benefits for which they may be eligible—including DAC benefits—before determining their initial or continuing SSI eligibility. Thus, SSI applicants and recipients who are, or become, eligible for DAC benefits are required to apply for those benefits. The receipt of DAC benefits may preclude an individual from receiving SSI or reduce a recipient's SSI payment to zero resulting in the loss of SSI as well as SSI-based Medicaid coverage.

The "DAC Passalong" Medicaid Eligibility Pathway

In general, individuals qualify for Medicaid coverage by meeting the requirements of a specific eligibility pathway. For aged, blind, and disabled (ABD) populations, SSI eligibility criteria form the foundation of Medicaid eligibility rules; Medicaid generally uses SSI categorical criteria to define the ABD populations and often uses or adapts SSI's financial standards and counting methodologies to specify the financial eligibility requirements for different ABD eligibility pathways. There are both mandatory and optional Medicaid ABD eligibility pathways for individuals that meet the general requirements of the SSI program. Most states automatically extend Medicaid coverage to SSI recipients, but there are other pathways for individuals deemed to be SSI eligible, or who would be SSI eligible if not for certain circumstances. One such pathway is the DAC passalong.

Before the DAC passalong was created, individuals who lost SSI due to the receipt of or an increase in DAC benefits would have also lost their SSI-based Medicaid coverage. At the time, some Members of Congress expressed concern that individuals who became ineligible for SSI due to their entitlement to DAC benefits lost their Medicaid coverage immediately but had to wait two years before qualifying for Medicare. The DAC passalong was established in 1986 as part of the Employment Opportunities for Disabled Americans Act (P.L. 99-643).

Under Section 1634(c) of the Social Security Act (SSA), individuals qualify for continued SSI-based Medicaid coverage (but not SSI cash payments) under the DAC passalong Medicaid eligibility pathway if they (1) lose eligibility for SSI due to receipt of DAC benefits on or after July 1, 1987, and (2) would continue to be eligible for SSI if not for their entitlement to or an increase in their DAC benefits. Data are not publicly available on the number of DAC beneficiaries who qualify for the DAC passalong.

Eligibility for Medicaid coverage through the DAC passalong continues once DAC beneficiaries begin to receive health care coverage under Medicare (following the 24-month waiting period) as long as they would remain eligible for SSI but for their DAC benefits. At this point, these individuals would be "dual eligibles," and Medicare would be the primary payer for health services, with Medicaid acting as the payer of last resort.

209(b) States

A handful of states—known as "209(b) states"—exercise the option of applying eligibility criteria that are more restrictive than those of the SSI program in determining Medicaid eligibility for SSI recipients under authority in Section 1902(f) of the SSA. However, these criteria may not be more restrictive than those contained in the state's Medicaid plan that was in effect on January 1, 1972. 209(b) states must deduct the value of SSI from an SSI recipient's income in determining Medicaid eligibility. They must also allow SSI recipients to "spend down" or deduct medical expenses from their income to the point where they meet the applicable income standard needed for Medicaid eligibility. 209(b) states have the option to exclude all, some, or none of the DAC benefit or increases in that benefit that caused ineligibility for SSI from an individual's income when determining Medicaid eligibility; 209(b) states vary in whether they exclude DAC benefits or not.

Hypothetical Example Illustrating the Applicability of the DAC Passalong

To understand whether the DAC passalong applies in different scenarios, consider two hypothetical siblings with the same disability: Sibling 1 is age 17 and Sibling 2 is age 19. Sibling 1, who is considered a child, does not qualify for SSI because deemed parental income makes them ineligible under SSI's income and resource rules, and Sibling 1 also does not qualify for SSI-based Medicaid coverage. Sibling 2, who is an unmarried adult and thus not subject to deeming, qualifies for SSI (and therefore Medicaid) based on their own limited income and resources.

One year later, when Sibling 1 is age 18 and Sibling 2 is age 20, their mother passes away and both siblings begin receiving DAC benefits based on their mother's Social Security work record. Because SSI requires individuals to apply for certain other benefits, including DAC benefits, and because DAC benefits reduce SSI benefits dollar for dollar (after certain exclusions are applied), Sibling 1 still cannot qualify for SSI since their DAC benefit is larger than the maximum possible SSI benefit. Because Sibling 1 receives DAC benefits but was not receiving SSI payments at the time their DAC benefits began, Sibling 1 does not qualify for SSI-based Medicaid coverage through the DAC passalong. Sibling 1 would qualify for Medicare after serving a 24-month waiting period.

On the other hand, when Sibling 2 begins receiving DAC benefits, they lose their SSI cash benefits since the larger DAC benefit reduces their SSI payment to zero. However, Sibling 2 will continue to receive SSI-based Medicaid coverage under the DAC passalong because they were receiving SSI payments at the time they became entitled to DAC benefits and would continue to be eligible for SSI if not for their entitlement to DAC benefits. As a DAC beneficiary, Sibling 2 would also receive Medicare coverage after satisfying the 24-month waiting period. Table 1 provides a summary comparison of these two hypothetical sibling DAC beneficiaries.

Issues for Congress

As illustrated in the hypothetical example above, there are some DAC beneficiaries who were not eligible (or did not apply) for SSI before receiving DAC benefits. SSI requires individuals to apply for certain other benefits for which they may be eligible, including DAC benefits, before determining their SSI eligibility. Thus, some of these individuals may not be able to qualify for SSI before receiving DAC benefits because of their receipt of those DAC benefits but would be eligible for SSI if not for those DAC benefits. The DAC passalong provided under Section 1634(c) of the SSA does not apply to these DAC beneficiaries because they were not enrolled in the SSI program when they began receiving DAC benefits.

There have been some legislative proposals aimed at extending the passalong to this group of DAC beneficiaries. For example, H.R. 9846, introduced in the 119^th Congress, would extend Medicaid coverage to all Social Security child beneficiaries with qualifying disabilities, including but not limited to DACs (i.e., minor children, student children, DACs), who would be eligible for SSI in the absence of such Social Security child benefits (i.e., would meet SSI's disability, financial, and other criteria). On one hand, proponents of such proposals argue that current law prohibits individuals with disabilities from receiving SSI-based Medicaid coverage because of circumstances that may be beyond their control, such as the timing of a parent's death. On the other hand, the DAC passalong was intended to bridge the gap in health care coverage for individuals who lost SSI-based Medicaid coverage but had to wait two years to receive coverage under Medicare. As such, some may argue that there is no need to extend Medicaid to individuals that were not receiving coverage to begin with and, therefore, never lost such coverage upon DAC entitlement.