Poverty, a risk factor for ill health, could be alleviated by generous welfare states. However, do generous social policies also reduce the health implications of socio-economic inequalities? This study investigates how minimum income protection is associated with socio-economic health inequalities. The author hypothesises that higher benefit levels are associated with lower health inequalities between income groups. Minimum income benefits support the people most in need, and therefore should improve the health of the lowest income groups, which in turn would reduce overall health inequalities. This hypothesis is tested with the European Social Survey (2002–2012) and the SaMip dataset using three-level multilevel models, covering 26 countries. The results show a robust relationship between benefit levels and individual self-rated health. However, the hypothesis of reduced health inequalities is not completely supported, since the findings for the cross-level interactions between income quintiles and benefit levels differ for each quintile.