Supplemental Security Income (SSI) is a federal safety net program for the elderly, blind, and disabled, providing them with a minimum guaranteed income. If your resources are above the program’s resource limits of $2,000 for an individual or $3,000 for a couple, you may be able to “spend down” your resources to qualify for SSI, similar to the process of qualifying for Medicaid.
However, a person cannot simply transfer countable resources to qualify for SSI, as this can cause significant problems.
What Does the Social Security Administration Consider a “Resource”?
The Social Security Administration’s (SSA) position is that resources available to you are cash or anything you own that you can convert into cash.
Bank accounts, brokerage accounts, cryptocurrency accounts, second vehicles, inheritance, lump sum settlements, investment property, stocks, bonds, certificates of deposit, and life insurance (one or more policies) with a face value over $1,500 are just some of the examples of what counts as a resource.
However, not all resources count for SSI eligibility determination. The following are excluded:
- Your homestead (the home you live in and the land it is on)
- One vehicle, regardless of value, if you or a member of your household use it for transportation
- Household items and personal effects
- Life insurance (one or more policies) with a combined face value of $1,500 or less
- Burial plots for you or your immediate family
- Burial funds of $1,500 or less each for you and your spouse
- Property used by you and/or your spouse in your trade or business, or required for your job
- Property set aside under a Plan to Achieve Self-Support where the person is disabled or blind
- Up to $100,000 in ABLE accounts set up through your state’s ABLE program
- The first $2,000 received each year for participating in certain clinical trials
- Disaster relief
- Special accounts for disabled or blind children
- Health flexible spending accounts
- Resources transferred into a qualifying trust
- Other resources specified by the SSA
What Does It Mean to Transfer a Resource, and Why Does It Matter?
Transferring a resource is defined broadly to include gifts and outright transfers of a resource. Any transfers of resources can cause you to be ineligible for SSI for up to 36 months. Selling a resource for less than it is worth is also potentially problematic.
Furthermore, any money you receive from a sale can make you ineligible for SSI if the amount received exceeds the countable resource limit.
The bottom line is that the SSA looks at whether you have transferred any resources within the previous three years. If you have, it computes a penalty period by dividing the transfer amount by your monthly benefit amount. In addition, if you become ineligible for SSI or are subject to a penalty period, your Medicaid benefits could also be impacted. This is because, similarly to SSI, Medicaid is a “means-tested” benefit for particular recipients.
If you give your son a $6,000 gift and then apply for a monthly SSI benefit of $600 within three years of the gift, you will not be eligible for SSI for 10 months (6,000 / 600 = 10). That 10-month period will begin on the date of the transfer and end 10 months later.
In other words, although you can be ineligible for up to 36 months due to a transfer, that is only a cap. The actual period of ineligibility is based on the value of what you transferred, divided by the monthly benefit in your state.
What If I Transfer Resources Into a Trust?
Not all transfers prevent you from qualifying for SSI. In fact, with appropriate planning, persons with special needs who meet specific qualifying criteria can transfer their resources into a supplemental or special needs trust. If done correctly, a person can still qualify for SSI after transferring assets to this trust. But, a person should only do this type of transfer with the guidance of an experienced attorney.
Can Transfers Be “Undone”? Are There Any Exceptions?
It is possible that a problematic transfer could be “cured” by the person to whom you made a gift or transfer, by returning to you the resource in question. However, this could result in the resource returning to your countable resources and pushing you above the applicable limit.
Certain exceptions to the transfer penalty may apply in your situation. These include, but are not limited to, the following:
- You may have an “undue hardship” exception. This is where the loss of SSI would result in loss of food or shelter, and your total available funds (income and liquid resources) do not exceed a certain amount.
- A non-home resource transfer may not be counted if it was made to a spouse or to a child of any age who is blind or disabled.
- You might have a spend-down exception to imposition of a transfer penalty if you spent money on goods and services (at fair market value) for your own needs. However, this exception usually needs to be substantiated by documentation or receipts.
- A home may also be transferred under certain circumstances.
If you need advice on how to properly “spend down” assets or have received an SSI suspension or termination notice from SSA, you should speak with an attorney in your area. You may be able to reverse the suspension, reinstate benefits, or prevent these events from happening.