What Happens When an SSI Beneficiary Receives Food and Shelter From a Third Party?

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A recent discussion on the ASNP Members-Only Listserve focused on what happens to a Supplemental Security Income (SSI) beneficiary'™s award when she lives in another person'™s home and does not pay for room and board. Questions also arose regarding beneficiaries who live alone but have their living expenses paid through a special needs trust or by another third party. Since this is a common scenario for families with adult children with special needs, below is a summary of the answers provided in the Listserv discussion by ASNP members <a href=" https://www.specialneedsplanners.com/content/FirmProfile.asp?FirmID=5293#KevinUrbatsch ">Kevin Urbatsch</a> and <a href=" https://www.specialneedsplanners.com/content/FirmProfile.asp?FirmID=5071#DavidLillesand ">David Lillesand</a>. As most special needs planners know, an SSI benefit may be reduced if the SSI recipient receives in-kind support and maintenance for household costs. According to the <a href="https://secure.ssa.gov/apps10/poms.nsf/lnx/0500835465!opendocument">SSA POMS manual</a>, only ten specific types of expenses count as 'household costs'. They are: food, mortgage payments, property taxes, rent, heating fuel, gas, electricity, water, sewer, and garbage removal. So, if a third party pays for, or provides, any of these items to a SSI recipient, the beneficiary'™s award may be reduced. Once the Social Security Administration (SSA) determines that an SSI beneficiary receives in-kind support and maintenance, it will apply one of two different formulas in order to calculate the benefit reduction. The choice of formula depends on the SSI recipient'™s specific living situation. For SSI recipients who live in someone else'™s home, the SSA applies the 'value of one-third reduction rule.' According to the rule, the SSA first calculates the recipient'™s pro rata share of household expenses. For example, if the beneficiary lives in a home with four other people and the total household expenses are $3,000 per month, then the beneficiary'™s pro rata share of expenses is $600. If the SSI beneficiary does not contribute $600 a month towards these expenses, his or her benefit will be reduced by one-third, regardless of how close the beneficiary comes towards making the proper contribution. In other words, it does not matter if the beneficiary contributes $100 or $590 per month; so long as she does not contribute her actual pro rata share, her benefit will be reduced by one-third. However, if an SSI recipient has his household expenses paid for by a special needs trust or by any other third party (typically when the beneficiary lives alone), the SSA applies a different rule, known as the 'presumed maximum value rule.' According to this rule, the SSI recipient'™s award is reduced by the lesser of either one-third of his benefit or the actual amount he received through in-kind support. Therefore, if a beneficiary receives an SSI award of $600 per month, and a special needs trust pays for his $2,000-a-month rent, the beneficiary'™s award is reduced by only $200 (one-third of the benefit). If the special needs trust pays only $150 a month for food, the award is reduced by $150 (since the $150 actually received is less than one-third of the total benefit). For the relevant discussion on the ASNP Members-Only Listserv, along with more detailed descriptions of both the "value of one-third reduction rule" and the "presumed maximum value rule," <a href=" https://listserv.specialneedsplanners.com/SCRIPTS/WA-ELDERLAW2.EXE?A0=MEMBERS&X=432D4731EE8C53F95C&Y=ken%40specialneedsplanners.com ">click here</a>. The discussion took place the fourth and fifth weeks of December 2007. To join the members only list serve, <a href=" https://www.specialneedsplanners.com/listserv/snp_signup_membersonly.asp"> click here</a>. Questions? Call us: (866) 296-5509

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A recent discussion on the ASNP Members-Only Listserve focused on what happens to a Supplemental Security Income (SSI) beneficiary'™s award when she lives in another person'™s home and does not pay for room and board. Questions also arose regarding beneficiaries who live alone but have their living expenses paid through a special needs trust or by another third party. Since this is a common scenario for families with adult children with special needs, below is a summary of the answers provided in the Listserv discussion by ASNP members Kevin Urbatsch and David Lillesand.

As most special needs planners know, an SSI benefit may be reduced if the SSI recipient receives in-kind support and maintenance for household costs. According to the SSA POMS manual, only ten specific types of expenses count as 'household costs'. They are: food, mortgage payments, property taxes, rent, heating fuel, gas, electricity, water, sewer, and garbage removal. So, if a third party pays for, or provides, any of these items to a SSI recipient, the beneficiary'™s award may be reduced.

Once the Social Security Administration (SSA) determines that an SSI beneficiary receives in-kind support and maintenance, it will apply one of two different formulas in order to calculate the benefit reduction. The choice of formula depends on the SSI recipient'™s specific living situation.

For SSI recipients who live in someone else'™s home, the SSA applies the 'value of one-third reduction rule.' According to the rule, the SSA first calculates the recipient'™s pro rata share of household expenses. For example, if the beneficiary lives in a home with four other people and the total household expenses are $3,000 per month, then the beneficiary'™s pro rata share of expenses is $600. If the SSI beneficiary does not contribute $600 a month towards these expenses, his or her benefit will be reduced by one-third, regardless of how close the beneficiary comes towards making the proper contribution. In other words, it does not matter if the beneficiary contributes $100 or $590 per month; so long as she does not contribute her actual pro rata share, her benefit will be reduced by one-third.

However, if an SSI recipient has his household expenses paid for by a special needs trust or by any other third party (typically when the beneficiary lives alone), the SSA applies a different rule, known as the 'presumed maximum value rule.' According to this rule, the SSI recipient'™s award is reduced by the lesser of either one-third of his benefit or the actual amount he received through in-kind support. Therefore, if a beneficiary receives an SSI award of $600 per month, and a special needs trust pays for his $2,000-a-month rent, the beneficiary'™s award is reduced by only $200 (one-third of the benefit). If the special needs trust pays only $150 a month for food, the award is reduced by $150 (since the $150 actually received is less than one-third of the total benefit).

For the relevant discussion on the ASNP Members-Only Listserv, along with more detailed descriptions of both the "value of one-third reduction rule" and the "presumed maximum value rule," click here. The discussion took place the fourth and fifth weeks of December 2007.

To join the members only list serve, click here.

A recent discussion on the ASNP Members-Only Listserve focused on what happens to a Supplemental Security Income (SSI) beneficiary'™s award when she lives in another person'™s home and does not pay for room and board. Questions also arose regarding beneficiaries who live alone but have their living expenses paid through a special needs trust or by another third party. Since this is a common scenario for families with adult children with special needs, below is a summary of the answers provided in the Listserv discussion by ASNP members <a href=" https://www.specialneedsplanners.com/content/FirmProfile.asp?FirmID=5293#KevinUrbatsch ">Kevin Urbatsch</a> and <a href=" https://www.specialneedsplanners.com/content/FirmProfile.asp?FirmID=5071#DavidLillesand ">David Lillesand</a>. As most special needs planners know, an SSI benefit may be reduced if the SSI recipient receives in-kind support and maintenance for household costs. According to the <a href="https://secure.ssa.gov/apps10/poms.nsf/lnx/0500835465!opendocument">SSA POMS manual</a>, only ten specific types of expenses count as 'household costs'. They are: food, mortgage payments, property taxes, rent, heating fuel, gas, electricity, water, sewer, and garbage removal. So, if a third party pays for, or provides, any of these items to a SSI recipient, the beneficiary'™s award may be reduced. Once the Social Security Administration (SSA) determines that an SSI beneficiary receives in-kind support and maintenance, it will apply one of two different formulas in order to calculate the benefit reduction. The choice of formula depends on the SSI recipient'™s specific living situation. For SSI recipients who live in someone else'™s home, the SSA applies the 'value of one-third reduction rule.' According to the rule, the SSA first calculates the recipient'™s pro rata share of household expenses. For example, if the beneficiary lives in a home with four other people and the total household expenses are $3,000 per month, then the beneficiary'™s pro rata share of expenses is $600. If the SSI beneficiary does not contribute $600 a month towards these expenses, his or her benefit will be reduced by one-third, regardless of how close the beneficiary comes towards making the proper contribution. In other words, it does not matter if the beneficiary contributes $100 or $590 per month; so long as she does not contribute her actual pro rata share, her benefit will be reduced by one-third. However, if an SSI recipient has his household expenses paid for by a special needs trust or by any other third party (typically when the beneficiary lives alone), the SSA applies a different rule, known as the 'presumed maximum value rule.' According to this rule, the SSI recipient'™s award is reduced by the lesser of either one-third of his benefit or the actual amount he received through in-kind support. Therefore, if a beneficiary receives an SSI award of $600 per month, and a special needs trust pays for his $2,000-a-month rent, the beneficiary'™s award is reduced by only $200 (one-third of the benefit). If the special needs trust pays only $150 a month for food, the award is reduced by $150 (since the $150 actually received is less than one-third of the total benefit). For the relevant discussion on the ASNP Members-Only Listserv, along with more detailed descriptions of both the "value of one-third reduction rule" and the "presumed maximum value rule," <a href=" https://listserv.specialneedsplanners.com/SCRIPTS/WA-ELDERLAW2.EXE?A0=MEMBERS&X=432D4731EE8C53F95C&Y=ken%40specialneedsplanners.com ">click here</a>. The discussion took place the fourth and fifth weeks of December 2007. To join the members only list serve, <a href=" https://www.specialneedsplanners.com/listserv/snp_signup_membersonly.asp"> click here</a>.

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What Happens When an SSI Beneficiary Receives Food and Shelter From a Third Party?

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