Supplemental Security Income (SSI) is a cash assistance program funded and administered by the federal government through the Social Security Administration. The SSI program is authorized by Title XVI of the Social Security Act, entitled “Supplemental Security Income for the Aged, Blind, and Disabled.” As of September 2011, over 8 million people received SSI benefits.

To be eligible for SSI benefits, a claimant must fit within 1 of the following 3 categories:

1. Aged – An “aged” person is someone who is age 65 or older;

2. Blind – A “blind” person is someone whose vision, with use of a correcting lens, is 20/200 or less or who has tunnel vision of 20 degrees or less; or

3. Disabled – A “disabled” person is someone who meets the Social Security disability insurance program definition of disability.

In addition to meeting one of the categorical requirements set forth above, SSI applicants must also meet the following financial requirements:

1. SSI income rules.  A claimant must have monthly “countable” income which is less than the current Federal Benefit Rate (FBR) The FBR for 2014 for an individual is $721 per month, and for a couple, $1,082 per month. Income is anything the claimant receives during a calendar month that can be used to meet the need for food or shelter. However, there are certain “exclusions” from income.  Among other exclusions, the first $20 of all income is disregarded, and $65 is deducted from earned income, plus one-half of the remaining amount of earned income.

Income may be in cash or in-kind. In-kind income is not cash; it is food or shelter, or something the claimant can use to obtain food or shelter. In-kind income that directly satisfies the need for food or shelter is called “in-kind support and maintenance.” Under the SSI rules, the value of the in-kind support and maintenance is an amount equal to one-third of the FBR regardless of the actual current market value of the support and maintenance received.

2. SSI Resource Rules.  In addition to the income limitations, a claimant must have limited resources; that is, resources cannot exceed $2,000 for an individual and $3,000 for a couple on the first day of each month.

For SSI purposes, a resource is anything of value owned by the claimant or claimant’s spouse, if any, including cash, liquid assets, and real or personal property. If the claimant has the right, authority, or power to liquidate the property, it is a resource countable by SSI.

Certain things are not counted as resources. They include: the claimant’s home, regardless of value; household goods and personal effects are excluded without regard to value; pne automobile, regardless of value; life insurance with a face value of less than $1500; and, all assets in a special needs trust. There are other non-countable resources.

3. Deeming of Income and Resources.  Under certain circumstances, all or portions of the income or resources of a spouse, parent, or sponsor of an alien are “deemed” to be the income or resources of the claimant and are counted in determining the claimant’s financial eligibility for SSI benefits.

4. Transfer of Assets Penalty.  A penalty is imposed under the SSI rules for transferring ownership of a resource for less than fair market value. Such transfers can result in a period of ineligibility for SSI. The look-back period for uncompensated transfers is 36 months. The length of the penalty is calculated by dividing the fair market value of the transferred resource by the FBR (Federal Benefit Rate, which is the maximum SSI payment to an single individual, for example, in 2014 it is $721). The result is the number of months of ineligibility, capped at 36 months from the date of transfer.

5. Exceptions to the Transfer of Assets Penalty.  No penalty period is imposed for the following transfers:

1) Transfers to Trusts. The period of ineligibility does not apply when an individual transfers a resource to a trust established for the sole benefit of the individual’s blind or disabled child.

2) Transfers of a home. Certain transfers of the home to another are permissible:

a)  Transfer to a spouse; a child under age 21; or, a child of any age who is blind or disabled.
b)  Transfer to a sibling of the claimant who has an ownership interest in the home, and who was residing in the claimant’s home for at least 1 year immediately before the date the claimant becomes institutionalized.
c)  Transfer to the claimant’s son or daughter who was residing in the transferor’s home for at least 2 years immediately before the date the claimant became institutionalized, and who provided care to the claimant which permitted the claimant to reside at home instead of in an institution.

3) Non-home resource transfer exceptions. The penalty does not apply if the non-home resource was transferred to the transferor’s spouse, or to another person for the sole benefit of the transferor’s spouse, or to the transferor’s blind or disabled child.

4) Resource returned. If the improperly transferred resource is returned in full, the penalty does not apply.

5) Transfers for purposes other than to qualify for SSI. If a claimant makes an asset transfer for reasons other than to qualify for SSI, and then the claimant becomes unexpected medically eligible for SSI disability benefits, the penalty would not apply.

6) Undue Hardship. In an undue hardship case, a claimant has transferred resources for less than fair market value within the look-back period and now needs SSI because the claimant has remaining funds equivalent to less than one month’s FBR but expenses greater than the FBR.

(Adapted from an article posted on the Academy of Special Needs Planners (ASNP)  websiteThe mission of the ASNP is to maintain a professional organization of attorneys skilled in the complex areas of public entitlements, estate, trust and tax planning, and the legal issues involving individuals with physical and cognitive disabilities. Mr. Vanarelli is a founding member of the ASNP.)

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