Because much of the elder law practice population is elderly or disabled and at or below the poverty level, a basic understanding of Social Security programs (and related Medicare and Medicaid benefits) is important.

Social Security Disability (“SSD”) Benefits:

Available to a blind or disabled worker who:

(1) applies for benefits;

(2) has not reached full retirement age;

(3) has sufficient social security earnings to be deemed insured for disability;

(4) is disabled;

(5) has been disabled for a 5-month waiting period within the last 17 months prior to the month of application.

20 C.F.R. §404.315; 42 U.S.C. §423.

Supplemental Security Income (“SSI”) Benefits:

Available to an aged (65 or older), blind or disabled individual who:

(1) applies for SSI and all other benefits for which he/she may be entitled;

(2) is a U.S. resident or qualified alien;

(3) is not a resident of a public institution;

(4) meets the income and resource requirements; and

(5) is not fleeing to avoid prosecution for a felony or violating probation or parole.

20 C.F.R. §416.202.

Major Differences Between The SSD and SSI Programs:

• SSD benefits are available only to those with sufficient social security earnings to be deemed “insured” for disability. SSI benefits are not based on insured status or the individual’s earnings. SSI benefits are paid to blind or disabled persons based upon that person’s income and resources.
• Unlike SSD, which is available to those who have not reached the age of retirement, SSI is available not only to the blind and disabled, but also to individuals over age 65.
• In New Jersey, individuals who receive SSI are also automatically entitled to Medicaid benefits.
• After 24 months of SSD eligibility, individuals who receive SSD are entitled to Medicare Part A, and are eligible for Medicare Part B subject to payment of a premium.

Interplay Between The SSI And SSD Programs:

• An individual may receive benefits under both SSI and SSD, if he/she qualifies for both.
• The standards for the medical determination of disability are the same for the SSI and SSD programs for adults.
• Although an SSI recipient may receive up to $20 per month of unearned income without penalty, any unearned income in excess of $20 per month will be deducted from the SSI benefit on a dollar-for-dollar basis. Benefits received under SSD are considered “unearned income,” and those monthly benefits decrease the amount of SSI benefits to which the individual is entitled, on a dollar-for-dollar basis. POMS SI 00830.050; POMS SI 00830.210. Conceivably, a recipient’s social security benefit could reduce his or her SSI benefit to zero, resulting in a loss of Medicaid benefits.

SSI Benefit Amounts:

The amount of SSI one may receive depends on three factors:

(1) The recipient’s living arrangement; and

(2) Whether the recipient is married; and

(3) Whether the recipient is elderly, disabled, or blind.

Some states, including New Jersey, supplement the federal SSI benefit. New Jersey recipients get both a federal benefit and a state supplement in one monthly check. The basic federal benefit in 2008 is $637.00. In New Jersey, the state supplement is $31.25 per month.

SSI Resource Limits:

Countable resource limits are $2,000 for an individual and $3,000 for a couple.

SSI Income Limits:

The applicant’s countable income must be below the maximum SSI benefit amount established for the applicant’s particular benefit category. Under SSI rules, income can be earned, unearned or in-kind.

a. Unearned income

Unearned income is income that is not received from work. An SSI recipient may receive up to $20 per month of unearned income without penalty. Any unearned income in excess of $20 per month will be deducted from the SSI benefit on a dollar-for-dollar basis.

b. Earned Income

Earned income is earnings from wages or self-employment. The receipt of earned income over $65 per month (or $85 per month if there is no unearned income) will reduce the SSI benefit. The formula to calculate the SSI benefit if there is earned income is as follows:

(1) Deduct the SSI General Exclusion of $20 (if not used up on unearned income),

(2) Deduct $65 per month (the SSI Earned Income Exclusion),

(3) Deduct one-half of the remaining balance. The balance is total countable earned income.

(4) The total amount of countable income is then deduced from the maximum SSI benefit amount. The remaining balance is the reduced SSI benefit.

c. In-Kind Income

Social Security rules define in-kind income (or “in-kind support and maintenance” (ISM)) as “not cash, but food, shelter, or something the recipient can use to get one of those items.” 20 C.F.R. §§416.1102 and 416.1130. If an SSI recipient receives food or shelter from a third party, then, according to Social Security rules, the recipient has received “in-kind income” and his or her benefit may be reduced. Social Security has two ways to calculate this type of income depending on the individual’s particular circumstances: the One-Third Reduction Rule and the Presumed Maximum Value Rule.

The One-Third Reduction Rule. This rule is used when the SSI recipient lives for a full calendar month in the household of another person who provides both food and shelter to him without charge. When the One-Third Reduction Rule is used, the SSI benefit amount is reduced by one-third of the federal benefit amount. 20 C.F.R. §416.1131; POMS SI 00835.200.

The Presumed Maximum Value (“PMV”) Rule. This rule when an SSI recipient has received food or shelter from an outside source but the One-Third Reduction Rule does not apply (for example, if the recipient lived in his/her own home but got outside help with living expenses). Under the PMV rule, rather than determine the actual value of food shelter received, Social Security presumes that the food and shelter has a maximum value, which is the one-third of the federal benefit amount, plus $20.