On September 30, 2024, two new rules regarding the deductions from Supplemental Security Income (SSI) payments for in-kind support and maintenance (ISM) became effective. One removes food as ISM (89 Fed. Reg. 25507).
If you have a loved one who is receiving SSI, these changes can make a big difference both in how you’re spending that SSI check and other resources for your loved one and within your estate plan.
SSI provides a monthly amount which is designated to provide food and shelter to qualifying individuals. California provides a State Supplementary Payment which increases the total amount the recipient is eligible to receive. In 2024, the combined total (both state and federal) for a single person in California is $1,182.94.
However, if that person receives any in-kind support or maintenance (if their food and/or shelter is paid for even in part by someone else), the value of that ISM reduces the benefit amount. In other words, helping your loved one with the grocery bill or the rent payment can cost them.
The good news is that with this change, food will no longer be considered ISM. That said, there is still a potential impact with food and this is where the rent calculation comes in. There are a few different ways that the Social Security Administration calculates the value of shelter which then determines if the SSI recipient is paying enough to avoid a reduction in benefits.[1]
There are two different calculation methods that come into play – the Value of One-Third Reduction (VTR) or the Presumed Maximum Value (PMV). The VTR takes the entire value of food and shelter and if the SSI recipient does not meet their pro-rata share then the SSI benefit is reduced by one-third of the federal portion (so $314.33 for 2024).
As an example, let’s say the SSI recipient lives in someone else’s household (such as with two roommates) and they share meals. The total cost of rent and food is $4,000/month. The SSI recipient needs to pay $1,333.33 to be considered to pay their fair share. If they don’t, their benefit is reduced by $314.33 (in 2024).
The other method, PMV, will apply if the SSI recipient pays for any of their own food. Under this calculation, the SSI recipient is responsible to pay their fair share of the rent and all utilities. As an example, if the total rent and utilities come to $3,000, the SSI recipient will need to pay $1,000.00 to avoid having their benefits reduced.
This is a very general overview of the rule changes. If you are the Trustee for a Special Needs Trust (SNT) and you need help determining how this change impacts your role, please call to schedule a consultation.
[1] Note that this does not include utilities. An SSI recipient will still need to pay their fair share of heating fuel, gas, electricity, water, sewer, garbage removal, and property taxes, as applicable, to avoid a reduction in benefits.
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