In-kind support and maintenance can be beneficial, but it must be handled carefully. When family members live with individuals with special needs or provide them with certain forms of financial support, like food or housing, the eligibility of these individuals for certain public assistance programs can be complicated. Supplemental Security Income (SSI) and Medicaid eligibility depend partly on a person’s income. As a result, when a third party provides what is classified as “in-kind support and maintenance” (ISM) to individuals with disabilities, it can jeopardize their eligibility for public benefits in some instances.
The Impact of In-Kind Support and Maintenance on SSI
If an individual with disabilities receives food and housing assistance from third parties, SSA considers the individual to receive ISM. Whenever an individual receiving SSI also receives ISM, their SSI benefits can decrease. Even worse, an individual who is receiving SSI and fails to report ISM to the Social Security Administration (SSA) can face an SSI overpayment, which can further reduce their benefits.
More specifically, SSA will decrease a person’s SSI benefits by one-third of the amount for which they otherwise would be eligible. However, if the individual receives ISM for food or shelter, or not completely for both, SSA will reduce the individual’s SSI benefit by at most one-third, plus $20.00. The rules for calculating ISM and its effects on a person’s SSI benefits are rather complex, and again, to avoid any potential for SSI overpayment, SSI recipients should immediately report any changes in their living situation to SSA.
One way to potentially avoid the reduction of SSI benefits due to ISM is for individuals with disabilities to live with a relative in a separate unit for which they pay a reasonable amount of rent. In that case, the individual would have established a separate household, and ISM would be inapplicable. Even if the individual does not live in a separate unit, paying reasonable living expenses to family members still could avoid the ISM decrease in SSI benefits.
The best way to document this arrangement is for the parties involved to sign a formal lease arrangement that is in keeping with the fair market rent prices in the area. The reasonableness of rent an individual pays is based on fair market value in the area. However, families should remember that ISM is not limited to rent costs. ISM housing costs can also include utility bills, including water, sewage, gas, and electricity, to name a few.
Finally, SSA intends to significantly change the rules in the future concerning ISM and food in the future. On March 27, 2024, SSA announced that it had published a final rule entitled “Omitting Food from In-Kind Support and Maintenance (ISM) Calculations.” The rule, scheduled for September 30, 2024, will no longer include food in ISM calculations. Therefore, when this rule takes effect, SSI recipients will no longer have to report any food assistance from family members or friends, nor will they face any reduction of their SSI benefits when receiving this type of assistance.
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Rubin Law is the only Illinois law firm to dedicate itself exclusively to providing compassionate legal services for children and adults with special needs. We offer unique legal and future planning techniques to meet your family’s individual needs.
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