Q. My wife and I have an adult son with a disability.  He receives SSI and lives in our home and pays us a modest rent from his SSI benefit.  We also help him with groceries. We report this to SSI.  To date, our “assistance” to him has been deemed a subsidy by SSI, and has reduced his monthly SSI benefit amount. However, I hear that there may be some favorable changes coming soon in how SSI treats this financial “assistance”. Can you tell us more?

A. Sure.  The Social Security Administration (“SSA”) recently announced some changes in the way it will calculate a reduction for the value of financial assistance for food and housing received by the recipient of Supplemental Security Income (“SSI”).

Background: SSI has been designed by Congress to provide a qualifying individual with money for food and housing. To qualify, an individual must be over age 65, blind or have a qualifying disability, AND have income less than the SSI benefit amount, and have less than $2,000 in countable resources (such as savings). To the extent the SSI beneficiary receives some income in any given month from other sources (so long as less than the SSI benefit), his SSI benefit will be reduced, but not eliminated.

In terms of income, there are three (3) types that SSI counts: (1) earned income, (2) Unearned income (such as pension income), and (3) In-Kind Income.  The treatment of In-Kind income is what will change.

In Kind Income results where a third party, such as parents or other family members, purchase some of the beneficiary’s food for him, or subsidize his housing expense. The treatment of this third kind of income is what the new rules will address when they fully go into effect on September 30, 2024.  This In-Kind income is frequently referred to as In-Kind-Support & Maintenance, or “ISM” for short.

Under current rules, the value of that ISM is deducted from his SSI benefit, but only up to a certain cap. That cap is called the Presumed Maximum Value (“PMV”), and this number increases each year with inflation. In 2024, that PMV amount is $334.34. In addition, there is also a $20 ‘unearned income exclusion ‘, so that the net PMV reduction from an individual’s SSI is capped at $314.34 ($334.34 – $20) in any given month. The benefit reduction for food and/or housing is always the lesser of the actual value thereof or that year’s net PMV amount.

Example: Let’s assume you purchased for him $100 in groceries this month. Let’s also assume that you charge him $400 for rent where, if you had rented his room out to a stranger on the open market, the Current Market Rental Value (“CMRV”) would be, say, $750/month. Your combined financial assistance to him would then be calculated as follows:  $100 + $350 rent subsidy ($750–$400) = $450 in total ISM.  Since the current net PMV for any given month is only $314.34, his SSI benefit reduction would be capped at only $314.34 for that month, which is much less than the full financial benefit he actually received from you. Here are the calculations:

$1,182.94 Gross SSI Benefit (with the California State Supplement)

<   314.34 ISM (Capped at the net PMV Amount)

$    868.60 Reduced SSI Benefit for that month

Not a bad deal, even under the current rules. But, with the implementation of the new rules on September 30, 2024, the good news will soon be even better. Here is why:

Food: When the new rules take effect, there will no longer by ANY reduction for food that you (or any other family member) purchase and give to your son, or even the value of a meal you purchase for him at a restaurant;

Rental Subsidy: So long as the rent you charge him is at least equal to the then existing PMV Amount ($334.33 for year 2024), it will generally be treated as if it were equivalent to the Current Market Rental Value (“CMRV”), and there should then be no reduction in his SSI by reason of your rental subsidy. Note: there may be some variation in application of this rule for different individuals, depending upon the number of persons in the household and other factors. But the basic thrust of the new rule is to benefit SSI recipients and eliminate the current reduction for the rent subsidy.

Caution: As before, if you give your son money directly, for whatever purpose, then there will continue to be a dollar-for-dollar reduction in his SSI. Thus, the way to maximize the benefit to him for, say, groceries is for you is to purchase them from the grocery store and then gift the groceries to him. Admittedly this two-step gifting process can be a bit cumbersome, but that is the best way to continue your assistance to him and avoid a reduction in his SSI Benefit.

This should come as welcome news to SSI beneficiaries and their loved ones.