How Rent Assistance Lowers SSI Benefits for Disabled Individuals

CAN I RECEIVE SSI BENEFITS IF SOMEONE HELPS ME PAY FOR RENT?

Disabled individuals who do not have enough work credits to be eligible for Social Security Disability Insurance (SSDI) may still be eligible for Supplemental Security Insurance (SSI) if they can prove they:

1. are disabled, and
2. own less than $2,000 in assets for an individual or $3,000 for a couple (not counting a house and car)

But individuals with minimal resources often need help paying for basic needs like food and shelter. Disabled individuals must often rely on help from family or friends to make ends meet. If a disabled person receives help with rent payments, does this make them ineligible for monthly SSI benefits?

 

SSI Recipients Receive Housing Assistance in a Variety of Ways

It is often hard to pay for basic needs like shelter while you are disabled and waiting to be approved for SSI. Everyone’s living situation is different. You might be living rent-free in the home of a friend or family member. Or you might live on your own, but a friend or family member pays your rent directly to your landlord every month. That person might even just give you cash every month to pay your rent.

HOW You Receive Rent Help Will Affect Your SSI Benefit

In any of these situations, the money given to you or spent on your behalf is considered “unearned income.” When you receive unearned income, it often reduces the amount of your SSI benefit.
Cash is a type of unearned income called a “gift,” and food and shelter that you receive because someone else pays for it is called “in-kind support and maintenance.” The Social Security Administration treats these different types of unearned income differently.

No matter what type of housing assistance you receive, if you are living rent-free, your SSI benefit might be reduced. The type of unearned income you receive will determine how much your benefit is actually reduced.

Living in a House Without Paying Rent

If someone lets you live in their home for free, this is considered in-kind support and maintenance, and it is valued using the “one-third reduction rule.” Under the one-third reduction rule, instead of determining the actual dollar value of the food and shelter being provided to you, the Social Security Administration counts one-third of the federal SSI benefit rate as unearned income. This unearned income is then subtracted from your benefit amount.

In 2022, the maximum federal SSI benefit amount is $841 for an individual and $1,261 for a couple. That means an individual living in someone else’s home for free will have a reduced maximum SSI benefit of $560.67 ($841 less a 33% reduction). A couple living in someone else’s home for free will have a reduced maximum SSI benefit of $840.67 ($1,261 less a 33% reduction).

Someone Pays Your Rent Directly to Your Landlord

If you live on your own but someone else pays your rent directly to your landlord, this is also considered in-kind support and maintenance, but instead of using the one-third reduction rule, it is valued using the “presumed value rule.”

Under the presumed value rule, instead of determining the actual dollar value of the food and shelter being provided to you, the Social Security Administration presumes that it is worth a maximum value equal to one-third of the federal SSI benefit rate plus $20. However, under a rule called the “general income exclusion,” SSI recipients are allowed to earn up to $20 without it coming out of their SSI benefit. Therefore, the presumed value rule has the same effect as the one-third reduction rule: Your SSI benefit is reduced by one third of the maximum federal SSI benefit.

In this case, the benefit reduction is the same as living with someone else rent-free: If an individual lives on their own but someone else pays their rent, that individual will have a reduced maximum SSI benefit of $560.67. If a couple lives on their own but someone else pays their rent, that couple will have a reduced maximum SSI benefit of $840.67.

Someone Gives You Cash to Pay Rent

Cash gifts are subtracted dollar-for-dollar from the monthly SSI benefit, which in 2022 is $841. Therefore, if a disabled individual living on their own receives $800 a month from a relative to help pay their rent, then their monthly benefit will be reduced to $41. This is obviously a bad outcome for that individual. It would be better for the relative to pay the disabled person’s rent directly, so that he or she could still receive up to $560.67 a month in SSI benefits.

A Bona-fide Loan Agreement Can Preserve Your Benefit

The Social Security Administration might not reduce your SSI benefit at all if you have a bona-fide loan agreement to pay back the person paying for your food and rent. However, the agreement must be enforceable under state law, and it must meet other strict requirements of the Social Security Administration.

If you would like assistance with your Social Security Disability Insurance application or appeal, please contact one of Hawks Quindel S.C.’s experienced disability attorneys for a free consultation. We help individuals throughout the state of Wisconsin.