How Paying for Food and Shelter Affect SSI Eligibility

by Stephen W. Dale, Esq.

One of the most common myths that I hear all the time is that a Special Needs Trust cannot be used for food and shelter. In reality a Special Needs Trust can be used for food and shelter - but first the trustee must follow this 3 step process: 

Step 1 - Determine What Benefits the Beneficiary is Receiving

In most cases maintaining eligibility for Medi-Cal and IHS (In Home Support Services) is of primary importance for the beneficiary's well being. In many cases the beneficiary accepting financial assistance for their food and shelter can affect eligibility for these programs. The first question that must be analyzed is whether these benefits are based on SSI or Medi-Cal rules.There are 2 common methods of qualifying for Medi-Cal. The most common method of qualifying for Medi-Cal is by qualifying categorically by receiving at least one dollar of SSI. Another way of qualifying is through the Aged & Disabled Federal Poverty Level Program or Medi-Cal's Share of Cost program. 

If your beneficiary is receiving Medi-Cal not based on SSI eligibility CLICK HERE to learn more.  If the beneficiary is receiving Medi-Cal based on SSI eligibility, then there are 10 items that could cause a reduction in the beneficiary's SSI if paid for by the Special Needs Trust.

Step 2 - Evaluate the Consequence of the Distribution on the Benefits

Beneficiaries Receiving Medi-Cal Based on SSI Eligibility

Payment of food or shelter from a Special Needs Trust will reduce the beneficiary's SSI dollar for dollar capped at what the Social Security Administration calls the Presumed Maximum Value (PMV). In 2010 - the PMV is $244.66. This amount changes slightly each year. In some cases, a loss of $244.66 is a minor price to pay and in other cases the reduction would be devastating.

10 Items Used to Determine ISM for Beneficiaries Receiving SSI

The following 10 items are used when computing household operating expenses:

- Food
- Mortgage (including property insurance)
- Real property taxes (less any tax rebate/credit)

- Rent

- Heating fuel
- Gas
- Electricity
- Water
- Sewer
- Garbage removal

Please note that these are the only food and shelter distributions that might affect eligibility. Items not on the list include maintenance on the residence, telephone, cable, and Internet. Paying for these items will not affect SSI eligibility.

Example Where Payment of Rent Might be Advisable

Jane receives $845 of SSI. She asks Bob - her trustee to have her Special Needs Trust pay her rent of $1,200 directly to the landlord. Jane understands that her benefits will be reduced by $244.66 - but she feels that the benefit of living in a decent apartment outweighs the reduction of her SSI.

Example Where Payment of Rent May Not Be Advisable

Jane receives $845 of SSI.  She asks Bob - her trustee to have her Special Needs Trust pay her rent of $250 a month. Jane's SSI will be reduced by $244.66 - meaning that she is receiving no real benefit.

Example Where Payment of Rent Eliminates SSI

Jane receives $800 of SSDI and $65 of SSI. She asks Bob - Trustee of her Special Needs Trust - to pay her rent of $1,200 a month. Payment of her rent will cause complete loss of SSI but will not affect her SSDI. Bob and Jane might elect to have the rent paid by her account, but she will need to maintain her Medi-Cal eligibility without SSI. NOTE - in this example if Jane elects to lose her SSI and maintain her Medi-Cal independently she will need to apply to her local county Medi-Cal office.

Step 3 - Report to the Proper Agency

The last step is to report to the proper agency if that is necessary. If the beneficiary is receiving SSI then the Social Security Administration should be notified by the 10^th day in the following calendar month that the expenditure was made. For example, if Barbara's rent was paid in the month of February, the Social Security Administration needs to be notified by the 10^th day of March. If the beneficiary is not receiving SSI but only receiving Medi-Cal then the local County Medi-Cal office needs to be notified only if the Special Needs Trust pays the entire rent amount and the beneficiary makes no contribution whatsoever.

GUEST ARTICLE -

Disability Accommodations

KNOW THE LAW!

by Fred Nison, Attorney, Disability Rights California

Under state and federal fair housing laws, a landlord must provide reasonable accommodations to people with disabilities when necessary to enable them to use and enjoy housing.   Under the Section 8 program, there are a number of specifically identified reasonable accommodations that must be available to individuals with disabilities who receive Section 8. Below are summaries of some of these reasonable accommodations.

Longer Search Time;  The term of a Section 8 voucher is at least sixty (60) calendar days.  24 C.F.R. § 982.303(a).  Hence, once a person receives a Section 8 voucher, he or she must find an apartment within 60 days.  However, if a family needs and requests an extension of this initial voucher term of 60 days as a reasonable accommodation to make the program accessible to a person with a disability, the Public Housing Agency (PHA) must extend the term of the voucher up to the term reasonably required to accommodate the disability.  24 C.F.R. § 982.303(b)(2); see also 24 C.F.R. § 8.28(a)(4) (A PHA must "take into account the special problem of ability to locate an accessible unit when considering requests by eligible individuals with handicaps for extensions of Housing Certificates or Housing Vouchers.")

Live-In Aides: A person with a disability can request that the PHA approve a live-in aide to live in the unit with the person with a disability.  The PHA must approve a live-in aide if the live-in aide is needed as a reasonable accommodation to make the program accessible to and usable by the person with a disability.  24 C.F.R. § 982.316(a). A live-in aide affects the size of the family unit and, therefore, may increase the number of bedrooms a person can receive.  See 24 C.F.R. § 982.402(a)(6).  For example, a single person is entitled to a studio or one-bedroom apartment, but if there is a live-in aide, that person is eligible for a two-bedroom apartment.  However, the PHA can refuse a particular live-in aide if that person committed a corrupt or criminal act against the PHA; has committed drug-related or violent criminal activity; or owes money to any PHA under a federal housing program.  24 C.F.R. § 982.316(b).

Exception Payment Standards (Higher Rent): Generally, a PHA may set a payment standard amount for a unit size at any level between 90% and 110% of the published Fair Market Rent (FMR) for that unit size.  24 C.F.R. § 982.503(b)(1)(i).  However, regulations implementing Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, state that a PHA must approve an exception rent as a reasonable accommodation if necessary for a family that includes a person with a disability to obtain housing within the voucher term.  24 C.F.R. § 8.28(a)(5).  A PHA may approve an exception payment standard up to 110% of the FMR as a reasonable accommodation.  24 C.F.R. § 982.505(d).  The U.S. Department of Housing and Urban Development (HUD) Field Office may approve an exception payment standard between 110% and 120% of the FMR as a reasonable accommodation.  See 24 C.F.R. § 982.503(c)(2)(B).    HUD Headquarters can only grant exception payments standards above 120% of the FMR. 

For more information, go to http://www.disabilityrightsca.org/pubs/541801.htm or call toll-free (within California) (800) 776-5746

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