April 25, 2014

Correcting a Rent Offset in an SSI Claim

This morning, I received an email question from a woman named Elena.  I’m not sure if Elana is an attorney, a non-attorney rep or a relative of the claimant, but she raises an interesting issue about SSI offsets.

I don’t deal a lot with SSI issues on this blog mainly because I don’t take a lot of SSI cases.  If you do not know, there are a number of disability programs administered by Social Security – Title II Social Security Disability (also called SSDI) is one program, and Title XVI Supplemental Security Income (SSI) is the other.

SSDI pays benefits to claimants who are disabled and who have a qualifying earnings record.  To oversimplify, you qualify for SSDI if you have worked for five out of the last ten years.  There are exceptions to this general rule, but basically SSDI applies if you have worked and paid enough Social Security taxes to be “insured” for the SSDI program.

SSI, by contrast, pays benefits to claimants who are disabled but do not have sufficient earnings or assets to qualify for SSDI.  An SSI claimant can be a disabled child, a 20 year old with a serious medical problem and minimal work experience, or a 50 year old housewife who worked for 15 year back in the 1970′s and 80′s but has not worked at all in the last 10 years.

Up until last year, I rarely took SSI cases because Social Security would not withhold attorney’s fees on past due benefits.  Unfortunately, when did take SSI cases, we would win, and the claimant would get a lump sum check, but would not pay me the 25% owed.  As I got busier, I made the decision not to take SSI cases because they were not worth the risk.

Last year, Social Security finally corrected this glitch in the payment process and now they do issue direct payments to attorneys.  However, I am still very careful about taking SSI cases because of the offsets involved.

As noted above, SSI claims are only payable to claimants with limited assets and income.  Social Security will count as income something called “in kind” services, which can be room and board, welfare payments, or support from family.  Also SSI will reduce your benefits if you are living in a household with a spouse or family member who works.  That is why the 50 year old married housewife who lives with her employed husband may qualify medically, but will not recover any benefits because of the “deeming” of household income.

Obviously, SSI claimants have to live somewhere and they need funds for food and transportation as well.   Therefore, in many cases there is an offset of benefits.  Since SSI benefits are set by law and the maximum monthly SSI benefit (for 2008) is $637, it doesn’t take too much in kind support or deeming to reduce that benefit down to nothing.  As a matter of business, I just can’t take on cases where I work for 2 to 3 years, appear at a hearing and expend hours of my time and paralegal time, only to end up with $400 or $500 or, in some cases, nothing.

With that background stated, let me address Elana’s question, which is:

I have a gentleman that lives with daughter and pays $500.00 for rent which he reported to SS. His daughter was asked to complete a form which asked the market value of room.  She put $1,000.00 market rent.  Now SSI benefits were reduced by the value of the $500.00 as income to the man.  How can he correct this.  I thought of obtaining an appraisal by a Real Estate Agent of the rental market value of the room.  If less than $1,000.00 submit this document to SS along with the request for reconsideration.  Do you think this would work?  Do you have any other suggestions to try to correct the market value of the room? I appreciate your input.  Thank you.

Here is my response: In this situation, the claimant is dealing with an offset of his benefits.  Based on the information that the claimant’s daughter provided, she is “giving” her father $500 of value in the form of room and board.  Social Security is reducing his benefit by that in kind support.  Assuming that the father is getting the maximum $637 from SSI, the $500 reduction leaves him with only $137 per month to live on.

Now, the father and daughter need to argue to Social Security that the actual market value of the father’s room is something less than $500.

I think that Elana is on the right track regarding what to do.  I would gather documentation from local real estate professionals.  This could take the form of a notarized statement, or documentation of comperable rental units in the area.

The father needs to look carefully at the documentation he has received from SSI.  I believe that when SSI computes an offset they provide written notice.  He needs to see if that written notice provides for any appeal rights or deadlines.

In any case, I would contact the local SSI office and ask to speak to a supervisor to discuss correcting this error.  Hopefully SSI will be cooperative.  If not, you may need to file for reconsideration of the deduction – my only question is whether the father has missed any applicable deadlines to do so.

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Jonathan Ginsberg represents Social Security disability claimants in Georgia. In practice for over 23 years, Jonathan publishes a widely known disability blog, a podcast and several disability web sites. In 2004, Jonathan published a "how to" book about Social Security disability called the Disability Answer Guide. Jonathan lives with his wife and 2 children in Atlanta.

Comments

  1. Gerald W Riley says:

    I agree with Mr Ginsberg’s response except there is a $20.00 unearned income exclusion so the reduction is $500-20=$480 and assuming the maximum check of $637 then the revised check is $637-$480=$157.

    What is not clear are the precise living arrangements. If the daughter owns a house and dad rents a room in the home with kitchen privileges and laundry access then the value would be equal the fair market value of the room rented to a stranger plus access to the kitchen and laundry. This could be computed by taking the square feet in the room and dividing by the livable square feet in the house. Thus if dad had 500 square feet and the house was 2500 livable square feet then 500/2500=20% so $20 of the monthly mortgage, utilities (excluding phone), trash, and food if the daughter buys his food would be his fair share. Thus, if these figures added up to $1800 then his fair share would be $360.00. This would assume that dad watches TV in his own room and generally stays in that room.

    If, on the other hand, he has access to the entire house then his fair share of rent would be the monthly mortgage, utilities(excluding phone), food costs if the daughter buys his food, and trash pickup all added together and divided by the total number of household members (including minors). Using the above figures and assuming these costs equal $1800.00 and three people live in the house then his fair share would be $600.00. If the daughter has an apartment the same rules apply.

    I would go through my monthly expenses and figures these things out because SSI rules require that you pay your fair share of expenses which can mean actual costs or fair market value.

    Also, remember SSI is a welfare program so that why these offsets occur. Most importantly, report any changes in his in-kind income or earnings to social security in person with documentation because this impacts his checks. DO NOT CALL THE 800 NUMBER TO REPORT THIS. They need to see actual stubs and income. Thus, if he gets a part time job and then he needs to report every month otherwise they will eventually hit him for an overpayment. If he wins a scratch ticket for $1000.00 in some gambling game then this needs to be reported.

    Good luck

  2. Jonathan Ginsberg says:

    Mr. Riley’s comment reflects the complexity of the SSI offset calculations. As noted in the original post, I rarely get involved in SSI claims and when I do take cases, I am focused on winning benefits. Calculating the offsets requires a different skill set.

  3. Evelyn Clark says:

    This is my confusion with SSI: My adult daughter is not and will never be able to live on her own or support herself. She is severely mentally disabled and needs constant supervision. SSI says the amount of support I give her is $224.00, which they deduct from her SSI of $637 monthly. How, if someone needs supervision and cannot live on their own, does SSI justify taking any money? Having someone of her abilities living in a group home or nursing home would surely cost more than $224 a month-but I am sure that would be covered without a question! It seems parents are penalized for wanting to have adult handicapped children in a safe, familiar environment for as long as possible. Why is this?

  4. gabe morrow says:

    @Evelyn Clark in your case you need to tell them your gonan start taking $224 a month for room and board on top of whatever amount your currently paying this will give them the maxmium amount possable

  5. I rented from a disabled person who collects ssi, andcash money for rent. She rented her barn to me , 3yr. Old daughter, and boyfriend we paid $200 a month. Another renter on the property pays her $200 also a month. And she has a mobile home on her property she rents for $1,000 a month. She was getting $1,400 a month and not reporting it. We moved out but the other two renters are still their. This is not right she has been doing this for years and not reporting the cash income she recieves. Talk about fraud, she even had one of the renters sue her, and she is getting some of the settlement money.

  6. Jordan Opalanie says:

    This is an extremely stupid policy. My dad decided to charge me rent of $200, about the same I would pay if I was in subsidized housing. The SSA then decides to cut me down to $480 from the $705 because apparently it is not fair market value. This is going to cause me economic hardship because nobody on SSI CAN AFFORD FAIR MARKET APARTMENTS, ESPECIALLY NOT IN NEW JERSEY.

    The law needs to be changed so that the 1/3 deduction only applies if a person pays less than 30% of the monthly FBR on rent (the amount that is generally paid if I have subsidized housing). Reason is, subsidized housing and Secton 8, among other services are HARD TO COME BY. I do realize now that $200 was less than 1/3 of the FBR, but even if my rent was raised to 30% of the FBR, it apparently would still have a 1/3 deduction.

    I swear, our benefits system is f-ed to all hell.

  7. Social Security FAX fraud: 1 410 597-0118

  8. angelina maya says:

    SSI is run by a bunch of F*@#$N a*&^%$#@!
    they want to give people as little money as possible to live on.
    an SSI check wuold not even cover “fair market value” rent unless it was in a tenement building or some sort of section 8 or disabled high rise.
    places where you have to worry about your own safety because of your neighbors.

    i am trying desperately to get into a situation where I can increase my SSD and not get SSI at all.

    SSI s&$@s !!

  9. Angelina Maya says:

    to Evelyn
    I agree with you that this is horrible! an adult child is certainly safer and probably happier at home with the family they grew up with than in some sort of institution>
    Parents should be compensated for child care especially if they have to take time off from a job.
    I had heard that some departments of welfare provided a stipend to people taking care of disabled family members.
    the reason SSI prefers to pay group homes is the probably the same reason insurance companies pay for pharmaceuticals and not natural treatments.
    It has to do with these businesses giving financial support to people running for political office.-the people who make the decisions on what is done w/government money.
    group homes are a business just like pharmaceutical companies are.,
    The government is all about supporting business and short changing people.

  10. Angelina Maya says:

    JOrdan
    I know exactly what you are going through. It is the reason why so many people on SSI end up homeless.
    The people who make these decisions never have to live on so little money themselves.

    A friend of mine who is on SSD only rented a room to a friend on SSI only and they cut the SSI person’s check because the rent was “only” 200 i.e. about 1/3 of the check!

    There are so many SSI rules that I HATE!!!!

  11. Gale Lovelace says:

    There was a comment that SSI is a welfare program and that is why there are so many offsets for income.
    actually SSI has WORSE rules than welfare.

    When I was on welfare my mother was allowed to pay my rent and utility leaving me with the whole welfare check to take care of my other needs.

    of course the welfare check is a pathetic amount of money that NO ONE can expect you to be able to pay anything out of that!
    It is horrible that SSI also seems to be “anti family” in that if a family member charges you $200 a month then they cut your check but if you rent in subsidized housing you can keep your whole check
    ( which you are going to need to pay for for the alarm system , bullet proof vest and self defense lessons you will need to live in the projects.

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