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More People to Qualify for SSI Under New Rental Subsidy Rule


A mother and her disabled child baking bread

The Social Security Administration (SSA) has published a final rule simplifying and expanding its rental subsidy program for Supplemental Security Income (SSI).

Effective September 30, 2024, the new rule is likely to allow more people to qualify for SSI. In addition, some current SSI recipients may see an increase in their monthly benefit amount as a result. The rule change is part of a broader agency effort to streamline certain aspects of the SSI program.

SSI applicants and recipients may want to talk to a special needs planning lawyer about the new rule if they have questions about how it affects them.


Remind Me, What Is SSI?

SSI is a federal public benefits program that provides a modest monthly benefit to qualifying recipients. It serves people with disabilities and older adults across the United States who meet strict income and resource limits. In most states, to be eligible for SSI, an individual must have less than $2,000 to their name.


SSI Rental Assistance Explained

Income does not only affect whether an individual is eligible for SSI benefits. It also has an impact on the SSI recipient’s benefit amount.

The SSA defines income as anything a person can use to meet their food and shelter needs. This includes not only “earned” income from a job and “unearned” income such as gifted cash, but also what SSA calls “items received in-kind,” including shelter given to an individual or that someone else pays for.

A rental subsidy can result in a lower SSI payment for current recipients. It may also disqualify someone from receiving SSI because their income is too high.

However, SSI is now changing how it calculates the rental subsidy amount. The new rule will expand an exception that previously only applied in seven states but starting in September will apply nationwide.


How Rental Subsidy Is Calculated – The Current Rule

If an individual pays a monthly required rent charge that equals or exceeds the current market rental value (CMRV) in their area, a “business arrangement” exists under SSA rules. This means that the SSA does not see the SSI applicant or recipient as receiving rental assistance.

SSA regulations consider a person to be receiving a rental subsidy — a type of unearned income — if they are paying a monthly rent amount for a property that is less than the CMRV where they live. This commonly occurs when somebody is living with a family member who charges them less for rent than what they would pay on the open market.

For example, consider an SSI recipient who lives with their sibling, paying a monthly rental rate of $400. If the CMRV in their area is $800, the amount of rental assistance would be $400.

However, SSA imposes a regulatory cap, called a Presumed Maximum Value (PMV), on the rental subsidy amount that can be assessed; that amount is $334.33 for 2024. The SSA also has an unearned income exclusion of $20 per month.

Using the example above, imagine a landlord accepting $400 per month instead of the CMRV of $800. The amount that the SSA would count as rental assistance would be $314.33 ($334.33 PMV minus the $20 general income exclusion amount.

Assuming a maximum monthly SSI payment of $943 in 2024, and assuming there is no other countable income, the recipient’s benefit amount would be reduced to $628.67 ($943 minus $314.44).


Exception

Following court cases that challenged SSA’s rental subsidy rule, exceptions were provided in seven states — Texas, Connecticut, New York, Vermont, Illinois, Indiana, and Wisconsin.

In these states, a “business arrangement” still exists. However, the rental subsidy does not count as income if the monthly rental rate equals or exceeds the PMV, instead of the CMRV.

Apply this exception to the example above: An SSI recipient in Connecticut pays $400 per month instead of the CMRV of $800 per month. They would not have their rental subsidy count as income because the $400 payment is more than the $334.44 PMV for 2024.

The SSA notes that in the seven excepted states, application of the rental subsidy exception generally results in a higher SSI payment amount.


New Rule Applies SSI Rental Subsidy Exception Nationwide

SSA announced in April 2024 that the new rule would make the state-specific rental subsidy exception national policy for SSI applicants and recipients.

According to the SSA, the policy change will increase the benefit amount for some recipients and allow more people to qualify for SSI payments. However, it will not affect how much SSA pays per month (a maximum of $943 in 2024).

Disability Scoop reports that the updated policy is expected to raise payments by an average of $132/month for 41,000 people and allow 14,000 additional people to qualify for SSI annually.

Even with this exception, though, some applicants could see their monthly benefit amount reduced; others may not qualify. The actual formula that the SSA uses is complicated and includes the number of household members, as well as other sources of income.

The rental subsidy rule change is the latest SSA effort to remove barriers to accessing SSI payments. Also in the fall of 2024, the agency will no longer use food an applicant or recipient receives from friends, family, and community support networks as part of its “in-kind support and maintenance” calculations. And in April, SSA published a rule changing how it factors support from other public assistance programs, such as SNAP, when determining beneficiary payments.

More than 7 million individuals received federal SSI benefits in January 2023, with payments averaging $654 per month. During calendar year 2022, 1.23 million individuals applied for SSI benefits based on blindness or disability, while 172,000 applied based on age. Approximately 522,000 applicants received SSI benefits in 2022, a decrease of 1 percent compared to 2021.


Understanding Social Security Benefits Can Be Difficult. An Attorney or Financial Advisor Can Help.

While the new SSI rule may be advantageous for many low-income, disabled Americans, terms like “PMV,” “CMRV,” and “in-kind” support are not necessarily intuitive. They may add to the confusion around an already long and challenging SSI benefits process.

To make sure the value of your rental subsidy is accurately determined, and that you receive the SSI benefits you’re entitled to, get in touch with a local special needs planning attorney or special needs financial planner can help.


If you have further questions about financial impacts do not hesitate to email us at office@staltfinancial.com, call 248-733-4344, or set a time to talk on our calendar www.calendly.com/staltfinancial


As your state may have specialized laws and regulations regarding Special Needs, please consult your own personal attorney or tax counsel for advise on state specific legal and tax matters.


The information contained in this material is for general information only and are those of the author, and not a recommendation or solicitation to buy or sell investment products.


This article contains links to third party websites. Stalt Financial does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Stalt Financial's web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

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