SSI and Awards, Settlements,
Lump-Sum payments
and Retroactive Awards

It is not uncommon for SSI recipients to receive a cash award or settlement from a court case. Since SSI is a needs-based program this award may make the individual ineligible for SSI.

Sections:

• Report changes
• Is a lump-sum counted as income or a resource?
• Retroactive SSI Awards
• Saving, Spending or Transferring Resources to Qualify for SSI
  • Saving Resources – PASS Program
  • Spending Resources – Spend-Downs
  • Transferring Resources – Permitted Transfers
  • Transferring Resources – Transfers NOT Permitted & Transfer Penalties

Note: Holocaust Survivor Supplemental Hardship Fund Payments should NOT count as a lump sum for SSI. (More information)

Also see: Legal Guide: Settlement Planning- Margolis & Bloom (download requires registration)

Report Changes

You should report any changes such as this to SSI within 10 days of the end of the month in which the event occurs. This should prevent an overpayment which you may need to pay back to SSI.

The following events may affect SSI eligibility or the amount of benefits and should be reported:

• A change of address,
• A change in living arrangement (you move in with someone)
• A change in income (you get a job, win the lottery),
• A change in resources (you inherit property),
• You become eligible for other benefits,
• A change in marital status,
• You enter a hospital, public institution, private institution,
• A change in school attendance,
• You leave the United States temporarily or permanently.

While reports can be made by calling the local SSA office, it is best to make a report in writing. Send it "return receipt requested" or hand-deliver and ask for a receipt.

Is a lump-sum counted as income or a resource?

A lump-sum is considered income for the month you receive it and could make you ineligible for that month, depending on the amount (read more about how income affects benefits).  If you keep the money into the next month, it then becomes a part of your resources. An individual cannot have more than $2,000 in resources to remain eligible ($3,000 for a couple). More on "spending down" and transferring resources below.

Retroactive SSI Awards

Section 221 of the PRWORA required that retroactive SSI benefits exceeding twelve times the maximum benefit payable (after any deduction for interim assistance due to the state) be paid in up to three installments at six-month intervals. Each installment payment is exempt from SSI resource counting for six months. (20 CFR 416.1210)

The first installment cannot exceed twelve times the federal benefit rate plus any federally administered state supplement. Six months later, a second installment may be paid in an amount not to exceed the first. Any remaining retroactive benefits may be paid in the third installment six months later. Installments may be increased beyond these limits by the amount of debts or expenses for food, clothing, shelter or medically necessary services, supplies or medicine. Installment rule does not apply to children or those who are terminally ill. (Special rules for children- 20 CFR 416.640)

-Code of Federal Regulations (CFR) 20 CFR Sec 416.545 (http://www.ssa.gov/OP_Home/cfr20/416/416-0545.htm)

Saving, Spending or Transferring Resources to Qualify for SSI

Saving Resources – PASS Program

Do you have an occupational goal that, if achieved, would significantly reduce dependence on SSI? If so, you may be able to set aside some money towards that goal that will not count as a resource. Social Security must approve this occupational goal and agree to disregard this money. To get this approval, learn more and apply for the Plan for Achieving Self-Support (PASS) Program.

Spending Resources – Spend-Downs

You can use the money to pay legitimate debts or for certain home improvements, to improve daily living conditions or for better medical care.

• Permissible payment for major health-related expenses, if not covered by the beneficiary’s health insurance, might include reconstructive dental care, a motorized wheelchair, rehabilitation expenses or insurance premiums.
• Money may be used to arrange for the beneficiary to go to school or get special training.
• Some of the money may be used for the beneficiary’s recreational activities, such as movies, concerts or magazine subscriptions.
• Special purchases
  • A home—You can use funds as a down payment, and you can use some of the money to make payments on a house owned by the beneficiary.
  • Home improvements—You can pay for renovations that make the beneficiary’s home safer and more accessible; for example, installing a wheelchair ramp or widening doorways to accommodate a wheelchair.
  • Furniture—You can buy furniture for the beneficiary’s personal use, as well as items that may be shared with other members of the household, such as a television.
  • A car—You can use funds as a down payment, and you can use some of the money to make monthly car payments as long as the car is used for and owned by the beneficiary.

  -For more information see "SSI Restrictions Loosen" - MGH Community News, 2/05 and www.socialsecurity.gov/pubs/10076.html#how, from which most of this section was adapted.

Transferring Resources – Permitted Transfers

In some circumstances it is permitted to transfer property for less than it is worth.

These include gifts to

• A spouse (or anyone else for the spouse's benefit);
• A blind or disabled child; (or a trust for the benefit of a blind or disabled child);
• A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the applicant, under certain circumstances).

Transfer of a home. The SSI applicant may freely transfer his or her home to the following individuals without incurring a transfer penalty:

• The applicant's spouse;
• A child who is under age 21 or who is blind or disabled;
• Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the applicant, under certain circumstances);
• A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home; or
• A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay

Transferring Resources – Transfers NOT Permitted & Transfer Penalties

Look-Back Period
SSI looks at whether or not you have transferred a resource within the previous three years. If you give away a resource or sell it for less than it is worth in order to get under the SSI resource limit and it is not one of the permitted transfers noted above, you may be ineligible for SSI for up to 36 months. This is called a transfer penalty.

Transfer Penalty
If you have made a transfer that is not permitted, SSI calculates a "penalty period" by dividing the amount of the transfer by your monthly benefit amount. So, for example, if you give your son a $6,000 gift and then apply for a monthly SSI benefit of $600 within three years of the gift, you will not be eligible for SSI for 10 months (6,000 ÷ 600= 10). That 10-month period will begin on the date of the transfer and end 10 months later.

In other words, although you can be ineligible for up to 36 months due to a transfer, that is only a cap. The actual period of ineligibility is based on the value of what you transferred divided by the monthly benefit in your state.

Transfers may also be "cured" by the person to whom you made a gift returning it to you.

 

 

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