Social Security Adopts New Income Rules for SSI Benefits

The SSA projects that eliminating food as an ISM issue will its increase outlays for SSI benefits by $1.6 billion and reduce the agency’s administrative costs by $26 million through 2033, according to the final version of the rule, which was published in March in the Federal Register.

Two other changes that took effect Sept. 30 amend ISM rules around housing costs and household makeup.

Rental subsidy exception: The SSA expanded a policy that makes it less likely that some forms of rental assistance, such as renting at a discounted rate, count as in-kind support. This exception, previously applied in seven states where it was subject to court decisions, will now cover all SSI claimants and recipients nationwide. The SSA estimates this will affect about 41,000 beneficiaries, who would see their payments grow by $132 a month.

Public assistance household: People who live in a “public assistance household” are assumed to not be getting in-kind income from other household members, making it easier for them to qualify for SSI benefits and avoid ISM reductions. Under the new rules, households receiving Supplemental Nutrition Assistance Program (SNAP) payments are now included in this category, as are households in which at least one resident besides one applying for or drawing SSI is receiving SNAP or another designated benefit. Previously, only households where all members received some benefit counted. These changes will increase SSI payments to about 277,000 people, the SSA says.

Income reduces benefits

SSI aims to provide a baseline level of financial support to people with very low incomes and few assets who are older, blind or have another disability. In 2024, the maximum federal SSI payment is $943 a month for an individual — about 25 percent below the federal poverty line — and $1,415 for a married couple in which both spouses are eligible for the program.

Because SSI is a means-tested program, Social Security considers a wide range of income and financial support in determining eligibility. The monthly payments can be reduced or even erased if you receive income from work or other sources, including ISM, although in the case of in-kind support the reduction is capped at about a third of the benefit amount.

The ISM rules come into play if a beneficiary lives with others and pays less than a proportional share of costs covered by the policy — for example, one-fourth in a four-person household — or receives help paying these bills from someone outside their household.

“We have historically included in-kind receipt of food in our consideration because food assistance helps people meet their basic needs,” the SSA said in proposing the change in the Federal Register. “However, the complexities of our current food ISM policies may outweigh their utility.”

The agency took a similar step in 2005, when it eliminated help paying for clothing as an ISM category.

Social Security says the new policy will increase financial security and lessen food insecurity for beneficiaries by eliminating one source of potential payment reductions and removing a “possible disincentive for family and friends to help applicants or recipients obtain food.”

The change will also make the ISM rules “less cumbersome to administer and easier for the public to understand and follow,” the agency says, reducing the amount of personal information applicants and recipients need to report and leading to “fewer benefit recalculations and payment errors.”

That could end up being the most significant aspect of the rule change, says Cheryl Bates-Harris, a senior disability advocacy specialist at the National Disability Rights Network.

“The ISMs are a very, very time-consuming, labor-intensive process for both Social Security to manage and for people to keep detailed records of,” she says. “There’s more important work to be done, I believe, at the Social Security Administration than determining whether or not food somebody received from someone is [in-kind support]. It just doesn’t make sense.”

‘First step’

Disability and antipoverty advocates have long called for broad changes in how SSI benefits are calculated and paid, but most would require congressional action.

Omitting food from ISM consideration is “an important first step,” Smalligan says. “Food is a fundamental aspect of life, so it’s significant. I certainly wouldn’t want us to stop here.”

For example, he says, Congress could loosen the “outdated requirement” that SSI recipients have no more than $2,000 in financial assets such as a savings account ($3,000 for a married couple who both qualify for the program). The current limits, set in the late 1980s, prevent SSI beneficiaries “from building adequate financial reserves to respond to emergencies,” he says.

Legislation now before Congress, the SSI Savings Penalty Elimination Act, would raise the asset caps to $10,000 for individuals and $20,000 for married couples and adjust them annually for inflation, as is done with Social Security and SSI benefit payments.

AARP has endorsed the bill, stating in a September 2023 letter to its sponsors, Sens. Sherrod Brown (D-Ohio) and Bill Cassidy (R-La.), that it is “long past time” to raise the asset limits.

“Americans should not be prevented from saving a few dollars for unforeseen circumstances, and SSI beneficiaries are no exception,” wrote Bill Sweeney, AARP’s senior vice president for government affairs.