Your level of Supplemental Security Income (SSI) benefits is based on the level of your economic need. Generally, the more monthly income and resources you have, the lower your monthly check will be. The Social Security Administration looks at all means of support, and these may include resources that you might not think would be counted. Here is a list of some of the most common reasons for reductions in SSI benefits:
Marriage
The Social Security Administration looks at the resources in a “household,” not just what you personally have. If a husband is applying because he can no longer work, but his wife is still working, his check may be reduced or eliminated based on her income. The income of a spouse may not be counted if the couple is separated, but it is up to the individual asking for benefits to notify the SSA that he or she is no longer living with a spouse.
Example
Husband and wife of twenty years June and Jim are having marital difficulties and want a divorce. Unfortunately, neither of them is doing well financially, and they don’t have money to pay an attorney for the divorce. Jim’s back has finally given out on him for good, and he cannot work anymore. Jim files for disability. June is able to go back to work, earning $1,700.00 a month. Even though she no longer wants to be married to Jim, June doesn’t want him to end up out on the street. She lets him stay in the spare room until his disability is approved.
After two years of waiting, Jim is approved for benefits. Jim is contacted by the local office to figure out his back pay benefits, and he tells them that he and his wife are really separated. The local office doesn’t believe him and chooses to count June’s income when figuring out Jim’s back pay award. Because of how much she has earned during this time, Jim receives no back pay for the two years he has waited.
How to avoid this problem:
a) If you and your spouse are separated, then physically separate. If at all possible, do not live under the same roof.
b) When you do separate from your spouse, notify the SSA of your change of address in writing immediately (within 10 days of moving). Remember to keep a copy of the notice you provide them.
Free Room and Board
If a friend or relative is letting you live with them while your claim is pending, and you are not paying rent, the SSA will automatically reduce your check by 1/3 for the months that you received this support. For 2013, assuming you have no other resources or income to reduce your check further, this will mean that your benefits are reduced from $710 to $497 a month. Unless you can show them proof that you were expected to reimburse the family member for rent, your check will be reduced to this level.
Example
Your cousin lets you stay on her couch for twelve months while your claim is pending with the understanding that you will pay her back for some of the rent and utilities once you get on your feet. When you eventually get your benefits, the SSA is going to reduce your back pay check for these twelve months by 1/3. This will mean that you receive $473.34 instead of $710.00 for every month that you stayed there. Over the course of the year, this means that your back pay award was $5680.08 (instead of $8520.00). Though you owe your cousin for his help, your check has been reduced, making it harder for you to pay him back.
How to avoid this problem:
If you are responsible for repaying the person you are living with for back rent, put it in writing at the time you agree to it. Preferably, this should be done in a formal lease agreement. Additionally, you need to submit a copy of this agreement to Social Security immediately (within 10 days) after it is signed. The agency is unlikely to accept as valid an agreement executed after you have been awarded benefits.
Vehicles
The SSA will usually exempt one car from consideration as a resource. If you own one car that you drive, the SSA will not reduce your check because you own a car. This exemption does not apply to a second car. If you have a second car, its value can be can be counted as a resource, and if it puts you over the resource limit, your back pay and monthly checks can be eliminated for every month you owned these cars.
Example
When Dave applies for benefits, his only possession is an old car he has had for years. While appealing his denial, the car breaks down, and Dave doesn’t have the money to fix it. To help him out, his brother Bill gives him title to his old truck. The car ends up on blocks, and the engine doesn’t run anymore. After two years of waiting, Dave eventually wins his benefits. The SSA excludes the value of the truck Bill gave him from consideration because Dave uses it for transportation. However, they consult the Blue Book value of the car and find that even though it hasn’t run in years, it has a value of $3,000.00. Because this is over the $2,000.00 allowable resource limit, for every month that Dave had the car and the truck, he is ineligible for any back pay. In other words, for the two years he was waiting, he ends up with no back pay.
How to avoid this problem:
Do not own title to more than one vehicle.
Life Insurance
Similar to the problem with the car, if you have a life insurance policy, any cash or surrender value over a certain amount may be considered an asset.
Bank Statements
Well-meaning family members will sometimes attempt to help by giving a claimant access to their bank account. Unfortunately, the SSA usually considers access to funds the same way it would if you actually possessed the money yourself.
Example
Joe has been waiting for his SSI application to be approved for over a year. During this time, his mother has been helping Joe pay his bills. Joe tries to live within his means and usually only receives about $300.00 in help from his mother each month.
However, because she is a successful business woman, Joe’s mother feels she doesn’t have time to deal with all the people to whom Joe owes money every month. Because she trusts her son, she puts Joe’s name on her checking account, which allows him to write these checks personally. Her bank statement is usually over $4,000.00 a month. Joe proves to be trustworthy and still only uses $300.00 a month.
After another year of waiting, Joe is finally approved for his SSI. Unfortunately, the SSA refuses to pay any back pay to Joe for the time that his name was on the checking account. Even though Joe took only the $300.00 a month he had been getting before, the mere fact that he had access to this money was enough for the SSA to refuse him benefits.
How to avoid this problem:
Do not allow your name to be put on anyone else’s checking account.
