Understanding Supplemental Security Income (SSI) and Special Needs Trust Rules can feel like solving a complex puzzle. This is especially true when it comes to understanding how ISM calculations affect your benefits. With new Social Security ISM rules coming in SEPT 2024, your food and living arrangements might impact your SSI or SSDI differently.
The new changes will directly impact many individuals’ SSDI/ SSI benefits, making it crucial to grasp the details.
Whether you’re setting up a special needs trust, living in a shared household, or simply planning for the future as an individual with special needs or disabilities, understanding these rules can make a big difference in your financial planning.
So, let’s explore what the new Social Security rules mean, why they matter, and how you can face the future with confidence about your benefits.
Significant Amendments to the Supplemental Security Income (SSI) & Regulations for In-Kind Support and Maintenance (ISM)
Changes to Food and Meal Calculations for ISM
Have you ever felt bogged down by the complex rules when applying for Supplemental Security Income (SSI) or Supplemental Security Disability Income? If so, you’re not alone.
News rules become effective September 30, 2024, and introduce significant amendments to the Supplemental Security Income (SSI) regulations concerning the calculation of In-Kind Support and Maintenance (ISM).
The biggest change is an update to remove food from the calculations of In-Kind Support and Maintenance (ISM).
Essentially, this means that a Special Needs Trust may be able to make a distribution for food for a beneficiary without a potential reduction in that beneficiary’s Supplemental Security Income (SSI).
Under the new final rules, SSA will consider only the defined shelter expenses in ISM calculations.:
- Room
- Rent
- Mortgage payments
- Real property taxes
- Heating fuel
- Gas
- Electricity
- Water
- Sewage and garbage collection services
This simplifies the administration of SSI benefits by making the rules less cumbersome and easier for everyone to understand and follow.
The Broader Impact
What does this mean for you? If you’re a beneficiary, it simplifies what you need to report. No more keeping tabs on every meal or food assistance you receive to report to the SSA.
By cutting out food from the ISM equation, the SSA is taking a step towards a more streamlined and less cumbersome system. This change acknowledges the complexity of current food support measures and the burden it places on all parties involved.
Definition of Income Adjusted
The definition of income has also been adjusted to emphasize that food is not included in the calculations of ISM.
Income is now more specifically defined as anything received in cash or in-kind that can be used to meet needs for shelter, excluding food.
Peeling Back the Layers: Technicalities of SSI’s ISM Calculation Overhaul
Unpacking the Definitions
If that was difficult for you to read, then let’s break down the jargon.
When we talk about In-Kind Support and Maintenance (ISM), we’re referring to the non-cash items that you might receive that can help cover your basic living expenses.
Historically, this included both food and shelter, but from September 2024, it will only include shelter-related items.
The New Rules in Action for Government Benefits
Here’s how it plays out:
Shelter, in this context, includes your rent, mortgage payments, real estate taxes, utility costs, and similar expenses. If you receive any help with these from someone else, it typically counts as ISM and can affect the amount of SSI benefits you receive.
However, with the upcoming changes in SEPT 2024, if someone buys you groceries or invites you to dinner, these gestures no longer impact your SSI benefits. This change aims to make your life easier by simplifying what you need to report.
ISM Valuation Mechanics: Simplified Yet Comprehensive
The valuation of ISM has always been a tricky affair. With these changes, the SSA introduces a streamlined approach to determining how much this support is worth. SSI has two primary rules at play:
Rule 1: One-Third Reduction Rule (VTR)
This rule applies if you live with someone else and they provide both shelter and meals throughout the month.
This rule currently considers both food and shelter. However, beginning SEPT 2024, it will focus solely on shelter. This means fewer calculations and less paperwork for you.
Rule 2: Presumed Maximum Value (PMV) Rule
Starting SEPT 2024, this rule kicks in when the VTR doesn’t apply. It caps the estimated value of the shelter you receive, which can be rebutted if you can show the actual value is lower. This provides a safety net, ensuring you aren’t unduly penalized if the actual support you receive is modest.
2 New Rules Waiting In The Wings
Potential Rule 1: Expansion of “Public Assistance Households” to include SNAP
There is potential that SSDI/ SSI will expand the Definition of Public Assistance Household to include SNAP as an additional means-tested public income-maintenance (PIM) program. The PMV does not apply to Public Assistance Households.
If the definition of “Public Assistance Household” in SSI/ SSDI regulations is expanded to include households receiving SNAP benefits, this could have significant implications for individuals in these households in terms of how their SSI benefits are calculated.
What This Means for You and Your Family If This Rule Becomes Part of the Change
Currently, the Presumed Maximum Value (PMV) rule estimates the value of in-kind support and maintenance (ISM) that an SSI recipient receives outside of cash payments. The PMV caps the assumed value of ISM at one-third of the federal benefit rate plus $20.
If a household is recognized as a Public Assistance Household, the PMV rule does not apply. Instead, any in-kind support provided does not count as income in the calculation of SSI benefits.
Simplified Benefit Calculation
If individuals in households receiving SNAP benefits are classified as Public Assistance Households, the calculation of SSI benefits could become simpler and potentially more favorable.
The exclusion of the PMV rule means that the support received from SNAP and potentially other forms of non-cash public assistance would not reduce the SSI benefits due to the non-counting of such in-kind support.
Potential Increase in SSI Benefits
If the PMV rule were not applied, individuals in households that receive SNAP would likely see an increase in their eligible SSI benefit amounts.
This is because the reduction usually applied under the PMV rule for estimating ISM would not be in effect, potentially leading to a higher countable income exemption.
Reduction of Administrative Burden
This change would also reduce the administrative burden on both the beneficiaries and the SSA.
Beneficiaries would not need to report the value of received SNAP benefits or other similar public assistance as ISM, simplifying the application and maintenance of SSI benefits.
Increased Access to Benefits
Expanding the definition to include SNAP recipients under the Public Assistance Household category could make more individuals eligible for maximized SSI benefits.
This can be particularly impactful for low-income families and individuals who rely heavily on public assistance for their daily needs.
In essence, including SNAP as part of the definition of a Public Assistance Household could provide substantial financial relief to those on SSI, streamlining the benefits process, reducing unnecessary calculations, and potentially increasing the monthly amounts received by individuals who are often most in need of support.
Potential Rule 2: Expansion of Rental Subsidy Policy for SSI Recipients
SSI may also expand the Rental Subsidy Policy for SSI Recipients to recognize that a “business arrangement” exists when the amount of required monthly rent equals or exceeds 1/3 of the SSI federal benefit rate.
Where a business arrangement exists, rental ISM does not apply. For instance, if you have a business arrangement to pay rent at market rates, in the future, it may not be considered ISM.
This ensures fairness and acknowledges the reality that not all financial arrangements between family or friends are charitable in nature—they can also be mutually beneficial agreements.
A Potential Boost in Social Security Benefits
Now, here’s some potentially great news. By removing food from ISM calculations, the SSA is also removing a variable that could have previously reduced your government benefits.
Think about it this way: if someone was helping out by paying for some or all of your food, this ‘help’ was previously considered as part of your income. It had the potential to decrease the amount of SSI benefits you were eligible to receive.
With the new changes, this is no longer the case. The support you receive for food won’t count against your SSI benefits.
What does this mean for you? It could lead to higher SSI payments. By lowering the countable ISM, your reported income decreases, potentially increasing the SSI amount you qualify for each month.
This adjustment aims to improve your overall financial support, making the benefits system fairer and more focused on your essential needs like housing and utilities.
Examples for Clearer Understanding
The new changes to the SSI ISM calculations specifically exclude food from being considered as part of in-kind support, which could have significant effects on how individuals report their income and receive benefits.
Here are five scenarios illustrating how different people might be impacted by these new rules:
George’s Streamlined Life SEPT 2024
George is a 25-year-old who lives with a neurological disorder that requires careful management and regular care. His condition and lower income qualify him for Supplemental Security Income (SSI) benefits, which help him manage his living costs. George also has a special needs trust set up by his brother to cover his additional medical expenses and personal care not covered by SSI.
Previously, George frequently received meals from his neighbors and a local church group, who knew of his struggles and wanted to help. However, under the old rules, George had to meticulously track and report these meals as in-kind support, which could potentially reduce his SSI benefits.
This reporting added stress to his life and made him wary of accepting too much help, fearing it might inadvertently lower his financial assistance.
In Sept, 2024, with the new SSI rule change excluding food from ISM calculations, George no longer worries about the implications of accepting these generous meal offerings on his benefits.
He can now freely accept the kindness of his neighbors and church group without the burden of reporting each meal or calculating its potential impact on his SSI benefits.
This change has not only simplified his monthly reporting responsibilities but also enhanced his quality of life by allowing him to engage more freely with his community support network.
Amanda’s Focus on Recovery SEPT 2024
Amanda, a 32-year-old recovering from a severe accident that left her temporarily disabled, relies on SSI to help make ends meet during her recovery period. She also benefits from a 1st party special needs trust, which she set up with a court settlement to ensure she could afford her rehabilitation therapy and adaptive equipment needed at home.
During her recovery, Amanda’s friends and local community services often brought her home-cooked meals, knowing that cooking was challenging due to her current physical limitations.
Under the old SSI rules, Amanda had to keep detailed records of these meals to report as in-kind support, which could potentially reduce her SSI benefits if deemed significant enough. This requirement was another layer of stress during a period when her primary focus should have been on recovery and physical therapy.
Thanks to the new rule that removes food from ISM considerations, as of SEPT 2024, Amanda no longer has to report these meals. She can now accept all the support her community offers without worrying about tedious paperwork or potential deductions from her SSI benefits.
This shift lets her direct all her energy toward healing and rehabilitation, secure in the knowledge that her financial support remains stable and unaffected by the food assistance she receives.
Emily’s Improved Financial Stability SEPT 2024
Emily, who has Down syndrome, lives in a group home, and her living expenses are partially paid through a special needs trust set up by her family.
Before the change, Emily and her caregivers had to carefully account for her home’s food and meal benefits when reporting to the SSA, which was often complicated and error-prone.
Starting in Sept., Emily won’t need to report her meal benefits, reducing the risk of errors and ensuring she receives the maximum possible SSI benefits. This adjustment will likely lead to greater financial stability and less dependency on her trust funds for daily living expenses.
Sarah’s Potential Relief from Reporting Stress in the Future
Sarah, a 30-year-old with cerebral palsy, has a special needs trust set up by her family to ensure she receives proper care without affecting her eligibility for SSI benefits.
Each month, Sarah receives SNAP benefits, which help her manage her grocery bills. Under the current rules, the burden of meticulously documenting these benefits and how they impact her in-kind support calculations is stressful and confusing.
With the proposed new rule considering SNAP as part of the definition of a “Public Assistance Household,” Sarah could potentially no longer worry about reporting her SNAP benefits.
If this new rule goes into effect, Sarah will likely be able to focus more on her well-being and less on the bureaucratic paperwork, improving her overall quality of life.
Tom’s Potential Enhanced Benefits in the Future
Tom, who lives with a painful leg syndrome, benefits from a special needs trust that his parents set up to cover additional expenses like therapy and special equipment.
He also receives SNAP benefits to help with food costs. Currently, the value of the SNAP benefits is considered as ISM, reducing his SSI payments.
With SNAP potentially included under the “Public Assistance Household” category in the future, Tom’s SNAP benefits could soon be entirely excluded from his ISM calculations. This change could simplify the reporting process and also increase his monthly SSI benefit amount, providing more financial flexibility for other necessities.
Special Needs Trusts and SSI: Navigating the New Food Exclusion Rule as a Family Member
Special needs trusts are crucial tools designed to supplement, not replace, the benefits provided by government programs like Supplemental Security Income (SSI). These trusts ensure beneficiaries maintain their quality of life by covering expenses that SSI does not.
First-Party vs. Third-Party Special Needs Trusts
- First-Party Special Needs Trusts are funded with the beneficiary’s own assets. They are subject to payback provisions to reimburse governmental programs for care provided throughout the beneficiary’s life.
- Third-Party Special Needs Trusts, on the other hand, are established by family members or other entities and are not required to pay back government programs upon the beneficiary’s death.
These trusts can cover various expenses such as out-of-pocket medical or dental expenses, personal care assistance, educational costs, and other services that enhance well-being, including recreational activities and assistive technology.
Impact of the New Food Exclusion Rule on ISM
Managing a special needs trust now comes with slightly altered responsibilities under the new SSI rules that exclude food from ISM calculations.
Here’s how this impacts trust management and beneficiary support:
- Reduction in Reporting Burden: Starting SEPT 2024, trustees no longer need to consider food provided by the trust when reporting ISM. This simplifies the management process, focusing only on substantial support like housing or direct payments for non-food items that improve the beneficiary’s quality of life.
- Potential for Increased Benefits: By excluding food from ISM calculations, beneficiaries might see an increase in their SSI payments. This is because the provided food no longer counts as in-kind income, potentially lowering the countable ISM and thus increasing the SSI benefit amount.
Estate planning attorneys play a vital role in setting up and advising on the administration of special needs trusts. Working with an experienced attorney ensures that your trust document complies with federal law. They also advise on supporting the beneficiary’s needs without risking governmental support.
Their help with special needs trusts also includes carefully selecting trustees, structuring the trust agreement, making disbursements, and managing the trust overall.
Preserving SSI Eligibility for Government Benefits
Effective planning and management of special needs trusts are crucial for preserving SSI eligibility. This involves understanding how distributions for housing expenses can be seen as ISM and may reduce SSI benefits.
Family members or trustees must navigate these rules to ensure that trust assets enhance the beneficiary’s quality of life in compliance with all legal requirements.
Criteria for ISM Development
While ISM development for food is no longer required under the new rules beginning SEPT 2024, understanding when ISM should be considered for other aspects remains essential.
This includes tracking contributions and expenses related to housing and other non-food-related support to ensure fair and accurate SSI benefit calculations.
In conclusion, beginning SEPT 2024, integrating special needs trusts into the new SSI benefits landscape demands meticulous planning and strategic asset management. By aligning trust activities with the updated SSI guidelines, trustees can safeguard the beneficiary’s financial future and ensure ongoing eligibility for essential government benefits.
Hopler, Wilms, and Hanna Can Help
If you’re feeling overwhelmed by special needs trust rules and how the new ISM calculations will apply in SEPT 2024, Hopler, Wilms, and Hanna is here to help you through the maze of regulations and paperwork.
We understand that managing a trust while ensuring your loved one continues to receive their full SSI benefits can seem daunting. And with the new rules coming soon, you may feel even more confused. However, with our experienced team by your side, you don’t have to navigate these waters alone.
Our approach is simple: we listen, we understand, and we strategize. We believe that every family’s situation is unique, and so are the solutions we offer.
Whether you’re setting up a new trust, adjusting an existing one, or just getting clear, actionable advice on maximizing government benefits, we’re here to support you.
Don’t let confusion or uncertainty about special needs trusts and government benefits prevent you from providing the best care for your loved one. Let Hopler, Wilms, and Hanna make the entire SSI and special needs process easier.
Ready to find out more? Contact us today for a consultation, and let’s explore together how we can support you and your family members.