Extra Income and SSI Eligibility: A Delicate Dance

Most people would jump at the chance to earn additional income or to receive a large cash gift from a friend or relative. But for Supplemental Security Income (SSI) recipients, extra income sometimes causes more problems than it’s worth. That’s because SSI recipients must follow extremely strict rules regarding how much income they can receive in any given month. If their income goes over their allotted SSI award, they could lose not only their SSI eligibility, but also the all-important Medicaid assistance that often comes with it.

What Is SSI?

Supplemental Security Income, or SSI, is a federal program that provides financial assistance to individuals with limited income and resources who are elderly, disabled, or blind. It aims to help these individuals meet their basic needs. SSI benefits are designed to supplement any other income the individual may have, ensuring a minimum level of financial support.

For SSI recipients, understanding the rules around income is crucial. Each month, they must carefully track their earnings to avoid exceeding the income limits set by the Social Security Administration (SSA). Even a small increase in income can lead to a reduction in benefits or, in some cases, a complete loss of eligibility. This can create a challenging situation where recipients may feel discouraged from seeking employment or accepting gifts, fearing the financial repercussions.

Requirements for SSI Income

As mentioned above, the SSI program requires its recipients to meet strict financial criteria. To qualify for SSI in most states, an individual must generally have less than $2,000 to their name in any given month.

The SSA, the agency responsible for running SSI, has long had a unique definition of income: “any item an individual receives in cash or in-kind that can be used to meet their need for food or shelter.” (Note that this definition is changing come September 30, 2024.)

This means that a beneficiary’s wages are income, as are any cash payments or cash equivalent items like gift cards that are given directly to a beneficiary by anyone or anything, including a trust. While an individual is on SSI, their monthly income must be lower than the amount they receive as an SSI benefit. If their income goes over this limit, even by $1, they lose SSI, at least temporarily.

Family members who have not consulted with a qualified special needs planner generally learn about these restrictions the hard way. One of the most common scenarios involves a well-intentioned friend or relative giving a person who relies on SSI a large cash gift, typically on a holiday or birthday. However, such a gift can end up canceling out the beneficiary’s SSI award. Fortunately, the SSA has a specific rule called the Infrequent or Irregular Income Exclusion that allows for small gifts to SSI recipients.

Infrequent or Irregular Income Exclusion

Here’s how this rule works: During each quarter of the year, the SSA does not count the first $60 of an SSI recipient’s infrequent or irregular unearned income, or the first $30 of their earned income against their SSI award.

The SSA defines infrequent income as any payment received from a single source that a beneficiary did not receive in the month before the payment and will not receive in the month right after the payment.

For example, if a beneficiary gets $30 in July for helping to paint a house but does not do the work in June or August, the $30 counts as infrequent earned income. Irregular income is any income a beneficiary cannot reasonably expect to receive. In this case, if a friend of the recipient gives them $50 “just because,” that $50 counts as irregular income.

In both of these examples, SSI would not count the payments as income because the payments fall under the Infrequent or Irregular Income Exclusion. However, if the SSI recipient does not spend the funds during the month in which they are received, any remaining money counts as an available resource in the following month, creating a separate problem for the beneficiary, who must keep assets under $2,000 to continue qualifying for SSI benefits.

For many people, an extra $60 each quarter would likely not have an especially significant impact. But for SSI recipients who must deal with many onerous financial requirements, every little bit helps. Of course, there are other, much less restrictive ways to help an SSI recipient with their daily needs, often through the use of a special needs trust. A qualified special needs planner can help you navigate the tricky world of SSI rules and propose solutions that can make an SSI recipient’s life much easier.

Additional Reading

• What to Know About Filing Applications for SSI or SSDI
• Before You Say 'I Do': 5 Questions to Ask Your Special Needs Attorney
• When Your Child Receiving SSI Is Age 18 or Older
• Will My Disability Benefits Change When I Reach Age 65 or Older?