What Is Supplemental Security Income? An Introduction

Supplemental Security Income (SSI) is a program offering public assistance to seniors or individuals with disabilities who have limited income and resources. This federal program helps millions of people across the United States pay for food, clothing, and shelter. It also is a key avenue to Medicaid coverage.

Many tend to confuse the SSI benefits program with Social Security Disability Insurance (SSDI). The Social Security Administration (SSA) does administer both programs. However, one of the main differences between the two is that SSDI does not use income to determine eligibility.

SSDI is available to people with disabilities no matter how much money they have. They may have acquired a disability later in life. If this is the case, money they earned before becoming disabled will not disqualify them from SSDI. (They may face limits on their income from work after qualifying for benefits.)

SSI is a "means-based" program, placing strict limits on a recipient’s income and assets. In most states, someone receiving SSI who gets even $1 from the program also qualifies for Medicaid health coverage. This can in fact prove far more valuable than the SSI benefit itself.

Because SSI’s income and resource limits are so restrictive, it pays to know the basics about the program. Be sure to do your research before deciding whether it is right for you or your family member.

SSI Eligibility

SSI recipients must be disabled, blind, or over age 65. This first requirement is often the hardest for SSI applicants to meet. In large part, this is because the federal government’s definition of disabled is so narrow.

SSI applicants with a disability seeking benefits must show they are effectively unable to work at any job whatsoever. According to the SSA, the applicant must have a "medically determinable" physical or mental impairment. This impairment must make it impossible for them to engage in any substantial gainful activity (SGA). Their disability also must be likely to last for longer than 12 months or else result in death.

If an adult applicant is able to engage in SGA, then they will typically not be eligible for SSI. For one cancer survivor, it took 14 years to prove she had a disability and that she qualified for benefits.

An applicant under age 18 must have a physical or mental impairment that results in marked, severe functional limitations. They, too, must have a disability that is likely to last longer than one year or result in death.

A Means-Based Program: SSI Recipients Must Have Limited Resources

Once an SSI applicant has shown that they are disabled, they must also prove that they have less than $2,000 to their name.

If they can use or liquidate an asset to pay for food or shelter, that asset may count as a resource against this limit. A resource would include any funds held in the applicant’s bank accounts, retirement accounts, or in cash. The applicant’s own home will not count as an available resource, and their car is also exempt.

The applicant may have set up a trust. However, if the trust does not meet specific requirements, the trust funds may also count against the $2,000 limit. To set up a trust correctly, it's always a good idea to work with an elder law or special needs planning attorney.

The $2,000 resource limit does not disappear once a person qualifies for SSI. If an SSI recipient ends a month with more than $2,000 in their name, they will lose their benefits in the following month.

SSI Benefits: Income Is Key

SSI recipients get only a modest monthly benefit. In 2024, the maximum federal benefit for SSI payments for an individual is $943 a month. Many states do add a small supplement to this. This sum, however, may be lower if the recipient has any countable income.

Note that SSI benefits reduce by $1 for each dollar of unearned income they receive. This can include interest or dividends. It also reduces by $0.50 for each dollar of earned income, such as wages. SSI benefits for an adult will diminish if they live in someone else’s home without paying for rent or meals.

Lastly, keep in mind that the income of the people living with the SSI recipient can count against them. If the SSI recipient’s combined income reduces their SSI benefit to zero, they lose SSI. If they lose SSI, they also lose any Medicaid benefits that may come with it.

Supplemental Needs Trusts Can Help

As noted above, SSI’s income and asset rules are highly restrictive. However, certain trusts exist that can protect an SSI recipient’s assets without jeopardizing their SSI benefits. These special needs trusts (or supplemental needs trusts) come in different varieties.

Relatives and friends of the SSI recipient can also set up a trust for them and fund it with their own money. If properly structured, these trusts will allow an SSI recipient to continue receiving benefits.

Unfortunately, a poorly drafted special needs trust can destroy any hopes an applicant has of ever qualifying for SSI.

Quality Advice Is Necessary

SSI is an essential program for millions, but it has a complex set of rules. Most attorneys who do not focus on this practice area have trouble understanding all the ins and outs.

A special needs planner has the necessary expertise in this area. They can guide you or your family through the process of obtaining and maintaining SSI benefits. Find a qualified special needs planning attorney in your area today.