SSI Transfer Penalty Rule Causes Concern

If an applicant for Supplemental Security Income (SSI), a needs-based federal disability benefit, transfers assets out of her name prior to applying for benefits, she could face a stiff transfer penalty that would delay receipt of often vital services.

In a policy issue brief, the National Senior Citizens Law Center (NSCLC) argues that this transfer penalty unfairly harms our poorest citizens because it can result in very long penalty periods. The NSCLC points out that the SSI transfer penalty mirrors the transfer penalty provisions for Medicaid applicants who are seeking coverage for long-term care, but since the numbers used to calculate the penalty periods for the two programs differ substantially, a $70,000 asset transfer that causes a 10-month Medicaid penalty could trigger a multi-year SSI penalty.

This disparity occurs because Medicaid divides the amount transferred by the monthly nursing home rate (which is often over $6,000) in order to obtain the penalty period while SSI uses the amount of the beneficiarys SSI award, which is often only several hundred dollars a month, as the divisor.

Read more about SSI transfer penalties and how they affect eligibility for benefits.