How Gift Cards Could Affect SSI Benefits

Special events like holidays and birthdays often include gift-giving. Gift cards are a convenient and common choice. According to Capital One Shopping, 54 percent of United States consumers buy gift cards as holiday gifts.

Supplemental Security Income Benefits

Before purchasing a gift card for someone who receives Supplemental Security Income (SSI), be sure to understand how receiving a gift card could affect the benefits on which they rely.

SSI is a needs-based program for people with limited income and resources who have a disability, are blind, or are 65 or older. To remain eligible for SSI benefits, your loved one must have income and resources below specific thresholds.

These limits, which can vary by state, can make giving gift cards to an SSI recipient challenging. The Social Security Administration (SSA), which runs the SSI program, may consider certain gift certificates income for the month received.

The SSA requires SSI recipients to report changes in income and resources. Giving a gift card that increases your loved one’s income could result in the SSA reducing or even eliminating their benefit altogether, depending on the amount you have given them. According to the SSA, an increase in their unearned income will affect the payment the beneficiary receives two months later.

Gift Cards as Unearned Income

The SSA considers gift cards as unearned income in the following circumstances:

• It allows the beneficiary to buy food or shelter; or
• the beneficiary could resell it

Since SSI benefits help a recipient cover their costs for food and shelter, the SSA considers income that could go toward these essentials as a reason to reduce or eliminate the need for SSI benefits. Many department stores and online sellers like Amazon offer food items such that their gift cards could affect a person’s SSI benefits. And, unless the terms of a gift card explicitly prohibit resale, the SSA assumes that the gift card has resale value.

The eligibility requirements for SSI limit the amount of earned and unearned income an individual may receive. The administration considers gift cards unearned income. In 2023, an individual can receive up to $934 per month in unearned income, per the SSA.

Imagine an SSI recipient with $800 in unearned income gets a $200 Visa gift card as a holiday present. The individual has the ability to use the gift card to purchase food and shelter items. With the gift card, their total monthly income will equal $1,000. Because this exceeds the income limit of $934, the individual no longer meets the SSA’s requirements.

SSI benefits are dependent on income. Even if the gift card does not put the SSI recipient over the unearned income limit, it could result in a reduction of their benefits. When an individual’s unearned income increases, SSI benefits reduce by about $1 for every $1 received, per the SSA. So, a $200 gift card would in turn reduce the recipient’s monthly benefit by $200.

If a single adult receives $914 in benefits each month, they could expect a reduced payment of $714.

Gift Cards as Resources

In addition to affecting income, gift cards also count as available resources. An SSI recipient can have up to $2,000 in resources ($3,000 for couples). When a beneficiary receives a gift card but does not spend it, it becomes a countable resource, which could disqualify them from benefits.

Suppose you give your loved one who receives SSI a gift card for $200, and they have $1,900 in resources. They would now have a total of $2,100 in resources. The $200 gift card could put them over the resource limit for a single person by $100.

Gift Cards Not Considered Income

While most gift cards allow the recipient to make food and shelter purchases or potentially resell the gift card, specific gift cards may not. These types of gift cards will not count as income or count toward available and countable resources for the recipient. For instance, a $200 gift card to an office supply store with a legally enforceable prohibition on resale would not count as income or resources of the recipient.

Consult With a Special Needs Planning Attorney

While you have good intentions, purchasing a gift card for an individual who receives SSI can result in potential problems with their benefits. Undoubtedly, you want to support a loved one who has limited income without jeopardizing their benefits, Contact a local, qualified special needs planning attorney near you for guidance today.

For more information on some of the basics of Supplemental Security Income benefits, check out the following articles:

• Three Changes You Must Report as an SSI Recipient
• A Short Primer on SSI Income Rules
• Extra Income and SSI Eligibility: A Delicate Dance