In-kind income that is unearned (not a result of employment) and results in food or shelter for the recipient is categorized as “in-kind support and maintenance” (ISM). Other types of in-kind income include goods given as gifts to you.
Income That Affects Your SSI Payment
In-kind income is relevant when someone is receiving Supplemental Security Income (SSI) benefits. SSI beneficiaries can have their monthly benefit payment reduced if they earn any other income. Income is defined as:
- wages from working
- SSDI benefits, and
- in-kind income (including ISM).
If you receive SSI benefits and someone provides you with shelter and/or food that you don’t pay for, the Social Security Administration (SSA) will reduce your monthly SSI payment to account for this in-kind support and maintenance, according to specific ISM rules. “Shelter” includes things like rent/mortgage payments, property taxes, and utility bills, but doesn’t include phone and cable bills, or any medical costs. Other types of in-kind income, such as goods given as gifts to you, are simply valued at their current market value and subtracted from your SSI payment like other income.
Are You Receiving In-Kind Support and Maintenance?
The SSA does not consider it ISM if you:
- live alone and pay for your own food and shelter
- live only with your spouse and minor children, and nobody outside the household pays for your food and shelter (although a working spouse’s income could potentially affect your SSI eligibility), or
- live with other people and pay your share of the food and shelter expenses.
If the last situation applies – say you live with three roommates and pay a portion of the rent, utilities, and food costs – the SSA will examine the amount you pay to determine if it is actually one-fourth of the monthly food and shelter costs. If the amount that you pay meets or exceeds one-fourth of the actual costs, you would not be receiving ISM. However, if your monthly payments are less than one-fourth of the monthly expenses, you would be found to be receiving ISM and the SSA would reduce your SSI benefit accordingly.
There's one more exception: if you are given food or shelter as a loan and need to pay it back, it won't count as in-kind income and shouldn't affect your SSI payment. For details on the requirements for this exception, see our article on how loans of food and shelter affect SSI.
How In-Kind Support and Maintenance Affects Your SSI Payment
The amount of your SSI payment is based upon the current “federal benefit rate” (FBR), a value established by the government each year. In 2014, the FBR is $721 for an individual and $1,082 for a couple. This is the maximum monthly amount that you can receive in SSI benefits (unless your state pays an extra supplemental payment).
If you’re awarded SSI benefits and have no income, you will receive this amount each month. If you have any other income, including ISM, your monthly payment will be reduced. When calculating the value of your ISM and reducing your SSI payment accordingly, the SSA uses one of two rules.
One-Third Reduction Rule
The “one-third reduction rule” is applied if your situation meets both of the following conditions:
- you lived in another person’s household for the full calendar month, and
- you received both shelter and food from others living in that household.
The one-third reduction rule simply means that your SSI payment will be reduced by one-third. Even if the fair market value of the food and shelter that you received for free exceeds this amount, your payment would still only be reduced by one-third. So, if you are an individual receiving SSI in 2014 and have no other income, your payment would be $480 instead of $721.
If you make other income, that income is subtracted after the one-third reduction. For example, John is a single person who receives SSI benefits. He also receives $200 per month from a private pension, and lives with his mother, who provides him with food and shelter that he does not pay for. Using the one-third reduction rule, the SSA values this food and shelter at $240 per month (one-third of $721). So, in 2014, John’s monthly SSI payment would be $281 (the FBR minus his income, which includes the value of his ISM and his pension, or $721 - $240 - $200 = $281.)
Presumed Value Rule
If the one-third reduction rule doesn’t apply to you (for example, if you lived in your own household but someone else paid your bills, or you lived in someone else’s household but they didn’t provide your food), the SSA will apply the “presumed value rule.”
Under this rule, the value of the food and shelter that you received is established as one-third of the FBR, plus $20. However, unlike the one-third reduction rule, you can dispute the amount established under the presumed value rule if you believe that the actual value of your ISM isn’t equal to the presumed value. You can show this by proving that the current market value of the ISM is lower than the presumed value, or that the actual amount that another person pays for your food and shelter is less than the presumed value.
Once the SSA determines the value of your ISM, that amount will be added to any other income you receive and will be deducted from your monthly SSI payment.
Additional provisions can apply to children who receive SSI benefits as well as homeless adults and those residing in a medical institution.
For information on income rules and financial eligibility for SSI, see our article on SSI income limits.