How Loans or Gifts of Housing or Food Are Counted for SSI Disability

If someone else pays for your food and/or shelter, Social Security won't reduce your monthly SSI payment if you have a loan agreement to repay this "in-kind support and maintenance."

By , J.D., University of Baltimore School of Law

Supplemental Security Income (SSI) is a federal benefit available to people who are considered disabled by the Social Security Administration (SSA) and who meet certain strict asset and income guidelines. For the purposes of SSI financial eligibility, the SSA will count free room and board, or money that someone gives you to help pay for your food and rent, as income. This is called in-kind support and maintenance (ISM).

But if someone loans you money for food or shelter, and you're expected to pay it back someday, the SSA will exclude it when it determines your eligibility for SSI or your monthly SSI payment amounts.

If you haven't yet been approved for SSI benefits, getting free food and shelter might make you ineligible for SSI (unless you have to repay the cost of these items). This is because the SSI program has an income limit you have to meet in order to qualify. If you have any income, the value of the food and shelter you receive might put you over the SSI income limit.

If you're already receiving benefits and you receive free food or shelter, and Social Security counts it as a gift of food or shelter rather than a loan, your SSI payment will be lowered. The way that ISM affects your SSI payments depends on your living arrangements. If you live in another person's home and someone else pays your food and shelter, the SSA will use the "one-third reduction" rule and take away one-third of your SSI payment.

If you don't live in someone else's household, or you paid for your own food, the "one-third reduction" rule doesn't apply. In that case, the SSA will use the "presumed value" rule to reduce your benefits. You can read in detail about how free food and shelter affect your SSI payment in our article on How In-Kind Support and Maintenance Affect Your SSI Disability Payment.

When ISM Money Is Counted as a Loan

Money for ISM can be:

  • borrowed from someone who lives either in your household or outside of your household
  • borrowed by an SSI recipient or his or her spouse or parent, or
  • borrowed as a one-time event or borrowed over a period of time.

If you receive a loan of ISM, the SSA will not count it as a resource as long as it is a bona fide loan. To be considered a bona fide loan for ISM, the loan must meet all five of the following requirements.

1. The Loan Must Be Enforceable Under State Law

The ISM loan must be in the form of an agreement that can be enforced under the laws of the state where it was created. In other words, the lender must be legally able to force you to pay it back. The agreement can be either a spoken or a written contract, but it must be a valid contract.

2. The ISM Loan Agreement Must Be In Effect at the Time the ISM Is Provided

The ISM loan agreement must be already in effect when you are given the money for food or shelter. Also, you must have agreed on the terms of your repayment of the ISM when the ISM is provided. If the repayment terms are not determined until after you have begun to receive the food, shelter, or both, whatever you received prior to establishing the repayment will not be considered a loan of ISM. This means that the SSA may use the value of the ISM you received to reduce your SSI payment.

3. You Must Acknowledge That You Have to Repay the Loan

In order for the SSA to consider a loan of ISM as a bona fide loan, you must accept the ISM with the express understanding that it will have to be repaid. Your requirement to repay must be:

  • acknowledged by both you and the person lending you the ISM, and
  • unconditional.

The SSA requires that even if you aren't awarded SSI benefits, your lender will require you to repay the loan.

4. There Is a Plan or Schedule for the Repayment of the Loan

Your ISM loan agreement must set forth the plan or schedule for its repayment and the loan must expressly state that you intend to pay back the loan in one of the following two ways:

  • by the sale or transfer of personal property or real estate, or
  • with your current income or anticipated income (like SSI).

You can't promise to repay the loan with future services that you'll provide.

The more details you put into your loan agreement, the better. Details will show the SSA that the money is indeed a loan and not a gift for SSI purposes.

One word of caution: If you sell real estate or personal property for less than its fair market value, you can lose eligibility for SSI for a period of time. You can learn more by reading our article on how to sell assets and still qualify for SSI.

5. The Repayment Plan or Schedule Must be Feasible

You need to make sure that the way your repayment plan or schedule is set up is actually doable under your particular set of circumstances. You must be able to show the SSA that you can repay the ISM loan with your own resources or income (and money from SSI). To decide if your plan is reasonable, the SSA will look at only the following:

  • the amount of your ISM loan
  • your resources and income (including income you anticipate getting), and
  • your monthly living expenses.

If you're already receiving SSI, Social Security probably won't accept a plan to pay back the money with your future SSI payments alone. You'll probably need to be expecting some other form of future income, such as an inheritance, a court settlement (like a personal injury award), or a housing supplement from Section 8 or a nonprofit agency.

But if you haven't started receiving payments and are expecting to receive SSI back payments in a lump-sum payment, your repayment plan can include part of your SSI back pay.

Examples of Bona Fide ISM Loans

Here are some examples of when a loan is considered to be a bona fide ISM loan. This means that the SSA will exclude the value of the ISM when determining your SSI payment amount.

Not Bona Fide Loans for ISM

The following are examples of when the SSA might conclude that loans for ISM are invalid. This means that the value of the ISM will be counted against the SSI recipients, lowering their payment or even making them ineligible for SSI.

Contact the SSA for Help

The rules regarding ISM loans are complicated, and if you don't follow them, you could lose benefits or have your benefits reduced. The way you handle your living arrangements or borrowing money can mean the difference between getting an SSI check or not. To become more familiar with the rules, read more about when Social Security treats loans as assets or income.

Contact the SSA directly if you still have questions or concerns regarding a loan of ISM and whether it's valid. You can call the SSA Monday through Friday at 800-772-1213 or visit your local field office to speak with someone in person.

Updated January 24, 2024

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