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

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). However, if the ISM is loaned to you and you are expected to pay it back someday, the SSA will exclude it when it determines your eligibility for SSI or your monthly SSI payment amounts.

Why It Matters Whether Paid Food and Shelter Is a Gift or Loan

If you haven't yet been approved for SSI benefits, getting free food and shelter may 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, and if you have any income, the value of the food and shelter you receive may put you over the SSI income limit. (The amount of income you can receive and/or earn each month and still get benefits depends on the federal benefit rate (FBR) and whether your state pays an SSI supplement. To learn more, read our article on income limits and SSI eligibility.)

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 might 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. 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 may 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.

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 (or 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 like SSI), and
• your monthly living expenses.

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.

Example 1

Mr. Miller applied for SSI benefits on May 1, 2021. In his interview with the SSA, Mr. Miller states that his brother provided him with food and shelter as a loan. Mr. Miller provides the SSA with a copy of a written agreement that states Mr. Miller must repay his brother even if he is denied benefits, starting July 1, 2021. Based on the information provided, the SSA concluded that a bona fide loan existed between Mr. Miller and his brother in part because the repayment plan was unconditional.

Example 2

Mrs. Jensen was approved for SSI on January 1, 2020. At that time, Mrs. Jensen's daughter, with whom she lived, was paying for Mrs. Jensen's living expenses. The SSA treated Mrs. Jensen's room and board as a gift of food and shelter and decreased Mrs. Jensen's SSI payment by one-third. However, on March 1, 2020, Mrs. Jensen's daughter lost her job and could no longer pay for her mother's expenses without getting paid back. At that time, Mrs. Jensen and her daughter entered into an oral agreement for a loan of ISM. After meeting with both Mrs. Jensen and her daughter, the SSA concluded that the agreement entered into by Mrs. Jensen and her daughter was valid, and as of March 1, 2020, the date the agreement was made, the ISM was excluded when the SSA determined Mrs. Jensen's benefit 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.

Example 1

Ms. Smith applied for SSI on June 1, 2020. At that time, she was living with her parents, who were providing her with food and shelter free of charge. Before Ms. Smith applied, she and her parents entered into a written agreement that stated that the value of the food and shelter was a loan that Ms. Smith must repay if she was approved for SSI benefits. Because repayment of the ISM was conditioned on getting approved for benefits, the SSA concluded it was not a valid loan for ISM.

Example 2

Mr. O'Connor was living with a friend when he applied for disability. The friend supplied his food and shelter, which was valued at $825 a month. At the time, Mr. O'Connor told the SSA that he had neither money nor resources. But Mr. O'Connor also stated that he had an ISM agreement with his friend that required him to repay the loan with monthly payments of $100 per month out of his SSI check, once he got approved for SSI. The agreement also stated that Mr. O'Connor would repay the loan by providing lawn services valued at $50 a month. The SSA concluded that the agreement wasn't valid because Mr. O'Connor's SSI check wouldn't be enough to pay his share of the household living expenses of $825. The repayment plan was also not feasible because the rules do not allow repayment of an ISM loan to be made from services rendered (see requirement #4, above).

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. Contact the SSA directly if you have questions or concerns regarding a loan of ISM and whether it is 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 May 12 ,2021}