SSI benefits are subject to a number of reduction rules when a person receiving SSI receives support from others for living expenses.
In-kind support and maintenance is valued in one of two (2) ways, depending on an individual's living arrangement. An individual who lives in the “household of another”, which means that the person is being subsidized for the actual cost of both food and shelter is subject to a flat one-third (1/3) reduction of the federal benefit rate.1 This is called the “value of one-third reduction” or VTR rule.2 The VTR constitutes a fixed amount reduction from the SSI benefit payment irrespective of the actual value of the subsidy received by the SSI Claimant. The VTR is not rebuttable.3
If the one-third (1/3) reduction applies, the Social Security Administration (SSA) will not calculate the actual value of the subsidy for food and shelter the Claimant receives, but will instead presume that the value equals one-third (1/3) of the applicable federal benefit rate and reduce the Claimant's SSI check by that amount. The Claimant is not permitted to rebut the presumption that a subsidy for food and shelter is worth less than one-third (1/3) of the monthly SSI benefit and no income exclusions are applied to the amount.4
In most cases, the Claimant will receive the larger SSI check if they can avoid the application of the one-third (1/3) reduction rule. The one-third (1/3) reduction rule can be avoided if the Claimant can show that they do not live in the household of another person. The Claimant is living in his or her own household if the Claimant has an ownership interest or a life estate interest in the home; or is liable to the landlord for the payment of any part of the rent; or if the Claimant has a flat fee agreement for room and board; or if Claimant lives in a non-institutional care situation; or lives in public's assistance household; or pays a pro-rata year of the operating expenses.5
The Presumed Maximum Value Rule (PMV):
The PMV rule applies whenever Claimant receives countable in-kind support and maintenance and the one-third (1/3) reduction rule does not apply.6 The PMV applies to a Claimant who lives in another person's household but does not receive both food and shelter from that person; or to a Claimant who lives in his/her own household but receives some food and/or clothing and/or shelter for free or for less than market value; or to a Claimant who lives in a nonmedical institution and receives countable in-kind support and maintenance.
Under the PMV rule, the value of any countable in-kind food, shelter, or clothing received by Claimant is presumed to equal the sum of one-third (1/3) of the applicable federal benefit plus the $20.00 general income exclusion.7 This amount is used to reduce the monthly benefit. However, a Claimant can rebut the presumption by showing the actual amount someone else paid for the food, clothing, and/or shelter the Claimant received, or the current market value of the food, clothing, and/or shelter minus any payment the Claimant made for them, is less than the presumed maximum value.
Persons receiving SSI need to be aware of these rules as they will directly affect the amount of SSI benefits they receive.
1 20 CFR § 416. 1131