Social Security Rules for Deeming Income from Parents to a Child with a Disability to Determine Whether a Child is Eligible for SSI, and if so the Amount
Social Security Rules for Deeming Income from Parents to a Child with a Disability to Determine Whether a Child is Eligible for SSI, and if so the Amount
This pub tells you about “deeming” rules. This means part of a parent’s income and resources count against their child in deciding SSI eligibility and benefit amount. This pub helps you figure out how SSI counts your income. It gives examples. It tells you how to report your income.
Generally, a parent’s income and resources are “deemed,” or attributed, to a child receiving SSI (Supplemental Security Income). This means that part of the parent’s income and resources count against the child in determining whether or not the child is eligible for SSI. This publication explains the deeming rules, specifically, how to determine how much income is deemed from the parents to the disabled child and how to determine whether the disabled child qualifies for any SSI.
Before getting to the actual procedures for calculating how much of a parent’s income is deemed and how much SSI a child can get, you need to understand Social Security’s “Retrospective Monthly Accounting” system and your reporting obligations. Social Security counts only the income and resources of the parent with whom the SSI child is living. Social Security does not count the income or resources of a parent with whom the SSI child is not living. The income of a step-parent with whom the SSI child lives is counted.1
Retrospective Monthly Accounting
Social Security uses retrospective monthly accounting during a period of SSI eligibility. 20 Code of Federal Regulations Section 416.420. That means the income received in one month determines the amount of SSI two months later. For example, the income received in January affects the amount of the March SSI check. However, if income is too high in one month to qualify for any SSI, is suspended for that month. Thus, if income in January is so high that your child is ineligible for SSI, SSI is suspended in January. Your child is entitled to automatic reinstatement without a new application if your income is low enough for your child to qualify for SSI in any of the subsequent 11 months.2 20 Code of Federal Regulations Section 416.1323(b). If you go 12 months without your income dropping low enough for your child to qualify for any SSI, the suspension turns into a termination. 20 Code of Federal Regulations Section 416.1335. Once your child has been terminated, you would have to file a new application for your child to get SSI again.
Parents’ Income Change Reporting Obligations
To make the “Retrospective Monthly Accounting” work, Social Security has a rule that says you must let Social Security know by the 10th of the month following the month with a change in your income. 20 Code of Federal Regulations Section 416.708(c), 416.714.3 If your January income was more or less than your December income, you must report the change so that Social Security knows about it by the 10th of February – better if by the 5th. You do not need to make any report if your income in January is the same as your income in December. When Social Security receives your income change report for January, Social Security is supposed to enter the changed information into the computer so that your March SSI check will be adjusted up or down to reflect the change in your January income.
We have included a sample income change report form to help you meet your reporting obligations. We suggest that you partially fill in the report form by writing in the address of your Social Security office and all the information after “re.” Then photocopy many copies of the partially filled-in form.
Each month where there has been a change in income, write in the date you are signing the form, the month you are reporting about, and the income information at the bottom. Then sign the form. Only one parent needs to sign the report form. Either photocopy the filled-in form or fill in a second form as a copy for you to keep. Attach photocopies of any pay or check stubs to the report form you are sending to Social Security. Attach the originals to the copy you keep for your files. Do not send Social Security your pay stub originals, only photocopies.4 Social Security often loses things sent by mail. Keep the original pay and check stubs attached to your copy of the report form so that Social Security may review the originals at the time of your annual review. On the income change report copy, you keep, write down the date you put the letter in the mailbox.5 Keep a copy of everything you send to Social Security.
In addition, keep a record of any time you talk to Social Security. Write down the date you talked, to whom you talked, and what was said. We recommend you 3-hole punch what you receive from Social Security and make copies of what you send to Social Security. Put everything in a notebook or binder.
Resources and Income that is Not Deemed to Children
Social Security does not count the following as a resource for purposes of determining a child’s SSI eligibility:
- Parents’ pension or retirement funds (such as Individual Retirement Accounts, KEOGH, or tax-deferred annuities) even if the fund could be cashed in. 20 Code of Federal Regulations Section 416.1202(b).
- Resources used for self-support such as a small business’ inventory and operating bank account or tools, equipment, or a second vehicle used while at work or necessary in order to get to work. 42 United States Code Section 1382b(a)(3).
Social Security does not count the following as income for purposes of determining a child’s SSI eligibility:
- Income received by a parent for providing In-Home Supportive Services (IHSS) to a disabled child. IHSS income is SSI exempt income. 20 Code of Federal Regulations Section 416.1161(a)(16).
- Through the Community First Choice Option (CFCO), IHSS that is provided by a parent to a child is covered by Medi-Cal and the income received by the parent is Medi-Cal exempt income. Additionally, income and resources counted for purposes of determining a child’s financial eligibility for SSI and the amount of the child’s SSI check cannot be counted again to determine the Medi-Cal eligibility of other members of the family.6
For more information about IHSS, see our IHSS Fair Hearing and Self-Assessment packet: http://www.disabilityrightsca.org/pubs/501301.htm
Doing the Deeming Calculations
The parent-to-child deeming regulations are found at 20 Code of Federal Regulations Section 416.1160, 416.1161, and 416.1165. “Earned income” includes wages and salary or income from self-employment.7 Everything else is “unearned income”: Gifts, unemployment benefits, state disability benefits, and Social Security benefits are all examples of unearned income. You combine parents’ unearned income. You also combine parents’ earned income. For earned income, you count the gross income, not what you take home. Gross income is the amount you earned before any deductions.8
Social Security starts by deducting an allocation for each non-disabled child in the family other than the SSI child or children with disabilities. You first deduct the allocation from any unearned income and then, to the extent the allocation has not been used up, from the earned income (see examples). “Child” for purposes of the deduction includes children below the age of 21 living in the same household and 21-year-olds who are full-time students under the standards in 20 Code of Federal Regulations Section 416.1861. The allocation for each non-disabled child is the difference between the individual Federal Benefit Rate (FBR) and the couple FBR. (The Federal Benefit Rate is that part of the SSI check that comes from the federal government; the rest of the SSI check is state money.)9 The ineligible child’s own income will reduce the allocation. However, if the ineligible child is a full-time student, earnings will be exempt to the same extent they are exempt for an SSI child or young adult under the age of 22. 20 Code of Federal Regulations Section 416.1112(c)(3), 416.1160(d), 416.1161(c), 416.1163(b), 416.1165, 416.1861.
After deductions for non-disabled children in the home, you next deduct the $20.00 any-income disregard first from unearned income (if any or if any remaining) and then, to the extent the deduction is not used up by the unearned income, from earned income. Next come special deductions for earned income – first $65.00 and then 50% of the balance. You then add the remaining unearned and earned income amounts. From that total, you deduct either the individual FBR (if a single parent) or the couple FBR (if both parents or parent and stepparent are in the home). The balance is deemed to the disabled child as the child’s unearned income. If there is more than one disabled child in the family, the amount deemed is divided among them.
The child’s SSI grant is determined the same way as that of any SSI recipient with two exceptions. First, only two-thirds of any child support is counted. 20 Code of Federal Regulations Section 416.1124(c)(11). Second, if the child is a student and under age 22 in 2016, Social Security does not count the first $1,780.00 in earned income each month up to a yearly maximum of $7,180.00. 20 Code of Federal Regulations Section 416.1112(c)(3).10 This is in addition to the deductions applicable generally to earned income.
Examples of the Application of the Deeming Rules
Included in this memo is a blank worksheet (see below). You may wish to make several copies of the worksheet to use in calculating the amount of your child’s SSI. In addition, we have attached two worksheets which have been filled out in accord with examples “A” and “B”. The calculations are based on 2016 benefit amounts. The numbers and letters below correspond to the numbers and letters on the deeming worksheet. The Federal Benefit Rate for Individuals in January 2016, is $733.00.
|The Federal Benefit Rate for Individuals in January 2016, is $733.00.||The Federal Benefit Rate for Individuals in January 2014, was $721.00.||The Federal Benefit Rate for Individuals in January 2016 is $733.00.|
|The Federal Benefit Rate for Couples in January 2016, is $1,100.00.||The Federal Benefit Rate for Couples in January 2014, was $1,082.00.||The Federal Benefit Rate for Couples in January 2016 is $1,100.00.|
|The Income Deduction for Nondisabled Child in January 2016, is $367.00.||The Income Deduction for Nondisabled Child in January 2014, was $361.00.||The Income Deduction for Nondisabled Child in January 2016 is $367.00.|
|The SSI Rate for Disabled Child in January 2016, is $796.40.||The SSI Rate for Disabled Child in January 2014, was $784.40.||The SSI Rate for Disabled Child in January 2016 is $796.40.|
|The SSI Rate for Blind Child in January 2016, is $944.40.||The SSI Rate for Disabled Child in January 2014, was $932.40.||The SSI Rate for Disabled Child in January 2015 was $796.40.|
Example A: Mr. and Mrs. Apple have three children including Adam who has a disability. Mr. Apple’s gross earned income is $2,000.00 a month. Mrs. Apple works part-time and her gross income is $1000.00 a month. They also receive income of $30 a month on an oil lease.
- 1. Although Social Security counts the income and resources of a stepparent for purposes of SSI, the state Medi-Cal (Medicaid) agency cannot. 42 USC Section 1396a(a)(17)(D). For a child, the Medi-Cal program only looks to the income and resources of the parent and child. If your child does not qualify for SSI because of the income and resources of a stepparent, apply for Medi-Cal under the Federal Poverty Level program for aged and for children and adults with disabilities (A&D FPL). If your child is not eligible under the A&D FPL program, apply for Medi-Cal under the ABD (aged-blind-disabled) medically needy program. You apply for Medi-Cal at your County Welfare office. Explain that your child is a Sneede (the name of a lawsuit) case to ensure the right rules are used.
- 2. To get your child’s SSI started again, write or go into your local Social Security Office to report the reduction in income or that your resources are now within Social Security limits. Include documents that show that your income is now lower or that your resources are now within SSI limits. You should specifically ask that SSI be reinstated. If you request reinstatement by mail, we suggest you do so by certified mail.
- 3. Income change is not the only thing you need to report. See 20 Code of Federal Regulations § 416.708. You need to tell Social Security if you move, if your disabled child or nondisabled children go to live elsewhere, if a parent marries if one of the parents moves out of the home, or if your disabled child moves to a medical facility.
- 4. Some parents have reported that local offices tell them that Social Security cannot accept photocopies. That is not correct. In the income change letter you swear under penalty of perjury that the photocopies are true copies of the originals.
- 5. Some families report that their local Social Security office tells them they do not need to send in monthly income change reports, that Social Security will make the adjustments after the fact at the time of the annual review. Sometimes this is correct when Social Security arranges for your benefits to be adjusted in line with anticipated fluctuations in your income. If paid weekly, you receive five instead of four paychecks in some months; if paid every two weeks, you receive three rather than two paychecks in a month twice a year. At the time of the annual review, Social Security may program in anticipated income fluctuations for the coming year. However, unless Social Security gives you something in writing saying you are not to report changes in income, you must send in the income change reports. If you do not, and there is an overpayment as a result, Social Security will say that you are at fault because you did not report the income change.
- 6. 42 USC Section 1309, California Code of Regulations, Title 22, Section 50555.1. In the case of the Apple family members in Example A on page 5, the other two children would qualify for Medi-Cal based on zero income. The parents may not qualify if both are working. In the case of a single parent or where one of the parents is unemployed or underemployed or has a disability including a temporary disability, the parents also could be covered by Medi-Cal. If a parent is receiving IHSS to care for a child with a disability, that income is not counted when determining the child’s financial eligibility for SSI nor, because of the IHSS Community First Choice Option, is it counted when determining the Medi-Cal eligibility of anyone else in the household.
- 7. If you are self-employed, Social Security wants to know your adjusted gross income. 20 Code of Federal Regulations Section 416.1110(b). Bring to Social Security your income tax return from last year together with information about your gross receipts this year. Social Security will look to your income tax return from last year together with information about your gross receipts this year. Social Security will look to your tax return last year as a yardstick for estimating your adjusted gross income this year. If your gross receipts last year were $40,000 but your adjusted gross income (what you paid taxes on after Internal Revenue Service allowable business deductions) was $18,000 or 45% of your gross receipts, Social Security would estimate that your adjusted gross income this year would be 45% of this year’s gross receipts. Because self-employment income is determined on an annual basis, which is then evenly divided over the 12 months in accord with 20 Code of Federal Regulations Section 416.1111(b), you will be using estimates subject to adjustment when you prepare your income tax return. Social Security does not count as a resource property necessary for self-support including as an employee. 42 USC Section 1382b(a)(3). That can include inventory, computers, farm equipment and livestock, farmland, separate business bank accounts, buildings, fishing boat, as well as a car you need to use on your job or which is essential for getting to and from work.
- 8. Some employers have plans that allow you to put money in a special account to pay for childcare or healthcare pursuant to Section 125 of the Internal Revenue Code. These are often called “cafeteria plans.” Money set aside in these accounts and used for qualified benefits is not considered “income” because you do not pay social security tax on this income. 20 Code of Federal Regulations Section 404.1054. Your gross earned income for SSI purposes is your gross income less money put into a cafeteria plan. However, earnings put in a tax-sheltered retirement account are counted as income. The funds in a parent’s retirement or pension account are an exempt resource not deemed to the child. 20 Code of Federal Regulations Section 416.1202(b).
- 9. Because of retrospective month accounting (see pages 1-2), calculations for income received in November and December should use the Federal Benefit Rate for the following year. This is because the SSI check received in January and February is supposed to reflect income received and deemed in November and December of the prior year.
- 10. The annual and monthly maximums go up each year by the amount of the annual cost of living allowance. 20 Code of Federal Regulations Section 416.112(c)(3)(B). The regulations provide for flexibility and accommodation to disabilities when determining when a child or young adult is a student for purposes of the earned income deduction. 20 Code of Federal Regulations Section 416.1861. The regulations and statutes are available in public libraries. They are also available at the Social Security website: www.ssa.gov. Once at the Social Security website, click on “our program rules” which is on the right side of the website.