If you have a minor child with special needs, SSI benefits and Medicaid coverage may be available to your child. It may be worth crunching numbers and reviewing SSA’s charts and formulas to see if your child may qualify. If your child is already receiving SSI benefits, it is important to understand the basics of deeming parental income and disability. Inadvertently breaking the rules could jeopardize those benefits.
Supplemental Security Income (SSI) is a federal program that helps people with disabilities and very low incomes pay for food, clothing and shelter. But even more valuable than the SSI benefit itself is that, in most states, a beneficiary who receives even $1 from the program also qualifies for Medicaid health coverage.
Deeming Parental Income And Disability Benefits
To qualify for SSI benefits, the beneficiary’s income and assets cannot exceed certain limits. The Social Security Administration (SSA) doesn’t look at just the child’s income and assets. SSA also may consider a portion of the parent’s income and assets to be available to the child. This is called “deeming.”
The logic behind the deeming rule is that parents have a legal duty to support their child. Since parents’ income and assets are legally available to support that child, they may be factored in the determination of the child’s eligibility.
Unmarried children seeking SSI benefits are deemed with the income and assets of the parent the child lives with. A stepparent’s income also counts if the stepparent lives in the same home as the child. If the parents are divorced and the child lives with only one parent, the child is not deemed with the income or assets of the parent living in another household.
If a parent receives her own SSI benefits, or if the child does not live with either parent — for example, a child lives with a stepparent or grandparents and no parent lives in the home — there is no parental deeming. The amount of deeming to the child is reduced if the child is living in a household with other children under the age of 21. Once a child reaches the age of 18, even if she is living with a parent, deeming parental income and disability CEASES. After 18, only the child’s own income and assets are counted in determining SSI eligibility.
What does the SSA include in deemed income?
The SSA defines “income” as both “earned” income, like wages, and “unearned” income, like retirement and investment income, unemployment benefits, and gifts. Importantly, Social Security benefits count as unearned income. For example, in 2017 a child with special needs living with one parent earning less than $3,065 a month in earned income would qualify for SSI. If all the parent’s income is unearned, the monthly income limit would be $1,510. “Income” also includes non-cash items such as the value of food and housing one receives from others. This is called “in-kind” income, and SSI treats it the same as unearned cash income.
Assets, or what SSA refers to as “resources,” include things like bank accounts, cash on hand, and investments. However, they don’t count all assets. For example, a parent’s home, automobile, and most retirement accounts are excluded from counting. While you do not have to count a retirement account as a resource, retirement withdrawals ARE counted as income.
Calculating Deemed Income
The calculation of the deeming parental income and disability is complex. The living arrangement of the child makes all the difference and it is not one-size-fits-all. SSA provides an annually updated Deeming Chart to help families make this calculation. However, there are many exceptions that would cause the chart not to apply to a particular family’s situation. One exception is if the family has a mix of earned and unearned income, which many do. A family’s best resource is the procedure, or formula, that SSA uses in the deeming calculation. The documentation that explains this formula can be found on SSA’s website here.
These rules are complicated. We can help you sort through them and determine if your child might qualify for SSI.
Revised and published with permission from the American Society of Special Needs Planners.