TN 67 (06-11)
SI 00835.200 The One-Third Reduction Provision
A. When the value of the one-third reduction (VTR) applies
When a claimant or couple lives throughout a month in another person's household and receives both food and shelter from others living in the household, we reduce the applicable federal benefit rate (FBR) by one-third. This reduction in the FBR has an income value, known as the VTR or the value of the one-third reduction.
When the value of the one-third reduction (VTR) applies, it applies in full or not at all.
When the VTR applies, no additional in-kind support and maintenance (ISM) is countable.
EXAMPLE: An eligible individual and his friend live in a house the friend owns. The friend buys all of the food for the household and pays all the shelter expenses except for electricity. The friend's mother pays the electric bill each month. Based on the eligible individual receiving both food and shelter from the household and not paying his pro rata share, he is subject to the VTR. Because the VTR applies, no additional ISM will count. Therefore, the electric bill paid by someone outside the household will not count as ISM.
The VTR (couple rate) can continue to apply to both members of an eligible couple in the month that they separate. For example, when an eligible couple subject to the VTR separates, the VTR continues to apply to the member who leaves the household, moves into the household of another, and does not contribute toward the household operating expenses.
For ISM purposes, we treat the members of an eligible couple as individuals in the month following the separation month. For example, a married couple separates on May 5, 2011. For ISM purpose, we treat them as two eligible individuals beginning in June 2011.
When the value of the one-third reduction (VTR) applies, no income exclusions apply to the VTR.
The VTR may apply even if the individual receives part of his or her food and shelter from inside the household and part from outside. It is not necessary that an individual receive food and shelter from inside the household on each day of the month to apply the VTR.
B. When the VTR does not apply
The VTR does not apply in the following situations.
1. Individual lives in own household
When an individual lives in his or her own household, ISM cannot be valued at the VTR, but must be determined under the presumed maximum value (PMV) rule. We consider the following individuals to be living in their own household:
An individual who is in noninstitutional care;
An individual who has ownership interest in the home in which he or she lives;
An individual who has rental liability for the shelter in which he or she lives;
An individual who lives in a public assistance household; and
An individual who pays a pro rata share of the household operating expenses.
NOTE: For purposes of determining ISM, we may consider more than one eligible individual in a household to be living in his own household even though all the individuals are members of the same larger economic unit known as a household.
2. Individual lives in another's household but does not receive both food and shelter
The following individuals are not subject to the VTR because they are not receiving both food and shelter from inside the household:
An individual who is separately consuming food;
An individual who is separately purchasing food;
An individual who is contributing an earmarked share for food or shelter; and
An individual whose household operating expenses do not include food (e.g., all food is purchased with food stamps) or do not include at least one item of shelter (e.g., all shelter expenses are paid by someone outside the household).
3. Individual does not live in a household
Individuals not living in a household are not subject to the VTR. We determine ISM using the PMV rule. These include:
4. Individual does not meet the throughout a month requirement
An individual is not subject to the VTR unless he or she lives throughout the entire calendar month in the household of another.
NOTE: If temporarily absent from the household, an individual who is not physically present in the household throughout the month may still meet the throughout a month requirement per SI 00835.040. In addition, an individual may reside in more than one household where the VTR applies and meet the throughout a month requirement. For more information on evaluating ISM for month of residence change, see SI 00835.500E.2.
5. Individual lives alone
An individual who lives alone cannot be in the household of another (subject to the VTR) because food and shelter are not provided from within the household. When the individual lives alone, determine ISM using the PMV rule.
C. Procedures for developing the VTR
Developing the VTR is the process of ruling out every living arrangement basis above VTR in the sequence of living arrangement development and documenting the file accordingly. For more information on the sequence used in developing an individual’s living arrangement basis, see SI 00835.001.
1. Document the living arrangement basis in MSSICS
Document on the appropriate MSSICS screens that the individual resided throughout a month with at least one person other than a spouse, child, or someone whose income is deemable to the individual; and
Document on the appropriate MSSICS screens that ownership interest, rental liability, public assistance household, and separate consumption or purchase of food do not apply.
MS INTRANETSSI 010.007, Residence Address and Jurisdiction
MS INTRANETSSI 010.011, Household Composition
MS INTRANETSSI 010.012, Home Ownership and Rental Liability
MS INTRANETSSI 010.013, Household Expenses and Contributions
MS INTRANETSSI 010.014, Household of Another
2. Document the individual's allegations in MSSICS
Document the individual’s allegation on the Household of Another page within MSSICS that the individual:
makes no contribution toward household expenses; or
makes only a token contribution (i.e., the individual alleges that his or her contribution could not possibly meet the pro rata share of total or earmarked household operating expenses); or
alleges a pro rata share that is at least $20 more than either his or her contribution to food and shelter expenses or his or her earmarked contribution to food or shelter expenses.
Determine that the VTR applies.
3. Document the individual’s allegations in non-MSSICS cases
For non-MSSICS cases, document an individual’s allegation on an SSA-8006-F4 (Statement of Living Arrangement, In-Kind Support and Maintenance). A claimant or representative payee signature is not required when completing an SSA-8006-F4 over the telephone. Document the following within the body of the form or within the remarks section:
information about the individual’s living arrangement;
the CR’s determination;
field office code;
the name of the claims representative completing the form; and
this statement, “The claimant completed the SSA-8006-F4 via a telephone interview.”
NOTE: Fax the SSA-8006-F4 into the appropriate electronic folder. After documenting the issue electronically, do not retain the paper form.
4. Verify household operating expenses and contributions
If the situations in SI 00835.200C.2. (in this section), do not apply, verify the allegation with a knowledgeable adult member of the household other than the individual's spouse. Use a MSSICS report of contact screen (DROC) or an SSA-8011 (Statement of Household Expenses and Contributions), which verifies:
If the individual does not meet the sharing guidelines per SI 00835.160 or earmarked sharing guidelines per SI 00835.170, determine that the VTR applies.
When verifying an allegation with a knowledgeable adult member of the household, refer to documentation instructions for the SSA-8011 and DROC screen in SI 00835.625.
D. Examples of VTR determinations
1. Example of an individual who gets some food from outside household
Marjorie Jones is filing for SSI. She lives with her adult daughter and her grandchildren in a home her daughter owns. Following sequential development, the CR determines that Ms. Jones:
does not have rental liability;
does not live in a public assistance household;
does not separately consume or purchase all of her food; and
does not contribute toward the household operating expenses.
Ms. Jones eats breakfast and dinner in the household, and usually eats lunch at the senior center. Although Ms. Jones does not get all of her food in the household, the CR determines that Ms. Jones is subject to the VTR because she gets both food and shelter from within the household.
2. Example of an individual who lives in rent-free shelter
Ms. James is filing for SSI. She lives in an apartment with two roommates. The CR determines that no one in the household has rental liability and that the household is getting rent-free shelter. The roommates pay for the food and utilities for the household. Ms. James does not have income and does not contribute toward the household expenses. The CR determines that Ms. James is subject to the VTR because she receives food and some shelter items from within the household. Based on Ms. James being subject to the VTR, additional ISM is not chargeable. Therefore, development of the rent-free shelter is not required.
3. Example of an individual who owns his home but gets food and shelter items from household members
Mr. Smith is filing for SSI. His son lives with him. Mr. Smith owns his home and currently has no income and does not contribute to the household operating expenses. His son buys all of the food and pays for all of the shelter costs. The CR determines that Mr. Smith is not subject to the VTR. Although Mr. Smith does not contribute toward food and shelter, he cannot be subject to the VTR because he has a living arrangement basis that is higher in the sequence of development, e.g., home ownership. However, the CR uses the PMV rule to develop inside ISM, per SI 00835.340.