TN 75 (12-12)

SI 00835.712 Exclusion of In-Kind Support and Maintenance for Residents in Private Nonprofit Residential Care Institutions

CITATIONS: Social Security Act, as amended, section 1612(a)(2)(A); Regulations, 20 CFR 416.1144

This section applies only when the eligible individual lives in a private nonprofit residential care institution.

When the private nonprofit institution pays for some or all of the individual's food and shelter, it is necessary to determine whether the food and shelter counts as In-kind Support and Maintenance (ISM). This section provides the instructions to make that determination.

A. Procedure for developing ISM in private nonprofit institutions

1. Individual or third party pays the current market value (CMV)

When the recipient or a third party pays the CMV for all of the food and shelter, to determine whether the individual receives countable ISM, follow the instructions in SI 00835.706 and SI 00835.707. It is not necessary to develop whether the exclusion for support and maintenance applies.

2. Some or all food or shelter paid for by institution

When the private non-profit institution pays for some or all of the food, or shelter, or both, the following procedure applies:

  1. Determine whether the ISM provided by the institution is excludable under the support and maintenance exclusion (“Church amendment”). To determine if the “Church amendment” applies, use the procedures in SI 00835.712B. NOTE: The name “Church Amendment” refers to the late Senator Frank Church who drafted this legislation. This provision is not exclusive to religious organizations such as churches.

  2. If the ISM is not excludable under the “Church amendment,” decide whether the ISM provided by the institution is excludable under the Support and Maintenance Assistance (SMA) exclusion in SI 00830.605.

  3. If the ISM is not excludable under the SMA exclusion, to determine whether the individual receives countable ISM, follow the procedures in SI 00835.707B.3.

3. Distinguishing between donations and third party payments

Donations to the institution are not third party payments. They do not count as ISM. Use the following procedures if the issue of a donation is present:

  1. Do not routinely inquire about, or document, the existence of donations to the institution on behalf of the eligible individual.

  2. If a question material to the ISM determination arises about whether funds provided to the institution are a charitable donation or a third party payment for food and shelter, contact the institution and determine the nature of the funds in question.

  3. Accept the institution's allegation without further development and document the file, using the Report of Contact (DROC) screen in MSSICS or, for non-MSSICS cases, the paper SSA-5002 (Report of Contact).

EXAMPLE: Donations to a private nonprofit institution

Frank Stone, an eligible individual, lives at the Mount Royal Retirement Home. A religious organization operates the home and it is tax-exempt under section 501(c) of the Internal Revenue Code.

During the interview, Mr. Stone tells the claims representative (CR) that several of his relatives send money regularly to Mount Royal.

The CR contacts Mount Royal and learns that neither Mr. Stone nor any third party pays for his food and shelter.

Upon admission, the retirement home informs relatives of the residents that it costs $500 per month per resident and asks them to contribute whatever they can afford to the facility. NOTE:The facility does not send bills to the relatives and the facility does not maintain billing accounts for the individual residents.

The CR determines that the funds provided by Mr. Stone's relatives are donations as defined in SI 00835.710B.3. Therefore, such payments are not countable as ISM.

Since neither Mr. Stone nor any third party pays for his food and shelter, the CR must determine whether to count the food and shelter provided by the institution as ISM or to exclude it under the criteria for the “Church amendment” or under the SMA exclusion in SI 00830.605.

B. Procedure for determining if the “Church Amendment” applies

Determine that the “Church Amendment” ISM exclusion applies when the case meets all three criteria:

  1. Neither the individual nor the institution (or its controlling organization) have an express obligation to provide full support and maintenance;

  2. The institution has tax-exempt status; and

  3. The institution does not receive payment to provide support and maintenance.

1. No express obligation to provide full support and maintenance

Determine whether an individual or a representative of the institution has an express obligation to provide support and maintenance using the following criteria.

  1. There is an express obligation to provide full support and maintenance because of either:

    • a lump-sum payment, or

    • membership in an organization.

  2. If the contact alleges that an express obligation exists, accept the allegation and determine that the exclusion does not apply.

  3. If the contact alleges that no such obligation exists, verify the arrangement by obtaining a copy of an appropriate document (e.g., membership certificate, entrance agreement, organizational constitution, bylaws, etc.).

  4. If the document establishes that an express obligation exists, the ISM exclusion does not apply. ISM provided by the institution is countable unless otherwise excluded (e.g., under the SMA exclusion in SI 00830.605).

  5. If you obtain a document to verify the express obligation issue, put a copy in the file (Non-Disability Repository for Evidentiary Documents (NDRED) or Certified Electronic Folder (CEF) or record the pertinent information on a DROC screen in MSSICS.

  6. If the development establishes that there is no express obligation, the ISM exclusion may apply. Develop for the institution's tax-exempt status.

2. Determine whether the private nonprofit institution or the controlling organization is tax-exempt

a. If a SEANET 8045 precedent exists for the institution

If a SEANET 8045 exists:

  • Review the 8045 precedent to determine whether the institution or its controlling organization is tax-exempt under section 501(a) of the Internal Revenue Code and is of the kind described in sections 501(c) and 501(d) of that code. NOTE: This includes organizations covered under section 501(c)(3).

  • Document the file by recording the information pertinent to the tax-exempt status on a DROC screen (SSA-5002 for non-MSSICS cases).

  • If the institution is tax-exempt, then the ISM exclusion may apply. Develop whether the institution is paid to provide the eligible individual's support and maintenance per SI 00835.712B.3.in this section.

b. If no SEANET 8045 precedent exists check the Atlanta Precedent and Contact (APAC) website

If an APAC precedent exists:

  • Determine if the institution is an IRS-approved tax-exempt organization by entering the name of the organization and searching Atlanta Precedent and Contact (APAC) intranet site:

  • Create a DROC for MSSICS cases or use an SSA-5002 for non-MSSICS cases, to document the APAC precedent as proof of the organization’s tax-exempt status; and

  • If the institution is tax-exempt, then the ISM exclusion may apply. Develop whether the institution is paid to provide the eligible individual's support and maintenance per SI 00835.712B.3.in this section.

c. If no SEANET 8045 or APAC precedent exists

If no precedent exists:

  • Request the institution to fax or send a copy of its State nonprofit certification or its determination letter from the IRS. Verify the tax-exempt status and document the file by recording information pertinent to the tax-exempt status on a DROC screen (SSA-5002 for non-MSSICS cases). If provided, fax the certification or IRS letter into the appropriate electronic folder.

  • If the institution or controlling organization is not tax-exempt, determine that the ISM exclusion does not apply and count the food and shelter provided by the institution as ISM unless it is otherwise excluded (e.g., under the SMA exclusion). For more information on the SMA exclusion, see SI 00830.605).

  • If the institution or controlling organization is tax-exempt, then the ISM exclusion may apply. Develop whether the institution is paid to provide the eligible individual's support and maintenance.

d. Verifying questionable tax exempt status

Use the following steps to verify the organization’s tax exempt if there is an indication that the IRS revoked its tax-exempt status:

e. Documenting that an organization lost its tax-exempt status

If the organization lost its tax-exempt status, do not apply the ISM exclusion. Document the following on a DROC in MSSICS or on an SSA-5002 for non-MSSICS cases:

  • The date the organization was added to the IRS “Revocations” list;

  • The source of this information; and

  • “ISM exclusion does not apply.”

NOTE: For additional information on verifying an organization’s tax-exempt status, please see SI 00830.750E.

3. Documenting whether the Institution received payment to provide support and maintenance

Use the following steps to document whether the institution received payment to provide support and maintenance:

  1. Contact the institution to determine if the institution provides support and maintenance for which it does not receive payment.

  2. Document the file with the response of the institution using the DROC screen on MSSICS or an SSA-5002 for a non-MSSICS case.

  3. Determine that the exclusion does not apply if the institution does not provide at least some support for which it does not receive payment.

  4. Determine that the exclusion applies if the institution provides at least some support for which it does not receive payment and meets the two other criteria.

NOTE: If the individual or a third party makes some payment for the individual's food and shelter, the unpaid portion provided by the institution is still excludable if the institution meets all three requirements listed in
SI 00835.712B.1. through SI 00835.712B.3. in this section.

EXAMPLE: Individual makes a partial payment

Henry Jackson, an eligible individual, resides in St. Joseph's Retirement Home, a nonprofit residential care institution. A charitable organization operates t