TN 1 (05-08)

PS 09905.002 Atlanta Region

A. PS 08-111 In-Kind Support and Maintenance, Proposed Attorney Letter to Supplemental Security Income Claimants

DATE: July 12, 2007

1. SYLLABUS

This opinion addresses an attorney’s request for the Social Security Administration (SSA) to approve language used in a letter that instructs his Supplemental Security Income (SSI) clients on the information needed by SSA to establish a valid loan agreement.

The Social Security Administration does not provide legal advice; but would provide the attorney with the Program Operations Manual System (POMS) section used when determining whether or not allegations of a loan agreement is a bona fide loan of in-kind support and maintenance.

2. OPINION

Question Presented

You asked us to review a letter, which a claimants' attorney drafted, concerning the issue of possible one-third reduction of Supplemental Security Income (SSI) due to in-kind support and maintenance. The attorney is seeking Agency approval of the letter's language that instructs his SSI claimant-clients on what information they should provide the Agency to establish the existence of loan agreements for support and maintenance.

Answer

We do not believe that the Agency should be providing the attorney with legal advice on this issue. At most, the Agency should refer the attorney to the relevant sections in the Program Operations Manual System (POMS) that the Agency uses when determining whether an alleged loan agreement constitutes a bona fide loan of in-kind support and maintenance.

Discussion

SSI benefits are authorized by Title XVI of the Act and are funded by general tax revenues. See Social Security Handbook, § 2100 (14th ed. 2001). The SSI Program is a general public assistance measure providing an additional resource to the aged, blind, and disabled to assure that their income does not fall below the poverty line. See 20 C.F.R. § 416.110. Eligibility for SSI is based upon proof of indigence and disability. See 42 U.S.C. §§ 1382(a), 1382c(a)(3)(A)-(C). An SSI recipient is paid a flat monthly benefit, but that monthly benefit is reduced by the amount of non-excludable "income" which the recipient receives. See 42 U.S.C. § 1382(b). Under the applicable regulations, loans are not income. See 20 C.F.R. § 416.1103(f). For purposes of determining SSI benefits, "income" may include, however, "support and maintenance furnished in cash or in kind." See 42 U.S.C. § 1382(a)(2)(A), 1382a(a)(2); 20 C.F.R. §§ 416.1102, 416.1104, 416.1120, 416.1121(h). In this context, "[i]n-kind income is not cash, but is actually food, clothing, or shelter, or something [the recipient] can use to get one of these." 20 C.F.R. § 1102. In-kind income which is derived from someone else's payment of a recipient's food, clothing, or shelter is also referred to as in-kind support and maintenance. See 20 C.F.R. § 416.1130(b).

The fixed amount an SSI recipient receives in benefits is "reduced by the amount of income" to the SSI recipient. See 42 U.S.C. § 1382(b)(1). When an SSI recipient lives in the household of another person who provides both food and shelter, in-kind income is valued at one-third of the recipient's federal benefit rate, regardless of its actual value. See 20 C.F.R. § 416.1131 (describing the "one-third reduction rule"). Thus the SSI recipient is subject to a one-third reduction in SSI benefits. See 20 C.F.R. § 416.1131(a). If, however, the support and maintenance received in-kind was a loan, it is not considered income and the one-third reduction does not apply. See 20 C.F.R. § 416.1103(f).

The text of the attorney-drafted letter essentially encourages his clients to report to the Agency that a family member or friend provided them with support under an agreement to repay the person providing the support. The letter also informs the clients that the Agency will require a signed agreement documenting the loan. While the attorney is free to give this advice to his clients, the Agency should not be blessing the attorney's advice on this issue, which historically has been an area of high-abuse with SSI recipients. Moreover, the POMS indicates that the Agency should individually evaluate any allegation of a loan of in-kind support and maintenance, using five factors to determine whether or not the loan is bona fide. See POMS SI 00835.482 (Loans of In-Kind Support and Maintenance); see also POMS SI 01120.220 (Cash Loans). Specifically, the Agency looks at: whether the loan is enforceable under State law; whether a loan agreement exists at the time of the transaction; whether the loan agreement acknowledges an obligation to repay (that is, whether the person is requ