TN 74 (11-12)
SI 00835.350 Computation of In-Kind Support and Maintenance (ISM) from Outside a Household (Including Vendor Payments by a Third Party Outside the Household)
A. Actual value (AV) of ISM provided from outside the household
The purpose of this ISM computation is to determine the AV of food and shelter someone outside a household provides to a recipient. The result of this computation is added to the result of the computation described in SI 00835.340 Computation of In-Kind Support and Maintenance from Within a Household if the recipient receives ISM both from outside the household and from within the household (other than the value of the one-third reduction (VTR)). The sum of the AV's of ISM from within, ISM from outside a household, and ISM benefiting only one person is subject to the presumed maximum value PMV, see SI 00835.400 In-Kind Support and Maintenance (ISM) to One Person.
NOTE: If a recipient alleges a loan for the value of food or shelter received from outside the household, the following instructions do not apply. Develop such a loan allegation per SI 00835.482 Loans of In-Kind Support and Maintenance.
B. Procedure for determining outside ISM
1. Who is a household member
To use this ISM computation, refer to the definitions in SI 00835.020 Definitions of Terms Used in Living Arrangements (LA) and In-Kind Support and Maintenance (ISM) Instructions. Consistent with the definition of “household,” do not count persons who live under the same roof but who are not members of the recipient's economic unit as household members. To be a household member, a person must reside in the household as of the first moment of the month.
2. Determine the current market value (CMV) of food and shelter
In computations of ISM from outside a household, use the CMV of the item of food and shelter after conversion (if necessary) as described in SI 00835.470 ISM and Households - Conversions.
Deduct from this amount the cash payment made by all members of the household toward that item, if any. The payment by the household toward the item of ISM is generally equal to the household operating expense for that item in the month(s) in which the household receives ISM from outside the household.
Occasionally, you must convert vendor charges for food and shelter shown on a bill or statement to monthly amounts, see SI 00835.470 ISM and Households - Conversions. If you convert a CMV for this reason, you must convert the household payment in the same manner.
EXAMPLE: If a household pays $600 of its annual $1,200 real property tax bill and a third party pays the remainder, divide the $1,200 CMV by 12; divide the $600 household payment by 12. Subtract the converted household payment from the converted property tax bill. Use the resulting $50 household payment in the computation of monthly outside ISM.
3. Rent-free shelter or prepayment of rent
See SI 00835.370 Rent Free Shelter, which explains special rules applicable to household payments in rent-free situations. Also, SI 00835.380 Rental Subsidies defines prepayments of rent (a type of household payment) and discusses situations in which a household prepays rent in both rent subsidy and other rental liability situations.
4. Allocate ISM to household members
The final step in the computation of ISM from outside a household is to allocate the ISM equally among all household members.
Use this formula to compute ISM from outside the household.
Enter Converted Current Market Value
Deduct Household Payment Toward Item
Divide by Number of Household Members
Actual Value to Individual
Compare the amount yielded by this computation to the PMV for the recipient. The lesser is “H” income if the recipient is not receiving any other ISM.
C. Procedure for determining AV for a couple or eligible child
For eligible couples, the AV that results from the computation above is the AV of ISM to each member. Multiply this amount by 2 and compare the result to the PMV for a couple receiving no other ISM.
For an eligible child, when an absent parent provides the ISM, apply the one-third exclusion explained in SI 00830.420B.2. to the AV and then compare this amount to the PMV and charge the lesser amount.
EXAMPLE 1: Conversion of a bill and household payment
Bernie and Alex Bell are cousins who are both supplemental security income (SSI) recipients. They share the household operating expenses of the house in which they live. Bernie Bell has ownership interest in the house, and he receives a $1,300 real property tax bill for a prospective 12-month period beginning June 1. His sister, who lives elsewhere, pays $400 directly to the county in June; the cousins pay the remaining $900. After the claims representative (CR) converts the CMV to $108.33 ($1,300 divided by 12), the CR also converts the household payment to $75 ($900 divided by 12). The CR then computes the AV to them as follows:
Converted CMV $108.33
Less Converted Household Payment Toward Item - $75.00
Balance = $33.33
Divided by Two Household Members 2
Actual Value to Each beginning June 1 = $16.66
NOTE: The CR divides the household payment of $900 by 12, just as it divided the vendor charge by 12. It is immaterial whether Bernie and Alex split the household payment equally; both receive the same amount of outside ISM.
EXAMPLE 2: Computing AV of ISM to a Couple
Bruce O'Neill is an eligible recipient who lives with his eligible spouse, Gracie, in a home they own jointly. The only other household member is their 25-year-old daughter. Each March, an adult son (who lives elsewhere) pays all of their annual real property taxes. These taxes, due in March, are $1,300 and cover services for the following 12 months. Thus, the O'Neill’s receive ISM from outside their household in each month of the year. (See SI 00835.474B. and SI 00835.360.) To compute the amount of ISM to charge the couple, the CR performs the following calculation for the period beginning April 1, 2010.
Vendor Charge (annual taxes) $1,300.00
Divide by 12 = Converted CMV of $108.33
Less Household Payment - 0 = $108.33
Divide by 3 household members = Actual Value to each $36.11
Multiply by 2 = Actual Value to couple $72.22
Since this AV is less than the couple's PMV, the couple's “H” income is $72.22.
EXAMPLE 3: Third Party Vendor Payment Involving an Arrearage
Bessie Marshall, an ineligible parent, has two eligible children, Karen and Jacob. She also has two ineligible children. They all live in an apartment, which Mrs. Marshall rents for $210 per month. In February 2010, Mrs. Marshall's brother (who lives elsewhere) pays part of Mrs. Marshall's rent ($150) to help her out. This payment is a gift, and he sends it directly to the landlord. Mrs. Marshall pays an additional $35 and still owes $25. She elects rebuttal and furnishes evidence of these facts. The CR computes ISM from outside the household to the two eligible children as follows.
Less Household Payment
Balance (Paid by Third Party)
Divided by 5 Household Members
Actual Value to Each
Since $30 is less than the PMV for a recipient, we charge each disabled child “H” income of $30 for February, the month in which the third party makes the vendor payment.
EXAMPLE 4: Individual Receives both Inside and Outside ISM
Michael O'Keefe, an eligible recipient, lives in a household with three other persons. A third party outside the household pays the entire mortgage of $235, directly to the bank. The household expenses are $407. (NOTE: These expenses do not include the mortgage paid by the third party.) Mr. O'Keefe is not paying his pro rata share ($101.75) of all household operating expenses, but he is paying his share ($50) of the food expenses for the household ($200) with his earmarked contribution of $60. Therefore, Mr. O'Keefe is federal living arrangement (FLA-A) based on contributing an earmarked share of household food costs.
This case has issues of both ISM from within the household (in the form of shelter) and ISM from outside the household (in the form of a third party vendor payment resulting in shelter). The computation of ISM from within the household is as follows.
Total Household Operating Expenses
Divided by Number of Household Members
Mr. O'Keefe's Pro Rata Share
Less Mr. Okeefe's Contribution
The computation of ISM from outside the household is: CMV of Mortgage
Less Household Payment
Divided by Number of Household Members
Add the two results:
Actual Value of ISM From Within
Actual Value of ISM From Outside
Total Actual Value
Since the total AV is less than the PMV for an individual, the CR charges Mr. O'Keefe “H” income of $100.50.
D. Develop and document ISM from outside the household
1. When to develop ISM from outside a household
Develop ISM from outside a household when its receipt is alleged or otherwise indicated and the recipient is not subject to the VTR. See SI 00835.320 for instructions on when to offer a rebuttal and an explanation of the rebuttal rules. See SI 00835.370 and SI 00835.380 for additional development instructions for outside ISM in the form of rent-free shelter and rental subsidy.
2. When to obtain evidence of the AV of outside ISM
Obtain evidence of the AV of outside ISM whenever the recipient wishes to rebut the PMV or rental subsidy See SI 00835.320 for an explanation of the rebuttal rule. The following describes evidence of the factors that determine the AV of outside ISM.
a. Evidence of the CMV
We base the CMV of an item of food or shelter provided by someone outside the household on the vendor charge if there is a vendor charge associated with it or the provider's estimate of the CMV of the item if there is no vendor charge associated with it.
Obtain evidence of the CMV in accordance with the chart below.
Type of ISM
(Signed Statement or DROC)
A statement from the person who paid for the food or a statement from the provider.
A copy of the bill or receipt, or a statement from the person who paid the bill or a statement from the provider.
NOTE: If you cannot obtain the CMV from the provider, contact a knowledgeable source (e.g., a real estate or rental agent for the value of rent) and document the contact on a report of contact (DROC) screen or other form.
b. Evidence of the household payment
If the household makes any payment towards the item of food or shelter (e.g., the household pays part of its electric bill and a third party pays the rest), obtain evidence of the payment. Preferred evidence is a receipt, a cancelled check, or a corroborative statement from the third party who paid the rest of the bill or from the householder (if the recipient does not have ownership interest or rental liability). If no preferred evidence is available, accept the statement, signed or DROC screen, of the eligible recipient.
c. Evidence of household composition
Obtain a signed statement from the recipient, or a DROC, as to the number of household members in the month in which the recipient receives ISM (household membership always includes persons who are temporarily absent, see SI 00835.040). It is not necessary to corroborate this statement.
3. Breakpoints and a change in ISM
Breakpoints are certain identifiable events that may indicate that the ISM the recipient receives changed. (See SI 00835.510 for an explanation of breakpoints.) Report of breakpoints may be timely or they may come to our attention during a redetermination. We should evaluate breakpoints to see if they actually affect ISM and we should document any change in ISM according to the rules in SI 00835.350D.2. in this section. Changes due to breakpoints are effective with the breakpoint effective month.
See SI 00835.520C. for an explanation of when to redevelop outside ISM at a redetermination.