Maximizing Your Social Security Disability Benefit: Plan Ahead

Supplemental Security Income, also known as SSI, is a disability benefit. In addition to proving that you are disabled, you must establish that you meet the financial need requirements. For every month that you are disabled, the Social Security Administration will look at your “resources” and “income.” Income is liberally defined, and includes things or services that are provided to you. Often times, this includes room and board. Early planning can help you maximize your SSI benefits.

As mentioned above, income includes any support and maintenance furnished not only with cash, but “in-kind.” However, if somebody provides rent, room and board, or even cash, that money may not be considered income if it is a bona fide loan. Social Security has its own definition of a loan.

Under Social Security definitions, a loan is an advance from a lender to a borrower that the borrower must repay, with or without interest. The loan can be for cash or an in-kind advance in lieu of cash. For example, somebody may provide food or shelter, and that can be a loan of the pro rata share of household operating expenses. This applies to commercial or noncommercial loans, and can be an agreement between relatives, friends or others. This kind of low must be recognized under State law. The loan agreement can be written or can be oral, as long as it is enforceable under the law in the state where the loan was originated.

In Oregon, a loan for money must be in writing, unless it is a loan of money to a natural person (not a corporation) and it is primarily for family, personal or household purposes.

Social Security will consider a loan to be a bona fide loan if it is enforceable under state law, in effect at the time the support or money was provided, was acknowledged by both the borrower and the lender that there was an unconditional obligation to repay the loan, that there was a plan or a schedule for repayment of the loan, and that the repayment plan must be feasible.

Often times, one family member will provide room and board to another family member, and there is an understanding that once SSI benefits are paid, there will be repayment of loan. However, the best practice is to have a simple agreement in writing, but include some plan for repaying the loan.

This can be significant for a disabled person. For example, a typical reduction of SSI benefits for room and board is one third of the monthly benefit amount. If you are fighting for your SSI benefits for two or three years, that cannot up to significant amounts of money. Planning ahead always make sense.

If you have a denied claim, and wonder if you may benefit from documenting a loan for any cash or in-kind assistance, call us at 503-325-8600. We can answer any questions you may have.