Social Security Administration Building.Supplemental Security Income (SSI) is a federal program that helps people with disabilities and very low incomes pay for food, clothing, and shelter. It also is a key avenue to Medicaid coverage.

SSI is often confused with Social Security Disability Insurance (SSDI). One of the main differences between the two programs is that SSDI is available to people with disabilities no matter how much money they have or earned before becoming disabled (with limits on their income from work after qualifying for benefits), while SSI is a “means-based” program, placing very strict limits on a recipient’s income and assets.

However, in most states, an SSI beneficiary who receives even $1 from the program also qualifies for Medicaid health coverage, which can be far more valuable than SSI’s benefit itself.

Because SSI’s income and resource limits are so restrictive, it pays to know the basics about the program before deciding whether it is right for you or your family member.

In Order to Qualify For SSI, You Must Be Aged, Blind or “Disabled”

This first requirement is often the hardest for SSI applicants to meet, in large part because the federal government’s definition of “disabled” is so narrow.

In essence, adult SSI applicants who are seeking benefits based on a disability must show that they are almost completely unable to work at any job whatsoever. The applicant must have a physical or mental impairment that makes it impossible for him to engage in any “substantial gainful activity.” This impairment must be expected to last for longer than one year or to result in death.

If an applicant is able to engage in substantial gainful activity, then they will typically not be eligible for SSI. A child applicant must have a physical or mental impairment that results in marked and severe functional limitations and can be expected to last for longer than one year or result in death. It took one cancer survivor 14 years to prove that she was “disabled” and therefore entitled to benefits.

A Means-Based Program: An SSI Beneficiary Must Have Very Limited Resources

Once an SSI applicant has shown that they are disabled, they must also prove that they have less than $2,000 to their name.

If the applicant can use or liquidate an asset to pay for food or shelter, the asset will probably count as a “resource” against this limit. A resource would include any funds held in the applicant’s bank accounts, retirement accounts, or in cash. If the applicant has set up a trust that does not meet specific requirements, the trust funds are also counted against the $2,000 limit.

The applicant’s own home will not be considered an available resource, and their car is also exempt.

The $2,000 resource limit does not disappear once a person qualifies for SSI. If an SSI beneficiary ends a month with more than $2,000 in their name, they will lose their benefits in the following month.

SSI Benefits: Income Is Key

SSI recipients get only a modest monthly benefit, and this sum is reduced by any income they may have. In 2023, the maximum federal SSI benefit for an individual is $914 a month, although many states add a small supplement to this.

Note that SSI benefits are reduced by $1 for each dollar of unearned income a beneficiary receives (such as interest or dividends), and by $0.50 for each dollar of earned income (such as wages).

SSI benefits are also reduced if an adult beneficiary lives in someone else’s home without paying rent, or if they receive free meals. Finally, the income of the people living with the beneficiary can count against the beneficiary. If the beneficiary’s combined income reduces their SSI benefit to zero, they lose SSI, along with any Medicaid benefits that may come with it.

Supplemental Needs Trusts Can Help

Although SSI’s income and asset rules are highly restrictive, several types of trusts — called “special needs” or “supplemental needs” trusts can protect an SSI beneficiary’s assets while allowing them to maintain SSI eligibility. Relatives and friends of the SSI recipient can also set up a trust for the recipient and fund it with their own money. If properly structured, these trusts also will allow an SSI recipient to continue receiving benefits.

Unfortunately, a poorly drafted special needs trust can destroy any hopes an applicant has of ever qualifying for SSI.

Quality Advice Is Necessary

SSI is a very complicated program with rules that most attorneys who do not focus on this practice area have trouble understanding. A qualified special needs planner in your area can guide you or your family through the complicated process of obtaining and maintaining SSI benefits.