SSI and Third Party Payment of Food & Shelter Expenses
When a trust Beneficiary receives SSI, we must be careful when using the trust to pay for anything that the Social Security Administration defines as "food" or "shelter." When a third party, including a Special Needs Trust, pays a shelter expense for a person who receives SSI benefits, SSI will take a dollar-for-dollar reduction from the following month's SSI check, up to a regulatory cap called the Presumed Maximum Value. This Presumed Maximum Value is one-third of the maximum federal benefit rate, plus $20. It is a complicated law. When an SSI recipient receives money from a third party to pay for a shelter expense, he or she can expect to lose up to one-third of his or her SSI benefits for the following month.
Determining whether or not an item is "food" is fairly self-explanatory. "Food" includes groceries, snacks, milk bread, etc. However, we can use the trust to pay for a Beneficiary to go out to eat, as this is reported as an entertainment expense, which is acceptable to the government.
SSI defines "shelter" expenses as the following:
This does not mean that we can never pay a shelter expense for an SSI recipient. However, it does mean that the answer often is no, and that we must approach these requests with caution and prudence to ensure it is in the Beneficiary's best interest.