Payment of Food & Shelter
Generally speaking, trust funds should not be used to pay a trust beneficiary's food and/or shelter expenses. Paying these items will reduce a beneficiary's Supplemental Security Income (SSI) check. However, it may be necessary.
Social Security considers these items to be In-Kind Maintenance and Support (ISM). The trust beneficiary's benefits will be reduced dollar for dollar up to the Presumed Maximum Value (PMV). PMV is a value created by Social Security and represents a cap on the amount that can be deducted from the trust beneficiary's monthly SSI benefit.
Medicaid-Only Clients in California (Medical): The charity/trustee may pay for any item including In-kind Support & Maintenance (ISM) items such as groceries and utilities such as gas, electricity, water, sewer, heating fuel, and garbage removal so long as the trust beneficiary partially contributes to the bill. A home should be purchased outside the trust. When the home is bought prior to when the Special Needs Trust is established, CPT Institute can make mortgage payments.
SSI Client: In-kind Support & Maintenance (ISM) items such as groceries and utilities such as gas, electricity, water, sewer, heating fuel and garbage removal can only be paid if the trust beneficiary elects to take a Presumed Maximum Value (PMV) reduction. With a PMV reduction all items can be paid. See Below on how to calculate a PMV reduction.
PMV Reduction = (Current federal benefit rate / 3) + $20
The monthly maximum Federal SSI payment for 2021 is $794 for an eligible individual.
Maximum Reduction to SSI = ($794/3) + $20 = $284.67
Numbers are updated yearly. Please refer to this link https://www.ssa.gov/cola/ for the latest figures.
The Social Security Administration calculates assistance in food & shelter assistance provided by third parties on a calendar month basis.
See how ISM may affect benefits in the examples below.
Example 1: Mr. Smith receives $794/month in SSI payments. His Trust pays rent & electricity of $1,000/month and $200/month for food. Benefits will be reduced by $284.67. Mr. Smith will receive $509.33 in SSI. Net benefit to the Client each month is $1,709.33. The Client continues to receive Medicaid.
Example 2: Mr. Smith receives $794/month in SSI payments. His Trust pays food and/or shelter expenses of $200 in a month. Benefits will be reduced by $200 and Mr. Smith will receive $594 in SSI. Net benefit to the Client each month is $794. Client continues to receive Medicaid.
Example 3: Mr. Smith receives $543/month from Social Security Disability SSDI and $190/month in SSI. His Trust pays $200/month in either food and/or shelter expenses. Mr. Smith receives $0 SSI because $200 is greater than the $190 he received. Net benefit to client $743, but Mr. Smith may also lose his Medicaid benefits. If this fits your situation, we recommend seeing an attorney specializing in SSI & Medicaid for further assistance.
In the above examples, all payments are made directly to third parties. A beneficiary cannot be reimbursed for food or shelter expenses. Shelter expenses are generally easy to pay directly. Because of the nature of food expenses, food purchases are usually made on credit card or purchased by a third party. The trust would then pay the credit card or reimburse the third party in most states.
The trustee has a duty to keep records of payments. However, it is the recipient of the SSI who has a duty to report the receipt of the ISM. Typically, ISM should be reported in the month the food and/or shelter items are received. If credit was extended to pay for the item, the month in which the bill was paid may be appropriate as well.
Disclaimer: This resource provided by CPT Institute is for informational purposes only and arc intended to be used as a non-legal guide prior to consultation with an attorney familiar with your specific legal situation. CPT Institute is not engaged in the practice of law or in rendering legal advice or counsel. No such legal advice or counseling is either expressly or impliedly intended. If you require legal advice, you should seek the services of an attorney. © 2021 CPT Institute All rights reserved.