The Difference Between a Loan and a Gift When Applying for and Collecting SSI, Part I

When applying for Supplemental Security Income (SSI) it is important to understand the difference between what is considered a loan and what is considered a gift: the two are treated vastly different by the Social Security Administration.  Likewise, when understanding the treatment of loans it is important to understand the difference between a cash loan and what is referred to by  SSA  as an “in kind” loan.  

There are two (2) cash assistance programs available for disabled individuals that are administered by SSA: one is called Social Security disability insurance (or what is referred to as SSDI or Title II benefits under the Social Security Act and the other is called Supplemental Security Income (or what is referred to as SSI or Title XVI under the Social Security Act).  The former program is payable as an insurance benefits assuming a claimant has earned sufficient quarters of coverage to be insured under the program based on their years of Social Security taxed income.  The latter program is a welfare benefit that is meant to “supplement” income for those disabled who either didn’t earn enough to qualify for a sufficient disability insurance benefit to bring them above the poverty line (or they do not have sufficient other income or assets in their household to bring them above the poverty line: the SSI benefit is meant as a safety net for those who may otherwise be left in poverty as they may never have worked and earned income that was taxable under the Social Security disability insurance program.  under the Social Security disability be  through their payroll taxes Social Security the Social Security under the Social Security disability program.

Because the SSDI program is an insurance based program under which a benefit is payable based on what contributed to the program, it is not a welfare based program whose benefits are reduced by that which one has for income or assets: much like retirement benefits, one can be a multi-millionaire and can have significant assets or income in the household and will not be disqualified for a benefit check as the benefit is not a welfare-based benefit. It is important to understand that one must still show that they remain incapable of earning income at “substantial gainful activity” levels in order to qualify for this type of disability benefit.   The SSI program, however, being welfare-based, will look at one’s income and assets in order to determine eligibility for a benefit, with the goal of the program to ensure that individuals are in fact brought above the poverty line.

With the above in mind, it is important to understand that a loan of cash in a given month will not serve to disqualify an SSI claimant even if in fact it brings the claimant above the SSI asset limit rules of cash resources in the amounts of  $2000.00 for an individual and $3000.00 for a couple: see 20 C.F.R. § 416.1103(f).  This is because the amount of money given is only meant as a loan and under the Social Security regulation cited above, it is not considered income or an asset as it is required to be repaid.  If however, the money given to the claimant is deemed to be a gift to the claimant by SSA, the effect of such a gift is ordinarily that the claimant’s monthly SSI check is reduced dollar for dollar by the amount of such a cash payment.  With consideration given to the above, it is important to note that there are two ways to structure such assistance so as to maximize the amount of one’s SSI check that the claimant will receive at the end of the day.

In part two of this series, we will discuss how best to structure these payments so as to best assist the disabled claimant both with their need to survive, and with their need to maximize ensuring their potential receipt of SSI upon approval of their claim. At the Law Offices of Russell J. Goldsmith, we have been assisting New England’s disabled throughout Maine, Massachusetts and New Hampshire to ensure that they receive the best possible outcome with the SSDI and SSI claims.  If you or someone you love is in need of advice or assistance with regard to their disability circumstances, feel free to contact us at 1-800-773-8622 for assistance.


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