VCU-BARC

Resource Decisions

SSA conducts periodic SSI Redeterminations for all SSI recipients. The SSI Claims Representative looks at the person’s income and resources to see if the payments have been correct. At that time, they examine resources available to the SSI recipient at the beginning of each month. If the resources are too high, then no SSI payment is due. Eligibility with respect to resources is a determination made at the beginning of each month for the entire month. Thus, changes in resources during a month don’t count until the beginning of the next month.

Remember, the decision about what is a resource is solely up to the Social Security Administration (SSA). The following discussion of excluded resources is not all-inclusive. When in doubt, check with SSA before telling people that something will not count against the resource limit.

Household Goods and Personal Effects

The SSA excludes the value of clothing, basic furniture, and other personal property that are household possessions not of high value. If an item is of a high value (valued over $500) it may or may not be excluded as a resource. If the total value of these items is less than $2,000, the items will be excluded from resources. If the total of such items is higher than $2,000, the part over $2,000 will be considered a resource, and count against the $2,000 resource limit.

Medical Devices and Adaptive Equipment

Medical devices, like wheelchairs and scooters, for individuals with disabilities, are completely excluded as a resource for SSI, regardless of their value. The value of adaptive equipment is also completely excluded, regardless of how much the adaptive equipment cost or is currently worth. (Note: Only equipment required because of a person’s disability is excluded under this rule.)

Life Insurance Policies

There are several types of life insurance. Term life insurance generally has no value, except upon death. People pay premiums and the insured person is covered by the insurance for the term of the policy. If the premium is not paid, the individual is no longer insured. Term policies generally have no cash surrender value (CSV) while the person is alive, and therefore they are not resources. However, some term policies do have a CSV which may be a resource.

Whole life, or Universal Variable Life are two types of life insurance that build a cash surrender value. The more that is paid in, the more these policies are worth. People who own these policies may use them not only to pay a death benefit, but also for an investment while these individuals are alive. These policies have a cash value if they are sold back to the insurance company and policy owners may borrow against the value of the policy. Policies with a cash value may count as a resource which may have an effect on SSI eligibility.

Even when a life insurance policy has a cash value, it may be excluded as resources in some situations. The policies are only completely excluded if the face value of all policies on an individual does not exceed $1,500. The face value is the amount the policy pays if the person dies. If the total of all the policy face values exceeds $1,500, then the cash surrender value of the policies is a resource. The cash surrender value is the amount of money the insurance company will pay out if the policy is turned back to them.

Homes

The primary residence of an SSI recipient is completely excluded from consideration as a resource no matter what it is worth. However, if someone gives an SSI recipient a home the value of the home is income in the month the deed is transferred. After that, the home is completely excluded as a resource. An example of this might be parents buying a condo for a disabled child. In the month the parents sign the condo over to the SSI recipient, the value of the home is income. After that, the home is a completely excluded resource.

The parcel of land on which a home is located is also excluded, regardless of its size or value. Yet, if someone uses part of that land to generate income, the income may be countable in the month it is received. Retained proceeds would be counted as a resource in the month after the month they are received.

Automobiles

For the purposes of the automobile exclusion, SSA considers any form of conveyance to be an automobile including a boat, a car, a motorcycle, a snowmobile, or a horse and buggy. If the automobile is modified for the use by or transportation of someone with a disability, (for example, with hand controls or a ramp) it is completely excluded regardless of its value. If the conveyance is what a person uses to get treatment for a specific or regular medical problem or get to work it is also completely excluded. Automobiles are also excluded as resources needed because of climate, terrain or distance to perform essential activities of daily life, regardless of the automobile’s value.

If the automobile can’t be excluded under the preceding rules, then up to $4,500 of the current market value is excluded. Current market value is what the car, van, or horse would normally bring at sale, not the equity value. Equity value is what the car would bring at sale, less whatever is owed on the automobile. Second cars or other conveyances are not excluded.

If there is more than one automobile, SSA will exclude the automobile of higher value. The equity value of the less expensive one would count against the resource limit.

Burial Funds, Burial Spaces, and Life Insurance Assigned to Funeral Provider

A burial fund is a specifically designated fund of up to $1,500 in value set aside to pay for funeral expenses. Each eligible individual and spouse may have their own burial fund. The SSA must know this fund exists before it is excluded so Benefits Specialists must be sure that recipients let the SSA know as soon as they plan to set money aside. Burial funds must be kept separate from all non-burial related resources. If they are co-mingled, the burial exclusion will not apply. For example, burial funds cannot be kept in the same bank account into which the individual’s SSI check is deposited. Interest or other appreciation of burial funds is not counted as income or resources even if the total of the burial fund thus excluded exceeds $1,500. However, once money is designated as a burial fund, the eligible individual cannot use the fund for non-burial purposes. Improper use of the fund will result in a financial penalty that is withheld from SSI benefits.

Burial spaces: The burial space exclusion applies to burial spaces for use by the eligible individual, spouse, and members of his/her immediate family. Burial plots, crypts, caskets, urns etc., may be purchased in advance and are completely excluded up to an unlimited value. The only exception to this is if there is more than one of a particular item for one individual. For example, if a person owns a collection of urns or caskets, only one item is excludable. This provision is in addition to the burial fund exclusion. Prepaid costs for opening and closing of a grave are also excluded.

Life insurance or resources assigned to a funeral provider: People may have life insurance policies or other resources that are signed over to a funeral director to purchase a burial plot or pay for funeral services. The money or insurance policy may be assigned irrevocably, meaning that the person surrenders the right to pull the money back. The person may also create a revocable arrangement where the individual assigns the proceeds and later could revoke the arrangement. Whether the arrangement is revocable or irrevocable affects how the asset is treated.

A life insurance policy that is irrevocably assigned to fund a burial contract is not a resource for SSI purposes. However, if the assignment of the life insurance policy is revocable, the policy continues to count against the resource limit. Generally, a burial contract includes burial space items (casket, cemetery plot, etc.) and “non-space” items (funeral home, limousine, etc.). There is no dollar limit on exclusion of burial space items in the burial contract, but it must be paid in full. Items other than burial spaces covered by an irrevocable burial contract offset the $1,500 burial fund exclusion. For example, if an individual has an irrevocable burial contract for $2,000 in funeral services, the value of the contract offsets the $1,500 burial fund exclusion dollar-for-dollar and they cannot set aside any money for burial under that exclusion. The face value of excluded life insurance also offsets the burial fund exclusion dollar-for-dollar so if you have excluded life insurance with a face value of $1,000 we will only exclude up to $500 as a burial fund.

Instead of using insurance to fund a burial contract, the individual may designate a life insurance policy as an excluded burial fund which has a $1,500 limit. If the person designates the policy as the excluded burial fund, only the first $1,500 of the cash surrender value is excluded. When designating the policy as a burial fund, the cash surrender value is used, not the face value. Remember that term life insurance policies that don’t have a cash surrender value are not counted as a resource.

An individual may also purchase with cash a prepaid burial contract in which burial expenses are paid for in advance. If the contract cannot be revoked it is not a resource, regardless of value. If the contract can be revoked, it is a resource. However, the portion of the revocable contract that is specifically for burial space items can be excluded regardless of value. The “non-space” items covered by the revocable contract may be excluded under the $1,500 burial fund exclusion.

Retroactive Social Security Benefits.

If an individual receives past-due Social Security benefits, the payment is considered income in the month it is received. If the recipient still has part of the retroactive payment by the beginning of the next month, the remaining amount of the back payment is excluded as resources for up to six-months. After that, it counts as a resource. Retroactive SSI payments are similarly excluded as a resource for 6 months.