If you’re trying to apply for Social Security disability benefits through the Social Security Administration (SSA), be careful about accepting financial gifts from well-meaning family members. A kind offer to help with the electrical bills or groceries can reduce the amount of monthly Social Security disability that you’d be eligible to take.
SSDI vs. SSI: The impact of financial gifts on disability benefit eligibility
To understand the impact of a financial gift on your disability claim, let’s first look at the key differences between the two SSA programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). It can be easy to confuse the two or use the terms interchangeably, but the differences matter when it comes to understanding the impact of gifts on monthly benefit amounts.
SSDI and income
SSDI is a benefit you earn by paying into the Social Security system. SSDI provides benefits earned through paycheck withholdings for Social Security taxes. If your income does not exceed the monthly limit and you meet all the disability requirements, you are eligible for SSDI benefits.
Those who can earn a “substantial wage” through gainful employment are ineligible for SSDI benefits. The SSA lists the types of income-generating “gainful activity” that count toward the monthly SSDI limit:
- work done for pay or profit,
- a type of work usually done for pay or profit, or
- work done in pursuit of pay or profit regardless of whether you received payment.
Provided a financial gift does not fall into one of these three categories, it will not be deemed “gainful activity” for SSDI purposes and will not affect your eligibility for benefits.
SSI and income
SSI is a needs-based system, providing monthly income for those with little to no monthly earnings and minimal assets. You need not have paid into the SSA system to qualify for SSI benefits.
The SSI program considers more sources of income when determining your eligibility for disability benefits. By SSI standards, “countable” income includes the following:
- earnings from wages, self-employment net income, honoraria, sheltered workshop payments, and some types of royalties;
- unearned income, that is, income you receive but do not work for, including unemployment benefits, interest income, disability payments, pensions, Social Security benefits, and financial gifts from family and friends;
- in-kind income (food or shelter provided at a reduced cost or for free); and
- “deemed” income, which is money earned by a cohabitating spouse or, in the case of minors, parents.
How financial gifts impact SSI benefits
If you meet the eligibility criteria for SSI, the SSA will calculate the amount of your SSI check using the following method:
- subtracting any income that is not countable from your total gross income to determine your countable income, then
- subtracting your countable income from the SSI federal benefit rate to determine your SSI federal benefit amount.
If your countable income is higher than the rate, you could face disability denial. Because of this, it is vital for well-meaning family and friends to know how a cash gift can affect your eligibility for SSI benefits.
If your loved ones want to help you, there are several ways to avoid unintended disability benefits denial. For instance, they can pay a bill directly instead of writing you a check to cover the costs, or they can give you tangible items like food or clothing in lieu of a cash transfer.
However, as in all cases, it’s crucial to consult an attorney before making a financial decision that could impact your disability benefits eligibility.
Denial of a disability claim is devastating. We’re here to help.
It’s possible to avoid the denial of Social Security disability benefits if you have the right guidance. If you need assistance with a disability claim, contact the Social Security disability lawyers at Hunter & Everage. We can help you ensure that you’re positioned to file a strong claim.
