SSI TRANSFERS & TRUSTS

If an SSI recipient or spouse of an SSI recipient disposes of resources for less than fair market value during a 36-month look back period,¹ the individual is ineligible for benefits for a period of time.  The period is calculated by dividing the uncompensated value of the transfer by the amount of the maximum monthly benefit payable, including any state supplement.² The penalty is rounded to the nearest whole number with a cap of 36 months.³ The penalty begins the first month in or after which resources were transferred which does not occur during any other period of ineligibility.⁴

The exemptions from the SSI transfer penalty track the Medicaid penalty exemptions. They include: transfers between spouses,⁵ transfers “for the sole benefit of” the spouse,⁶ transfers to a trust established solely for the benefit of the transferor’s child who is blind or disabled,⁷ and transfers to (d)(4)(A) and (C) trusts.⁸  The transfer of a home to a spouse,⁹ a minor or disabled child,¹⁰ a sibling who has an equity interest and has lived in the home for at least one year,¹¹ and a caregiver child¹² are all exempt.

The transfer penalty may be waived under circumstances similar to the Medicaid waiver, i.e., the recipient intended to dispose of the assets at fair market value, ¹³ the transfer was made exclusively for purposes other than to qualify for SSI, ¹⁴ all of the transferred assets are returned, ¹⁵ or undue hardship.¹⁶ Note that, in Medicaid planning, a penalty is reduced if there is a partial return of assets.  Under the statute for SSI, all of the assets must be returned.

The statute also tracks the Medicaid rules concerning jointly-owned assets.  A resource held by an individual with another person or persons in a joint tenancy, tenancy in common, or similar arrangement, is considered disposed of by the individual when an action is taken, either by the individual or by any other person, that reduces or eliminates the individual’s ownership or control of such resource.¹⁷

A number of issues remain.  Is the transfer of income subject to a Medicaid transfer penalty?  The term “resource” apparently does not include income.¹⁸ Since the transfer penalty applies to the transfer of resources, it apparently does not apply to the transfer of income.  If an SSI recipient receives an inheritance or a recovery from a personal injury settlement, it is income in the month received.  If the SSI recipient transfers the income in the month received, is there a Medicaid transfer penalty?

An interesting difference between the Medicaid rules and the SSI rules is that there is a 3-year look back for transfers under SSI and a 5-year look back for transfers under Medicaid.