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Social Security Income Guidance for HUD & LIHTC

Social Security Income Guidance for Applicants at HUD & LIHTC Properties

The verification and calculation of Social Security (SSA) or Supplemental Security Income (SSI) present many challenges for HUD and Tax Credit properties. You might think this type of income is easy to verify and calculate. However, inconsistent verification documentation, death benefits, and overpayments can make  SSI and SSA possible areas of compliance concerns.

Verification of SSA Benefits

Years ago, the Social Security Administration (SSA) announced it would stop providing Property Managers third-party verifications. As a result, Property Managers have to rely on documentation provided by applicants to verify SS and SSI income to determine income eligibility and/or tenant rent. Annual award letters provided by an applicant can be utilized to verify gross Social Security benefits for the applicable year.

For example, the award letter recipients received in 2014 stating 2015 benefits can be utilized for certifications effective in 2015. SSA letters are good for the full year because they are not dated and they are provided after a COLA or no COLA has been announced. If an SSA letter is dated, it is likely due to a change in benefits. SSI verifications must be dated within 120 days of the effective date since SSI benefits can change.

A relatively new tool is available for applicants to obtain a current verification. Applicants may create an account at www.ssa.gov and obtain an instant copy of their SSA award letter. Applicants may also call the SSA at 1-800-772-1213 to request a benefits verification letter.

Non-Disclosure of SSA benefits

One of the eligibility factors for receiving SSA benefits is reaching retirement age. Persons can receive Social Security retirement benefits as early as age 62, but benefits will be lower than waiting until full retirement age. Full retirement age had been 65 for many years; however, beginning with people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959. That being said, how should a Property Manager deal with a 62-year-old applicant who claims that he/she does not receive Social Security benefits?

To ensure due diligence, we highly recommend that non-receipt of SS benefits be verified as follows. The applicant would have to log in to www.ssa.gov and, if they have not already done so, create a username and password to obtain instant verification of benefits. Not only does the website provide instant verification of SSA benefits, but it also verifies pending claims and verifies non-receipt of SSA benefits. This tool has proven to be invaluable in the housing industry.

Here is an example of the verification to prove non-receipt:

Social Security Survivors Benefits

In the unfortunate instance of a deceased family member, it is important to note SSA’s eligibility guidelines for Survivorship Benefits. Certain family members may be eligible to receive monthly benefits, including:

  • A widow or widower age 60 or older (age 50 or older if disabled);
  • A widow or widower at any age who is caring for the deceased’s child under age 16 or disabled;
  • An unmarried child of the deceased who is:
    • Younger than age 18 (or up to age 19 if he or she is a full-time student in an elementary or secondary school); or
    • Age 18 or older with a disability that began before age 22;
    • A stepchild, grandchild, step-grandchild or adopted child under certain circumstances;
    • Parents, age 62 or older, who were dependent on the deceased for at least half of their support; and
    • A surviving divorced spouse, under certain circumstances.

Survivor’s Benefits for Deceased Family Members

Property Managers may not always know if there is a deceased family member where the applicant is eligible to receive Survivor Benefits and some applicants receiving survivor’s benefits may not realize that these benefits are counted towards household income. If your checklist does not specifically ask the question of survivor benefits, some instances that may require further inquiry include:

  • An applicant who disclosed marital status as “widowed”;
  • An applicant who disclosed on a Child Support Affidavit the reason for non-receipt of child support is “parent deceased”; and
  • Dependents residing with a grandparent.

When a grandparent is receiving benefits on behalf of a dependent household member, the income needs to be included as household income even if the grandparent will not reside in the unit. For example, parents of two dependents are deceased and the children reside with their grandfather, who is divorced and applying for an apartment. The grandfather is the representative payee for Survivor Benefits for one child. The absent grandmother is the representative payee for the second child. Survivor benefits for both children are included in household income even though the representative payee will not reside with the household.

Supplemental Security Income (SSI)Supplemental Security Income

(SSI) is a Federal income supplement program funded by general tax revenues (not Social Security taxes). SSI gives cash assistance to people with limited income and resources who are age 65 or older, blind or disabled. Children with disabilities can receive SSI benefits as well. SSI is an income source that can fluctuate based on other household income. Currently, the max monthly benefit for SSI is $733 monthly for an individual and $1100 for a couple.

Many states supplement the Federal SSI benefit with additional payments. This makes the total SSI benefits levels higher in those states. More information about State SSI can be found at https://www.socialsecurity.gov/ssi/text-benefits-ussi.htm.

  • As a side note, Social Security administers two programs for people who have become disabled and need monthly benefits payments to make up for their inability to work and earn a living. The two programs are Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)
  • SSDI is a program designed for people who have worked and paid taxes into the Social Security system for years prior to becoming disabled. If an individual is determined to be disabled, the individual will receive SSDI benefits regardless of the individual’s assets or family income. SSDI should be verified in the same manner as Social Security benefits.
  • SSI, unlike SSDI, is a “needs-based” program. SSI is designed to pay benefits to disabled people who need help with basic living costs, even if they haven’t worked or paid taxes into the Social Security system. To qualify for SSI payments, a claimant cannot have family assets or income over a certain limit.
Using Social Security Award Letters

Some award letters suggest an applicant has unreported income. Since SSI fluctuates based on household income, award letters are very helpful. As they provide information on how the monthly benefit is calculated. If an applicant discloses that his/her sole source of income is SSI, yet they are not receiving the full $733 for SSI, the Property Manager should obtain more information.

For example, an SSI award letter reflects the benefit is $643 and reflects the following:

Your Income Other Than Your SSI
  • The income you receive in February 2015 affects your payment for February 2015 through April 2015
  • Income from interest, dividends, rents or royalties $110.00
  • By law, we don’t count $20.00 of above income $ -20.00
  • The total income counted is $ 90.00

It is necessary for property managers to verify this potential income. Once verified, they need to determine whether or not it is counted as anticipated-household-income.

Another example is when an applicant originally discloses SSI at the time of application and then later, during the Interview process, discloses that he/she no longer receives SSI and has no income/assets. Property Managers should obtain a current award letter to determine whether benefits have ceased permanently or temporarily. If benefits are temporarily suspended, it may be due to unreported income or assets. In these cases, further verification is required to clarify.

Prior Overpayments of SSA/SSI

Oftentimes, SSI benefits are reduced as a result of a prior overpayment. For both the HUD and LIHTC programs, management is required to use the amount after the deduction as household income. However, Property Managers need to go one step further and verify the overpayment balance to determine how long the reduced benefit will last. Anticipated changes need to be factored when calculating anticipated income. If the overpayment will be satisfied within the next 12 months, the Property Manager needs to calculate the number of months at the reduced rate and the number of months at the gross benefit and use the total as household income.

Cost of Living Increases (COLA)

The SSA has confirmed that recipients will not receive a Cost of Living Adjustment in 2016. Therefore, Social Security benefits will not increase effective January 1, 2016. At this time, it appears Medicare premiums will not be adjusted for the majority of Medicare beneficiaries. Medicare premiums may increase for those with higher income levels.

Direct Express Debit Cards

When an applicant discloses receipt of SSA benefits and also claims to have no assets, Property Managers should dig a little more. In March 2013, a law went into effect requiring all SSA recipients who were not receiving benefits through direct deposit to sign up and register for a Direct Express Debit Card; direct express debit cards are considered assets. In rare circumstances, Treasury may grant an exception; therefore, Property Managers should obtain a statement from applicants who still receive paper checks.

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