SSI's Thorny Rules for "Deeming" a Parent’s Income to a Child

Supplemental Security Income (SSI) is a federal program that helps people with disabilities and very low incomes pay for food, clothing and shelter.  But even more valuable than the SSI benefit itself is that, in most states, a beneficiary who receives even $1 from the program also qualifies for Medicaid health coverage.

To qualify for SSI benefits, the beneficiary’s income and assets cannot exceed certain limits. But the Social Security Administration (SSA) doesn’t look at just the child’s income and assets, but also may consider a portion of the parent’s income and assets as if they were available to the child.  This is called “deeming.”  

The logic behind the deeming rule is that parents have a legal duty to support their child, and because parents’ income and assets would be legally available to support that minor child, their income and assets may be factored in the determination of the child’s needs for purposes of SSI eligibility.

Unmarried children under the age of 18 seeking SSI benefits may be deemed with the income and assets of any parent with whom the child lives, and even a stepparent if the stepparent and parent live together. If the parents are divorced and the child lives with only one parent, the child is not deemed with the income or assets of the parent living in another household. If a parent receives her own SSI benefits, or if the child does not live with either parent — for example, a child lives with a stepparent or grandparents and no parent lives in the home — there is no parental deeming. The amount of deeming to the child is reduced if the child is living in a household with other children under the age of 21. Once a child reaches the age of 18, even if she is living with a parent, deeming of parental income ceases and only the child’s own income and assets are counted in determining SSI eligibility.

The SSA defines “income” as both “earned” income, like wages, and “unearned” income, like retirement and investment income, unemployment benefits, and gifts. Importantly, Social Security benefits are counted as unearned income. For example, in 2017 a child with special needs living with one parent earning less than $3,065 a month in earned income would qualify for SSI.  If all the parent’s income is unearned, the monthly income limit would be $1,510.  “Income” also includes non-cash items such as the value of food and housing one receives from others. These are more commonly known as “in-kind” items of income, and are considered unearned income. 

Assets, or what SSA refers to as “resources,” include things like bank accounts, cash on hand, and investments. However, not all assets are counted. For example, a parent’s home, automobile, and most retirement accounts are excluded from counting. But while a retirement account itself may not be counted, any payment from the account to the parent is countable income and thus subject to being deemed to the child.

The calculation of the deeming of income is complex. The living arrangement of the child makes all the difference and it is not one-size-fits-all. SSA provides an annually updated Deeming Chart to help families make this calculation. However, there are many exceptions that would cause the chart not to apply to a particular family’s situation, one exception being if the family has a mix of earned and unearned income, which many do. A family’s best resource is the procedure, or formula, that SSA uses in the deeming calculation, and this can be found on SSA’s website here.  

If you have a minor child with special needs, SSI benefits – and by extension, Medicaid coverage — may be available to your child. It may be worth crunching numbers and reviewing SSA’s charts and formulas to see if your child may qualify. And if your child is already receiving SSI benefits, it is important to understand the basic workings of these deeming rules so that you do not inadvertently jeopardize those benefits. 

But, as you now realize if you have read through the above, the rules are complicated.  Your special needs planner can help you sort through them and determine if your child might qualify for SSI.