What Should You Charge Your Adult Child for Rent When They’re on SSI?

The Social Security Administration (SSA) has recently updated its policies regarding rental subsidies for individuals receiving Supplemental Security Income (SSI). Starting September 30, 2024, these changes affect situations where someone pays rent to a landlord who is also their parent or child. Let’s break down these updates into simple terms to help you understand how they might impact you or your loved ones

What’s New About Rental Subsidies?

The SSA considers a business arrangement to exist when the rent or flat fee you pay equals or exceeds either:

1. The Presumed Maximum Value (PMV): This is a standard amount the SSA uses to estimate support and maintenance in-kind. For 2025, the PMV is $342.33 per month.
2. The Current Market Rental Value (CMRV): This is the typical rent charged for a similar property in your area.

If your rent equals or exceeds either the PMV or the CMRV, the SSA assumes there is no rental subsidy, and no additional development or investigation is needed. However, if your rent is less than both the PMV and the CMRV, the SSA will investigate further to determine if any in-kind support and maintenance (ISM) applies.

What is ISM and How Does It Affect SSI Benefits?

In-Kind Support and Maintenance (ISM) refers to non-cash assistance that helps cover basic needs such as food or shelter. Examples of ISM include free rent, reduced rent, or someone else paying for your utilities. When the SSA determines that you are receiving ISM, it can reduce your SSI benefit amount.

Effective September 30, 2024, food is no longer included in ISM calculations when determining if a claimant’s contribution equals or exceeds their share of household expenses. This means that only shelter expenses (e.g., rent, utilities) are considered when calculating ISM.

Key Points:

• Food remains part of the general definition of income, but it is excluded from ISM calculations.
• This change simplifies the evaluation process for many SSI recipients and their families.

Example: If a claimant pays their share of rent and utilities but contributes little or nothing to food costs, they will no longer face a reduction in benefits due to food contributions.

The SSA values ISM using either:

1. The PMV Rule: A standard reduction amount, which is $342.33 per month for 2025.
2. The One-Third Reduction (VTR): If you live in someone else’s household and receive both food and shelter for free, your benefits may be reduced by one-third of the federal benefit rate.

For rental subsidy cases, ISM is calculated when your rent is less than both the PMV and CMRV. The SSA uses the difference between the PMV and your actual rent to determine the countable ISM. This countable ISM amount is then subtracted from your SSI benefit, reducing the amount you receive.

Example: Kelly pays their father $200 monthly for a basement apartment. The rent is less than the 2025 PMV of $342.33, so the SSA must determine the CMRV. If the CMRV is $500 per month, the SSA calculates the ISM as $134.33 (the difference between the PMV of $342.33 and the rent of $200). This ISM amount reduces Kelly’s SSI benefit.

Previously, this rule was only applied in specific states: Connecticut, New York, Vermont, Illinois, Indiana, Wisconsin, and Texas. Now, it applies nationwide.

Every year, the SSA adjusts the PMV to account for cost-of-living increases. This means the PMV will likely rise annually. If your rent is close to the PMV amount, this increase could affect your rental subsidy status and potentially result in a reduction in SSI payments.

Example: If a claimant pays $350 in monthly rent, this exceeds the 2024 PMV of $334.33, so no subsidy is charged. However, if the PMV increases to $380 in 2025 and the claimant’s rent doesn’t increase, they could face a rental subsidy charge starting in January 2025.

1. Monitor the PMV: Keep track of the PMV each year. If your rent is close to the PMV, consider adjusting it to avoid potential rental subsidy charges.
2. Understand the Rules: Knowing whether your rent meets the PMV or CMRV can save you from unnecessary investigations or ISM charges.
3. Communicate with the SSA: Inform the SSA if your rent changes or if there are updates to your living arrangement.

These updates aim to clarify how rental subsidies are evaluated, making it easier for individuals and families to navigate SSI requirements. By understanding these rules and how ISM affects your benefits, you can ensure that your rental arrangements comply with SSA guidelines and avoid unexpected reductions in your SSI payments.