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Be Careful Trustees of SNTs – When Paying Credit Cards

The Supplemental Security Income program, like other needs-based programs, has certain limitations on the type of services and resources that can be given to recipients. For instance, if cash is given directly to an SSI recipient, then his or her benefits may be reduced on a dollar-for-dollar basis.

Credit Card

Beneficiaries of a Special Needs Trust are often faced with this issue when they request that the trust make disbursements to pay their credit card bills. While Social Security treats debit card accounts as cash accounts, and does not allow reimbursements, a trust may pay for certain charges on the credit card bill of a beneficiary who is an SSI recipient without jeopardizing benefits.

For Medicaid purposes, there is no problem paying any of the credit card charges but for SSI purposes, payment of credit cards could lead to a reduction of SSI benefits.

Under SSI, if the bill includes non-food, non-shelter items, such as a computer or landscaping services, then Social Security will not treat the disbursement as giving the recipient income.

However, if the bill contains items that relate to food or shelter, then payment for these items by the trust will result in the individual receiving in-kind support and maintenance (ISM) up to the presumed maximum value (PMV). This will cause a dollar-for-dollar reduction in the recipient’s benefits up to one-third of the SSI benefit.

A common example is when a credit card bill contains charges for a restaurant and a television. Payment of the restaurant charge will result in ISM; payment of the television is no problem.

If a trust beneficiary receives SSI or any needs-based income, it is very important for the Trustee to understand these complicated SSI rules and seek the assistance of a special needs planning attorney to help guide them.

For a directory of special needs planning attorneys, go to:

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