There’s a mountain of online and in-person discussion about the importance of SSI rules to trustees. The Social Security Administration maintains a “SSI Spotlight on Trusts” page that explains how to maintain SSI eligibility. The Special Needs Alliance — an organization that we belong to and love — publishes detailed guidance on how to protect SSI eligibility.
But SSI’s strict rules can actually discourage independence, preclude savings, and complicate family involvement and community living. Perhaps SSI rules were intended to enhance those things while protecting the public. But they too often act as technical barriers to individual growth.
For the trustee of a trust for the benefit of an individual with a disability, maintaining Supplemental Security Income (SSI) eligibility is often critically important. But sometimes it’s not. Or it’s worth violating the rules to improve the beneficiary’s life experience.
Four circumstances that justify ignoring the SSI rules
1. Housing
The SSI rules on direct payment of housing costs are very confusing. That’s primarily because they don’t make any logical sense. But bear with us: we’re going to make them understandable.
If someone else pays for housing costs for an SSI recipient, the SSI benefit can be reduced. The calculation is stupidly hard to explain, but here’s the bottom line: no matter how much housing-related expense is paid by someone else, the maximum benefit loss is about $350 in SSI. (Note: that’s the result in 2026. It will increase in subsequent years.)
So let’s figure out how that applies in actual situations. Let’s talk about Bill, who is eligible to receive the maximum SSI benefit in 2026 — $994 per month. Bill lives in a group home that works very well for him, but his parents have to pay $1,000/month rent for him to live there. That means his SSI goes down to $642.27.
But Bill still receives SSI, and (in Arizona, at least) that means that he retains his eligibility for AHCCCS. And if his trust makes the payment instead of his parents: same result. And if the rent goes up to $2,000 (and the trust can pay it): same result. Even if the trust also pays other housing expenses (like electricity, gas, garbage pickup, etc): same result.
Admittedly, the trustee of Bill’s trust isn’t really ignoring the SSI rules. Instead, she’s understanding the rules and applying them in a way that benefits Bill.
Even better: there are a number of housing-related costs that just aren’t “housing” in the SSI rules. Like repairs (including accessibility adaptations). Insurance (in most cases). Internet, phone, and other things that feel like housing aren’t.
2. Better insurance elsewhere
One of the key reasons trustees focus on SSI rules is because they want to protect eligibility for Medicaid (AHCCCS in Arizona). The actual SSI benefit makes a huge difference in many cases. But in many, especially if there is a trust available, the $994/month SSI benefit is just not essential to the beneficiary’s welfare.
In that case, there might be other options. Maybe there is other medical insurance available. Maybe the beneficiary can even qualify for their own medical policy. And particularly where the beneficiary also receives some Social Security Disability benefit, they might be covered by Medicare for most medical needs.
The medical insurance landscape has changed a lot in the past year. And it likely will change more over the next few years. But it might be worth exploring other alternatives to allow the beneficiary — and the trustee — to ignore SSI rules and move out of the public benefits arena.
3. Choosing to leave the public benefits merry-go-round
If there is enough money in a trust for the beneficiary, it might be worth just giving up on all of the SSI rules and simplifying life. The costs might be high, but the autonomy and rule reduction can be such a relief for beneficiaries and families.
Admittedly, choosing to just forego benefits (and get to ignore SSI rules) can be scary and concerning. But it’s also likely that the benefits “holiday” can be reversed if it doesn’t work out (make sure this is true in the individual facts before relying on it, of course).
In our practice we have taken this scary step several times. Usually it has made sense in the individual facts because of the uncommon circumstances of the individual beneficiary. Sometimes the SSI rules are simply too confining.
4. The episodic SSI rules violation
For the trust beneficiary who is active in their community, it might make sense to periodically — maybe once every year or two — to simply lose benefits for a month or two. If, for instance, the beneficiary has credit card debt, or needs to make a cash purchase, this strategy might work.
The trustee, in close collaboration with the beneficiary or representative, can make cash available. SSI rules then result in a suspension of the benefit (and the medical benefits related to SSI). But if the purchase is completed, or the debts paid off, the beneficiary may be able to return to SSI in the next month. Because of how the SSI rules work mechanically, it might not even result in any interruption of benefits. Or the beneficiary may get an overpayment notice from Social Security (which can be paid with reserved cash, or perhaps even by the trust itself).
Careful planning can also allow the beneficiary to rebuild their $2,000 cash account permitted by SSI rules. And everyone is happier at the end of a one-month (perhaps two-month) interruption in benefits.
Other ways to accomplish the same goals
It should be noted that many of the same goals can be accomplished by careful use of ABLE Act accounts and direct payments by the trustee. But sometimes it’s worth at least considering just giving up on SSI rules altogether.
Another important development has been discussed here and elsewhere. The rules about housing payments now apply only to housing. A trustee can provide food or clothing without violating the SSI rules.
Do be careful. This is an area fraught with difficulties. Before simply deciding to forego benefits, make sure you have explored all of the options and implications. Get good legal and social support advice.
Oh, by the way: did you notice that we have not used the phrase “special needs trust” in this newsletter article yet? That’s on purpose. We’re not trying to focus on types of trusts but on decisions affecting the quality of life for public benefits recipients. And the same rules apply in largely the same way if you substitute “generous parent” for “trustee” throughout what we suggest here.
And remember: the goal of a special needs trust (any trust, for that matter) is not to preserve SSI. It is to improve the beneficiary’s life. SSI is only one of the tools available to assist. It may even be the most important tool in some cases, but not the sole mechanism.
One Response
Thanks for mentioning #3: Foregoing benefits. It’s easy to ignore the indirect costs associated with hopping on the benefits bandwagon, when people focus on the shiny penny. In cases involving families which are financially set, the benefits amount to not much more than the functional equivalent of a penny. (I’m sure there’s a psychological term for ignoring the costs attendant to getting something for free. The motivator is powerful!!!)