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Inheritances

SSA defines an inheritance as cash, rights, or non-cash items received as the result of someone's death. For SSI purposes, an inheritance is treated as income (the receipt of anything in cash or in kind which can be applied, either directly or by sale or conversion, to meet basic needs of food, clothing, or shelter) in the first month it has a value to the recipient. Any remaining amount is treated as a resource beginning with the following month.

Inheritance As Death Benefit

SSA policy makes clear that an inheritance is a death benefit, such as:

·          proceeds of life insurance policies received due to the death of the insured;

·          lump sum death benefits from SSA;

·          RR burial benefits;

·          VA burial benefits;

·          inheritances in cash or in kind;

·          cash or in-kind gifts given by relatives, friends, or a community group to "help out" with expenses related to the death.

Recurring survivor benefits such as those received under SSDI Title II, private pension programs, etc., are not death benefits.

Until an item or right has a value (i.e., can be used to meet the heir's need for food, clothing, or shelter), it is neither income nor a resource. The inheritance is income in the first month it has a value and can be used, and any amount retained into the following month is considered a resource for SSI purposes.

Income From Death Benefits

The amount by which the total death benefits provided to an individual exceed the expenses of the deceased person's last illness and burial paid by the individual is income.

Last illness and burial expenses include: related hospital and medical expenses; funeral, burial plot, and interment expenses; and other related expenses. Expenses must be reasonably related to the last illness and burial. It is expected that related expenses may include such items as: new clothing to wear to the funeral; food for visiting relatives; taxi fare to and from the hospital and funeral home; etc.

To determine the income derived from death benefits, subtract the total expenses from the total death benefits. SSA charges the income in the month the death benefits are received. If death benefits are received in more than one month, SSA assumes that the funds first received are the first spent. For example, if the death benefits are $1,000 received in January and $1,000 in February and the allowable expenses are $1,500, SSA charges the remaining $500 as income in February.

Inheritance Already A Resource

An inheritance is not income to an individual if the inheritance is something that was considered that individual's resource (either as a member of an eligible couple or through deeming of resources) immediately before the death.

The proceeds of a life insurance policy were not a resource before the death. Even though a life insurance policy may have been a resource in the past (i.e., the cash surrender value was a resource), at the time of the insured's death that particular resource ceases to exist. The insurance proceeds received as a result of the death are not a converted resource (i.e., the proceeds represent the death benefit payable not a return of the cash surrender value).

Inheritance Of A House

SSA values the inheritance of a house that is used as shelter under the PMV rule in the month of receipt.

Effect of Inheritances on SSI

The inheritance is income in the month of receipt. Depending upon the amount, an SSI recipient could be ineligible due to excess income for the month of receipt.

Any amount retained into the following month is considered a resource for SSI purposes. This could cause the recipient to be ineligible due to excess resources to the extent that countable resources exceed $2,000 for an individual or $3,000 for a couple. Countable resources would include existing countable resources, as well as any remaining amounts from the inheritance.

If the inheritance is other than cash, e.g., real property, the recipient could receive a contingent interest in the property. That means there could be a resource issue even before the property passes through probate.

For couples, it does not matter whether the inheritance is in the name of one or both members. As long as they live in the same household, SSA combines the income and resources of an eligible couple when making eligibility and payment determinations.

If the inheritance causes a recipient to become ineligible due to excess resources, it may be possible to regain eligibility once the funds are spent or total countable resources fall below the resource limit. For example, the inheritance could be spent for items that the couple needs (including medical care).

The money should not be given away because of the transfer of resources penalty, which could lead to an additional 36 months of ineligibility.

Effect of Inheritances on Medicaid

When SSI recipients' circumstances change, SSA conveys to all States a monthly finding of SSI eligibility and ineligibility via a system known as the State Data Exchange or SDX.

In most States, the State extends Medicaid eligibility to those individuals who are determined by SSA to be eligible for SSI cash payments. In other States, individuals may qualify for Medicaid but the State will determine their Medicaid eligibility using the standard SSI criteria or, in some cases, more restrictive criteria.

SSA does not render Medicaid ineligibility determinations. If an individual is ineligible for SSI, the State will learn of this determination via the SDX and review any potential continuing Medicaid eligibility under any provision of its Medicaid State plan before issuing its Medicaid termination notice.

Source

SSA POMS SI 00830.550 - Inheritances

SSA POMS SI 00830.545 - Death Benefits

SSA POMS SI 00810.005 - What is Income

SSA Office of Income Security Programs - Communication with ESI dated 06/02/2003

NOTE: In the sources above, references to SSA POMS indicate SSA's Program Manual Operations System (POMS), which contains the instructions used by employees and agents of SSA to carry out the law, regulations, and rulings. It is available online at:
http://policy.ssa.gov/poms.nsf/poms?OpenView

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