Does parent's $$ support count towards adult child's household income?

February 12, 2022 9:54 AM

A number of governmental social service programs determine eligibility in part on household income. If a parent financially supports an adult child who does not have a job or any other source of income, and the adult child lives alone (not with their parents, but in a separate apartment or house, for which the parent pays the rent), does the amount that the parent contributes to the adult child's living and other expenses count toward the adult child's household income, for purposes of determining eligibility for benefits?

I am thinking about programs like, for example, Medicaid or SSI/SSDI.

I have always thought the parent's contribution would be counted as the adult child's household income, but a friend (not an expert in this area) thought it would not, because the parent can cut off that money at any point for any (or no) reason. Which is true, in the scenario I am positing here. The significance, of course, is that if the parent's contribution counts towards the adult child's household income, the adult child would not qualify for many (any?) of these programs.

I will consult a lawyer about this if the question becomes more concrete and immediate for us, but I am hoping people here who may have had personal experience with this situation would be willing to share how this worked for them.

Location: New York Ciy

posted by merejane to Work & Money (16 answers total)

So at least here in IL, that answer would be yes. How common it is not not but disclosed this i can't say but I've certainly run into that situation more than once in my social work life where people with disabilities are getting undisclosed support. I can say when social security takes back income it can be a serious long term thing that follows vulnerable people long past whatever it was and can be pretty harsh for people who already have so little. You absolutely do not want this to happen. But you also want to ensure they are getting as much as possible Because it absolutely does count and can limit the meger benefits like food stamps for a single adult to even less.

In general is advice that any letter of support (because in general if someone reports they are living alone with no job and no income is getting support from somewhere and they are going to ask for one) that you provide mention that any income that the support provided is limited, short term and with income that they will be expected to pay something in rent/ utilities to ensure they recieved the benefits they are entitled to and hopefully you are not paying for everything forever.

There are ways to legally set aside money for adult children with disabilities without it counting. Usually these are special sorts of trusts. I don't want to give exact details because I don't know them. It is worth talking to a lawyer to do it right, because if something goes wrong and there is a take back of benefits it will be ugly for your child especially if you are unable to support them any longer.
posted by AlexiaSky at 10:14 AM on February 12, 2022

New York Medicaid eligibility is determined by MAGI (modified adjusted gross income) which does not take parental gifts into account, so the adult child would likely be eligible for Medicaid. In some other states I believe this remains an issue.

I believe SSI counts gifts as income, but SSDI does not. (this is not definitive information).

Unfortunately, programs in general frequently have their own way of calculating income and resources and so it's hard to generalize.
posted by The Elusive Architeuthis at 10:19 AM on February 12, 2022

In my experience all financial support for adult disabled people has to be under the table to avoid having them lose their benefits. The general model in the USA is that you have to impoverish yourself before you can get any help. Then the help you get is enough to keep you alive but still very much in poverty.

The rules may be different in your jurisdiction. This is something that many families have to grapple with. Again, my personal experience is that social workers are understanding and don't ask too many questions, so under the table support is still possible. Just don't put it on any forms. Some offices might be stricter about that, of course.
posted by Winnie the Proust at 10:28 AM on February 12, 2022

It’s a confusing area and the answer varies by state. As far a federal income tax, financial support styled as a gift is not taxable to the donee. The donor may be responsible for some tax if the gift exceeds yearly or lifetime limits or is one of a certain type ( from irs.gov):

“The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.

Gifts that are not more than the annual exclusion for the calendar year.
Tuition or medical expenses you pay for someone (the educational and medical exclusions).
Gifts to your spouse.
Gifts to a political organization for its use.”

Social Security is more strict in counting gifts as income. Here is a basic description of the rules.

Medicaid is a state program so you would need to check the rules in your locality. For those states that use MAGI (NY, FL, and others), gifts are generally not included as income (see here.)

For those states with state income tax, the rules vary. I believe NY follows the federal rule, but check with your atty/CPA.
posted by sudogeek at 11:01 AM on February 12, 2022

Yeah, at least in my experience, there's a place on the paperwork that one would be expected to list that income.

Additionally, some paperwork has additional pages where one is required to explain how they are supporting themselves if they have zero income... even in a household where others have income. (In the paperwork I've seen, applies to all adults in household with zero income. One of my kids has had to fill it out (for section 8 housing voucher), because all he technically had was financial aid grants for school that just cover tuition, books, and transportation, almost exactly.)

Additionally, it was a question I was asked during a phone interview this year about LIEHP. (Heating assistance.)

SNAP and medical assistance are going to vary widely from state to state, I imagine. Food banks, community action programs, and other more localized help may have their own rules.
posted by stormyteal at 11:08 AM on February 12, 2022

You might find it valuable to read about supplemental needs trusts. These provide a mechanism to establish a fund or leave an inheritance to someone without endangering their access to government benefits. Many of the same principles would apply to giving someone money without a trust. There are many New York specific resources for supplemental needs trusts, for example.

It is good that you are going to consult with an attorney. It is a complex area of law, and the cost of making a mistake can be very high.
posted by Winnie the Proust at 11:37 AM on February 12, 2022

(social worker here) agreed, this is something you want to consult a lawyer about. You might try a legal aid clinic in your area, if it's not an urgent thing and/or if money is an issue; they will be well versed in this kind of thing, unfortunately.
posted by tivalasvegas at 12:10 PM on February 12, 2022

Since you're asking about SSI and SSDI, I'm assuming that the adult child has a qualifying disability. Here's a list of the questions the Social Security Administration asks about on the forms, and none of them are about assistance from families:
https://www.ssa.gov/forms/ssa-16.html

And really, that makes sense.

As a datapoint: I receive both SSDI and early Medicare due to qualifying disability. At no point was I ever asked about my rent or assets for these programs, either in the beginning or at the time of my periodic review. My house technically belongs to my parents' estate, but I pay every expense related to the house and its upkeep, which is still significantly below market rent for my city. My sibling with the same disability is on both programs I'm on, and is married, with a spouse who pays for everything my sibling's SSDI doesn't cover, which is pretty much almost everything, and their situation does not change their benefit amount.

SSI and Medicaid may have different rules (asset based, etc.) and I can't speak to them, but keep in mind that about half of patients with my particular medical condition qualify for both of those AND most of them live with family who support them. It's almost impossible not to on such a limited benefit.

Like others have said, it's important to check with a social worker (and perhaps a disability lawyer) who can confirm these things for you.
posted by mochapickle at 1:43 PM on February 12, 2022

And I should add, there were certainly other programs that did ask about family support. One that comes to mind was a foundation that offered financial support specific to my particular illness, and the cumulative effect of my circumstances meant I didn't qualify for help from them.
posted by mochapickle at 1:58 PM on February 12, 2022

A few things I learned when I looked lightly into this
- SSI and SSDI are very different. SSDI is for people who have paid into Social Security for a minimum number of quarters and are now disabled. Qualification relates to earned income and ability to work - they can still have assets. SSI is for people who are poor as well as disabled and there are very tight limits on assets and income.
- I think that since you are providing money as a gift, there is (probably) a way to indicate that the gifts will end when they qualify for SSI. Once they do start to received SSI there is a very strict accounting of all sources of income. People who live with their families and get free room and board have their benefits reduced. (unless they are able to successfully hide the transfer which is obviously problematic in several ways) It is possible to use a special needs to trust to give the person access to some funds in way that doesn't impact their benefits.
- With the Affordable Care Act, you can qualify for Medicaid based on just income in states that have extended coverage. See here.
posted by metahawk at 3:05 PM on February 12, 2022

This depends a lot on the program. In the ones I worked with, as long as the child never had their hands on the money (pay rent directly, etc) this would not count against them, but apparently it might be an issue for SSI given the above post. I would definitely take a look at the specific programs.
posted by corb at 4:30 PM on February 12, 2022

I just went through this with my sister; we live in Minnesota. We learned that if my mom gives money to my sister so she can pay her rent, it counts as income. If my mom pays my sister's landlord directly, it does not.
posted by leftover_scrabble_rack at 4:37 PM on February 12, 2022

Also, just to add, the age of your adult child may have an effect on the b lmkenefit they recieve. If you are eligible for Medicare and SSDI AND your child is under 22(I think? I may have this number wrong but quick Google says 22) they may qualify for a higher benefit based off your work history than adult who is disabled with no work history after the cutoff age. So it is imperative if they are in the qualifying age range you move quickly.
posted by AlexiaSky at 2:33 AM on February 13, 2022

Just to expand on the comment from Alexia Sky, if the parent is receiving any form of Social Security (regular retirement included) AND the child was disabled at age 21 and 364 days, then the child can receive regular Social Security disability (SSDI which is better than SSI) based on the parent's SS record. If the child are already judged disabled before turning 22, that's easiest but it is possible (but challenging) to demonstrate the older child was disabled before 22 and continues to be disabled, then they can qualify.
posted by metahawk at 10:55 PM on February 13, 2022

Thank you so much, everyone, for your helpful responses. I will likely be consulting a lawyer sometime in the coming months. I plan to read and study all of the replies here, so that I can have a good understanding of this area going into the meeting with the attorney. Thank you again.
posted by merejane at 10:14 AM on February 16, 2022

In all the multiple states I've lived in it would have counted.
posted by liminal_shadows at 4:49 PM on February 16, 2022