A Social Security Rule You've Never Heard Of Could Cost You A Lot

Social Security benefits run across a wide range of programs. The retirement benefits that people take from the government are certainly the most well-known of the lot, but there's also the spousal benefit system that allows spouses of workers who didn't earn as much to support themselves in retirement, too, and all manner of disability and tertiary coverages that support workers and their families in other ways. In addition to the wide ranging support systems that the Social Security Administration rolls out to help Americans when the need it most, there are plenty of rules in place to ensure that people don't abuse the social security net. Some of these rules are intuitive and simple. For instance, if you begin drawing checks while you're still working, earnings over a certain limit will reduce your benefit amount by $1 for every $2 earned (for 2025, the limit is $23,400 before deductions are enforced).

However, there's a slate of rules and regulations that many people won't be all that familiar with. Yet, they can ruin your financial wellbeing if you aren't careful. For people who rely on SSI coverage (Supplemental Security Income), one important rule must be followed religiously. The program supports disabled people and older Americans with little to no income and other financial resources to support themselves. The consequences of finding yourself on the wrong end of this line can be devastating.

SSI coverage was built to provide for the most vulnerable people in America. It provides an average benefit check of $698 to recipients every month, and those utilizing SSI number in the millions. When you sign up for SSI you agree to regularly check in with SSA and divulge important financial details. One of those figures that the Social Security Administration will be looking for revolves around total asset ownership. This includes things like a second car (although your first car, and your home are not counted in this calculation), and any cash you have in a checking or savings account. The value of non-exempt assets must remain below an asset limit threshold in order to maintain eligibility for the program. If you're assets rise north of the miniscule $2,000 limit, you'll be cut off from this crucial benefit that helps finance your life.

To make matters worse, the Social Security Administration is essentially guaranteed to discover changes in your financial picture. When applying for SSI coverage, recipients will grant the government access to their accounts and allow for expansive checks on their financial health, SSA even monitors your social media presence. If you've bought something that counts as an asset for eligibility purposes, eventually it will be uncovered. When this happens, you'll see your benefits frozen and you may even be forced to pay back some or all of the money you've been provided through the program. Staying on top of eligibility requirements and knowing what you can and can't purchase in order to remain under the limit is therefore critical for SSI users.

Buying something new or saving more money aren't the only things that can shift your asset total. These are direct actions you can take to change your financial circumstances, but an indirect one might also play a role. Getting married functionally merges the assets of two people together into one shared pool of resources. Even if you and your spouse choose to account for your assets and expenses separately, the government won't see it that way. Your asset balance is guaranteed to change if you get married, and the excessively low cap ensures that this frequently results in recipients being bumped from the program.

As is the case with this being an indirect change in circumstance, the consequences are often more obscure at first, too. Not only will recipients lose the monthly check they were accustomed to, but their Medicaid eligibility may dissipate, too. This means that health coverage no longer applies either, leaving those who are most vulnerable to fend for themselves in both the health care and financial arenas at the same time.

One hangup that many SSI recipients often find themselves caught on is the purchase of burial insurance. This is something that receives an exemption from your asset calculation for the purposes of SSI eligibility. However, many companies that offer burial insurance package this coverage as a life insurance policy. Life insurance isn't exempted, and the face value of the policy counts against your SSI asset cap. For many, this is more than enough to send them over the limit and eliminate their eligibility. Unfortunately, SSI is an aging program that hasn't seen updates to its logistical processes or regulations in decades. The $2,000 asset limit has remained steady since 1989, and even if it were only adjusted for inflation in the years since its establishment, recipients would have a cap set at roughly $10,000 today.

To successfully navigate the tangle of rules governing SSI payments, you'll need to first start with exempt financial resources and those that count against you. Income set aside as part of the PASS program (Plan to Achieve Self-Support) is exempt, anyone can write up one of these plans, and it can help you offset earnings that may rise above the threshold for eligibility while allowing you to save for an important financial goal. Money loaned to you and money that other people spend to pay for items other than food and shelter (like your electricity bill or gas for your car) also don't count. Exempted dollars offset your earnings, which are then subtracted from the maximum benefit rate ($943) to deliver your personal benefit amount. With this information in mind, making a plan to ensure continued eligibility is less challenging.