oversight

Need to Change Income Criteria of the Supplemental Security Income Program

Published by the Government Accountability Office on 1977-06-23.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         DOCUMENT   BESUME

02745 -   A1852878)

[Need to Change Income Criteria of the Supplemental Security
Income Program]. HRD-77-101; HRD-77-114; HRD-77-113;
B-164031(4). June 23, 1977. 7 pp. + enclosure (1 pp.).

Report to Sen. Russell B. Long, Chairman, Senate Committee on
Finance; Rep. James C. Corman, chairman, House Committee on Ways
and Means: Public Assistance and Unemployment Compensation
                                                           Ways
Subcommittee; Rep. Al Ullman, Chairman, House Committee on
and Means; by Elmer B. Staats, Comptroller General.

Issue Area: Income Security Programs (1300).
Contact: Human Resources Div.
Budget Function: Income Security: Public Assistance and Other
    Income Supplements (604).
Organization Concerned: Social Security Administrution.
Congressional Relevance: House Committee on Ways and Means:
    Public Assistance and Unemployment Compensation
    Subcommittee; House Committee cn Ways and Means; Senate
    Committee on Finance.
Authority: Social Security Act, title XVI (42 U.S.C. 1381). H.P.
    3282 (95th Cong.).

         An examination was performed of the Supplemental
Security Income program to i3entify legislative changes needed
for recipients to be treated more equitably.
Findings/Conclusions: Concern was expressed about a provision
that calls for a reduction in benefits when recipients receive
in-kind support and maintenance. The amount of the reduction
varies depending upon the recipient's living arrangements. This
can result in recipients with similar in-kind support and
maintenance being paid different benefits. Of the 4.2 million
recipients receiving benefits as of December 1976, one-half
million, or about 12%, had their benefits reduced under this
provision. H.R. 3282, one of several bills relating to this
subject, would eliminate consideration of in-kind support and
maintenance in determining eligibility for program benefits and
the amount of such benefits. This change wcold simplify program
administration and also eliminate the noted inequities.
According to Social Security estimates, it would cost about $485
million p r year in increased benefits, compared to about $15
million under a GAO legislative proposal.    Recommendations:
Congress should amend the  law to treat  in-kind support and
maintenance the same,  regardless of the  living arrangement  of
the recipient. (Author/HTW)
       i..
                     COMPTROLLER GENERAL OF THE UNITED STATES
                                WASHINCTON D.. Ad



At   B-164031(4)


     The Honorable Russell B. Long
     Chairman, Committee on Finance
     United States Senate
     Dear Mr. Chairman:

          We have recently examined the Supplemental Security
     Income program established under title XVI of the Social
     Security Act (42 U.S.C. 1381) to identify legislative changes
     needed for recipients to be treated more uniformly and equit-
     ably under the program.

           We are concerned about one program provision that pro-
     vides for a reduction in recipients' benefit amounts when
     they receive in-kind support and maintenance. 1/ The amount
     of the reduction varies depending upon the recipient's
     living arrangements. This can result in recipients with
     similar in-kind support and maintenance being paid different
     benefits.   Of the 4.2 million recipients receiving benefits
     as of  December 1976, 1/2 million, or about 12 percent, had
     their benefits reduced under this provision.

          We discussed with your Committee's staff a legislative
     amendment which would eliminate the inequities resulting from
     the different treatments of in-kind support and maintenance.
     Since our discussion, several bills have been introduced in
     the 95th Congress which would have a impact in varying ways
     on the treatment of in-kind support and maintenance in com-
     puting benefits.   (See enc. I.)

          One of these bills--H.R. 3282--would eliminate considera-
     tion of in-kind support and maintenance in determining eligi-
     bility fr program benefits and the amount of such benefits.
     The primary purpose is to simplify program administration.
     However, it would also eliminate the inequities we are
     addressing in this letter. According to Social Security
     estimates, completely eliminating in-kind support and main-
     tenance as contemplated by H.R. 3282 would cost about $485
     million per year in increased benefits.


     1/In-kind support and maintenance is room and board and in-
       cidentals necessary to an individual's normal sustenance.
                                                                HRD-77-101
B-164031(4)



     If the committee finds that this resulting cost is
prohibitive, we recommend eliminating these inequities
through our legislative proposal which, according to the
Social Security Administration, would cost about $5 mil-
lion annually in increased benefits.

BACKGROUND

     The monthly basic Fede:al benefit as of July 1, 1976,
was $167.80 for an individual and $251.80 for a couple.
Basic benefits are reduced dollar for dollar for countable
income. Anything cf value received by the individual or
couple is included in countable income, except for certain
excluded amounts. For example, the first $20 of monthly
income, whether earned or unearned, is excluded fro.
countable income. This exclusion was to recognize the ef-
forts of working people who provided for themselves in
retirement and to assure that their total income will be
more than if they had never worked.

     Section 1612 of the act provides that in-kind support
and maintenance is unearned income to the recipient. One
exception to this provision is when a recipient lives in
another person's household.   In these cases, the recipient's
standard benefit amount is  reduced by one-third instead of
counting the support and maintenance as unearned income.
This statutory one-third reduction was included because of
the practical proibems involved in determining the value
of room and board for people who live with a friend or re-
lative.

     For recipients not living in another person's household,
Social Security estimated the current market value of in-kind
support and Maintenance received and treated it as unearned
income before December 1974.  In December 1974 Social Security
eliminated the need for determining the market value and sub-
sequently has required that in-kind support and maintenance
in these cases be valued at one-third of the benefit amount
plus $20 ($75.93 for an individual as of July 1, 1976). This
change was made so that, regardless of recipients' living
arrangements and the amount of in-kind support and maintenance
received, recipients would nave the equivalent of two-thirds
of the benefit amount to spend at their discretion. Also,
the change was made to avoid the administrative tasks in-
volved in determining the market value of in-kind support
and maintenance.


                             2
B-164031(4)



nRESENT TREATMENT OF IN-KIND SUPPORT
AND MAINTEUANCE RESULTS IN INEQUITY

     Some recipients have their maximum monthly Federal
benefit reduced when in-kind support and maintenance is re-
ceived and others do not. For example, when recipients re-
cieve in-kind support and maintenance based on need from
State or local political subdivision, their benefits are
not reduced. In other cases, a reduction generally depends
on a recipient's living arrangement.  In addition, all re-
cipients are not given an opportunity to rebut the amount
of the reduction.

     When a recipient lives in another person's ousehold,
the benefit amount is automatically reduced one-third for
in-kind support and maintenance, and the recipient is unable
co rebut the amount of the reduction. These recipients are
not provided a right of rebuttal because of the prohibitive
language contained in the legislative history of the program.
This report provides that the one-third reduction would apply
regirdless of whether the recipient made any payment for
room and board.

     In all other living arrangement situations where in-kind
support and maintenance is received, the benefit amount may
be reduced one-third plus $20 subject to the $20 income ex-
clusion. When it is reduced, the Social Security Adminis-
tration allows the recipient an opportunity to rebut the
amount of the reduction.

     The payment differences resulting from these two methods
of handling in-kind support and maintenance depend on two
factors:   (1) the presence or absence of other types of in-
come and (2) the value placed on in-kind support and mainten-
ance after rebuttal.   Four possible combinations of these
factors exist:

     1.   The absence of other types of income and the absence
          of exercise of rebuttal results in no benefit differ-
          ence.

     2.   The resence of other types of income and the absence
          of exercise of rebuttal results in a $20 difference
          in enefits.




                              3
B-164031(4)



     3.     The presence of other types of income and the presence
            of exercise of rebuttal results in a difference of
            $55.93, minus the value agreed to because of rebuttal.

     4.     The presence of exercise of rebuttal and the absence
            of other types of income results in the difference
            in the preceding combination plus $20.

The following eamples illustrate the payment differences in
the last three combinations when two recipients have the same
type and amount of income but different living arrangements.

Example 1--The presence of other types of income and the
           absence of exercise of rebuttal

                            Living arrangement
                          Household
                          of another       Other

Benefit amount             $167.80        $167.80
Support and main-
  tenance                 a/$55.93        t/75.93
Pension                    c/50.00        c/50.00
Income exclusion            (20.00)        (20.00)
Deduction                  $ 85.93        $105.93
Payment                    $ 81.87        $ 61.87
Difference                                $ 20.00

a/Statutory one-third reduction.

b/One-third plus $20.

c/Assumed amount for example purposes.




                                4
B-164031(4)

Example 2--The presence of other types of income and the
           presence of exercise of rebuttal

                              Living arrangement
                            Household
                            of another      Other

Benefit     mount            $167.80       $167.80

Support and maintenance    a/$ 55.93     b/$ 30.00
Pension                      c/50.00       c/50.00
Income exclusion              (20.00)       (20.00)

Deduction                    $ 85.93       $ 60.00

Payment                      $ 81.87       $107.80

Difference                   $ 25.93

a/Statutory one-third reduction.

b/Assumed value agreed to because of rebuttal for example
  purposes.

c/Assumed amount for example purposes.

Example 3--The presence of exercise of rebuttal and the
           absence of other types of income

                             Living arrangement
                           Household
                           of another       Other

Benefit amount               $167.80        $167.80

Support and maintenance    a/$ 55.93      b/$ 30.00

Income exclusion                   -         (20.00)

Deduction                    $ 55.93        $ 10.00

Payment                      $111.87        $157.80

Difference                   $ 45.93

a/Statutory one-third reduction.

b/Assumed value agreed to because of rebuttal for example
  purposes.
B-164031(4)



     The payment differences resulting from the two methods
of handling in-kind support and maintenance and the result-
ing inequity can be eliminated by amendirg the law to provide
for only one treatment of in-kind support and maintenance
and to provide for a right of rebuttal for everyone.

RECOMMENDATION TO THE COMMITTEE

     We recommend that the law be amended to treat in-Kind
support and maintenance the same, regardless of the living
arrangement of the recipient.  This can be accomplished by
changing section 1612(a)(2)(A) of the Social Security Act
to read as follows:

     (A) support and maintenance; except that (i)
     in the ase of any individnal (and eligible
     spouse, if any) receiving support and mainte-
     nance in-kind (not excluded under any other
     provision of this title!, the dollar amounts
     otherwise applicable to such individual (and
     spouse) as specified in subsections (a) and
     (b) of section 1611 shall be reduced by 33-1/3
     percent (subject to rebuttal if the actual
     value of support and maintenance is a lesser
     amount) in lieu of including such support
     and maintenance in the unearned icome of
     such individual (and spouse) as otherwise
     required   y this subparagraph * * *.

     Our amendment would (1) result in recipients being
treated more uniformly and equitably, (2) eliminate the $20
difference in benefit amounts and the need for determining
whether a recipient lives in another person's household, and
(3) extend the right of rebuttal to all recipients. Bowever,
there could be more cases in which Social Security would have
to review the value recipients place on in-kind support and
maintenance received. Therefore, it may not have a measurable
impact on reduciig the complexities involved in administering
this provision.




                              6
B-164031(4)



     Information contained in this letter is also being
furnished to the Chairman of the Subcommittee on Public
Assistance and Unemployment Compensation, House Committee
on Ways and Means, and the Chairman of the Bouse Committee
on Ways and Means.

                                Sincerely yours,




                                Comptroller General
                                of tha United States
Enclosure




                            7
ENCLOSURE I                                          ENCLOSURE I


                       PENDING LEGISLATIVE

                 IN-KIND SUPPORT AND MAINTENANCE

              SUPPLEMENTAL SECURITY INCOME PROGRAM

House of Representatives

Bill number                         Provision
B.R. 3282         To eliminate in-kind support and maintenance
                  from countable income in the program.
H.R. 1946         To eliminate in-kind support and maintenance
                  from countable income for recipients that
                  live in another person's household.
H.R. 1762 and     To eliminate counting as income, support and
  H.R. 444        maintenance received from a relative in
                  cash or kind up to $250 (00   for H.R. 444).
H.R. 3937         To eliminate support and maintenance furnished
                  a mentally retarded individual living in an-
                  other person's household.
United States Senate

Bill number                        Provision
S. 1181           To eliminate counting as income, in-kind
                  support and maintenance received from a
                  relative in whose household the recipient
                  resides.
    6,44,,-L     - /   at n

               COMPTROLLER GENErAL OF'THE UNITED STATES
                          WASHINGTON. D.C.   05




B-164031(4)                                               JUN2 3 1977
The Honorable James C. Corman
Chairman, Subcommittee on Public
  Assistance and Unemployment Compensation
Committee on Ways and Means
House of Representatives

Dear Mr. Chairman:

     We have recently examined the Supplemental Security
Income program established under title XVI of the Social
Security Act (42 U.S.C. 1381) to identify legislative changes
needed for recipients to be treated more uniformly and equit-
_bly under the program.

     We are concerned about one program provision that pro-
vides for a reduction in recipients' benefit amounts when
they receive in-kind support and maintenance. 1/ The amount
of the reduction varies depending upon the recipient's
living arrangements. This can result in recipients with
similar in-kind support and maintenance being paid different
benefits. Of the 4.2 million recipients receiving benefits
as of December 1976, 1/2 million, or about 12 percent, had
their benefits reduced under this provision.

     We discussed with your Subcommittee's staff a legislative
amendment which would eliminate the inequities resulting from
the different treatments of in-kind support and maintenance.
Since our discussion, several bills have been introduced in
the 95th Congress which would have an impact in varying ways
on the treatment of in-kind support an maintenance in com-
puting benefits.   (See enc. I.)

     One of these bills--H.R. 3282--would eliminate considera-
tion of in-kind support and maintenance in determining eligi-
bility for program benefits and the amount of such benefits.
The primary purpose is to simplify program administration.
However, it would also eliminate the inequities we are
addressing in this letter. According to Social Security
estimates, completely eliminating    -kind support and main-
tenance as contemplated by H.R.       would cost about $485
million per year in increased be    Lts.


l/In-kind support and maintenance is room and board and in-
  cidentals necessary to an individual's normal sustenance.

                                                          HRD-77-114
B-164031(4)



     If the committee finds that this resulting cost is
prohibitive, we recommend eliminating these inequities
through our legislative proposal which, Recording to the
Social Security Administration, would cost about $15 mil-
lion annually in increased benefits.

BACKGROUND

      The onthly basic Federal benefit as of July 1, 1976,
was $167 80 for an individual and $251.80 for a couple.
Basic benefits are reduced dollar for dollar for countable
income. Anything of value received by the individual or
couple is included in countable income, except for certain
excluded amounts.  For example, the first $20 of monthly
income, whether earned or unearned, is excluded from
countable income.  This exclusion was to recognize the ef-
forts of working people who provided for themselves in
retiremnert and to sure that their total income will be
more than if they hd never worked.

     Section 1612 of the act provides that in-kind support
and maintenance is unearned income to the recipient.  One
exception to this provision is when a recipient lives in
another person's household.  In these cases, the recipient's
standard benefit amount is reduced by one-third instead of
counting tne support and maintenance as unearned income.
This statutory one-third reduction was included because of
the practical problems involved in etermining the value
of room and oard for people who live with a friend or re-
lative.

     For recipients not living in another person's household,
Social Security estimated the current market value of in-kind
support and maintenance received and treated it as unearned
income before December 1974.  In December 1974 Social Security
eliminated the need for determining the market value and sub-
sequently has required that in-kind support and maintenance
in these ases be valued at one-third of the benefit amoun
plus $20 ($75.93 for an individual as of July 1, 1976). This
change was made so that, regardless of recipients' living
arrangements and the amount of in-kind support and maintenance
received, recipients would have the equivalent of two-thirds
of the benefit amount to spend at their discretion. Also,
the change was made to avoid the administrative tasks in-
volved in determining the market value of in-kind support
and maintenance.


                             2
B-164031(4)



PRESENT TREATMENT OF IN-KIND SUPPORT
AND MAINTENANCE RESULTS IN INEQUITY

      Some recipients have their maximum monthly Federal
benefit reduced when in-kind support and maintenance is re-
ceived anC others do not.   For example, when recipients re-
cieve in-kind support and maintenance based on need from a
State or local political subdivision, their benefits are
nct reduced. In other cases, a reduction generally depends
on a recipient's living arrangement.    In additin, all re-
cipietnts are not given an opportunity to rebut the amount
of the reduction,

     When a recipient lives in another person's household,
the benefit amount is automatically rduced one-third for
in-kind support and maintenance, and the recipient i unable
to rebut the amount of the reduction. These recipients are
not provided a right of rebuttal because of the prohibitive
language contained in the legislative history of the program.
This report provides that the one-third reduction would apply
regardless of whether the recipient made any payment for
room and board.

     In all other living arrangement situations where in-kind
support and maintenance is received, the benefit amount may
be reduced one-third plus $20 subject to the $20 income ex-
clusion. When it is reduced, the Social Security Adminis-
tration allows the recipient an opportunity to rebut the
amount of the reduction.

     The payment differences resulting from these two methods
of handling in-kind support and maintenance depend on two
factors:   (1) the presence or absence of other types of in-
come and (2) the value placed on in-kind support and mainten-
ance after rebuttal.   Four possible combinations of these
factors exist:

     1.   The absence of other types of income and the absence
          of exercise of rebuttal results in no benefit differ-
          ence.

     2.   The presence of other types of income and the absence
          of exercise of rebuttal results in a $20 difference
          in benefits.




                              3
B-164031(4)



     3.   The presence of other types of income and the presence
          of exercise of rebuttal results in a difference of
          $55.93, minus the value agreed to because of rebuttal.

     4.   The presence of exercise of rebuttal and the absence
          of other types of income results in the difference
          in the preceding combination plus $20.

The following examples illustrate the payment differences in
the last three combinations when two recipients have the same
type and amount of income but different living arrangements.

Example 1--The presence of other types of income and the
           absence of exercise of rebuttal

                          Living arrangement
                        Household
                        of another       Other

Benefit amount           $167.80         $167.80
Support and main-
  tenance               a/$55.93         b/75.93
Pension                 -c/50.00         c/50.00
Income exclusion          (20.00)         (20.00)

Deduction                $ 85.93         $105.93

Payment                  $ 81.87         $ 61.87

Difference                               $ 20.00

a/Statutory one-third reduction.

b/One-third plus $20.

c/Assumed amount for example purposes.




                               4
B-164031(4)

Example 2--The presence of other types of income and the
           presence of exercise of rebuttal

                             Living arrangement
                            Household
                            of another     Other

Benefit amount               $167.80       $167.80

Support and maintenance    a/$ 55.93     b/$ 30.00
Pension                      c/50.00       c/50.00
Income exclusion              (20.00)       (20.00)

Deduction                    $ 85.93       $ 60.00

Payment                      $ 81.87       $107.80

Difference                   $ 25.93

a/Statutory one-third reduction.

b/Assumed value agreed to because of rebuttal for example
  purposes.

c/Assumed amount for example purposes.

Example 3--The presence of exercise of rebuttal and the
           absence of other types of income

                             Living arrangement
                           Household
                           of another       Other

Benefit amount               $167.80        $167.80

Support and maintenance    a/$ 55.93     b/$ 30.00

Income exclusion                   -         (20.00)

Deduction                    $ 55.93        $ 10.00

Payment                      $111.87        $157.80

Difference                   $ 45.93

a/Statutory one-third reduction.

b/Assumed value agreed to because of rebuttal for example
  purposes.


                             5
B-164031(4)



     The payment differences resulting from the two methods
of handling in-kind support and maintenance and the result-
ing inequity can be eliminated by amending the law to provide
for only one treatment of in-kind support and maintenance
and to provide for a right of rebuttal for everyone.

RECOMMENDATION TO THE SUBCOMMITTEE

     We recommend that the law be amended to treat in-kind
support and maintenance the same, regardless of the living
arrangement of the recipient. This can be accomplished by
changing section 1612(a)(2)(A) of the Social Security Act
to read as follows:

     (A) support and maintenance; except that (i)
     in the case of any individual (and eligible
     spouse, if any) receiving support and mainte-
     nance in-kind (not excluded under any other
     provision of this title), the dollar amounts
     otherwise applicable to such individual (and
     spouse)  s specified in subsections (a) and
     (b) of section 1611 shall be reduced by 33-1/3
     percent (subject to rebuttal if the actual
     value of support and maintenance is a lesser
     amount) in lieu of including such support
     and maintenance in the unearned income of
     such individual (and spouse) as otherwise
     required by this subparagraph * * *.

     Our amendment would (1) result in recipients being
treated more uniformly and equitably, (2) eliminate the $20
difference in benefit amounts and the need for determining
whether a recipient lives in another person's household, and
(3) extend the right of rebuttal to al' recipients.   However,
there could be more cases in which Social Security  would  have
to review the value recipients place on in-kind support   and
maintenance received. Therefore, it may not have a measurable
impact on reducing the complexities involved in administering
this provision.




                              6
B-164C31(4)



     Information contained in this letter is also being
furnished to the Chairman of the Senate Committee on Finance
and the Chairman of the ouse Committee on Ways and Means.

                                 Sin   ely your




                                 Comptroller General
                                 of the United States

Enclosure




                             7
ENCLOSURE I                                            ENCLOSURE I



                       PENDING LEGISLATIVE

                 IN-KIND SUPPORT AND MAINTENANCE

              SUPPLEMENTAL SECURITY    NCOME PROGRAM

House of Representatives

Bill number                           Provision
H.R. 3282         To eliminate in-kind support and maintenance
                  from countable income in the program.

H.R. 1946         To eliminate in-kind support and maintenance
                  from countable income for recipients that
                  live in another person's household.

H.R. 1762 and     To eliminate counting as income, support and
  H.R. 444        maintenance received from a relative in
                  cash r kind up to $250 ($200 for H.R. 444).

H.R. 3937         To eliminate support and maintenance furnished
                  a mentally retarded individual living in an-
                  other person's household.

United States Senate

Bill number                           Provision
S. 1181           To eliminate counting as income, in-kind
                  support and maintenance received from a
                  relative in whose household the recipient
                  resides.
                         WASHINGTON, D.C   2054S



                                                   1B-164031(4)
B-164031(4)
The Honorable Al Ullman
Chairman, Committee on Ways and Means
House of Representatives

Dear Mr. Chairman:

     We have recently examined the Supplemental Security
Income program established under title XVI of the Social
Security Act (42 U.S.C. 1381) to identify legislative changes
needed for recipients to be treated more uniformly and
                                                       equit-
ably under the program.

     We are concerned about one program provision that pro-
vides for a reduction in recipients' benefit amounts when
they receive in-kind support and maintenance. 1/ The
of the reduction varies depending upon the recipient   amount
living arrangements. This can result in recipients with
similar in-kind support and maintenance being paid different
benefits.  Of the 4.2 million recipients receiving benefits
as of December 1976, 1/2 million, or about 12 percent,
                                                        had
their benefits reduced under this provision.

     We discussed with the staff of your Subcommittee on Pub-
lic Assistance and Unemployment Compensation a legislative
amendment which would eliminate the inequities resulting
                                                          from
the different treatments of in-kind support and maintenance.
Since our discussion, several bills have been introduced
the 95th Congress which would have an impact in varying   in
on the treatment of in-kind support and maintenance in   ways
                                                        com-
puting benefits.   (See enc. I.)
     One of these bills--H.R. 3282--would eliminate considera-
tion of in-kind support and maintenance in determining
                                                       eligi-
bility for program benefits and the amount of such benefits.
The primary purpose is to simplify program administration.
However, it would also eliminate the inequities we are
addressing in this letter.  According to Social Security
estimates, completely eliminating in-kind support and main-
tenance as contemplated by H.R. 3282 would cost about $48'
million per year in increased benefits.


l/In-kind support and maintenance is room and board
                                                    and in-
  cidentals necessary to an individual's normal sustenance.

                                                   HRD-77-113
B-164931(4)



     If the committee finds that this resulting cost is
prohibitive, we recommend eliminating these inequities
through our legislative proposal which, according to the
Social Security Administration, would cost about $15 mil-
lion annually.in increased benefits.
BACKGROUND
     The monthly basic FedeLal benefit as of July 1, 1976,
was $167.80 for an individual and $251.80 for a couple.
Basic benefits are reduced dollar for dollar for countable
income. Anything of value received by the individual or
couple is included in countable income, except for certain
excluded amounts. For example, the first $20 of monthly
income, whether earned or unearned, is excluded from
countable income. This exclusion was to recognize the ef-
forts of working people who provided for themselves in
retirement and to assure that their total income will be
more than if they had never worked.
     Section 1612 of the act provides that in-kind support
and maintenance is unearned income to the recipient. One
exception to this provision is when a recipient lives in
another nerscn's household. In these cases. the recipient's
standard benefit amount is reduced by one-third instead of
counting the support and maintenance as unearned income.
This statutory one-third reduction was included because of
the practical problems involved in determining the value
of room and board for people who live with a friend or re-
lative.
     For recipients not living in another person's household,
Social Security estimated the current market value of in-kind
support and maintenance received and treated it as unearned
income before December 1974. In December 1974 Social Security
eliminated the need for determining the market value and sub-
sequently has required that in-kind support and maintenance
in these cases be valued at one-third of the benefit amount
plus $20 ($75.93 for an individual as of July 1, 1976). This
change was made so that, regardless of recipients' living
arrangements and the amount of in-kind support and maintenance
received, recipients would have the equivalent of two-thirds
of the benefit amount to spend at their discretion. Also,
the change was made to avoid the administrative tasks in-
volved in determining the market value of in-kind support
ani maintenance.

                             2
B-164031(4)



PRESENT TREATMENT OF IN-KIND SUPPORT
AND MAINTENANCE RESULTS IN INEQUITY

     Some recipients have their maximum monthly Federal
benefit reduced when in-kind support and maintenance is re-
ceived and others do not. For example, when recipients re-
cieve in-kind support and maintenance based on need from a
State or local political subdivision, their benefits are
not reduced. In other cases, a reduction generally depends
on a recipient's living arrangement.  In addition, all re-
cipients are not given an opportunity to rebut the amount
of the reduction.

     When a recipient lives in another person's household,
the benefit amount is automatically reduced one-third for
in-kind support and maintenance, and the recipient is unable
to rebut the amount of the reduction. These recipients are
not provided a right of rebuttal because of the prohibitive
language contained in the legislative history of the program.
This report provides that the one-third reduction would apply
regardless of whether the recipient made any payment for
room and board.

      In all other living arrangement situations where in-kind
support and maintenance is received, the benefit amount may
be reduced one-third plus $20 subject to the $20 income ex-
clusion. When it is reduced, the Social Security Adminis-
t,.ation allows the recipient an opportunity to rebut the
amount of the reduction.

     The payment differences resulting from these two methods
of handling in-kind support and maintenance depend on two
factors:   (1) the presence or absence of other types of in-
come and (2) the value placed on in-kind support and mainten-
ance after rebuttal.   Four possible combinations of these
factors exist:

     1.   The absence of other types of income and the absence
          of exercise of rebuttal results in no benefit differ-
          ence.

     2.   The presence of other types of income and the absence
          of exercise of rebuttal results in a $20 difference
          in benefits.




                              3
B-164031(4)



     3.     The presence of other types of income and the presence
            of exercise of rebuttal results in a difference of
            $55.93, minus the value agreed to because of rebuttal.

     4.     The presence of exercise of rebuttal and the abse-ce
            of other types of income results in the difference
            in the preceding combination plus $20.

The following examples illustrate the payment differences in
the last three combinations when two recipients have the same
type and amount of income but different living arrangements.

Example     -- The presence of other types of income and the
               absence of exercise of rebuttal

                            Living arrangement
                          Household
                          of another       Other
Benefit amount             $167.80        $167.80
Support and main-
  tenance                 a/$55.93        b/75.93
Pension                    c/50.00        c/50.00
Income exclusion            (20.00)        (20.00)
Deduction                  $ 85.93        $105.93
Payment                    $ 81.87        $ 61.87
Difference                                $ 20.00
a/Statutory one-third reduction.

b/One-third plus $20.

c/Assumed amount for example purposes.




                               4
B-164031(4)

Example 2--The presence of other types of income and the
           presence of exercise of rebuttal

                             Living arrangement
                            Household
                            of another     Other
Benefit amount               $167.80       $167.80
Support and maintenance    a/$ 55.93     b/$ 30.00
Pension                      c/50.00       c/50.00
Income exclusion              (20.00)       (20.00)
Deduction                    $ 85.93       $ 60.00
Payment                      $ 81.87       $107.80
Difference                   $ 25.93
a/Statutory one-third reduction.

b/Assumed value agreed to because of rebuttal for example
  purposes.

c/Assumed amount for example purposes.

Example 3--The presence of exercise of rebuttal and the
           absence of other types of income

                             Living arrangement
                           Household
                           of another       Other
Benefit amount               $167.80       $167.80
Support and maintenance    a/$ 55.93     b/$ 30.00
Income exclusion                   -         (20.00)
Deduction                    $ 55.93       $ 10.00
Payment                      $111.87       $157.80
Difference                   $ 45.93
a/Statutory one-third reduction.

b/Assumed value agreed to because of rebuttal for example
  purposes.


                             5
B-164031(4)



     The payment differences resulting from the two methods
of handling in-kind support and maintenance and the result-
ing inequity can be eliminated by amending the law to provide
for only one treatment of in-kind support and maintenance
and to provide for a right of rebuttal for everyone.

RECOMMENDATION TO THE COMMITTEE

     We recommend that the law be amended to treat in-kind
support and maintenance the same, regardless of the living
arrangement of the recipient. This can b'e accomplished by
changing section 1612(a)(2)(A) of the Soc.-'  ecurity Act
to read as follows:

     (A) support and mLaintenance; except that (i)
     in the case of any individual (and eligible
     spouse, if any) receiving support and mainte-
     nance in-kind (not excluded under any other
     provision of this title), the dollar amounts
     otherwise applicable to such individual (and
     spouse) as specified in subsections (a) and
     (b) of section 1611 shall be reduced by 33-1/3
     percent (subject to rebuttal ij the actual
     value of support and maintenance is a lesser
     amount) in lieu of including such support
     and maintenance in the unearned income of
     such individual (and spouse) as otherwise
     required by this subparagraph * * *.

      Our amendment would (1) result in recipients being
treated more uniformly and equitably, (2) eliminate the $20
difference in benefit amounts and the need for determining
whether a recipient lives in another person's household, and
(3) extend the right of rebuttal to all recipients.   However,
there could be more cases in which Social Security would have
to review the value recipients place on in-kind support and
mai:'tenance received. Therefore, it may not have a measurable
impact on reducing the complexities involved in administering
this provision.
B-164031(4)



     Information   contained in this letter is also being
furnished to the   Chairman of the Senate Committee on Finance
and the Chairman   of the Subcommittee on Public Assistance
and Unemployment   Compensation, House Committee on Ways and
Means.

                                  Sincerely yours,




                                  Comptroller General
                                  of the United States
Enclosure




                              7
                                                     ENCLOSURE I
ENCLOSURE I


                       PENDING LEGISLATIVE

                 IN-KIND SUPPORT AND MAINTENANCE

              SUPPLEMENTAL SECURITY INCOME PROGRAM

House of Representatives

Bill number                         Provision

H.R. 3282          To eliminate in-kind support and maintenance
                   from countable income in the program.

H.R. 1946          To eliminate in-kind support and maintenance
                   from countable income for recipients that
                   live in another person's household.

H.R. 1762 and      To eliminate counting as income, support and
  H.R. 444         maintenance received from a relative in
                   cash or kind up tc $250 ($200 for H.R. 444).

H.R. 3937          To eliminate support and maintenance furnished
                   a mentally retarded individual living in an-
                   other person's household.

United States Senate

Bill number                         Provision

S. 1181            To eliminate counting as income, in-kind
                   support and maintenance received from a
                   relative in whose household the recipient
                   resides.