This blog is the second in a series of three blogs that explain the impact oil and gas payments may have on social security benefits. Episode 3 will post on November 4. Make sure you “like” our Facebook page to keep posted on the blogs. If you have any questions, do not hesitate to contact our office at (304) 845-9750.
In case you missed it, click here for Modern Day Beverly Hillbillies Episode 1: Know the Benefits.
In the last episode, we discussed the most common types of Social Security benefits, and how they are different. If you are uncertain what type of benefits you receive or should apply for please start here, Modern Day Beverly Hillbillies Episode 1: Know the Benefits.
Oil and Gas Royalty Payments and Social Security Payments
“Uncle Jed, get a hold of yourself. I got some bad news for ya” – Jethro
In today’s episode we deal with the problematic Social Security Supplemental Security Income (SSI) benefits. Just like some of the Clampetts’ problems were harder to handle than others, so some Social Security benefits are harder to work with than others as well. Unfortunately, Supplemental Security Income is the Milburn and Margaret Drysdale of problems. Other income creates the most impact that is the hardest to resolve when you receive SSI benefits. SSI is based on financial need. Because of this, the Social Security Administration (SSA) considers all other income when determining monthly payment amounts, and reduces monthly payments dollar for dollar by any other income or benefit received. This includes oil and gas lease and royalty payments. The maximum monthly SSI payment in 2019 is $771 for an individual. If you have royalty payments in a month it will be subtracted from the $771 payment, and you would receive the difference as your payment amount for that month. For example, if you received $500 in royalty payment in January that $500 would be subtracted from the $771 maximum, and your January SSI benefit payment would be reduced to $271. This means that if you received a royalty payment of $771 or more your monthly benefit would be $0. This can be unexpected for individuals receiving SSI payments who think they will be increasing their monthly income because of royalty payments.
Ineligible for Social Security Payments
“I hope this ain’t gonna break your heart, but I just gotta say it”
Unfortunately, the concerns do not stop there. Just as the both Milburn and Margaret each created their own, separate problems for the Clampetts, oil and gas lease payments create problems independent of royalty payments for SSI recipients. Lease payments tend to be larger sums of money paid all at once, which leads to an infusion of income that may affect your Supplemental Security Income benefits for more than a single month. Regardless of the amount, the lease payment received is treated as income in the month you receive it. This will likely reduce that month’s SSI payment amount to $0. The first day of the next month is more concerning. The following month, any remaining money will be treated as an asset. The 2019 asset limit to maintain qualification for Supplemental Security Income benefits is $2,000 for an individual or $3,000 for a married couple. That means if in the month after you receive your lease payment you have more than the $2,000/$3,000 asset cap in checking or savings accounts you will be over the asset limit and become ineligible for SSI payments.
Keeping Your Social Security Eligibility
“Well, I spent some of the money on vittles”
The answer to this asset problem is allowable “spend down.” Spending that lump sum of money on items that the Social Security Administration allows is the solution to maintaining SSI eligibility. This does not mean you can simply spend your money on anything or simply remove it from your account. Spending it on the wrong things could also negatively affect your SSI benefits or eligibility. You must be mindful that you do not spend the money on further items that will be considered assets, or on items the Social Security Administration does not consider allowable. Examples of allowable spend down are payment of any legitimate debt, home repairs, and rent and utilities. You are further required to notify the Social Security Administration of any spend down you make.
Social Security Eligibility Questions
“Well Heck Fire!”
All of this can be as confusing as posh Beverly Hills life was to the down-home Clampett family. If you have questions regarding any payments you are receiving, spend down, or are facing cessation of your social security benefits please contact Gold, Khourey & Turak. We have the experience and knowledge you need to navigate the Social Security landscape.
– This blog post is part 2 in a series of 3 with the next and final post on Nov. 4 dealing with disability insurance and retirement benefits.
Attorney Blogs and News
- Modern Day Beverly Hillbillies Episode 1: Know the Benefits
- Modern Day Beverly Hillbillies Episode 3: Series Finale
- Social Security Myth #11: When Will I Start Receiving Payments?
- Social Security Myth #10: Helped, but Not Whole! – How Much Will You Receive in Social Security Disability Benefits?
- Social Security Myth #7: Only One SS Benefit to Rule Them All