20 CFR 416.1201 and 416.1205(b)

SSR 81-37

The claimants, a husband and wife, were recipients of supplemental security income (SSI) benefits as an eligible couple. In 1979, they purchased an automobile from their daughter-in-law for $600, but did not pay her for it until the following year. When the Social Security Administration (SSA) determined that the claimants were ineligible for SSI benefits from January 1979 through May 1980 because the cash in their bank accounts exceeded the resource limit established by statute, the claimants filed an appeal. They argued that if SSA had subtracted the $600 automobile debt from the cash in their bank accounts, their countable resources would not have exceeded the statutory limit. Held, under 20 CFR 416.1201, the automobile debt does not qualify as encumbrance against the cash in the claimants' bank accounts; therefore, the claimants were ineligible for SSI benefits during the period in question because their countable resources exceeded the statutory limit.

It has been determined that the claimants meet all factors of eligibility for SSI benefits except with respect to the question of their resources. Accordingly, the issue is whether the claimants' resources, other than those excluded pursuant to section 1613(a) of the Social Security Act (the Act), are more than the $2,250 limit provided in section 1611(a)(2)(B) of the Act.

The claimants are both 82 years of age and recipients of SSI benefits. Their banking records showed they had balances in their checking and savings accounts on the dates indicated as listed below:

Jan. 1979 $1800 $ 615
Feb. 1979 1800 704
Mar. 1979 1800 691
Apr. 1979 1822 646
May 1979 1822 738
Jun. 1979 1822 789
Jul. 1979 1800 781
Aug. 1979 1800 851
Sep. 1979 1800 946
Oct. 1979 1824 936
Nov. 1979 1824 922
Dec. 1979 1824 1,003
Jan. 1980 1848 1,074
Feb. 1980 1800 1,006
Mar. 1980 1800 969
Apr. 1980 1800 905
May 1980 1800 655
Jun. 1980 1200 500

As a result, SSA determined that the claimants had countable resources in excess of the $2,250 allowable limit during the period January 1979 through May 1980, and thus were ineligible for SSI benefits during this period.

The claimants argued that they owed their daughter-in-law $600 covering the purchase price of an automobile sold by the daughter-in-law to the claimants, and that if this debt had been subtracted from the bank account balances, their countable resources would have been below the allowable limit. The car purchase details are as follows. The claimants' ancient automobile (1962 Plymouth) became inoperable. Their daughter-in-law had purchased another car to replace her 1974 Chevrolet. On May 12, 1979, she agreed to sell the claimants the 1974 Chevrolet for $600 and gave them permission to take possession of the car with the understanding that they pay her within 12 months. The claimants took possession in May 1979, and had the title on the car changed to their names in August 1979. The daughter-in-law's name was not on the new title. The claimants paid their daughter-in-law for the car by check for $600, dated April 12, 1980.

By comparing the $600 purchase price with the tabulation of the bank accounts, one can readily see that the claimants' countable resources would have dropped below the $2,250 permissible level if the car had been paid for promptly. The claimants argue that the car debt should be treated as a charge against the bank accounts and a debt against their countable resources, the bank accounts. SSA denied this argument because first, there is no provision for reducing a claimant's resources by the amount of a claimant's debts and second, the debt on the automobile was not a legal charge or encumbrance on the claimants' countable resources, the bank accounts, which would reduce the monies realized from liquidating the accounts.

Thus, the issue arises as to whether the debt on the automobile can be treated as a charge against the bank accounts so as to reduce the claimants' countable resources below the permissible $2,250 level.

Section 1611(a)(2)(B) of the Act and § 416.1205(b) of Regulations No. 16 provide that an aged, blind, or disabled individual who has an eligible spouse shall be eligible for benefits under title XVI of the Act if their nonexcludable resources do not exceed $2,250 and all other eligibility requirements are met.

Section 416.1201(a) of Regulations No. 16 defines "resources" as cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his support and maintenance. If the individual has the right, authority or power to liquidate the property, or his share of the property, it is considered a resource. If a property right cannot be liquidated, the property will not be considered a resource of the individual (or spouse).

Section 416.1201(b) of Regulations No. 16 provides that liquid resources are those assets that are in cash or are financial instruments which are convertible to cash. Liquid resources include cash on hand, cash in savings accounts or checking accounts, stocks, bonds, mutual fund shares, promissory notes, mortgages and similar properties. Liquid resources, other than cash, are evaluated according to their equity value.

Section 416.1201(c) of Regulations No. 16 provides that non-liquid resources include all other properties. The term includes both real and personal property. Non-liquid resources are evaluated according to their equity value except as otherwise provided. The "equity value" of an item is defined as the price that item can reasonably be expected to sell for on the open market in the particular geographic area involved, minus any encumbrances.

There is no evidence that either the claimants' checking or savings accounts were encumbered; for instance, the claimants did not guarantee repayment of the debt by pledging their bank accounts as security. The claimants' promise to pay the $600 car debt to their daughter-in-law represents an unencumbered debt and does not establish an encumbrance against their savings and checking accounts.

There is no provision under the SSI statutes and regulations for offsetting outstanding debts against countable resources so as to reduce the amount of such resources unless the outstanding debt represents an encumbrance against a liquid resource other than cash (see § 416.1201(b)) or against a nonliquid resource, such as real and personal property (see § 416.1201(c)). The debt for the car could not be used to offset the value of the claimants' checking and savings accounts.

The weight of the evidence supports SSA's determination that, during the period January 1979 through May 1980, the claimants were ineligible for SSI benefits because their available and countable resources exceeded the $2,250 limit; therefore, the determination must be affirmed.

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