Can Gift Cards Affect SSI Benefits?

Americans sure love their gift cards!

In fact, according to Capital One Shopping, the U.S. accounts for approximately 38% of the global gift card market (at a value of $339.5 billion), with a whopping 54% of US consumers buying gift cards as holiday presents.

But, if you are thinking about buying a gift card as a birthday or holiday gift for someone who receives Supplemental Security Income (SSI), first make sure you understand how receiving a gift card may affect the benefits on which the recipient may rely.

To maintain SSI eligibility, one must have income and resources below specific thresholds. These limits can make giving a gift card to an SSI recipient challenging as the Social Security Administration (SSA), which oversees the SSI program, may consider gift cards income for the month received. In turn, this could lead to the unintended consequence of reducing or even eliminating the benefit.

Gift Cards as Unearned Income

The SSA considers gift cards as unearned income in the following circumstances:

It allows the beneficiary to buy food or shelter; or
the beneficiary could resell it

Since SSI benefits help a recipient cover their costs for food and shelter, the SSA considers income that could go toward these essentials as a reason to reduce or eliminate the need for SSI benefits.

Some stores and online sellers offer food items, so their gift cards could affect a person’s SSI benefits. Similarly, unless the terms of a gift card explicitly prohibit resale, the SSA assumes that the gift card has resale value.

Since eligibility requirements for SSI limit the amount of earned and unearned income an individual may receive, SSA considers gift cards unearned income.

An example…

In 2024, an individual can receive up to $943 per month in unearned income, per the SSA. Let’s say an SSI recipient with $800 in unearned income gets a $200 Visa gift card as a holiday present. The individual can use the gift card to purchase food and shelter items. With the gift card, their total monthly income will equal $1,000. Because this exceeds the income limit of $943, the individual would no longer meets SSA’s requirements.

Furthermore, SSI benefits are dependent on income. So, even if the gift card does not put the SSI recipient over the unearned income limit, it could still result in a reduction of their benefits. According to SSA, when an individual’s unearned income increases, SSI benefits reduce by about $1 for every $1. Therefore, in this example, a $200 gift card would reduce the recipient’s monthly benefit by $200 and they could expect a reduced payment of $743.

Gift Cards as Resources

In addition to affecting income, gift cards also count as available resources. An SSI recipient can have up to $2,000 in resources, but if the beneficiary receives a gift card and does not spend it, it becomes a countable resource, which could disqualify them from benefits.

As in the example above, let’s say an SSI recipient with $1,900 in resources receives a $200 gift card. The $200 gift card added to the $1,900 in resources would total $2,100 in resources and could now put them $100 over the $2,000 individual resource limit.

Gift Cards Not Considered Income

While most gift cards allow the recipient to make food and shelter purchases or potentially resell the gift card, there are some gift cards that may not. These types of gift cards, with a legally enforceable resale prohibition, will not count as income or count toward available and countable resources for the recipient.

You may have the best of intentions in giving a gift card as a present, but if the card’s recipient receives SSI, it can result in potential problems that jeopardize their benefits. Therefore, it is best to connect with a special needs planning attorney for guidance.

If you need help, in navigating and protecting your loved one’s public benefits please reach out to us. We’d be happy to assist you.

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