Social Security & SSI Income: Award Letters, COLAs, and HOTMA Implications 💵📄

Erica Davis
Jul 22
10 min read

Social Security income is one of the most common income sources we encounter in affordable housing compliance.

And compared to self-employment income, it should be easy, right?

Get the benefit letter. Calculate the income. Approve the file.

Well…mostly. 😂

The complications usually come from determining which amount to count, using outdated documentation, handling cost-of-living adjustments (COLAs), understanding lump-sum payments, and—because apparently we needed another layer—applying HOTMA requirements correctly.

Let’s break down what compliance professionals should be looking for.

First Things First: Social Security and SSI Are Not the Same Thing 🧐

Although both programs are administered by the Social Security Administration, Social Security benefits and Supplemental Security Income are different programs.

Social Security benefits may include:

Retirement benefits
Social Security Disability Insurance (SSDI)
Survivor benefits

Supplemental Security Income (SSI) is a needs-based benefit for eligible individuals with limited income and resources.

Both may be countable income for affordable housing purposes, but understanding which benefit the household member receives matters.

💡 TCC Tidbit: Never assume every payment from the Social Security Administration is the same type of benefit.

Identify the benefit first. Then determine how it should be verified and calculated under the applicable housing program.

What Documentation Should You Review? 📂

Social Security and SSI benefits should be verified using current documentation.

As a general affordable housing compliance standard, verifications should be no more than 120 days old as of the certification effective date, unless the applicable program, monitoring agency, or written policy establishes a different requirement.

Acceptable documentation may include:

A current Social Security benefit verification letter
An award letter for newly approved benefits
Documentation obtained through an applicable verification system, such as EIV for HUD-assisted households
A my Social Security benefit verification letter or printout
Other acceptable documentation permitted by the applicable housing program

Bank statements showing direct deposits may help support the income received, but remember:

The amount deposited into the household member’s bank account may not be the amount you need to count.

Why?

Medicare premiums and other deductions may already have been removed before the payment reaches the household member’s account.

📌 TCC Tidbit: Check the date before you check the amount.

A verification can contain accurate information and still be unacceptable because it is outdated. Before completing the income calculation, confirm that the documentation meets the applicable 120-day verification standard.

Gross or Net? Let’s Clear This Up. 🧮

One of the most common mistakes involving Social Security income is counting the amount deposited into the household member’s bank account rather than the applicable gross benefit.

Let’s look at an example.

A household member’s benefit documentation shows:

Gross monthly Social Security benefit: $1,847
Medicare premium deduction: $175
Net monthly payment: $1,672

Social Security and SSI are generally counted using the gross recurring benefit before routine deductions such as Medicare premiums. A documented SSA overpayment recovery may require different treatment, particularly under HUD programs, so the deduction must be identified before the income is calculated.

$1,847 × 12 months = $22,164 in annual income

Not:

$1,672 × 12 months = $20,064

That $2,100 difference could significantly affect the household’s eligibility.

💡 TCC Tidbit: Don’t calculate Social Security income from the bank deposit alone.

Verify the benefit. Identify applicable deductions. Determine the countable amount under the applicable program requirements.

Let’s Talk About COLAs 📈

Each year, the Social Security Administration may announce a Cost-of-Living Adjustment, commonly known as a COLA.

And every year, compliance professionals have to determine:

Do I use the current benefit amount or apply the upcoming COLA?

The answer depends on the effective date of the COLA, the certification effective date, and the requirements of the applicable housing program.

This is where simply multiplying the number on an old benefit letter by 12 can create problems.

Before finalizing the calculation, ask:

What is the certification effective date?
Is a COLA scheduled to take effect during the applicable certification period?
Does the current verification already reflect the COLA?
What does the applicable housing program require?

📌 Avoid double-counting the COLA.

If the verified benefit amount already includes the adjustment, do not apply it again.

That sounds obvious.

And yet…here we are discussing it. 😂

What About Lump-Sum Social Security Payments💰

A household member may receive a retroactive or lump-sum Social Security payment.

For example, an individual approved for SSDI may receive several months—or even years—of retroactive benefits in one payment.

The compliance question becomes:

Is the lump-sum payment income, an asset, or both?

The answer depends on the applicable program requirements and circumstances.

Compliance professionals should:

Identify the source of the payment
Determine the period covered by the payment
Review the applicable program requirements
Determine how any remaining funds should be treated for asset purposes
Clearly document the determination in the file

💡 TCC Tidbit: A large deposit is not automatically recurring income.

Find out where the money came from before deciding how it should be counted.

SSI Deserves a Little Extra Attention 👀

Because SSI is needs-based, the benefit amount may change based on the household member’s circumstances.

Changes may result from:

Other income received by the household member
Changes in living arrangements
In-kind support or maintenance
State supplemental payments
Other eligibility factors

That means you should not automatically assume that an SSI benefit will remain unchanged simply because the household member received the same amount previously.

Review current documentation and investigate discrepancies when the verified amount does not match the amount reported by the household.

And Then There’s HOTMA… 😅

HOTMA has changed several aspects of income and asset calculations for applicable affordable housing programs.

These changes may affect households receiving Social Security or SSI benefits, particularly when the household also has assets or receives a lump-sum payment.

For example, compliance professionals may need to consider:

Applicable asset thresholds
Verification requirements
Treatment of lump-sum payments
Income generated by assets
Program-specific implementation guidance

📌 Remember: HOTMA implementation is program-specific.

Do not assume that a HOTMA requirement implemented for one affordable housing program automatically applies in exactly the same way—or on the same timeline—to another.

Same Income. Different Program Rules. 🏘️

Social Security and SSI may come from the same federal agency, but the way the benefit is verified and calculated can depend on the housing program governing the household.

The first step is to identify the funding sources attached to the unit.

The second step is to determine which income definition applies.

And the third step is to make sure the file satisfies every applicable program—not just the easiest one.

LIHTC: Generally, Count the Gross Benefit

For Low-Income Housing Tax Credit purposes, Social Security, SSDI, survivor benefits, and SSI are generally included in annual household income.

In most LIHTC files, the countable amount is the gross recurring benefit before deductions, including deductions for:

Medicare premiums
Voluntary tax withholding
Insurance premiums
Other routine deductions taken from the payment

For example, suppose the verification shows:

Gross Social Security benefit: $1,847 per month
Medicare premium: $175 per month
Net payment: $1,672 per month

The general LIHTC calculation would be:

$1,847 × 12 = $22,164 in annual income

The Medicare premium is not normally deducted from the household’s countable income simply because SSA removes it before issuing the payment.

LIHTC properties should also follow the procedures of the applicable state Housing Finance Agency. Some agencies prescribe specific verification documents, calculation worksheets, or policies for upcoming COLAs.

📌 LIHTC takeaway: Start with the gross recurring benefit, not the bank deposit, and confirm the state agency’s current requirements.

HUD Multifamily Housing and Project-Based Section 8: Use EIV, but Read It Carefully

For HUD Multifamily Housing programs, including project-based Section 8, EIV is generally the primary verification source when benefit information is available.

However, using EIV does not mean simply copying the amount that appears closest to the household’s bank deposit.

Staff must review the EIV information carefully to determine:

The type of benefit received
The current monthly benefit
Whether Medicare is being deducted
Whether the benefit includes dual entitlement
Whether SSA is withholding money because of a prior overpayment
Whether the EIV information agrees with the household’s reported circumstances

For routine Medicare deductions, the general rule is still to count the gross Social Security benefit before the Medicare premium is withheld.

Example: Routine Medicare Deduction

EIV or other SSA documentation reflects:

Monthly Social Security benefit: $1,847
Medicare deduction: $175
Monthly payment after Medicare: $1,672

The annual income calculation is generally:

$1,847 × 12 = $22,164

Example: SSA Overpayment Recovery

Suppose the household’s normal benefit is $1,847 per month, but SSA is withholding $250 per month to recover benefits that were previously overpaid.

The household is currently receiving $1,597 per month before any Medicare deduction.

This is not treated the same way as a routine Medicare premium. During an authorized SSA overpayment-recovery period, HUD guidance may permit the amount actually available to the household after the recovery reduction to be used.

The file should include documentation showing:

The normal benefit amount
The amount being withheld
The reason for the withholding
The expected duration of the recovery
The amount used in the income calculation

Do not assume every deduction shown on an SSA record receives the same treatment.

💡 TCC Tidbit: Medicare is a personal expense deducted from the benefit. An SSA overpayment recovery is a reduction of the current benefit to recapture money previously paid. That distinction matters.

SSI: Verify the Current Benefit and Any State Supplement

SSI is also countable income, but it deserves additional review because it is needs-based and may change when the recipient’s income, resources, or living arrangement changes.

The compliance file should determine whether the household receives:

Federal SSI only
A separate state SSI supplement
Both federal SSI and a state supplement
Social Security and SSI at the same time

Do not automatically annualize one deposit without confirming what the payment represents.

A household may receive multiple SSA-related payments, and EIV or the benefit documentation should be reviewed to prevent income from being omitted or counted twice.

HOME: The Selected Income Definition Controls

HOME does not always operate under one universal income-calculation method.

The Participating Jurisdiction may require income to be determined using an approved definition, which may include the Section 8 annual-income definition or another permitted methodology.

When the HOME activity uses the Section 8 income definition, Social Security and SSI will generally be handled similarly to HUD annual income:

Count recurring benefits
Use the applicable gross amount
Do not deduct routine Medicare premiums from income
Evaluate retroactive payments and overpayment recoveries under the governing rules

When another permitted HOME income definition is used, the treatment may differ.

📌 HOME takeaway: Never begin the calculation until you know which income definition the Participating Jurisdiction requires.

Rural Development: Follow RD Verification and Annual-Income Rules

USDA Rural Development properties generally include recurring Social Security, SSDI, survivor benefits, and SSI in annual income.

The file should use acceptable current verification and identify the gross recurring benefit, including any Medicare deduction that must be added back.

RD properties must also follow current Rural Development handbook requirements concerning verification, retroactive payments, deductions, and recertification procedures.

Layered Properties: Apply Every Applicable Requirement

A household may occupy a unit governed by more than one program, such as:

LIHTC and HUD PBRA
LIHTC and HOME
LIHTC, HOME, and project-based assistance
LIHTC and Rural Development

At a layered property, one benefit may need to be reviewed under multiple program requirements.

The practical approach is to:

Identify every program attached to the household and unit.
Determine which income definition each program uses.
Review the verification requirements for each program.
Calculate the benefit under each applicable methodology.
Apply the most restrictive eligibility requirement when determining whether the household qualifies.
Keep enough documentation in the file to support compliance under every applicable program.

💡 TCC Tidbit: One benefit letter may support several programs, but one program’s calculation method should never be assumed to satisfy them all.

Common Mistakes to Avoid 🚫

❌ Calculating income using only the net amount deposited into the household member’s bank account

❌ Failing to identify whether the household receives Social Security, SSDI, SSI, or another benefit

❌ Using benefit verification documentation that is more than 120 days old as of the certification effective date

❌ Applying a COLA twice

❌ Failing to consider an applicable COLA when projecting anticipated income

❌ Automatically treating a large Social Security deposit as recurring annual income

❌ Ignoring potential asset implications of lump-sum payments

❌ Assuming HOTMA requirements apply identically across all affordable housing programs

❌ Failing to investigate discrepancies between household-reported income and available verification

Before You Approve That File…Check This List ✅

Social Security and SSI income may be relatively straightforward, but that does not mean the documentation should be given a quick glance and pushed through.

Before approving the file, make sure the documentation supports the benefit received, the income calculation, and any additional considerations created by COLAs, deductions, lump-sum payments, or layered funding requirements.

Your Social Security or SSI income documentation may include:

✅ Current acceptable verification of the benefit received

✅ Documentation identifying the specific type of benefit

✅ Benefit verification documentation dated within the applicable 120-day verification period

✅ Verification of the applicable gross benefit amount

✅ Calculation showing how annual income was determined

✅ Documentation addressing applicable COLAs

✅ Review of Medicare premiums or other deductions affecting the net payment

✅ Documentation and explanation of any lump-sum or retroactive payments

✅ Review of applicable asset implications

✅ Resolution of discrepancies between household-reported and verified income

✅ Documentation sufficient to meet the requirements of all applicable funding sources

And, as always:

✅ Enough documentation for another compliance professional—or an auditor—to follow your reasoning without needing you in the room to explain it.

📌 One final reminder: documentation requirements are not one-size-fits-all.

Before determining that a file contains sufficient documentation, review the requirements of the applicable housing program, allocating or monitoring agency, owner, and management company.

The strongest compliance files do not simply contain a benefit letter and an income calculation.

They clearly show what was verified, how the anticipated income was determined, and why the final calculation is reasonable and compliant.

The Bottom Line 🎯

Social Security and SSI income may appear straightforward, but the details matter.

The type of benefit matters.

The gross versus net amount matters.

The age of the verification matters.

The certification effective date matters.

The COLA matters.

The funding source definitely matters.

A strong compliance file clearly identifies the benefit, uses current and acceptable verification, applies the appropriate calculation methodology, addresses unusual payments or discrepancies, and documents how the final income determination was reached.

Because even the “easy” income calculations can become findings when we stop asking the right questions. 👀

Need support strengthening your compliance processes or reviewing complex affordable housing files?

The TCC Firm partners with affordable housing owners, operators, and site teams through practical compliance guidance, file review support, training, and customized compliance solutions.

👉🏾 Visit www.thetccfirm.com to learn more.

Compliance made manageable. Practical support. Real partnership.