What can you own on social security disability?

If you have an illness, injury, or other disabling condition that limits your ability to work, you may be eligible for disability benefits from the Social Security Administration (SSA). These benefits provide the income needed to meet everyday expenses and make special purchases.

Social Security benefits should be first spent on the beneficiary’s current needs like food, clothing, utility bills, rent, medical costs, and other everyday expenses. You can also use the funds for the beneficiary’s personal comfort and recreational purposes. If there is money left, you can make special purchases that are for the benefit of the beneficiary such as home down payment, car payments, furniture, and home improvements like ramp installation.

Assets you can own on Social Security Disability

Social Security allows beneficiaries to make special purchases for improving their daily living conditions. Here are assets you can own on Social Security disability benefits:

Home

If you are planning to buy a house, and you don't have money for the down payment, you can use the monthly disability payments to pay the down payment. The house must be owned by the beneficiary and not a representative of the beneficiary. If you have IRA or 401(k) savings, you can top up your monthly payments to buy your principal residence.

Furniture

You can use the monthly checks to buy pieces of furniture to make the home more accommodating for people with disabilities. The furniture must be for the beneficiary's personal use or shared with other people within the household. Examples of furniture and equipment that you can buy include an adjustable dining table, scooters, a motorized wheelchair, accommodating bathroom accessories, a toilet grab bar, etc.

Car

If you need a car for your personal use, you can use the disability payments to make a down payment for the car. The car must be owned and used by the beneficiary to help in their daily movements. If you have an outstanding payment on a car loan, you can use the monthly checks to make the loan payments, as long as the car purchased using the loan is for the beneficiary's personal use.

Home improvements

If you need to make the home more friendly and accessible, you can use the disability payments to fund home repairs or improvements. For example, if you need a wheelchair to move around, you can use the monthly payments to install a ramp at the entrance of the house or widen the doorways and hallways. You can also change the home lighting system to use voice commands. Other home improvements you can do include roof repair, repainting the house, air conditioning, etc.

Expenses you can spend on

Though there are no limits on the type of expenses you spend your disability benefits on, you should first spend the funds on day-to-day living expenses. Use the money to pay for food, clothing, shelter, utility payments, medical costs, and other living expenses.

You can also use the money on healthcare costs that are not covered by health insurance such as dental care, therapy, insurance premiums, motorized wheelchair, and rehabilitation. If the beneficiary needs a special school, you can use the disability benefits to enroll them in the special school.

Once the personal needs have been met, you can spend the leftover money on personal comfort items and recreational items like gateways, movie tickets, and magazine subscriptions. You can also spend some of the money on entertainment or luxury items.

The SSA also recommends saving the money left after meeting your personal needs. You can save the money in an interest-paying savings account or invest in US Savings bonds.

How to handle Back payments

When you apply for disability benefits, the application can take a long time before it is approved. For the period you will be waiting for the benefits to be approved, you will be entitled to back pay, which represents the benefits you would have received if the application was approved immediately. You may follow up with Social Security, or wait until the benefits are approved.

Benefits start accruing from the date SSA receives your application, and the back pay can be received in a lump sum when your benefits are approved. The back pay can be as high as $25,000 or more, and you should allocate these funds appropriately to maintain your eligibility for benefits.

If you have received your back pay all at once in a lump sum, you should spend the money on the beneficiary’s needs. First, SSA recommends spending the money on the beneficiary’s current needs such as food, clothing, rent, and paying utility bills. Once you meet these needs, you can use the benefits to improve the beneficiary’s living conditions. You can decide to pay for therapy, at-home assistance, or upgrade the beneficiary’s medical care.  You can also use the money to make the home accommodating for the disability or make other home improvements.

If there is money left after these expenses, you must save it in an interest-earning account like a savings bank account or treasury bonds that are insured under federal or state law.

What representative payee can spend on

If the beneficiary is unable to direct or manage his or her disability benefits, a representative payee may be appointed to manage the benefits on their behalf. Typically, a representative payee may be appointed if the beneficiary is a child, mentally ill, addicted to drugs or alcohol, or an elderly person with dementia.

A representative payee is required to follow strict SSA guidelines (PDF) when deciding how to spend the disability benefits. First, they are required to spend the money on approved expenses for the beneficiary such as food, mortgage or house rent, clothing, and utilities. If the current needs have been paid, the representative payee can use the money to pay the beneficiary’s unpaid bills. If there is leftover money, it can be used for discretionary spending or saved in the beneficiary’s savings account for future use.

The SSA does not allow the representative payee to take a fee from the beneficiary's monthly payments unless the payee is a nursing home or other non-profit organization that has a written approval letter from SSA to charge payee fees. Every year, the SSA sends a form to the representative payee that the payee must fill out to account for how the monthly benefits were spent.