Disability benefits are counted as income for THDA housing vouchers, but the calculation depends on which benefit you receive and your household's total income

When you explore for a Tennessee Housing Development Agency (THDA) voucher, the agency calculates your total household income to determine your rent contribution. Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and other disability payments are included in that total. However, SSI has a special rule that can reduce the amount counted, and some income exclusions may lower your overall household total.

The key difference is this: SSDI counts dollar-for-dollar as income. SSI counts dollar-for-dollar as income, but THDA excludes the first $65 per month of unearned income (which includes SSI) plus half of the remainder. This means SSI recipients often pay less rent than SSDI recipients with the same total income.

Key Takeaways

  • SSDI is counted as full income with no exclusions; SSI is counted after subtracting $65 per month plus half of what remains above that.
  • Your rent contribution is typically 30 percent of your adjusted monthly income, so a $200 difference in counted income changes your rent by about $6 per month.
  • You must report all disability income when you explore and during annual recertifications, even if you receive it from multiple sources.
  • THDA also excludes certain other income types (such as the first $480 per quarter of child support received), which can lower your total household income further.

How SSDI and SSI are treated differently on THDA vouchers

THDA uses the federal income limits and calculation rules set by the U.S. Department of Housing and Urban Development (HUD). Under those rules, SSDI counts as earned income for the purposes of the $65 exclusion and 50 percent calculation. This means SSDI does not receive the $65 monthly exclusion—it is counted in full.

SSI, by contrast, is unearned income. THDA excludes the first $65 of your total unearned income each month, then counts half of anything above that. If you receive $800 in SSI per month, THDA counts it as follows: $800 minus $65 equals $735, then half of $735 equals $367.50. Your counted income from SSI is $367.50, not $800.

If your household receives both SSDI and SSI, only the SSI qualifies for the $65 exclusion. SSDI is counted in full, and the $65 exclusion applies only to unearned income sources like SSI, pensions, or child support.

What happens if you receive disability benefits from multiple sources

Some households receive more than one disability payment. For example, you might receive SSDI and also a Veterans Administration (VA) disability payment, or SSI and a pension. THDA counts each source separately according to its type.

If you receive SSDI and VA disability, both count as full income with no exclusion. If you receive SSI and a pension, the $65 exclusion and 50 percent rule explore to your total unearned income—meaning THDA subtracts $65 from the combined amount, then counts half of the remainder. The order in which you list your income sources does not matter; THDA groups them by type (earned versus unearned) and applies the rules accordingly.

When you report income during your annual recertification, list each source separately on the THDA form. The housing authority's staff will calculate the total and explore the correct exclusions. If you are unsure whether a payment counts as earned or unearned, ask your THDA case manager before the recertification meeting.

How your counted income affects your rent payment

THDA calculates your rent contribution as 30 percent of your adjusted monthly income. Adjusted income is your total household income after THDA applies all exclusions and deductions. The more income that is excluded or deducted, the lower your adjusted income, and the lower your rent.

For example, if you are a single person receiving $1,200 in SSI per month and no other income, your counted income is $567.50 (calculated as described above). Your adjusted income is $567.50. Your rent contribution is 30 percent of $567.50, which is $170.25 per month. If you received $1,200 in SSDI instead, your counted income would be $1,200, your adjusted income would be $1,200, and your rent would be $360 per month—a difference of $189.75.

THDA also applies other deductions to your adjusted income, such as a dependent deduction for each child under 18 in your household, a disability deduction if you are unable to work, and an elderly deduction if you are 62 or older. These deductions further reduce your adjusted income and your rent.

Reporting disability income during recertification

You must report all disability income when you first explore for a THDA voucher and again during your annual recertification. THDA will ask you to provide proof of your current monthly benefit amount. For SSDI and SSI, bring a recent benefit verification letter from Social Security, which shows your monthly payment amount and the date it began.

If your disability benefit amount changes—for example, if you receive a cost-of-living adjustment (COLA) or if your benefit is reduced due to work income—report the change to THDA within 30 days. Some changes increase your rent; others decrease it. THDA will recalculate your contribution based on the new amount and adjust your rent accordingly, usually effective the first of the following month.

Keep copies of all benefit verification letters and any notices from Social Security or other benefit sources. Bring them to your recertification appointment. If you cannot locate a letter, contact Social Security at 1-800-772-1213 (TTY 1-800-325-0778) and request a current benefit verification statement.

What to do if THDA's income calculation seems wrong

If you believe THDA has miscounted your disability income or applied the wrong exclusion, ask for a written explanation of how your income was calculated. THDA staff must provide this upon request. The explanation should show your gross income, the exclusions applied, your adjusted income, and your rent calculation.

Review the explanation against your benefit verification letters. Check that SSDI is counted in full and that SSI has the $65 exclusion plus 50 percent applied correctly. If you find an error, contact your THDA case manager in writing and include a copy of your benefit verification letter. THDA must correct the error and adjust your rent retroactively to the date the error began, usually with a refund or credit toward future rent.

If you disagree with THDA's decision and cannot resolve it with your case manager, you have the right to request an informal hearing. THDA will provide information about how to request a hearing when you ask for one. Bring your benefit verification letters and a written statement of why you believe the calculation is incorrect.

Other income exclusions that may reduce your total household income

THDA excludes certain types of income entirely, which lowers your household's total income before the disability benefit rules are applied. These exclusions include the first $480 per quarter (or $160 per month) of child support received, the first $2,000 of assets and half of assets above $2,000 (for income calculation purposes only), and income earned by full-time students under 18.

If your household receives any of these types of income, report them during your process and recertification. THDA will explore the exclusion automatically. These exclusions explore to all households regardless of disability status and can significantly lower your adjusted income if your household receives child support or has student income.

Frequently Asked Questions

Does receiving SSDI reduce my THDA voucher amount?

No. THDA voucher amounts are based on the local fair market rent for your unit size, not on your income. Your income determines only your rent contribution—the amount you pay out of pocket. The voucher covers the difference between your contribution and the actual rent.

If I work part-time and also receive SSDI, how is my income counted?

Work income and SSDI are both counted as earned income. THDA excludes the first $65 per month of earned income, then counts half of the remainder. If you earn $400 per month and receive $800 in SSDI, your total earned income is $1,200. THDA counts it as $1,200 minus $65 equals $1,135, then half of $1,135 equals $567.50.

What if my SSDI benefit increases due to a cost-of-living adjustment?

Report the increase to THDA within 30 days. THDA will recalculate your adjusted income and your rent contribution based on the new amount. Your new rent usually takes effect the first of the following month. You may owe additional rent, or THDA may owe you a refund if the calculation results in lower rent.

Can I exclude disability benefits from my THDA income to lower my rent?

No. THDA is required by federal law to count all income sources, including disability benefits. The only exclusions available are those set by HUD rules—such as the $65 monthly exclusion for unearned income and the 50 percent calculation for SSI. You cannot choose to exclude disability income.

Do I need to report my disability benefits if I already reported them when I first applied?

Yes. You must report all income, including disability benefits, during your annual recertification even if the amount has not changed. Bring a current benefit verification letter to prove the amount is still correct. If you do not report income at recertification, THDA may terminate your voucher.