The Chicago Regional Chief Counsel Precedent issued in May, 2010, restricts the use of “Retained Funds” after the member/beneficiary has died.

This decision represents “current policy, albeit unwritten” according to the head of the SSA office that drafts POMS in conversation on March 17, 2011. A similar decision was issued in New Jersey last summer. Another was applied by the San Francisco Regional Office against a pooled trust in Arizona. However, contemporaneously, there had been a proposed POMS on this subject last summer that was not issued – yet. Accordingly, SSA Regional Offices have been advised by the national office to consult the national office, and not apply this “precedent” below without consultation. However, in March, 2011, the San Francisco SSA Regional Office applied the policy to an Arizona trust. 

Thus, the safest route is to draft pooled trusts to comply with the standards on retained trusts delineated in the following opinion. Basically, the analysis indicates that the national office believes that the retained funds belong to the pooled trust (to be used for other members of the pooled trust), and do not belong to the sponsoring non-profit agency. 

Thus, the common practice of using retained funds to make “grants” to other agencies or the courts for the benefit of “disabled persons” in general, is not allowed under SSA’s view of the difference between d4A individual SNTs and d4C pooled SNTs].

Pooled Special Needs Trusts in three states – Minnesota, Arizona, and New Jersey – in three different regions of the country, have had their pooled trust disqualified based on the same analysis as in the Chicago Regional Office’s “Regional Chief Counsel Precedent” below. Note that in the body of the report, we find the language,

“However, we have recently received guidance from the Office of Income Security Programs (OISP) that funds retained by a pooled trust may be used only for the benefit of beneficiaries with accounts in the pooled trust. This means that the use of retained trust assets to add new trust beneficiaries (section 7.3B) and to aid disabled individuals generally (section 7.3C, D) are not acceptable under POMS SI 01120.203(B)(2)(g). Second, section 7.8 of the Trust appears to permit the Trust to avoid reimbursing Medicaid if the remainder beneficiaries agree to forego any distributions from the Trust. This provision is inconsistent with POMS SI 01120.203(B)(2)(g), which requires that, aside from certain allowable expenses, any amounts in the IBA not retained by the Trust must be used to reimburse the State for Medicaid.”

The language of the decision and the conversations with the national office in Baltimore are consistent. This is a problem to be aware of.

So what’s one to do? First, consider amending the language of the pooled trust so that it is consistent with the principles in this RCC Precedent, or at a minimum, is silent on what the pooled trust intends to do with any retained assets. There is nothing in the statute or existing POMS that requires that there be a statement that describes what happens to retained assets. There is nothing in the national POMS 8-step Action Checklist for SSA staff reviewing pooled SNTs that would lead the staff to question the retained asset provisions in a pooled trust.

Secondly, or perhaps, most importantly, do not let the time deadlines to appeal adverse decisions pass. The SSA procedure here is that some client member/beneficiary of the pooled trust will receive a Notice of Planned Action and then a Determination that the funds in their pooled trust account are “countable resources” and SSA is terminating the client’s SSI benefits effective “X” date, including retroactively back “X” number of years. The client has to act quickly and file a “Request for Reconsideration” checking the box in the middle of the form that indicates that they want a Formal Conference. The time limit is 65 days from the date of the SSA determination. If the client appeals within 10 days, SSA may continue their benefits pending the Reconsideration determination. If the Reconsideration is denied, the client can file a Request for Hearing before an SSA Administrative Law Judge – again, within the time limits stated above.

The “guidance” from national SSA is not based, in my opinion, on the d4C pooled trust statutory language. Congress did not limit how the retained funds could be spent, and did not clearly define whether the funds belonged to the sponsoring non-profit, or must stay in the trust for the benefit of other current members of the pooled trust. The argument that SSA is acting outside its authority is not a slam-dunk, however, because other parts of the Social Security Act give the Commissioner of Social Security extremely broad powers to carry out the purposes of the Act without specific or detailed direction from Congress.

If the ALJ hearing is lost, there is an appeal on the record to the Appeals Council in Falls Church, Virginia, and if denied there, to the U.S. District Court, Court of Appeals and the Supreme Court.

Our office would be interested in representing claimants on this issue anywhere in the country, or in assisting local counsel in other states who wish to challenge SSA’s new “guidance” on retained funds. Contact us at 727-330-7895 or David@LillesandLaw.com or Jessica@LillesandLaw.com.

David and Jessica Lillesand

The Social Security Administration published new POMS, the staff operating manual, on Special Needs Trusts.  As Chair fo the Special Needs Trust Committee of the Florida Bar’s Elder Law Section, I have set a meeting to review the new POMS in detail for March 19th, in Tampa.

Here’s a "CLEAN COPY" of the new 2009 POMS on Trusts.

I also prepared a word-by-word analysis of the 2009 changes from the original 2001 POMS.  Deletions are indicated by striking through the word, and additions by underlining.  See "THE CHANGES HERE."  See also the  5 PAGE MEMORANDUM that highlights the changes.

Generally, the POMS are claimant friendly, although attorneys who do not follow them closely, can cause some significant problems for their clients.  The new POMS specifically approve of child support Special Needs Trusts and Alimony Special Needs Trusts, which will go a long way in ehlping to resolve family law disputes where continued health insurance is an issue.

The Social Security Administration (SSA)  has provided attorneys and the general public with very useful information on their analysis of Special Needs Trusts – are you eligible or ineligible if you have such a trust.  There are a lot of ways that attorneys can inadvertently cause a Special Needs Trust to be found in violation of the many SSI resource rules.  While Special Needs Trusts are perfectly legal and will keep SSI benefits for disabled persons, simple drafting errors by attorneys can result in loss of SSI and Medicaid health insurance.

Fortunately, SSA is trying to help clients stay eligible by educating the public and attorneys.

Unfortunately, although the Regional Chief Counsel opinion letters, called "Precedents" in SSI-speak, are availabe as a category on the Internet in the POMS, they are poorly organized and not indexed.

The good news:  attached is a LENGTHY ANALSYS OF THE RCC OPINION LETTERS issued between 2006 through 2008, with a table that summarizes the issues and the holding, and an 18 page explanatory text of the "Top Ten Things Learned by Reviewing RCC Opinion Letters" and a 6 page chart, as well as the RCC opinion letters themselves.  The total package is 176 pages. 

The organizers of the Florida State Guardianship Annual Convention asked me to prepare some comments on Social Security, Medicare and Medicaid – It Just Keeps Changing.  The ten page paper highlights changes in how  attorneys and guardians of disabled individuals will have to change the way they interact with SSA, video hearings, “paperless” medical and legal files at SSA, as well as the 2008 changes in Medicare, and changes we are expecting in the SSI POMS that relate to Special Needs Trust administration: new rules on employment by the trustee of parents to care for minor disabled children, support of dependent spouses and minor children using the disabled parent’s trust funds (see our previous post on July 11th), and structured settlement annuity problems, particularly with deeming of healthy parents’ annuities against the disabled child’s continued eligibility for SSI and Medicaid.

If you want more information on guardianship, or the Florida State Guardianship Association and an application for membership, click here.

There are no clear instructions from the Social Security Administration on whether a trustee of a Special Needs Trust can use a disabled person’s d4A Special Needs Trust to support a healthy spouse and dependent children. 

For statutory and policy reasons, we argue, not only can a trustee use a disabled beneficiary’s self-settled SNT funds in the appropriate circumstance to support these dependents, but failure to do so may have criminal consequences. 

See our six-page  Thoughtson the matter, attached, which reference the federal and state statutes that apply to this issue.

 

Social Security Region 4   

Good news!  One of the tasks of our Florida Bar Elder Law Section’s Special Needs Committee which I co-chaired this year, was to petition the Social Security Administration to change the Atlanta Regional POMS on Trusts.  Specifically, we wanted recognition that the Doctrine of Worthier Title no longer applied in Florida.  The Atlanta Regional Office of the Social Security Administration publishes the instructions to Florida SSA staff on interpretations of Florida law.

Our petition was adopted, and a new Atlanta Regional POMS styled "SI ATL01120.201 – Trust Property," was published by SSA on the Internet on April 15, 2008.

The Doctrine of Worthier Title had previously made irrevocable trusts into revocable trusts, automatically by operation of law, whenever the trust document failed to name a specific residual beneficiary.  This caught many Florida drafters of Special Needs Trusts by surprise.  For a Special Needs Trust to be valid under federal SSI rules, and thus trigger SSI-related Medicaid in Florida, the trust must be irrevocable.  A previous attempt by our law firm, through litigation in the federal courts, was unsuccessful in persuading the courts that Florida had abandoned the Doctrine through case law. Thus we sought an administrative remedy by petition.

That problem has now been corrected.   Life is good!

On May 15, 2008, the California Supreme Court legalized same-sex marriages.  The ruling took effect on June 17, 2008.   On June 6th, the Social Security Administration issued EM-08061, an Emergency Message telling the 61,000 member staff to "wait for instructions" before answering any questions about the effect of the ruling on certain Social Security benefits accorded to spouses.

For example, SSI rules provide that a disabled or elderly person’s financial eligibility for SSI benefits depends on having low income.  Four types of income are considered:  earned (generally, wages or net self-employment income), unearned income (savings accounts and other investment income), in-kind support and maintenance (someone else providing food and shelter), and deemed income, the earnings of a spouse that are regarded as being available to the disabled or elderly spouse.

Will they count the income and resources of a same-sex spouse to deny benefits to a disabled partner? 

The administration has not felt restrained in using the law to the disadvantage of non-traditional heterosexual couples.  For example, most states, like Florida in 1968, abandoned "common law marriage" between a man and a woman.  Indeed, SSA has denied Title II regular SSA spousal retirement or disability benefits to heterosexual partners who did not have a marriage license, but if the person sought Title XVI SSI benefits, denied them on the grounds they were holding out to be a husband and wife.  So basically, SSA said that to get money from us on Social Security taxes you paid, we regard you as NOT married, but to get money from us for SSI benefits, we again deny you but regard you as being married. 

The ruleapplied only to a man and a woman in a "holding out" alleged marital relationship.  It created the anomaly that a heterosexual man and woman holding themselves out to be husband and wife were denied benefits, but a same-sex couple in a husband and wife relationship were approved for SSI. 

Now, will the administration recognize under federal law that benefits should be denied to same-sex couples?   If they deny SSI benefits to same-sex couples, this administration will be admitting that the same-sex couple are "married."  Ah, hoisted on the petard of the Defense of Marriage Act! 

 

The first week of July, we will be presenting a "webinar" (an Internet Seminar) for members of the Academy of Special Needs Planners on the POMS and how to use them.  "POMS" is an acronym for the "Program Operations Manual System," the Social Security Administration’s staff manual for its 61,000 employees.  In preparation for the seminar, I expanded the presentation outline of official SSA websites into word document, and organized them by general legal citations (statutes, regulations, rulings, POMS) and secondary sources, such as the Social Security Handbook and other materials published by the agency for public use.   I hope you find it useful. 

If you are an attorney and want to join a terrific organization that focuses on helping severely disabled children and adults, and helping their families plan for the future, shelter personal injury or medical malpractice awards, join ASNP– the Academy of Special Needs Planners.

It won’t come up often, but will certainly help in certain situations.  The general rule is that eligibility for SSI disability payments, and SSI-related Medicaid, for minor children depends on the income and assets of the parents, which are "deemed" to be available to the child.  "Parents" include "step-parents."  But only the income and assets of a parent or step-parent who resides with the child are deemed against that child’s eligibility for disability benefits and Medicaid.

An unusual situation arises when the natural parent of a child terminates the relationship with the step-parent, moves out of the family home, but leaves the child living with the step-parent.  For years, SSA’s position was that even where the parent-step-parent relationship ended, the child lost eligibility for SSI disability benefits through deeming of the (former) step-parent.

The courts did not agree.  In Florez v. Callahan, the Second Circuit reversed SSA’s position:

"The plaintiff stepfather took on the care and support of his emotionally disabled stepson after his wife, the child’s mother, abandoned her family. When the stepfather applied for SSI disability benefits on behalf of his stepson, the Social Security Administration….

"Plaintiff, in assuming the sole responsibility of caring for his wife’s child after she left home, shows himself to be a person who plainly believes that in passing through life, any kindness he can show to another must be shown now, and not put off until another day. One would suppose that a social services agency would encourage such a generous attitude. But, the Social Security Administration adopted quite the opposite position and penalized the stepfather by ruling that his income, prior to the child’s entering the psychiatric center, was attributable to the child and thereby reduced the amount of monthly SSI benefits. The stepfather appeals this first ruling, and also appeals a second ruling that interpreted the regulations to authorize a reduced flat-rate payment of SSI benefits once his stepson was admitted to the medical care facility. "

The court reversed SSA’s rule in 1998, at least for residents of the Second Circuit.  On May 15, 2008, the Social Security Administration finally nationalized the rule adopted by the court and issued a new regulation, modifying 20 CFR 416.1160.