Social Security Administration

 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

With millions upon millions of baby boomers about to retire, the Social Security Administration has created an online  “retirement benefits estimator” that is a substantial improvement over the previous Internet version. Go to  www.socialsecurity.gov/estimator.

There are a number of things that are significant improvements.  Unlike previous versions, this one uses your actual Social Security taxes paid over your lifetime, to calculate the benefit for you — exactly.  Secondly, it provides an opportunity to ask for different scenarios – such as, what if I retire early at age 62, or age 64, versus my full retirement age of 66.  Finally, it is FAST!  Two simple pages of input items (name, SSN, date of birth, mother’s maiden name), and you’ll instantly have the amount of your Social Security check.

With over 1 million people visiting Social Security local offices each week, anything that will cut down on unnecessary trips to SSA will benefit both individuals who need the information as well as the number of SSA employees needed to respond to requests for information.

The new 2008 Deeming Chart should be used by banks and other Special Needs Trust Administrators judiciously.  Pay particular attention to the qualifications indicating when the trust may not be used, which appear at the end of the chart.  Also be aware that these numbers increase annually, but a slight amount, due to changes in the SSI Federal Benefit Rate.

However, the chart is definitely useful to indicate approximately how much a parent could be paid, for example, for disabled child caretaking, to stay within the deemed amount that will not eliminate a child’s SSI disability benefits.  In 31 U.S. states and jurisdictions, receipt fo $1 of SSI triggers automatic eligibility for state Medicaid benefits.

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!

The four major programs fall nicely into a Matrix: the two columns are the monthly SSA payments (either RIB/DIB or SSI) which trigger the two major medical programs, Medicare and Medicaid.  The two rows indicate which two programs are insurance-based (RIB/DIB and Medicare) and which two are welfare programs with monthly means-testing for income and assets (SSI and Medicaid).

Some individuals get benefits from all four programs, called "Current Benefits" represented by the circle in the center of the Matrix.

We have attached a full explanation of the eligibility requirements for RIB and DIB, which trigger Medicare health insurance, and for SSI which triggers Medicaid eligibility. 

If you’ve ever wondered how the Social Security Administration decides whether a person is disabled, look here.

If you’ve wondered what are the steps to get disability, look here, and note the length of time between each step.

If you’re absolutely bewildered by the length of time it takes to get a hearing before a federal Administrative Law Judge, read some of the entries on NOSSCR’s collection of news and editorials on the scandal (scroll down on the web-page to see the articles).  Last year, SSA judges heard 550,000 cases.  Unfortunately, the backlog grew to 750,000 severely disabled people waiting to get a hearing.

In the 1990’s we had a system in place that moved the cases much more quickly.  But that was before all the tax cuts and then the staff cuts – eliminating or not replacing judges, secretaries, and other staff.  We are now operating with a Social Security staff workforce that is the same size as when John Kennedy was president, and the population was 179 million, not the 304 million we have now.

You can’t have a hearing without a judge.  And a judge can only hear 15-20 cases per week.  Less judges means long, long delays waiting for a judge to be assigned and your hearing to be scheduled by SSA.

More funding, more judges, more judges, less delay in getting a hearing.  Write your congressman!

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.