Congratulations and a  big thank you to our Florida Congressmen, Ander Crenshaw and Kendrick Meek, who have introduced legislation to allow families to plan for their loved ones with some significant tax saings.   Information on the bill follows.  To see the bill in its entirety, click on H.R. 1205.

Disability Savings Accounts

The bipartisan Achieving a Better Life Experience Act of 2009 (ABLE Act), H.R.1205/S. 493, was introduced in both the House and Senate on February 26.  The bills would allow individuals and families to establish special accounts for meeting the future needs of children and adults with disabilities.  Funds in the accounts and expenditures which meet the requirements of the bills would not affect the individuals’ eligibility for federal benefits.  Using these accounts, parents would be able to save funds for a child’s future in a manner similar to the special "529 accounts" currently used to save for a child’s future educational expenses.  The House bill was introduced by Rep. Ander Crenshaw (R-FL) along with Representatives Patrick Kennedy (D-RI), Cathy McMorris Rodgers (R-WA), and Kendrick Meek (D-FL).  The Senate bill was introduced by Senator Robert Casey, Jr. (D-PA) along with Senators Sam Brownback (R-KS), Richard Burr (R-NC), Christopher Dodd (D-CT), Orrin Hatch (R-UT), and Edward Kennedy (D-MA).  The bills were referred to the House Ways and Means and the Energy and Commerce Committees and to the Senate Finance Committee.  The Arc and UCP worked with the sponsors and with other supporting organizations on development of the bills.

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. 

Although it is like filling out a tax return, it is possible to accurately calculate the amount of parents’ income that will be deemed against a disabled minor child’s SSI and Medicaid eligibility.  The attached ARTICLE ON SSI DEEMING CALCULATIONS explains how.

The FORMS FOR CALCULATING PARENT TO CHILD, and FORMS FOR CALCULATING SPOUSE-TO-SPOUSE deeming are included, along with an EXAMPLE OF CALCULATED DEEMING FOR A CHILD from the article.

Our firm does SSI deeming calculations for individuals and for bank trust officers upon request.

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.

An attorney asked us, "How does the Social Security Administration treat Worker’s Compensation benefits for SSI eligibility purposes?"  

WC weekly wage replacement payments.  The SSI financial eligiblity rules require that a claimant have low income and few assets, which they call "resources."  Weekly worker’s comp wage payments are treated as "unearned income" for SSI monthly income eligibility purposes, and except for a $20 general income disregard, the full amount of the worker’s comp payments are subtracted from the potential full SSI benefit of $637.  Thus, an injured worker who receives worker’s comp payments of $657 or more in a month, would not be eligible for SSI for that month.  See the SSI federal income regulations on unearned income.  Whether the income stream from WC payments can be irrevocably assigned to a Special Needs Trust, is a matter of state law that varies from state to state.  The SSI POMS at SI 01120.201.J. do NOT list WC payments as income items that cannot be assigned to a trust.

WC Wash-out Settlements.  Sometimes workers "wash out" the settlement, taking a lump sum and foregoing any additional payments from the worker’s compensation insurance company.  These settlements can range from a few thousand dollars, to hundreds of thousands, depending on the seriousness of the injury.  The SSI rules would treat the lump sum settlement as "income" in the month received, probably knocking out SSI and SSI-related Medicaid eligibility for the month of receipt of the settlement check.  However, what happens next?  Teh retained funds become a resource (asset) that is usually over the $2,000 limit.  If the worker keeps the settlement money, and the amount is over $2,000, SSI eligibility is lost, and SSI-related Medicaid is lost, UNLESS the worker places the funds in a Special Needs Trust.  A trust will solve the problem.

 

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!

…at least for a couple of months.

The general rule for SSI financial eligibility is that an item of income received, is "income in the month received, and becomes a resource (asset) on the first of the following month" if still retained by the disabled or elderly SSI recipient.

However, EM-08029, an Emergency Message to SSA staff, declares that checks received as part of the Economic Stimulus program will not count as income in the month received, and will NOT become a resource for two months more:

 Income

Any payment made to any individual based on this law will not be counted as income for purposes of determining eligibility and payment amount for SSI.

Resources

If the payment is retained by the individual, it will not be counted as a resource for 2 months following the month of receipt. For example, if the individual receives a payment in May 2008, it will be excluded from resources for June 2008 and July 2008. In this example the funds, if retained, would be countable as a resource starting in August 2008.

I doubt poor people will have to wait two months to spend that $600 check.  It’ll be gone in a jiffy paying for that $4.50 per gallon Texas gasoline!

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.