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Advanced Elder Law Review January 27 & 28 Newport Beach, CA

Social Security Benefits


and SSI Issues

Supporting Document for Session 12

Gregory Wilcox, CELA

January 28, 2015

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GLOSSARY OF SOCIAL SECURITY TERMS

ABD Aged, Blind, or Disabled

AIME Average Indexed Monthly Earnings (used to determine Social Security


benefit amount)
Appointment of
Representative Social Security Form SSA-1696

ALJ Administrative Law Judge

CDB Childhood Disability Benefit, formerly DAC

COLA Cost of Living Allowance

DAC Disabled Adult Child Benefit, now renamed CDB

DDS [State] Disability Determination Service

DIB Disability Insurance Benefits (Title II)

Early Retirement Retirement before full retirement age

FBR Federal Benefit Rate (Supplemental Security Income {SSI} paid by the
federal government)

Fee Agreement One of two ways to seek SSA approval of attorneys fees after appeal

Fee Petition Second of two ways to seek SSA approval of attorneys fees

FMA Family Maximum Amount

FICA Federal Insurance Contribution Act (Social Security tax)

Fully Insured Insured for RIB (Retirement Insurance Benefits)

HA-501-U5 Social Security Form: Request for Hearing by Administrative Law Judge

HA-520-U5 Social Security Form: Request for Review of Hearing Decision/Order

Husbands
Benefit Husbands entitlement to a Dependents Benefit based on wifes work
record

ISM In-Kind Support and Maintenance (food and clothing income)

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GLOSSARY OF SOCIAL SECURITY TERMS (contd)

Insured status Sufficient credits to qualify for benefits (varies by benefit)

Insured for
Disability Sufficient credits to qualify for DIB (Disability Insurance Benefits)

OASDI Old Age, Survivors, and Disability Insurance (Social Security, Title II)
Retirement, Disability, Dependents, and Survivors Benefits

ODAR SSA Office of Disability Adjudication and Review, in charge of SSA


Administrative Law Judge (ALJ) hearings, used to be Office of Hearings
and Appeals (OHA)

OHA Old name for SSA Office of Disability Adjudication and Review (ODAR)

PARS Public Agency Retirement Systems (in lieu of Social Security for
government employees); see also PERS below

Payback trust A self-settled trust allowed by the SSI program for those under age 65.
Also known as a (d)(4)(A) trust, from its authorizing statute, 42 U.S.C.
1396p(d)(4)(A).

PEBES Personal Earnings and Benefit Estimate Statement (now known as Annual
Social Security Statement)

PERS Public Employees Retirement System; see also PARS above

PIA Primary Insurance Amount, the full Social Security Benefit

POMS SSAs Program Operations Manual System

PMV Presumed Maximum Value (of In-Kind Support and Maintenance {ISM} by
Supplemental Security Income {SSI} program)

Provisional Income Used to measure taxability of Social Security Benefits

Qualified alien Aliens eligible to receive Supplemental Security Income {SSI}, under
certain conditions

RIB Retirement Insurance Benefits

SSA-1696 Social Security Form: Appointment of Representative

SECA Self-Employment Contributions Act (Social Security tax)

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GLOSSARY OF SOCIAL SECURITY TERMS (contd)
SGA Substantial Gainful Activity, threshold for SSDI (Social Security Disability
Insurance)

SSDI Social Security Disability Insurance (aka, DIB)

SSI Supplemental Security Income

Ticket to Work Social Security program of employment services to reduce disability


claims

Title II Old Age, Survivors, and Disability Insurance (Social Security)

TWP Trial Work Period

VTR Value of One Third Reduction (In-Kind Support and Maintenance {ISM} value
under Supplemental Security Income {SSI} program)

WE Wage Earner, aka worker

Widow(er)s Benefit Surviving spouses survivor benefit based on deceased spouses work record

Wifes Benefit Wifes entitlement to a Dependents Benefit based on husbands work record

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Social Security Benefits and SSI Issues
Gregory Wilcox, CELA
Advanced Elder Law Review
NAELA Summit
Newport Beach
January 28, 2015

I. SOCIAL SECURITY BASICS

I. Basics:

A. Formal name: Old Age, Survivors, and Disability Insurance (OASDI), Title
II of the Social Security Act. It is actually four different programs, not just
"retirement." (See Glossary for acronyms and definitions.)

B. It is an entitlement, not a welfare program based on need (even wealthy


people are eligible).

C. Current workers provide the money to pay benefits (pay-as-you-go); it is


a pyramid scheme. Currently receipts exceed expenditures, but this will
change as the number of workers per recipient decreases over the next
few decades. SSA projects that annual costs will exceed total income by
2020 and that in 2033 the trust fund will only be able to pay 77 cents for
each dollar of scheduled benefits.

D. The benefits are entirely federal; there is no state component.

E. The benefits are based on a worker's work history rather than on need,
i.e., on his average earnings from work "covered" by Social Security (but
not on unearned income).

F. The purpose of all Social Security benefits is to replace some part of


normal income when it stops or shrinks due to certain triggering events.
Originally, when enacted in 1935 it was only an old age pension program
for workers, but it now provides limited income replacement for certain
categories of people of all ages. Spouses and children were added in
1939, the severely disabled in 1956.

II. Triggering events are required (all presumed to reduce income)

A. Retirement
B. Disability
C. Death

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III. The four Social Security programs (not including SSI)

A. Retirement benefits -- for worker (aka, "wage earner", or WE)

B. Disability benefits -- for worker

C. Dependents benefits -- upon retirement or disability of the worker

D. Survivors benefits -- upon death of the worker

IV. Funding of the system

A. Payment is made into the system through FICA (Federal Insurance


Contribution Act) and SECA taxes, paid by the worker and employer (6.2% by
each, or, if self-employed, 12.4%) on a Social Security taxable Wage Base of
$118,500 (2015). The 1.45% Medicare charge (2.90% for self-employed) is
imposed on all earnings (no cap), and brings the employee's total bite to
7.65% (and self-employed to 15.3%). Note: taxable self-employment income
does not include investment earnings.

B. There are universal requirements for all four Social Security programs.

1. The worker must have worked in "covered employment". 95% of all


workers are now covered. But categories have been added over
time, so advisers must ask a client about coverage. For example:

a. Self-employed have been covered since 1951

b. Household workers since 1951 (but note repeated political


embarrassment of nominees failing to report or contribute).
Now employers must obtain an Employer Identification
Number and report and pay FICA taxes only if annual
domestic worker cash payments exceed $1,900 (2014 and
2015). Also, employers can report and pay once a year with
their regular Form 1040 (Schedule H) -- after adjusting their
estimated tax payments or withholding to reflect the larger
total tax due at the end of the year.

c. Farm workers since 1954

d. Military: active duty since 1957, inactive duty since 1988

e. New federal employees since 1984 (if before, then by Civil


Service)

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f. Workers for non-profits (including religious organizations)
since 1984 (with shorter work credit requirements)

g. State and local employees not otherwise covered since


1991. However, many are not covered. Instead they are
covered by state pensions or local Public Agency Retirement
Systems, aka, PARS.

Note: If a person does not qualify for Social Security, he will also
not qualify for Medicare, and have to buy in under
Medicare rules.

2. The worker must have earned sufficient work credits to gain


"insured status", i.e., be eligible.

a. Up to four work credits can be earned in one year,


depending on amount earned. Compensation of $1,220
earns one work credit (2015); so $4,880 ($1,220 X 4) earned
in one year earns the four credits -- even if all were earned in
one quarter of the year (but everyone, even the Social
Security Administration, still calls the credits "quarters" of
coverage).

b. The number of work credit requirements to gain "insured


status" vary according to 1) the particular type of Social
Security benefit sought and 2) the applicant's age at time of
his/her claim (benefit formulas vary similarly, see below).

For example, there are three categories used to determine


eligibility for benefits (not the amount): fully insured (used
for retirement), currently insured (e.g., for surviving
children and caregiver surviving spouses), and insured for
disability (for disability claimants).

V. Benefit Amounts

A. A beneficiary can collect only one Social Security benefit at a time, i.e., the
highest (usually). For example, a claimant can often receive either a
spouses benefit or a workers benefit.

B. The full benefit is referred to as the Primary Insurance Amount (PIA).


Reduced benefits and derivative benefits payable to the insured worker's
dependents and survivors are expressed as a percentage of the PIA. The
PIA is also used as a base for increased benefits, e.g., for late retirement.

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C. Benefits are based on the average of yearly reported earnings in "covered
employment".

1. Since 1951 caps have limited the annual earnings counted


(thereby reducing benefits for high income earners -- and helping
the system stay solvent). Such capped earnings are then used to
determine the worker's Average Indexed Monthly Earnings (AIME)
using "bend points" in effect for the year used in the calculation.

2. Only the best (i.e., highest) 35 years on the earnings record are
used to calculate benefits, usually the most recent.

D. Benefit formulas also vary according to 1) the particular Social Security


program and 2) the applicant's age at time of his/her claim.

E. Benefit amounts are adjusted each year for inflation. The cost of living
adjustment on January 1, 2015, was 1.7 percent, based on the Consumer
Price Index (CPI).

F. Benefits may be subject to income tax. Up to 50 percent of Social


Security income is subject to tax -- but only to the extent that taxable
"provisional income" exceeds certain protected "base amounts".

1. The base amount is $32,000 for those married and filing jointly;
$25,000 for all others.

2. "Provisional income" is composed of 1) Adjusted Gross Income


(aka, AGI), 2) tax exempt investment income (e.g., tax free
municipal bonds), and 3) 1/2 of Social Security income.

3. However, up to 85 percent of Social Security benefits may be


included in gross income at higher income levels (i.e., over $34,000
single and $44,000 joint).

G. Benefits are not subject to garnishment (except, of course, by the IRS) or


assignment, whether payable or already paid (unless they are put into a
joint account or commingled with other funds).

H. The Social Security Administration will attempt to recover payments


wrongfully made (overpayments). However, it will sometimes waive
recovery of such overpayments if the claimant was without fault (i.e.,
ignorant) and recovery would 1) cause an undue hardship, or 2) be
against equity and good conscience, or 3) the recovery would be so
small it would not be worth the effort. Even if SSA will not waive recovery,

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it will often negotiate a repayment schedule through a reduction of periodic
benefits.

VI. Social Security Records

A. SSA provides Social Security Statements describing estimated benefits


under various different circumstances (disability, retirement, death).

B. SSA used to mail Statements to everyone but discontinued it in 2011 as


an economy measure. In September, 2014, SSA resumed mailing to
some workers: those without online SSA accounts, and only every five
years.

C. SSA wants workers to get their Statements online through an account set
up at www.ssa.gov/mystatement.

D. Workers used to be able to request a copy of their Social Security


Statement by using a Form SSA-7004, Request for Social Security
Statement, downloaded from the SSA site. However, this service has
been suspended in light of the current budget situation. Alternatively,
SSA invites workers to visit their local SSA office.

E. There is a limitations period of 3 years, 3 months, and 15 days after the


year of earnings to make corrections to the earnings record (with some
exceptions). Errors frequently come from inaccurate Social Security
Numbers, amended tax returns, and intentional nonreporting to avoid
payment of tax. The Social Security Administration reports that employers
make reporting mistakes 4% of the time and that $1 out of $100 is not
credited correctly.

VII. Sources

A. 2015 Social Security Changes, SSA web site:


http://www.socialsecurity.gov/news/press/factsheets/colafacts2015.html

B. Basic rules: Social Security, Medicare & Government Pensions, Joseph


L. Matthews and Dorothy Matthews Berman; 19th Edition, February 2014,
Nolo.com.

C. Detailed rules:

Tax, Estate, and Financial Planning for the Elderly, Regan, Morgan, and
English; Matthew Bender

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The Elder Law Answer Book, Robert Fleming and Lisa Nachmias Davis;
Aspen Publishers

Social Security and Medicare Answer Book, David A. Pratt and Sean K.
Hornbeck; Fifth Edition; Aspen Publishers

Online Social Security Handbook, Social Security Administration, available


online at:
http://www.socialsecurity.gov/OP_Home/handbook/handbook.html. It is
updated at least every six months. It is no longer available in paper.

Revised 11/13/2014

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II. SOCIAL SECURITY RETIREMENT

I. Basics

A. Retirement Insurance Benefits (RIB), since 1935, known commonly as


"Social Security" (30 million recipients)

B. An entitlement, not a welfare program

C. It is fully paid for and administered by the Social Security Administration


(SSA)

II. Who is eligible? A worker must be "fully insured" to be eligible.

A. At least 40 credits are required to receive benefits (unless the worker was
born before 1929, then fewer are required). Because credits are earned
at a maximum rate of 4 per year, 10 years of employment are usually
sufficient (and most people exceed this requirement).

B. A worker can ask SSA for a statement of the work credits earned to see
how close he or she is to eligibility.

III. What are the benefits? They depend on two factors:

1. The earnings record: the average of (capped) incomes for best


(highest income) 35 years

2. The claimant's age at time of the claim, i.e., at "retirement":

a. The claimant's age when the claim was made, i.e., before or
after "full retirement" age, aka, early retirement or late
retirement (which determines the discounts or
enhancements to the standard benefit), and

b. The claimant's year of birth (which determines the benefit


formula used)

3. Benefits range from a few dollars (no minimum) to the $2,663


(2015) Maximum Social Security Benefit per month (at "full
retirement age").

4. Average benefit (2015): $1,328 for a single person. Benefits range


from 20% of capped earnings maximum for high earners, to 50%

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for low earners, with 40% being the average. In other words, there
is a leveling effect.

IV. When is a worker eligible?

A. "Early retirement", that is, retirement at ages between 62 and 66 (but


eventually at any age between 62 and 67)

1. Monthly payments are permanently less (because they are likely to


be received for a longer period). For workers claiming early
Retirement Benefits at age 62 the reduction is about 25% for those
whose full retirement age is 66, but it will be 30% for those whose
full retirement age is 67. It takes about 15 years before the
permanent benefit reduction from early retirement causes a loss of
total benefits compared to what the worker would have received by
waiting until full retirement age. Other factors need to be
considered in deciding on whether to take "early retirement," e.g.,
potential earnings, spouse's benefits, other sources of support, and
health.

2. Practice Tip No. 1: If the worker is in ill health, he or she should


apply for Social Security Disability Insurance (SSDI, see next
section) instead of "early retirement". The benefits are the same as
"full retirement" benefits and do not depend on the age of the
worker.

3. Practice Tip No. 2: Widows and widowers can claim early


retirement at 62 and later switch to higher Survivors Benefits at age
66. But contrast: spouses of living workers may not claim early
retirement and then switch to higher Dependents Benefits at 66
without a reduction in benefits. This is a program bias for surviving
spouses vs. dependent spouses.

B. Full retirement age

1. For 2015: the full retirement is 66 (if born in 1949 + 66 years =


2015), and the worker will receive the Primary Insurance Amount
(PIA).

2. The full retirement age is increasing (averaging 1 month more per


year, but not evenly):

a. 65 until 2003 (the traditional age) for people born in 1937or


earlier
b. 66 until 2020 for people born in from 1943 to 1954
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c. 66 + additional months: people born from 1955 to 1959
d. 67 for people born in 1960 or later

C. Late retirement, that is, claiming benefits after reaching age 66

1. Up to age 70, a delayed claim increases later monthly benefits. The


increase is 8% per year for those born in 1943 or later.

2. Practice tip No. 1: Delayed retirement is most useful if the worker


intends to keep working until age 70. Also, 6 to 8 percent return is
a very good return compared to alternative investments.

3. Practice tip No. 2: The worker should still sign up for Medicare at
age 65 in any case. Note: the increasing age for "full retirement"
and penalty for "early retirement" under Social Security do not
affect eligibility for Medicare at 65.

V. Receipt of benefits

A. Delayed payment

1. Payments are made in the month following the month for which
payment is due.

2. Eligibility pre-1997: on the 3rd day of the month

3. Eligibility 1997 and after: on Wednesdays throughout the month,


depending on beneficiary's birthday.

B. Direct deposit: Since 1999, payments are made by direct deposit to the
beneficiary's bank account.

C. Death: Survival for an entire month is required, so benefits paid in the next
month must be returned -- usually done by reversing the deposit in the
bank account. Telephone notice to SSA is sufficient. It is not clear what
the decedent was supposed to have lived on during the partial month for
which payment is returned.

VI. What increases benefits?

A. Delayed retirement (above), and recent high earnings

B. Benefits are indexed for inflation (1.7% for 2015)

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VII. What reduces benefits?

A. Working after claiming Retirement Benefits

1. But working only reduces the benefits of workers claiming "early


retirement", i.e., between ages 62 and full retirement. The Senior
Citizens Freedom to Work Act (2000) repealed the former
retirement earnings test for workers between full retirement age
and 70.

2. For such early retirement claimants, benefits are reduced if


earnings exceed $15,720 per year (in 2015), i.e., $1,310 per month
(investment income does not count). The reduction: $1 of
retirement benefits for every $2 earned over the limit.

3. There is a special transition rule: benefits are reduced only to the


extent earnings exceed $41,880 per year, i.e., $3,490 per month (in
2015) during the year the claimant reaches full retirement age for
months before full retirement age. Then SSA will withhold $1 of
benefits for every $3 of earnings.

4. Note: if SSA withholds some benefits because earnings are over


the exempt thresholds, it will pay the worker a higher monthly
benefit (adjusted for inflation) when he or she reaches full
retirement age. On average, the total value of lifetime benefits will
not be reduced (and may actually increase) on account of benefits
that have been withheld.

B. There are offsets for receipt of government pensions (the Windfall


Elimination Provision) to avoid artificial increased benefits for years the
worker was not in covered employment and therefore apparently not
working.

VIII. Representative payees

A. SSA will deal only with the beneficiary or his/her representative payee not
with an agent under a durable power of attorney, and not even necessarily a
court-appointed guardian or conservator.

B. Both the requirements to become a representative payee, and the reporting


requirements once the rep payee is approved, are less burdensome than for
a guardianship, but:

1. All the Social Security funds must be used for the beneficiary (even
if gifts would be otherwise appropriate, e.g., for Medicaid planning).
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2. No commingling of Social Security funds with other funds is
permitted; if such funds are accumulated they could trigger a
burdensome probate.

3. Conventional advice: avoid it if possible. If not possible, use joint


tenancies to dispose of any residual Social Security funds after the
beneficiarys death.

Revised 11/13/2014

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III. SOCIAL SECURITY DISABILITY

I. Basics

Compare Social Security Disability Insurance (SSDI) with Supplemental Security


Income (SSI):

A. Both programs provide income to disabled people, and both are paid for
and administered by Social Security Administration (SSA).

B. SSDI is an entitlement program, not a welfare program like SSI.

C. SSI covers disabled minor children, while SSDI does not.

II. Who is eligible? It depends on three issues: the applicable work credits, the
disabled claimant's relationship to the worker, and the nature and extent of the
disability.

A. Work credits: How many are needed to be "insured for disability"?

1. They range by age from 20 credits for a person 42 or younger, to a


maximum of 40 for a person disabled at age 62 or older.

2. Good news: fewer credits may be needed than for Retirement


Insurance Benefits (20 vs. 40, usually 5 vs. 10 years). Also, to
protect workers under age 31 who would not have had much time
to earn the minimum 20 credits (and also blind workers) there are
even easier eligibility requirements.

3. Bad news: the normally required 20 units have to have been


acquired during the previous 10 years (a 40 credit period -- hence
known as the 20/40 rule).

B. Relationship: Which disabled persons may claim, relying on the worker's


credit history? See also Dependents and Survivors Benefits in the
following sections. Major examples:

1. Disabled worker him or herself

2. Certain unmarried disabled widows and widowers, age 50 and


over, of a deceased worker

3. Certain disabled divorced former spouses of a deceased worker

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4. Certain unmarried disabled adult children if they were disabled
before age 22, and the worker is retired, disabled, or deceased
(aka, Childhood Disability Benefits (CDBs), formerly Disabled Adult
Child (DAC)).

C. Disability

1. Who makes the determination? SSA delegates it to the state's


Disability Determination Service (DDS).

2. There are two basic criteria:

a. The disability is expected to last one year (or has lasted one
year), or to result in death, and

b. The disability prevents the worker from doing any substantial


gainful work -- for which he or she is suited.

3. Types of disability (all must be medically verifiable):

a. Listed impairments (presumptive disability). Suffering these


results in likely approval of a claim (unless there is a
contrary history of work), or

b. Functional test. The claimant must prove actual disability.


Note: disability arising from drug or alcohol abuse is barred
unless the applicant can show continuing disability without
the abuse.

4. Duration: expected to last at least one year

a. The worker can apply for and receive benefits before the
end of one year, if a one-year duration is expected.

b. The worker does not have to return benefits if he or she has


an unexpected early recovery.

5. Seriousness: unable to perform Substantial Gainful Activity (SGA)

a. Work is not "substantial" if it does not earn the worker more


than $1,090/month, or $1,820/month if the worker is blind
(2015).

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b. First test: can the worker do his or her former job?

c. Second test: can the worker do any job earning more than
$1,090 per month? The test is relative to education, work
history, age, and job availability. It is reported that it is
easier to obtain approval for SSDI after age 50 because it
is harder for older workers to retrain and/or relocate, and
because SSA will be paying fewer years of benefits before
the worker retires and receives SSA retirement benefits in
any case.

6. Once the worker meets the first test by showing he or she cannot
perform his or her usual work, the burden shifts to SSA to prove
that there is gainful alternative work available to the worker. There
is a long-standing controversy over the SSA policy of considering
work available nationwide, not just in the applicant's home locale.

7. Disability is the most frequent cause for appeals; it is more open to


interpretation than the other two eligibility triggers: retirement or
death.

III. What are the benefits? The Primary Insurance Amount (PIA)

A. The estimated average monthly benefit is $1,165 for all disabled workers,
and $1,976 for a disabled worker, spouse and one or more children
(2015). The maximum benefit is $2,642 (2014).

B. Actual amounts:

1. For an individual worker, it is based on his or her age and personal


earnings record.

2. A current worker can estimate his or her disability benefit by looking


at his Social Security Statement online, or use SSAs online
calculators.

C. Like retirement benefits, SSDI benefits are indexed for inflation.

D. There is a 5-month waiting period before benefits begin (from the month
the applicant is both disabled and insured). This is to allow temporary
disabilities to be corrected, or show signs of recovery within 12 months.

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However, there are up to 12 months of retroactive benefits available (6
months for spouses and dependents).

E. The worker gains Medicare eligibility at any age if he or she has received,
or has been entitled to receive, SSDI for 24 months (after the 5-month
waiting period). A rule often cited.

IV. What increases benefits?

A. Picking a later date for a progressive disability (if more recent higher
incomes increase the PIA)

V. What reduces or eliminates benefits?

A. Working

1. SSA will presume that earnings over $1090 per month (in 2015)
provide evidence of the workers ability to engage in Substantial
Gainful Activity (SGA).

2. SSA will not ordinarily presume that a low level of earnings implies
that the worker is capable of SGA. However, it is not a guarantee.

a. SSA will evaluate the overall circumstances

b. The workers regularity of work extended hours,


responsibility, and ability to earn more. Self-employment
also causes SSA scrutiny.

3. The worker is allowed to deduct Impairment-Related Work


Expenses (IRWE) from earnings before SSA determines if the
$1,090 SGA limit is exceeded.

B. Receipt of other benefits and income

1. Other Social Security benefits

c. A worker can receive only one Social Security benefit at a


time (they are not cumulative), except,

d. A worker can also receive Supplemental Security Income


(SSI) in addition to SSDI (and often does, because the SSDI
falls below the maximum SSI level).

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2. The total of worker's compensation and government disability and
pension benefits, including SSDI, is capped at 80% of prior
earnings level.

3. Benefits are also capped by a "Family Maximum Amount (MFA) if


other family members (e.g., spouses and minor children) also
qualify for benefits. The cap is 150% - 180% of the workers
individual benefit. SSA wants to avoid creating an incentive to
malinger if the worker's family would do better receiving SSDI than
returning the worker to employment.

3. In contrast, private and employer disability insurance and VA


disability benefits do not prejudice SSDI (a collateral source rule).

4. Personal injury awards, inheritances, and investment income are


not earnings and so are not counted.

F. Recovering from disability

1. SSA reviews a workers disability periodically

a. The frequency of periodic reviews is based on likelihood of


recovery:

(1) Customarily, 5 - 7 years if the worker is not expected


to recover, but

(2) Every three years if improvement is theoretically


possible but not predicted; and

(3) Every 6 - 18 months if the worker's condition is


expected to improve.

b. A review may also be caused by evidence of regular income


close to the Substantial Gainful Activity level, i.e., $1090 per
month (2015).

c. Benefits are conditioned upon cooperation with restorative


medical treatment, with limited exceptions (religious objections,
amputations, or congenital disorders).

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2. Returning to work

a. Trial Work Period (TWP). SSA encourages its SSDI


beneficiaries to return to work by allowing them to test their
ability to work. During nine months (not necessarily
consecutive) in a five-year period, beneficiaries may perform
services and earn any amount and still receive disability
benefits (that is, there is no cap on earnings). However, if
the beneficiary earns more than $780 in a month (2015), the
month is treated as one of the nine trial work months. Also,
at the end of the TWP SSA may use the work performed to
determine that the beneficiary's disability has ended. There
is only one TWP allowed within any single period of eligibility
(but usually the period is for lifetime).

b. Extended Period of Eligibility (EPE). For at least three years


after the TWP, SSDI beneficiaries may receive their regular
monthly benefit for any month that earnings are below the
SGA earnings level. Benefits may then resume without a
new application. There is also a three month grace period,
starting with the first month of SGA earnings during which
full SSDI benefits continue.

b. Expedited Reinstatement. For five years after SSDI benefits


stop, SSA allows a worker to reinstate his or her SSDI
without a new claim if the worker has gone back to work but
is disabled again from the same impairment.

c. Medicare coverage continues for 93 months after SSDI


benefits stop.

3. Ticket to Work Program

a. Genesis

The program is a response to a big increase in the number


of people receiving disability benefits, and a minuscule
departure rate of beneficiaries back to employment. The
trends were breaking the bank. The program started in
January 2002.

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b. Program features

"Tickets" allow, but do not require, beneficiaries to "obtain


services from providers in the employment network" to
create a plan outlining services that will be provided to help
the beneficiary reach "employment goals." There are
provisions to protect a beneficiarys' health coverage.

Revised 11/15/2014

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IV. SOCIAL SECURITY DEPENDENTS BENEFITS

I. Who is eligible?

A. Family members of retired or disabled workers who are eligible for


Retirement or Disability Benefits (family members of deceased workers
receive Survivors Benefits).

B. Reduced income is the rationale for the benefit, but specified family
beneficiaries, e.g., spouses and most minor children, do not actually have
to depend on the worker for support.

II. Qualifying claimants? There are a multitude of categories. Here are some
important ones:

A. Spouse, if married for at least one year (or is the parent of worker's
natural child), and age 62 or older (compare: a surviving spouse only has
to be 60 or older). This is also known as the "Wife's Benefit" or
"Husband's Benefit.

B. Spouse under age 62 who is caring for a minor or disabled child. The
child must be under 16 or disabled before age 22, and entitled to receive
a Childs Benefit (see below).

C. Divorced former spouse and the worker is age 62 or over:

1. The marriage must have lasted at least 10 years, and the divorce
must have lasted at least 2 years before the former spouses
application for benefits (unless the worker was already entitled to
collect benefits, in which case the 2 year waiting period does not
apply). Note that a divorced former spouse is eligible once the
worker becomes entitled to receive benefits; the worker does not
have to actually retire first, i.e. receive benefits. This is an
exception to prevent the worker from spitefully denying benefits to
his or her former spouse by refusing to retire.

Practice Tip: Spouses getting divorced who have been married


almost ten years should often stall the divorce to meet the ten year
marriage requirement.

2. Former spouse's marriage to someone else terminates benefits


based on the worker's employment history. Note: the workers

1
remarriage does not affect the former spouse's entitlement to
benefits.

D. Unmarried minor children of the worker. The workers child must be under
18 (or under 19 and still in high school). Proof of "dependency" is
required, but it is automatically accepted for natural children. Others, e.g.,
adopted and stepchildren, have to show actual dependency.

E. Unmarried disabled adult children of the worker. The workers child 18 or


older is eligible if he or she were severely disabled before age 22,
disabled since then, and never married. This is known as "Childhood
Disability Benefits (CDB) eligibility, and formerly (and often still) known as
Disabled Adult Child" (DAC) eligibility.

F. Stepchildren under 18 (or under 19 if still in high school). They must be


living with and under the care of the disabled or retired worker.

G. Grandchildren under 18. Their parents must be deceased or disabled,


and they must live with and receive support from the grandparent, or be
adopted by the grandparent.

H. Unmarried parents. A parent (or parents) of the worker must be at least


age 62 and have depended on the worker for half their support.

III. What are the Work Credit requirements?

A. Worker must be "fully insured" or "insured for disability" (as the case may
be).

IV. What are the benefits?

A. Benefits are based on earnings record of the worker and the total number
of people in family.

B. Spouse. A spouse receives 50% of the worker spouse's Primary


Insurance Amount (PIA) if the dependent spouse applies at his or her "full
retirement" age or applies for a Disability Benefit. This amount may be
higher or lower than the non-worker spouse's own benefit based on his or
her own work record. Note: the amount of the spouses benefit depends
on the spouse having reached full retirement age, not on whether the
worker has.

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Remember: the claimant can only receive one Social Security benefit at a
time, always the larger one.

C. Child. A Childs Benefit is equal to one half of the PIA if the worker is still
living, that is, retired or disabled (Survivors benefits are 3/4 of the PIA if
the parent has died). A child may be entitled to benefits based on more
than one parent's working record, but may only receive the higher benefit
(not both).

D. Other family beneficiaries. The total of all benefits is restricted to the


Family Maximum Amount (FMA). This includes the worker's benefit and
an additional amount of 50% to 80% for the other family members.

E. Planning trap: dependents claiming early retirement

1. Dependents claiming early retirement (ages 62 to 66) permanently


reduce their benefits. For example, a wife who claims reduced
early retirement spouses benefits on her husbands work record,
and then switches to her own benefits later, will have her own
benefits reduced by the same percentage as her early retirement
spouses benefits. Similarly, if she claims early retirement on her
own work record and then switches to a spouses benefit later
(which would otherwise be 50% of her husband's retirement
amount), her benefits under her spouses claim will be permanently
reduced as well.

2. Compare to the more generous rule for surviving spouses (widows


can switch to the higher benefit).

V. What reduces Dependents Benefits?

A. The worker does not "retire." If the worker does not claim benefits when
he or she is eligible and continues working, there are no Dependents
Benefits payable (except in the case of a divorced spouse). The rationale
is that there is no reduced income.

However, an SSA rule called Claim and Suspend, allows a worker


spouse to claim retirement benefits from SSA at full retirement age but
then to advise SSA to suspend actual payment. This has two
advantageous consequences: it allows the other spouse to start receiving
Dependents Benefits immediately and it allows the worker spouse to
continue working while his benefits are suspended, growing 8% per year
up until age 70 when he would presumably unsuspend them.

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B. The workers spouse retires early, i.e. draws benefits before full
retirement age at 66. For example, benefits are reduced 30% if a wife,
age 62, starts receiving Dependents Benefits based on the husband's
work record, even if her husband has reached full retirement age.

C. Working

1. After "retirement," i.e. claiming benefits, but during early


retirement (between ages 62 to 66).

2. Worker vs. dependent

a. If the worker under "full retirement" age works and earns


income after his or her retirement, any reduction in benefits
will first reduce Dependents Benefits.

b. If a dependent under "full retirement" age works and earns


income, his or her benefits will be reduced as well, $1 for
every $2 in earnings, to the extent they exceed the annual
maximum income limit.

D. Government Pension Offsets

1. A sometimes surprising rule that drastically reduces Dependents


Benefits

2. Dependents have often worked in an occupation exempt from


Social Security tax, such as a school district, or branch of federal,
state, or local government. They are usually entitled to a pension
under a Civil Service Retirement System (CSRS) or other pension
plan.

3. The Dependents Benefit is reduced by two-thirds the amount of the


government pension, unless the dependent paid Social Security
taxes for at least 60 months of government service.

2. Private pensions have no effect.

Revised 11/15/2015

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V. SOCIAL SECURITY SURVIVORS BENEFITS

I. Who is eligible?

A. Family members of deceased workers (similar to life insurance).

B. Again, reduced income is the rationale for the benefit.

C. The largest benefit is payable if a claimant is eligible for more than one
benefit.

D. Survivors Benefits are more generous than Dependents Benefits.

II. Qualifying claimants? There are a multitude of categories; here are some
important ones:

A. Surviving spouse, if married for at least nine months before the death of
the worker (with some exceptions), age 60 or older (or age 50 or older if
disabled), and has not remarried (unless marriage occurs after age 60).
This is the "Widow's" or "Widower's Benefit." No application for benefits is
required.

Practice Tip: Widows and widowers who plan to remarry should often wait
until age 60 to do so in order to qualify for Survivors Benefit on the first
spouse's work record. Such Survivors Benefit may be larger than the
Dependents Benefit available on the work record of the widow or
widowers second spouse.

B. Surviving spouse (or divorced former spouse) under age 60 caring for
worker's minor (under 16) or disabled child and not remarried. This is
known as the "Mother's Benefit" or "Father's Benefit." In contrast,
dependent divorced former spouses of living workers are not eligible
before age 62 even if they are caring for such a child.

C. Divorced spouse over age 60, if the original marriage lasted 10 years (or
the widowed spouse is caring for the workers minor or disabled child),
and any remarriage occurred after age 60 (or age 50 if the widowed
spouse is disabled).

D. Surviving unmarried minor children of the worker. They must be under 18


or under 19 and still in high school. "Dependency" is required, but
automatically accepted for natural children. Others, e.g., adopted and
stepchildren have to show actual dependency.

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E. Unmarried disabled adult children of the worker. The workers child 18 or
older is eligible if he or she were severely disabled before age 22,
disabled since then, and never married. This is known as "Childhood
Disability Benefits (CDB) eligibility, and formerly (and often still) known as
Disabled Adult Child" (DAC) eligibility.

F. One or both parents of the worker who are at least age 62 were
dependent on worker for half their support: the "Parents Benefit."

III. What are the Work Credit requirements?

A. Generally, fully insured.

B. However, where the surviving claimant is a surviving spouse (or


sometimes divorced spouse) and is caring for a child who is either under
age 16 or disabled, the worker only needs only to have been "currently
insured" (a much lower standard).

A. A deceased worker was "currently insured" if he or she earned 6 quarters


out of the last 13, in other words, at least 1 years of employment in the 3
years immediately before death.

IV. What are the benefits?

A. Benefits are based on the earnings record of worker.

B. Survivors receive a percentage of worker's full Retirement Benefit amount,


i.e., the PIA.

1. A surviving spouse who first claims at "full benefits age" (age 66)
receives 100% of the worker's full Retirement Benefit (up from 50%
for dependents).

2. A surviving spouse who claims at 60 (when first eligible) will have


71.5% of the full Retirement Benefit.

3. Mother's and Father's Benefit. The surviving spouse under age 60


caring for the worker's child under 16 or disabled will have 75% of
the full Retirement Benefit (up from 50% for dependents).

4. A surviving minor or disabled child receives 75% of the parent's full


Retirement Benefit.

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5. A surviving spouse and child (or children) are limited to a "Family
Benefit" limit, the Maximum Family Amount (MFA). This is 150% -
180% of the worker's Retirement Benefit.

6. A single surviving dependent parent receives 82.5% of the PIA.

C. Switching out of and into Survivors Benefits from ones own work record

1. Out: A surviving spouse can claim a reduced Survivors Benefit at


60 and later switch out to his or her own full Retirement Benefit
without prejudice, or

2. In: A surviving spouse can also claim reduced early retirement on


his or her own work record, and then switch into full Survivors
Benefits at, for example, age 66, without prejudice (not allowed for
Dependents Benefits).

D. Lump Sum Death Benefit

1. Social Security pays $225 toward burial or funeral expenses,


payable to surviving spouses or other dependents only. The
worker need only have been "currently insured."

V. What reduces benefits?

A. Survivors Benefits are permanently reduced if claimed before the


survivors full retirement age.

B. For such survivors their earnings are subject to the formula for working
under "full retirement age" (age 66).

1. Earnings test: $15,720 per year, or $1,310 per month (2015)

2. Reductions of $1 for every $2 earned

C. Pension offsets

3. Survivors Benefits are reduced by 2/3 the amount of government


pensions paid on the survivor's work record. However, if the
government pension received is as a surviving spouse of a worker
(that is, the pension is not on the claimant's own work record),

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there is no offset. The survivor can collect survivor benefits from
both programs.

4. Private pensions have no effect.

Revised 11/15/2015

4
VI. SUPPLEMENTAL SECURITY INCOME

I. Basics

Compare Supplemental Security Income (SSI) with Social Security Disability


Insurance (SSDI):

A. Both programs provide income to disabled people, and both are paid for
and administered by Social Security Administration (SSA), but

B. SSI is a welfare program (aka, "needs-based" or "means-tested"), not an


entitlement program like SSDI. It is supported by general tax revenues,
not "self-supported" by the applicant's contributions (there is no work
history requirement).

C. SSI is federally supported and administered (under Title XVI of the Social
Security Act), but:

1. 29 states have state administered state supplements (which makes


state governments and politicians very interested in the program's
cost).

2. 13 states have supplements that are federally administered, that is,


the payments are made by SSA as part of the benefit: California,
Delaware, Hawaii, Iowa, Michigan, Montana, Nevada, New Jersey,
New York, Pennsylvania, Rhode Island, Utah, and Vermont. The
District of Columbias supplement is SSA administered.

3. 8 states have no supplement: Arizona, Arkansas, Mississippi, North


Dakota, Tennessee, and West Virginia

D. SSI imposes strict income limits.

1. SSI has much tougher income rules than other Social Security
programs. Unlike SSDI, receipt of "income" offsets benefits.

2. Much more is counted as "income", e.g., various forms of unearned


income.

E. SSI imposes strict asset limitations. These are non-existent for SSDI.

F. The disability rules are the same.

1
G. Detail on the program is available in SSA's Program Operations Manual
System (POMS) online (Google: SSA POMS).

II. Who is eligible? Four factors: protected groups, citizenship, income, and assets.

A. Protected groups: Aged, blind, or disabled (aka, ABD)

1. Aged: 65 years of age or older

2. Blind

3. Disabled: Same as for SSDI -- physical or emotional impairment


that prevents applicant from doing any substantial work, and that is
expected to last at least 12 months or to result in death.

Note: Children can be eligible, but then the test of "disability" is not
work-related, but whether the applicant child has a "medically
determined physical or mental impairment that results in marked
and severe functional limitations." Furthermore, parents' assets
are "deemed" to be available to children until age 18.

B. Residence and citizenship (a test imposed by the Personal Responsibility


and Work Opportunity Reconciliation Act of 1996, aka, "Welfare Reform")

1. A U.S. citizen or claimants within certain narrow categories of long-


time legal residents

2. Residency: beneficiaries lose SSI for any month they are out of the
country.

C. Income limits

1. SSI counts various forms of income against benefits:

a. Cash income, e.g., gross earned and unearned income,


pensions, annuities, gifts, inheritances, as well as Social
Security retirement and disability benefits

b. Noncash income, known as In-kind Support and


Maintenance (ISM), i.e., food and shelter (Note: SSA
changed its rules to delete clothing as a form of ISM,
effective March 9, 2005)

2. SSI does not count some income against benefits, for example:

2
a. $20 any income (unless it's a form of welfare)

b. $65 from earnings (wages, salary, or self-employment)

c. One half of earnings over $65

d. Some infrequent earned income (up to $30 per quarter) and


unearned income (up to $60 per quarter), if received once
from a single source, but not if also received in an
immediately prior or subsequent month to the month of
receipt

e. Income tax refunds

f. Loans (but proceeds of a loan become a countable


"resource" to the extent they not spent and carried over into
the next calendar month)

g. Outside non-cash receipts that are not ISM, e.g., from


special needs trusts

h. Some other forms of welfare based on need, such as food


stamps, home energy and housing assistance

i. Some other one-time payments, such as compensation for


personal injury or property damage, insurance payments for
medical bills, and tax refunds

D. Asset ("resource") limits

1. All countable assets above $2,000 (single), or $3,000 (couple),


prevent eligibility.

2. Countable assets: cash and other liquid assets, and all real and
personal property the applicant or beneficiary owns and could
convert into cash for his or her own support and maintenance.
These include:

a. All of joint bank accounts (but claimant can rebut


presumption of ownership with a written statement), partial
interests in other co-owned property (unless it can't be sold
without permission, or would cause hardship through loss of
housing to co-owner).

3
b. Revocable trusts: Assets held in any trust that the
beneficiary has a right to revoke and then to use the trust
assets for self-support.

c. Irrevocable trusts: For trusts established on or after January


1, 2000, assets in an irrevocable trust are treated as fully
available if the SSI beneficiary or spouse transferred those
assets to the trust, and there are any circumstances under
which payment from the trust could be made to the
beneficiary or spouse. "Assets" is defined very broadly,
including "income," exempt assets such as a residence, and
disclaimed property. However, federal law carves out two
exceptions: sole benefit "payback" trusts (aka,"(d)(4)(A)"
trusts) for disabled people under age 65 pursuant to
Medicaid rules and pooled trusts. 42 USC 1396p(d)(4)(A)
and (C).

Note: Discretionary trusts created by 3rd parties, e.g., by a


parent, are not counted, even if support is permitted (but not
required) and the trust lacks a "payback" provision.

3. Noncountable assets, because they are either "exempt" (and


therefore not "resources" at all), or "unavailable" (and therefore
cant be used for support). There is no cost of living adjustment.
These include:

a. $2,000 or below in cash or other assets

b. Home and land where located, if used as residence

c. Automobile used for the transportation of the beneficiary or


member of the beneficiarys household (Note: SSA changed
its rules to remove the $4,500 dollar limit it previously
imposed automobiles, effective March 9, 2005).

d. Personal effects and household goods (Note: SSA changed


its rules to remove the $2,000 dollar limit it previously
imposed on such assets, effective March 9, 2005.)

e. Wedding and engagement rings

f. Property needed for medical care

g. Property needed for self-support, including tools of trade or


business
4
h. Cash values in life insurance policies with total face value up
to $1,500

i. Burial space, up to $1,500 in a revocable burial fund, and


irrevocable burial funds (with offsets for revocable funds).

4. Transfer of assets rules

a. Giving away assets is disqualifying for SSI. Specifically, an


SSI applicant will be disqualified from getting benefits if he
or she has given away assets within the previous 36 months.
Similarly, current SSI beneficiaries will disqualify themselves
if they give away newly received assets (e.g., an inheritance,
personal injury settlement, or life insurance payment). The
number of months of disqualification is approximately the
number of months the value of the gifted assets would have
lasted if consumed at SSI rates (including state
supplements). The disqualification starts with the month of
the transfer and can run no longer than 36 months. There
are exceptions for gift transfers to a Medicaid "payback" trust
or pooled trust under 42 USC 1396p(d)(4)(A) and (C), for
hardship, and for other circumstances.

b. In very limited cases, SSI rules allow an applicant to receive


conditional benefits subject to the applicants later selling
them or spending them down (but not giving them away) to
meet applicable limits, e.g., on purchase of exempt assets
such as burial space and pre-paid funeral expenses. The
time limit to get rid of disqualifying real estate is 9 months
but only 3 months for personal property (including excess
cash).

E. Deeming rules

1. The SSI program will often "deem" income and resources to the
applicant that actually belong to other family members, thereby
making the applicant ineligible.

2. The "deeming" rules apply only to 1) spouses, 2) parents and minor


children, 3) sponsors and aliens.

III. What are the benefits?

5
A. Federal Benefit Rate (FBR): In 2015, the federal contribution is
$733/month for a single person, or $1,100/month for a couple, if in an
independent living arrangement. There are different amounts for each
of four different living arrangements. The amounts are increased each
year to reflect changes in the cost of living.

B. State supplements vary. Monthly payments range from a few dollars to a


hundred or more over the Federal Benefit Rate. For example, in
California, the monthly state supplement was $156 (in 2014) for a single
person in an independent living living arrangement.

C. Medicaid: In most states, Medicaid is "categorically linked" to SSI (under


Section 1643 of the Social Security Act), so that SSI eligibility
automatically brings Medicaid eligibility along with it, as well as food
stamps and In-Home Supportive Services (IHSS).

1. Practice tip: It is often important to apply for or preserve SSI solely


to protect Medicaid eligibility. It is usually easier to replace modest
SSI income than lost health coverage. A reoccurring problem has
been what to do with windfalls (e.g., an inheritance, personal injury
award, or insurance payment). The most common way for an SSI
beneficiary to avoid SSI disqualification and subsequent loss of
Medicaid is to transfer his or her windfall to a Medicaid "payback"
trust for disabled people under age 65, or into a pooled trust.
Alternatively, an SSI recipient could just abandon SSI, give away
the windfall, and apply for Medicaid independently, under either a
traditional eligibility program, such as the Aged and Disabled
Federal Poverty Level Program, or under MAGI-related qualification
established by the Affordable Care Act (annual Modified Adjusted
Gross Income under $16,104 for an individual).

IV. What reduces benefits?

A. Cash receipts. SSI benefits are reduced dollar for dollar for any additional
cash income received per month, including gifts (except for the $20 "any
income" exemption, infrequent or irregular income, $65 of earned income,
and one half of earned income over $65 per month).

B. Housing circumstances (four kinds). Living Arrangements reduce or


enlarge benefits. For example:

1. If the applicant is in board and care, the benefits can be larger.

6
2. If the applicant is in a skilled nursing facility (SNF) he or she
receives no SSI (unless needed to provide a $30 personal needs
allowance not otherwise funded).

C. Outside noncash support, i.e., food or shelter, is counted as "In-Kind


Support and Maintenance" (aka, "ISM"). The amount that SSI is reduced
because of an individual's receipt of ISM depends on the individual's
Living Arrangement.

1. Living in the home of another and receiving board (food) without


paying a pro rata share, will reduce SSI benefits by the "value of
one third reduction" (VTR) of the Federal Benefit Rate (in 2015: 1/3
of $733 = $244.33) vs.

2. Living independently, outside noncash support (food and shelter)


will reduce SSI benefits at a "presumed maximum value" (PMV) of
the Federal Benefit Rate plus $20 (in 2015: 1/3 of $733 + $20 =
$264.33).

Note: The PMV reduction is only "presumed", and can be rebutted,


while the VTR cannot be rebutted.

D. Other receipts are not counted as income and do not reduce SSI benefits.

1. Examples (all typical "special needs" that make up distributions from


special needs trusts):

a. Almost any kind of service, e.g., entertainment, travel, education,


and therapies

b. Any kind of personal use items that would be counted as exempt in


the following month (when it would otherwise be counted under
resource rules), e.g., cell phones, books, CDs and DVDs, furniture
and furnishings, and clothing

2. Special case: loans are not counted as income, so a 3rd party loan
that is spent each month will not affect benefits -- if it is legally
enforceable.

V. SSI Issues (Litigation threats/opportunities}

A. Disputes over transfers

1. Transfers of income. There is inconsistency and therefore


confusion and controversy over the consequences of gift of
7
"income." The SSI statute does not specifically penalize it, but
POMS "cures" the statutory omission by inconsistently defining
certain forms of income, such as "inheritances," as "resources" for
purposes of the transfer rule so the transfers of such income will
then be disqualifying.

2. Transfers of exempt assets. Strictly speaking there no such thing


as an exempt resource because resources are, by definition,
counted in determining eligibility. Accordingly, if exempt assets are
not really resources, and the SSI transfer rules only apply to
resources, no transfer disqualification should arise if an applicant or
beneficiary transfers an exempt asset. However, SSA has not been
very anxious to confirm this conclusion. Indeed, it appears to be
hostile to it.

When it comes to the applicants residence, there is an


(apparently) clear SSI policy statement, stating that if the applicant
provides factual evidence that he/she did not transfer the home to
become eligible for SSI and intends to return home (among other
allegations), then a gift transfer will not trigger SSI disqualification.
POMS SI 01150.125. However, SSA may ignore this policy and go
ahead and disqualify the applicant/beneficiary anyway.

3. Transfers for fair market value. Payment for delivery of ISM


counts as fair market value so no transfer disqualification results.
POMS SI 01150.005 C.3.b.

B. Disputes over first party trusts

1. 42 USC 1396p(d)(4)(A). The resources of an applicant or


beneficiary can be sheltered so they do not prevent the applicant
or beneficiary from qualifying for SSI if the strict statutory rules
are met, as well as SSAs even stricter regulatory rules.

2. Some current issue areas

a. Background: SSA has barraged practitioners with surprising


technical objections to such (d)(4)(A) trusts. Local offices
have often not understood them and there have been
inconsistent treatments within the SSA bureaucracy. In an
attempt to obtain more national uniformity, SSA has
implemented a new Centralized Regional Trust Review
Process (April 2014). It will use a new Fact Guide for
National Trust Training (Fact Guide).

8
b. The Fact Guide has a number of serious errors that are
likely to cause many erroneous disqualifications until they
are corrected:

It says that payments into a (d)(4)(A) trust violate the


rule that the trust be funded before age 65, but does
not mention the special case of structured
settlements and annuities established before age 65
that make payments after age 65. These are
expressly allowed in POMS.

It addresses first party trusts almost exclusively,


without distinguishing the very different rules that
apply to third party trusts, erroneously implying that
they are the same.

It incorrectly describes the payments that are


permitted from a (d)(4)(A) trust before repayment to
the state Medicaid agency is made. It advises that
only taxes due from the trust and court filing fees are
payable. In fact, POMS expressly permits payment of
any state and federal taxes arising from the death of
the beneficiary as well as reasonable fees for
administration of the trust estate, such as accountings
of the trust to the court, completion and filing of
documents, and other actions required to wind up the
trust.

Finally, it persists in implementing extremely


technical, difficult, and surprising policies regarding
who established the trust. Under the statute, only a
parent, grandparent, court, or guardian is entitled to
establish a (d)(4)(A) trust for the applicant/beneficiary.
However, SSA has imposed an almost impossible
requirement for court-created trusts: that the court
must require (not just approve) the creation of the
trust without the request of any appointed
representative. Similarly, SSA has taken the position
that any parent with a power of attorney for the
claimant will be deemed to have established the trust
acting as an agent. In both cases. SSA will disqualify
the trust on the grounds that it was ultimately the
individual applicant him or herself who established the
trust which is not permitted.

9
Revised: 11/29/2014

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