»  Social Security Changes Its Position on Reimbursements

Social Security Changes Its Position on Reimbursements

Moorestown, NJ (Law Firm Newswire) March 26, 2012 - The Special Needs Task Force worked with Social Security to change how it reimburses third parties.

Historically, the Social Security Administration (SSA) permitted parents or other family members of disabled beneficiaries of special needs trusts to buy items for the beneficiary and be reimbursed from the special needs trust. Of course, the family members were required to keep receipts and records of these purchases and furnish them to the trustee. Items might include clothing and other relatively small items that were easier for the parent to pick up and pay for than to request a distribution from the trustee directly to the provider of the goods or services.

In the spring of 2012, the SSA stated that such items of reimbursement were “unearned income” to the trust beneficiary. This had the effect of reducing the SSI payment to the trust beneficiary dollar-for-dollar and, if the reimbursement items exceeded the maximum federal benefit rate (2013 rate is $710 per month for an individual), then the SSI payment was lost. If the trust beneficiary’s Medicaid was linked to SSI, then Medicaid was lost as well.

On May 21, 2012, SSA contended that it was “clarifying” the Program Operating Manual System (POMS) and began reducing and eliminating benefits of the disabled. It is the document that Social Security eligibility workers look to for guidance. While technically, the POMS do not have the force of law, they are given great deference by the courts and are followed scrupulously by eligibility workers. The effect of this clarification by SSA was chaos for trust beneficiaries with disabilities, as well as parents and trustees.

"In response, an advocacy group was assembled, led by the Special Needs Alliance," stated Thomas D. Begley, Jr., New Jersey estate planning attorney and founding president of the Special Needs Alliance. "The Task Force held a series of meetings with SSA and was able to convince SSA that the policy enunciated in the spring made little sense and worked a hardship on all involved."

On February 8, 2013, the POMS were changed, authorizing a special needs trust to reimburse a third party, such as a parent or other family member, for expenditures made on behalf of the special needs trust beneficiary with disabilities. Such distributions for reimbursement are no longer considered unearned income. The changes are found at POM SI 01120.200.E.1.d and POMS SI 01120.201.I.1.f.

This change brings a sigh of relief to trust lawyers, beneficiaries and trustees alike. The Task Force continues to work with SSA in identifying primary issues such as this and advocate for the clients it serves.

To learn more about Begley Law Group call 1.800.533.7227 or visit www.begleylawgroup.com.

Begley Law Group, P.C.
509 S. Lenola Road, Building 7
Moorestown, NJ 08057
Tel: 800.533.7227


  • INCOME TAX CONSIDERATIONS INVOLVING LONG-TERM CARE
    by Thomas D. Begley, Jr., CELA Medical Deduction – Client The IRS permits an income tax deduction for medical expenses. Medical expenses include qualified long-term care services. A taxpayer can claim an itemized deduction for unreimbursed medical expenses to the extent such expenses exceed 10% of adjusted gross income. For individual age 65 and older, the threshold is 7.5% until December 31, 2016. If an individual is institutionalized, an issue may arise as to whether room and board is deductible for medical expenses. The question frequently arises if an individual has resided in an assisted living facility. The answer is [...]
  • Estate Planning: 5 Things You Should Consider
    by Thomas D. Begley, Jr., CELA Grandchildren Many grandparents would like to leave something to their grandchildren. Frequently, the grandparents have not thought of this idea, but are enthusiastic when it is presented to them. One way to remember the grandchildren in a Will is to leave a flat sum of money, i.e., $10,000 per grandchild, another is to leave the grandchildren a separate share. For example, grandparents with three children may want to divide their estate into four shares, one for each of the children and one to be divided equally among the grandchildren. Some grandparents want to establish [...]
  • WRAPPING A MEDICARE SET-ASIDE ARRANGEMENT INSIDE A SPECIAL NEEDS TRUST
    by Thomas D. Begley, Jr., Esquire, CELA In any recovery involving a personal injury case, the interest of Medicare must be considered.[1] The idea is that because Medicare is a secondary payer, a beneficiary should not be permitted to receive a recovery for future medical care, pocket the money, and then bill Medicare for that future medical care. Are MSAs Appropriate in TPL Cases? A Medicare Set-Aside Arrangement (MSA) is never required. In the context of Workers’ Compensation (WC) settlements it is a safe harbor. It should be a safe harbor in the context of Third Party Liability (TPL) settlements [...]

See other news sources publishing this article. BETA | Tags: , , , , , , , , , , , ,



Get headlines from Law Firm Newswire sent right to your inbox.

* indicates required