»  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


  • Lien Resolution In Personal Injury Cases
    This is the third in a series of articles dealing with lien resolution in personal injury cases. Welfare Liens In New Jersey, there is a lien against real and personal property of a person who has been assisted by or received support from any municipality or county. This is true whether a person has been in a county facility or at home.1 Mental Health Liens In New Jersey. a person with a mental illness who is over age 18 and is being treated in a state psychiatric hospital shall be liable for the full cost of his treatment. maintenance. and all necessary related expenses.2 [...]
  • ALTERNATIVES TO A THIRD PARTY SPECIAL NEEDS TRUST
    by Thomas D. Begley, Jr., CELA There are a number of alternatives to a Third Party Special Needs Trusts. These include the following: Disinherit a Child. The problem with this strategy is that one cannot be certain that public benefits, as we know them today, will continue forever. Many public benefits have been cut back in recent years and there is no guarantee that current benefits will not be reduced as well. Many parents who have severely disabled children, whose needs are covered by public benefits, will consider disinheriting the children, but they should be made aware that current public [...]
  • ABLE ACCOUNT, THIRD PARTY SPECIAL NEEDS TRUST AND POOLED TRUST: COMPARE
    by Thomas D. Begley, Jr., CELA Below is a chart comparing an ABLE Account with a Third-Party Special Needs Trust.     ABLE ACCOUNT THIRD PARTY SPECIAL NEEDS TRUST OR POOLED TRUST Onset of Disability Qualifying disability exists prior  to age 26   No requirement Age of Beneficiary   No requirement No requirement Who May Establish   Beneficiary, parent, guardian, agent Anyone except beneficiary Number of Accounts   One per beneficiary Unlimited Fees   Financial institution fees Attorney and trustee fees Contribution Limits $14,000 per year (federal gift tax limit); total capped at state limit for 529 college savings accounts; SSI payments suspended when assets total $100K   Unlimited Investment Options Investment strategies may be changed [...]

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



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

* indicates required