Here is one questions I hear a lot:

I’m on SSI, do I have to tell Social Security about an inheritance/settlement I am getting?

The answer is simple:

YES!

There is no point beating around the bush with this one.  If you are on SSI and “come into money” whether it is a gift, inheritance or settlement (or through whatever means), you need to notify Social Security.  

Supplemental Security Income (SSI) is a “needs-based” program.  You only get it if you do not have money coming in from other sources.  So, if you are suddenly get some money, your benefits may be reduced or even cut off.  

Even worse for some people is the potential loss of Medicaid.  You have to be receiving at least $1.00 of SSI benefits to qualify for Medicaid benefits under Social Security.  So if you lose your SSI, you may also loose your Medicaid (unless you qualify under another program).

Well, I don’t want my benefits cut off!  And I can’t afford to have my Medicaid cut off!!!

I understand, and I sympathize.  However, there are worse things that can happen than having your benefits suspended or terminated.  If you fail to report this money to Social Security, you may be facing the following:

• Overpayment.  If it would be terrible to have your benefits stopped, imagine how bad it may be to have to pay back money that Social Security says you were not entitled to.  See my articles about how difficult it is to fight an overpayment claim, and how hard it is to get an attorney to help.  In my experience, it is easier to find an attorney to help you get your benefits back after SSA cuts them off rather than trying to find an attorney to help you fight an overpayment. 
• Prosecution.  While rare, if Social Security thinks that you intentionally hid assets to maintain SSI eligibility, that’s fraud.  Social Security may turn over your case to the Attorney General’s office for prosecution.  

Document communication with Social Security

Ok, so you have decided to the right thing and let Social Security know about the gift/inheritance/settlement/pot of gold.  Great!  Now ask yourself.  If Social Security comes back in two months or two years and you have to prove that you notified SSA about the money, do you have any proof?

TIP:  Always document communication with Social Security.

It does not matter if you spoke to someone over the telephone or in person at the Social Security office with a hundred witnesses.  If Social Security looses all record of your discussion, the ball is in your court to prove you provided notice.  Social Security has a lot of great, hard working people doing their very best under a heavy work-load.  

Protect yourself.   Assume that Social Security will not have proof of your communications.  You have to keep that keep that proof yourself.  

What kind of proof:

1. A certified, return receipt requested letter is always good.
2. If you meet with someone, follow up with a letter reviewing the communication.
3. A phone log and/or meeting log showing dates, times and who you met and spoke with at Social Security and a summary of what was said.  

Keep in mind, none of this is bullet-proof evidence.  However, it may show that you took steps to keep Social Security informed about your money situation, which may save you from a fraud charge. 

This is especially important if you meet with Social Security, review your income/assets and Social Security tells you that you can go ahead and keep the Social Security benefit check.  If you do not have proof of the discussion, what will you do if Social Security comes back two years later and says that you were never entitle to keep those benefits?

If you are not entitled to benefits, it may not matter if Social Security told you to keep the money

Here is another kick in the head:  even if Social Security tells you that you are entitled to keep the benefits, nothing stops Social Security from changing its mind down the road and demanding an overpayment.  Crazy, but true.  

Plus, if you read my overpayment article, you have seen that even if Social Security tells you that it is ok to keep the money, and you are without “fault,” that is only one of the two tests for determining if you have to pay the money back.  

You may still have to pay the money back.

Special Needs Trusts

Since you stuck it out through this long article, I will let you in on one way to keep the gift/settlement/inheritance and still maintain elligibility for SSI:  Special Needs Trust.

Special Needs Trust occaisionally pop up in personal injury cases.  A person has been serverly injured and becomes disabled.  Through a personal injury lawsuit the person becomes entitled to a settlement.  But, in the meantime, the person has also been approved for SSI benefits.  If the person takes the settlement, will this make him/her ineligible for SSI?  Not necessarily.

The settlement can by put into a special trust, a “special needs trust” which can only be accessed for very specific purposes.  Because of the stringent limitations on the use of the trust money, Social Security will usually not count this as an asset.  

How to set up a Special Needs Trust?

This requires a very special kind of legal voodoo.  You will need to have a trust attorney help you, and not just any trust attorney can do this right.  You need a trust attorney who is familiar with special needs trusts.  

You want a specialist for this.  

If the trust fails for any reason, the settlement or other money may be counted as an assett and the person may lose SSI benefits and Medicaid.

Social Security has two different benefit programs for individuals who are disabled.

• Disability Insurance Benefits (DIB, also known as SSDI, or Title 2 benefits); and
• Supplemental Security Income (SSI or Title 16 benefits).

Because of its name, it is a common misconception that must apply for “Disability Insurance” if you are disabled. Actually, both programs provide disability benefits.  

What is Disability Insurance Benefits (DIB)?

Generally, Disability Insurance Benefits are based on your payroll contribution to Social Security.  To qualify for DIB, you have to have earned enough Social Security credits, in the right time frame, by paying into Social Security through payroll taxes.  

There are several circumstances in which you may not have enough credits for Social Security Disability Insurance:

• If you have never worked.
• You worked so long ago that you are past your date last insured.  
• Instead of paying into Social Security, you paid into a state program (such as PERA). 

In each of these cases, you might not be eligible for Disability Insurance (DIB).
Please note that this is just an overview.  There are several circumstances in which you may still be eligible for Social Security Disability Insurance (DIB) even if you do not have not have enough credits under your own earnings, including:  

• Social Security Disability Insurance (DIB) based on a spouse’s, or former spouse’s, earnings.
• Widow/er’s benefits and Children’s benefits when a spouse/parent dies.
• DAC (Disabled Adult Child) benefits.

It is often a good idea to speak with Social Security if you think you may qualify for one of these other types of Social Security Disability Insurance Benefits (DIB).

What is Supplemental Security Income (SSI)?

Even if you are not eligible for DIB, you may still be able to apply for SSI.  

Supplemental Security Income is a Social Security program which provides disability benefits to the following groups:

• Children, 
• Adults who have never worked; and 
• Adults who do not have enough quarters of coverage, or are past their date last insured.

Between a Rock and Hard Place:

Is it possible to not be eligible for either Disability Insurance Benefits (DIB) or Supplemental Security Income (SSI)?

Sadly, yes.

If you cannot prove your disability prior to your date last insured, and your spouse makes too much money (or you have another problematic source of income), it is possible that you may not qualify for either DIB or SSI.  This is the proverbial between a rock and a hard place.

Which Program Should I Apply For?

In my opinion, apply for both.  Do not rule out your eligibility for a particular Social Security program. When you apply, Social Security will determine which benefit program(s) you are eligible for and will help you file the application.  However, if you want to know if you will qualify for either program, Social Security has a website where you can see what benefits you may be eligible for.

But, Wait!  There’s More.

Once again, this is just a quick overview of DIB and SSI.  There are differences between Social Security Disability Insurance (DIB) and Supplemental Security Income (SSI) which I will address in other articles.

Nate Craig of Truth of the Matter Asserted has a great article about what it means if a judge wants you to change the date you became disabled, or in Social Security parlance “amend your alleged onset date (AOD).”

Often, by the time the claimant’s hearing comes to be scheduled, the ALJ will review the file for the first time. During this review, the ALJ will determine if the onset date is established by the medical records. Most factors of a proposal to amend an onset date will be either a specific medical finding that seems to correlate with the claimant’s limitations or the claimant has earning posted to their earnings record, including unemployment benefits.

Long story short, if the Judge is asking you to amend the onset date, they essentially are going to award benefits.

Nate makes a great point, but there is one exception to this general rule of thumb:  SSI cases.

In a SSI (Supplemental Security Income) case, you can only get benefits back to the Protected Filing Date (PFD), the date you requested to file an application.  However, in many SSI cases I see in my Colorado practice, people (understandably and correctly) claim that their disability began when they stopped being able to work. Normally this is months before they ever filed for Social Security. 

I regularly see judges asking claimants to change their Alleged Onset Date (AOD) to the Protected Filing Date (PFD).  However, this is just a streamlining measure and does not necessarily mean the judge will approve the case. At least, not in my experience.

However, with this one exception, if the ALJ asks to amend the AOD to any other date, that is usually a good sign!

Read the rest of Nate’s excellent article here.  

There are several reasons why your back Supplemental Security Income (SSI) benefits may be delayed.

First, Social Security must reimburse the State for interim assistance that you recieved while waiting for your SSI decision. In Colorado, the interim assistance program is called Aid for the Needy Disabled (AND). This means that if you received AND and won your Social Security SSI case, Social Security will first repay the Department of Human Services (Department of Social Services).

Then, Social Security pays out your back benefits in installment payments.

What!?! My brother is on SSI, they didn’t make him wait to get his back benefits.

The way Social Security handles SSI back benefits was changed on May 8, 2006. If you are entitled to receive more than three months of back benefits, those benefits will be paid in three installments, every six months (Deficit Reduction Act of 2005 and 42 USC § 1383(a)(10)(A), (B)). The first and second installment payments are limited to three months worth of SSI benefits. However, the first and second installments can be increased to more than three months of benefits to pay for the following:

1. Outstanding debts for: food, clothing, shelter, or medically necessary services, supplies or equipment, or medicine; or
2. Current expenses or expenses anticipated in the near term for: medically necessary services, supplies or equipment, or medicine, or for the purchase of a home. 42 U.S.C. § 1383(a)(10)(B).

Installment payments do not apply in two situations:

1. If you have an impairment that is expected to result in death within 12 months; or
2. If you are ineligible for SSI benefits and are likely to remain ineligible for the next 12 months (for example, if you are only entitled to back SSI benefits because you are also receiving Disability Insurance benefits under Title II and the monthly amount exceeds the monthly SSI benefit payment. 42 U.S.C. § 1383(a)(10)(C).

For more information on how to qualify for one of these exceptions, see POMS SI 02101.020.

Supplemental Security Income, SSI for short, pays up to the Federal Benefit Rate (FBR).

For 2008, the Federal Benefit Rate is $637 for individuals and $956 for couples. For most people, this means the maximum SSI benefits you can get i 2008 is $637 per month.

This is up from $623 per month in 2007.

This page lists the Federal Benefit Rates back to 1998.

photo credit: greefus groinks