In this case, my friend's mother was married to a gentleman who had applied for benefits in the early 2000's.  He had been denied at his first hearing, then appealed and ended up before a judge a second time for a second hearing.  Shortly after the second hearing (but before a decision was made) he passed away.

Because of the more then 7 year pendency of his claim the past due benefit amount was substantial – over $115,000.  The question – who gets the money.

According to Social Security law (Code of Federal Regulations, Title 20, Section 404.503(b)), the surviving spouse would be the primary beneficiary if she/he was living in the same household as the claimant at the time of death.  If the surviving spouse does not qualify, the surviving children collect.  If there are no children, the parents of the deceased collect.  If there are no parents, the surviving spouse who was not living with the claimant at the time of his death, and so forth.

Note that the funds do not go into the deceased claimant's estate – they are payable directly to the spouse or other beneficiary.

I previously published a blog post about how I won a case for a deceased claimant.  Prior to proceeding I submitted form HA-539, a Notice Regarding Substitution of Party Upon Death of a Claimant.  Individuals eligible to receive benefits must complete and submit form SSA-1724, which is a form entitled Claim for Amounts Due in the Case of a Deceased Beneficiary.

Post from: Social Security Disability Blog

Who Collects Past Due Benefits if a Claimant Dies Before a Disability Decision is Issued

My 11 year old daughter's father has just been approved for disability. I'm not sure if it is SSI or SSD. He applied 16 months ago, he is now over $4000 behind on child support. Will she be entitled to any of the back pay he will receive? How do I go about applying to see if she is eligible to draw a check off of him now that he is on disability?

***Editor's Note:  Due to the large number of questions I receive about child support and Social Security disability, I have set up a blog specifically about that topic – please visit my Child Support and Social Security Disability blog**

Jonathan's response: Auxiliary benefits are payable to the child of an SSDI claimant if:

A.  An application for child's insurance benefits is filed;
B.  The child is (or was) dependent upon the parent (see below);
C.  The child is not married;
D.  The child meets any of the following conditions:

1. is under age 18;
2. is age 18-19 and a full-time elementary or secondary school student; or
3. Is age 18 or older and under a disability (which must have begun before age 22) ; and

E.  The parent meets any of the following conditions:

1. Is entitled to disability insurance benefits;
2. Is entitled to retirement insurance benefits;
3. Died and was either fully or currently insured at the time of death.

A child is presumed "dependent" upon the worker if
A.  The child has not been legally adopted by someone other than the worker during the worker's lifetime; and
B.  The child is one of the following:

1. The legitimate child of the worker;
2. A child born out of wedlock who would have the right under applicable State law to inherit intestate property from the worker as a child;
3. The child of a void or voidable marriage;
4. The child of an invalid ceremonial marriage;

In Susan's case, she needs to find out if her child's father has been approved for SSDI or SSI.  If he is receiving SSI only, the child will not be eligible for auxiliary benefits.  If the father is drawing SSDI, then the child would be eligible assuming she is a dependent.  Susan would need to file an application for benefits on behalf of her daughter.  Note that the child's auxiliary benefits are in addition to the disabled father's benefit and do not reduce his monthly check.

With regard to past due child support, Susan may be able to garnish the back pay or on-going SSDI benefits of the father if he is delinquent in his child support.  I would suggest that Susan speak with her domestic relations lawyer if she has one, or with her case worker at the child support enforcement office to discuss the procedures for seizing this money.

Post from: Social Security Disability Blog

Will Child be Eligible for Dependent's Benefits When "Out of the Picture" Father is Approved

What happens, therefore, if you decide to file for bankruptcy while you are waiting for your Social Security decision?  What happens if your SSDI or SSI case is approved the week after you file for bankruptcy?  Can you keep your past due "lump sum?"  Does your attorney get paid?

If you have a pending Social Security application, you need to let your bankruptcy lawyer know about it.  Bankruptcy lawyers hate surprises and pending Social Security benefits are certainly relevant to a bankruptcy evaluation.

Under the current bankruptcy law, Social Security benefits are not countable for means test purposes but they may be countable for budget purposes.  So, if you do get approved for benefits while your bankruptcy is still active, you may need to amend your budget.

In my view, bankruptcy works best when there are no changes during the course of your case – whether you file Chapter 7 or Chapter 13.  The addition of, say, $1,500 per month to a bankruptcy budget will change things and you need to know in advance what this change will mean.

The question on the mind of most Social Security applicants has to do with the lump sum payment – which represents months or years of "past due benefits."  Can you keep this lump sum?  The answer is "it depends."  It depends on your State's exemption laws and the practice and procedure in your local bankruptcy court.

In the Northern District of Georgia, where I practice bankruptcy, I have successfully argued that my client's Social Security disability payments are exempt assets pursuant to Georgia's exemption statute, which makes exempt a "debtors right to receive a Social Security benefits."   I take the position that the monthly benefits would have been exempt and that the debtor should not lose his lump sum check because Social Security took two to three years to issue payment.

Every State has its own exemption rules.  And every bankruptcy filing jurisdiction has most likely reached a consensus about this issue.   I suspect that in some jurisdictions, the trustee will ask for some of the lump sum.  Perhaps there are some where the entire lump sum is in play.  The point – ask your bankruptcy lawyer.  It may change when your file and what bankruptcy chapter you choose.

Similarly, you need to tell both your Social Security lawyer and your bankruptcy lawyer about both cases.  Your Social Security lawyer is entitled to get paid for his efforts.  He may need to file a special application in bankruptcy court to be approved as special counsel.  He may also need to file a motion for approval of his fees.

The bottom line: advise both your bankruptcy lawyer and your disability lawyer about your respective cases.  Ask your lawyer to sketch out in writing what you can expect.  I can imagine nothing more frustrating than to hang on for three years waiting for that past due benefit check, only to find that a trustee has grabbed it.

Post from: Social Security Disability Blog

Will Filing a Bankruptcy Affect My Social Security Disability Case?

Jonathan Ginsberg responds:  Manny, thanks for your question.  Generally, workers compensation does offset Social Security.  The question in my mind – does your SSDI payment already reflect an offset for workers compensation?

In Georgia, where I practice, Georgia workers compensation lawyers include special language in workers comp settlements that treats any lump sum settlement as if it was being paid over your lifetime.  In my law firm, my wife Jodi Ginsberg handles workers compensation cases.  If, for example, she settles a case for $50,000 for an individual who has a life expectancy of 30 years (per an actuarial table used in Georgia), this special settlement language treats the $50,000 not as a $50,000 lump sum but as $138.00 per month for 30 years.  In this example, our claimant would see his SSDI reduced by $138 per month.

You need to speak to your workers' compensation lawyer to see if your State has similar rules and to see if your settlement contains this pro rata payout language.

If Social Security did not take your workers compensation settlement into account, there could be issues – you will need to seek counsel to evaluate how to deal with this problem.  I have seen some instances where a  workers' compensation settlement has been reopened and the special language put in, and I have seen situations where a claimant successfully asked Social Security for a waiver of the overpayment obligation.  There is also a possibility that you could file bankruptcy to discharge any repayment obligation to Socal Security.

Post from: Social Security Disability Blog

How Do Workers Compensation Offsets Affect Social Security Disability Payments?

Jonathan Ginsberg responds:  Etta, the calculation is as follows:

• create a column for each year that you are eligible for past due benefits
• find out how much you get per month for each month of past due eligibility
• add up the columns

Assuming you entered into a fee agreement with your lawyer, his fee will be 25% of past due benefits up to $5,300.  You get the rest less any deductions for Medicare or similar program.

Note that SSA increases your monthly benefit every year for something called "cost of living" so your monthly benefit for 2006 will be less than your benefit for 2007.

Post from: Social Security Disability Blog

How Do I Calculate My Portion of the Past Due Benefits?

However they moved my onset date to Jan. 1 2006 and did not explain why. I had worked the first 3 months of the 05 and made about 26,000 dollars. When I applied thru the Hospital that took care of me, they also applied  for Medicade and SSI.

Now I cannot get an answer from the SSI people if they are going to pay me for the months of Jan-May '05. It seems to me to be ploy to keep me from appealing the AJL decision until the 60days are over and then deny me the SSI benefits. Can you give me your 2cents worth on what you have seen the SSA do to people in this situation?

–Bob

Jonathan Ginsberg responds:  Bob, a couple of thoughts occur to me.  First, when you say that someone at the hearing office changed your onset date, you need to make sure that you are not confusing the "five month waiting period" with a changed onset date.  In a Title II disability case, you do not get paid for the first five full months of disability.  In your case, if the onset was May 5, then you would not get paid DIB benefits for the remainder of May, June, July, August, September, or October of 2005.   Your first check would be for November, 2005.

If your onset was moved to January 1, 2006, then you would not get paid until June, 2006 as the five month waiting period would start in January.

A claimant can, by the way, get paid SSI during that five month waiting period – although, remember, SSI is an income and resource dependent program – if your spouse works or if you have any sort of significant resource, you may not be eligible for SSI at all.

Let's assume that someone in the AJL's office identified this case as an on-the-record candidate and did, in fact, change your onset date from May 5, 2005 to January 1, 2006.  Often this happens because the staff attorney at the ODAR (Office of Disability and Review) did not see specific evidence in your record that your condition was "disabling" until January 1, 2006.  Some judges (and by association their staff) will not assume anything into a record.  Logically, if a person has a third heart attack, a reasonable person would assume that the patient was not particularly healthy between the time of heart attack #1 and #3.  However, if the medical record does not specifically talk about activity limitations until the time of #3, then some judges will conclude that the patient's condition did not get really bad until heart attack #3.  It is silly and ridiculous, but it happens.

You can appeal a favorable decision but the risk is that a hearing judge might reverse the decision entirely.  Obviously, if you do appeal, you will want to get a narrative report or a form filled out by one or more treating doctors to support your May 5 onset date.

By accepting the amended onset date, you are giving up six months of benefits.   You have to decide if the risk of an outright reversal and the time and energy investment is worth the risk.  Generally I am not inclined to appeal a partially favorable decision but I have had clients do so.

Post from: Social Security Disability Blog

Claim Approved "On the Record" With Amended Onset Date – Should I Appeal the Changed Onset?

Jonathan Ginsberg responds:  Deb, thanks for your question.  Your SSDI benefit amount is a calculation based on how much tax you paid into the Social Security system.  Your disability benefit is calculated based on something called your Primary Insurance Amount (PIA).  Your PIA calculation is an exercise in fuzzy math.   You can read more about the PIA calculations on the SSA.gov web site.

I wish I could refer you to a reliable resource that could double check SSA's PIA calculations but I know of no such resource.  If any of my readers does know of such a resource, please let me know.

What I would recommend is that you request a copy of your earnings and benefit statement.  This statement, which is available to you free of charge from Social Security will show your estimate benefit payment and it will also identify your earnings and contributions to Social Security during those earnings years.  If you see that SSA has failed to credit you for certain earnings or for Social Security tax contributions, you would have the basis to ask for a review of your account and a correction to your record.

Technorati Tags: SSDI payment, my earnings record, earnings & benefit statement, PIA calculation

Post from: Social Security Disability Blog

How Do I Know if my SSDI Monthly Benefit Payment Amount is Correct?

Here is an example.  If your LTD benefit is $2000 per month and your SSDI benefit is $1,800 per month, once the SSDI kicks in, the LTD carrier will only pay you $200 per month – you get the higher of the two benefit amounts, but not both.  As an aside, some private LTD policies do not have an offset or repayment provision, whereas most employer provided policies do.

As you might imagine, SSDI claimants are not very happy about having to turn over their lump sum payments.  I once asked an LTD underwriter about this type of repayment requirement and his response was that the offset/repayment policy was built into the premium structure – presumably the cost of the policy would be significantly higher if the insurance company could not take advantage of your SSDI award.

Therefore, if you are collecting LTD benefits and you filed for SSDI, find out whether an offset and repayment provision applies to you. 

Mike has a big problem because an employee of the LTD carrier gave him incorrect information, as you can see from his email to me:

i was just approved for ssd after 3 years, i called my ltd insurer and told them i wanted to get thier money back i had gotten 38,000  i told my claim worker i had not heard from them so i was calling to find out what was going on, she told the paper work was in the mail then she said she could tell me how much i owed i said ok she told me 18,000 so i thought i was blessed.  i started paying back friends and family wo help me thru the 3 years and paid bills in the end i spent what i thought was my i have thier 18,000 but they want the 38,000 what can i do they told me wrong and by the time she called me back and said she told me wrongthe money was spent , i kept the phone call where she admits she told me wrong , what can i do give them the 18,000 and let them not pay me until it is sall paid back please help me, mike

 I think that Mike has an argument that the LTD representative entered into an oral contract with him to repay only $18,000.  I suspect that the policy itself has provisions that disclaim the right of any employee to modify the terms of the policy so the insurer will likely try to deny that the written policy terms have been changed.  The LTD carrier certainly has an argument that its repayment policy was in writing and agreed to in writing by Mike.

This might be a situation where Mike and the insurance company end up in arbitration (some of these policies contain a mandatory arbitration provision) or in court.  Perhaps Mike can enter into an agreement whereby he pays the $18,000 and then agrees to pay an additional sum – perhaps $8,000 or $9,000 over a two to three year period.

Mike might also want to contact his State's insurance commissioner to complain about unfair or misleading treatment.  My guess, however, is that at the end of the day the LTD carrier will likely play hardball.  Mike probably doesn't want to spend a lot of money hiring lawyers but that  may be his best bet – at least to get an opinion about what his policy says about resolving disputes and about the trend in the law in whatever court jurisdiction applies in this case.

Technorati Tags: LTD policy, LTD and SSDI offset, repayment of SSDI lump sum

Post from: Social Security Disability Blog

LTD Carrier Misleads Claimant About Repayment Obligation – What Next?

A question I hear more and more has to do with the tax implications of lump sum Social Security payments.  I found a helpful article at the MarketWatch web site that gives a nice overview of Social Security disability benefits and taxes.  This article was written by Eva Rosenberg a/k/a TaxMama.

Depending upon your household income, some of your SSDI payments may be treated as income for tax purposes.  In 2007, for a husband and wife filing jointly, if you joint income (including your SSDI payment) falls below $32,000, 50% of your SSDI benefit is taxable.  If you income exceeds $44,000 annually, 85% of your SSDI benefit is taxable.

Your lump sum SSDI payment is eligible for special treatment by the IRS – there are rules that allow you to spread out the taxes over several years.  Rosenberg notes that the calculations pursuant to IRS Publication 915 can be complex, so you may want to engage the services of a CPA or enrolled agent to help you.

For more information check out Rosenberg's TaxMama.com site, which offers a great deal of useful and easy to understand tax help.

Technorati Tags: tax treatment of SSDI benefits, tax treatment of Social Security lump sum payments, TaxMama, Eva Rosenberg

Post from: Social Security Disability Blog

Tax Treatment of SSDI Benefits and Lump Sum Payments

If you have been considering bankruptcy, be aware that there are new laws in place and new restrictions on discharging recently incurred credit card debt.

Post from: Social Security Disability Blog

Accrued a lot of debt while on SSI-can they go after my benefits?