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Payment Processing Mistakes Made by Social Security Result in Accusations of Claimant Fraud

SSD overpaymentsYou are going to be hearing a lot about Social Security disability fraud in coming months.  With the disability trust fund about to run out of money, Congress will find itself moving money from other programs into the disability fund to shore it up.

With their attention drawn to the disability programs, legislators will demand more accountability from Social Security administrators.  Fraud against the program will be a focus.

A recent USA Today story about fraud was entitled Feds: 36,000 Get Improper Disability.  The news article cited a GAO report showing that Social Security issued $1.3 billion in disability payments to people who had jobs from December, 2010 through January, 2013 and that Social Security is going to aggressively pursue recovery of these overpayments.

According to the news story Social Security has trouble tracking earnings during the five month waiting period applicable in SSDI claims.  Claimant earnings did not reach the wage-earner’s record and Social Security issued payment for months where an approved claimant was not eligible.

While this USA Today story and others like it are sure to inflame the passions of those who are convinced that 80% of disability claims are fraudulent, the truth is a little less newsworthy. Continue reading →

Your Lump Sum Payment for Past Due Benefits may be at Risk from Child Support Collection Companies

auxiliary benefitsRecently the Social Security disability lawyer discussion group on LinkedIn contained an interesting thread about child support issues.  Child Support and Social Security disability matters tend to draw a lot of attention from both custodial and non-custodial parents, so I try to write about any developments I note in this area.

The poster on LinkedIn reported that she represented a claimant who was a non-custodial parent who owed several thousand dollars in past due benefits.  The child support collection office (state not named) had apparently contracted with a private collection agency.  The collection agency notified Social Security about the child support lien and the minute that the past due benefit award was issued, it was grabbed by the collection agency.  Child support claims are one of the few types of claims that can garnish SSDI (but not SSI) benefits – see the federal statute here.

One of my colleagues, attorney Erin Schmidt from Cleveland, Ohio added a very salient point to this discussion.  Collection agencies do not account for auxiliary benefits.  Since auxiliary benefits (which can amount to 25% of a disabled claimant’s monthly benefit amount and are paid in addition to the claimant’s benefit), a favorable decision could result in the payment of thousands of dollars to the auxiliary. Continue reading →

Past Due Benefits Paid Up to One Year Prior to Application Date Only

onset date vs. application dateQuestions related to onset dates, application dates and the date of first payment continue to be one of the more confusing elements of Social Security disability.  A recent question from a blog reader incorporates all of these issues so I thought it might be helpful to use this question as the basis of a blog post:


Let’s first discuss the question of what is Robert’s onset date.  Generally, most claimants choose as their onset date the date that they last worked, and that is a reasonable choice.  However, your onset date should be the date that you became unable to work.  If, for example, Robert was laid off in May, 2009, and he suffered a major heart attack in October, 2009, the October date would be more appropriate.  In theory, you can choose an onset date prior to your last day of work, but doing so is an uphill battle and judges are reluctant to approve a claimant for disability for a time period when he was working full or close to full time.

Generally I advise my clients to choose the earliest possible onset date when their medical condition prevented full time work.  Your disability onset should be a date prior to the date that your SSDI insurance runs out. Continue reading →

Paying taxes on Social Security Disability benefits

With only one month to go until April 15th, our focus has quickly shifted to this year’s tax preparations. From W-2s to 1099s, to 1040 mailings to tax preparer solicitations, we are bombarded with reminders of our obligations to both the federal and state governments – whether we like it or not!

While some individuals who receive Social Security Disability pay taxes on their benefits, some do not. Individuals excluded from this rule are those persons receiving SSI. SSI benefits are non-taxable, thus depleting the need to report them on any tax return. However, if a SSI recipient earned additional monies other than SSI benefits, he or she is required to report those monies earned on the appropriate tax form.

Approximately one-third of all beneficiaries receiving benefits are required to pay taxes on money received. Two factors determine whether an individual will be required to pay taxes on any benefits received. The total amount of money earned (SSDI + additional income) and an individual’s filing status (single, married filing jointly, married filing separately) are those things considered. To determine whether your benefits are taxable, compare the base amount representing with filing status with one-half of your benefits plus any additional income, including tax-exempt interest.

Single $25,000.00 (base amount)
Married filing separately $0.00 (base amount)
Married filing jointly $32,000.00 (base amount)

Hypothetical cases incorporating these guidelines are below:

Hypothetical situation # 1

Anne is single and receives SSDI, and over the course of 2009 received $18,000.00 in disability benefits. She received $2,000.00 as additional income in the form of commission from a business that she has. Her combined total income for 2009 is therefore $20,000.00. Since the total amount earned is below the $25,000.00 required for a person-filing single, Anne is not taxed on her disability benefits. *Note: Because Anne’s salary combined was below the set income of $25,000, there was no need to consider one-half of her benefits. The results either way would have been the same.

Hypothetical situation # 2

Daniel, a single 43-year-old male, received $18,000 in disability benefits during the year of 2009. In addition, he earned $18,000.00 as a commercial construction consultant. In this case, to determine whether Daniel would have to pay taxes on his disability benefits, we would need to take one-half of Daniel’s disability benefits (1/2 of $18,000 = $9,000.00) and add those monies to any other income that Daniel received in 2009. In this case, he earned an additional $18,000.00. These two totals combined equal $27,000.00, which is $2,000.00 over the $25,000.00 maximum for individuals whom file single. In this case, Daniel’s benefits would be taxed as well as any other income he earned during 2009.

A rule of thumb, if you are in doubt whether you are required to pay taxes on your benefits, consult with a professional tax preparer. Ignorance is not a defense in law.

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

funeralsceneI recently received a call from a colleague about a situation that is all too common given the delays associated with the Social Security disability adjudication process – the death of a claimant prior to a final adjudication.

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.

Will Child be Eligible for Dependent’s Benefits When “Out of the Picture” Father is Approved

I get a lot of questions from mothers who are caring for the children of fathers who are out of the picture.  Susan’s situation is a fairly common one so I will answer it here:

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.

Will Filing a Bankruptcy Affect My Social Security Disability Case?

In my law practice, I have handled both bankruptcy and Social Security disability cases.  Unfortunately, with delays in the Social Security system approaching 3 years, more and more of my disability clients find themselves considering bankruptcy.

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.

How Do Workers Compensation Offsets Affect Social Security Disability Payments?

dear jonathan: i have been recieving ssd since around 2002 and also recieving workers comp (lifetime settlement)i am 53 years old.there is also a small payment from my ltd carrier, in the past they requested 13,000 back in which i paid because of approvel of ssd.i would like to know if ssd will want repayment of any of this money back also, I am over the 80% amount of former salery. i feel traped in this situation .i did use a law firm from the start and they handeled it all but never advised me on the details i described.  to date ssd has never requested information on any other payments recieved .your advice would be appreciated ..thank you jonathan i would think a ssd review could come up in the next year.

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.

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

how much do you recive from ss for 19 months backpay after your lawyer are paid?

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.

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

Jonathan, I was recently approved for ssd by the ALJ. I had my 3 heart attacks, the last on May 5, 2005.   At that time I became disabled to work. This has been my Doctors statement all along. Like a lot of people trying to get ssd, my financial situation got serious. I filed for an "on the record review" and after 6 months recieved a full favorable decision.

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?


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.