5 brown magical mystery tour - stetson university...a mystery tour, popular in 20th century england,...

A GUIDED MAGICAL MYSTERY TOUR THROUGH THE POMS

2019 National Conference on Special Needs Planning and Special Needs Trusts

Kenneth A. Brown, Esq.

Thursday, October 17, 2019 Stetson University College of Law

St. Petersburg, Florida

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TABLE OF CONTENTS Introduction......................................................................................................................4

Distributions From a Trust.............................................................................................4 SI 01120.201 Trusts Established with the Assets of an Individual on or after 01/01/00.......................................................................................................................4

In-kind Support and Maintenance (ISM)......................................................................7 SI 00835.001 Introduction to Living Arrangements and In-Kind Support and Maintenance.................................................................................................................8 SI 00835.465 ISM and Households - Household Costs...............................................9

Temporary Absences......................................................................................................10 SI 00835.040 Temporary Absence from a Federal Living Arrangement (LA) .........10

Smart Use of ISM Payments From a Trust.................................................................12

Income Rules...................................................................................................................13 SI 00815.550 Receipt of Certain Noncash Items.......................................................14 SI 00815.400 Bills Paid By a Third Party..................................................................15 SI 00810.410 Infrequent or Irregular Income Exclusion...........................................16

UsingTrustsWithABLEAccountsandVice‐Versa.................................................25 Transfers From a Trust to an ABLE Account/Income Avoidance...................................25 Support Payments.............................................................................................................25

SI 01130.740 Achieving a Better Life Experience (ABLE) Accounts......................25 SI 01120.201 Trusts Established with the Assets of an Individual on or after 01/01/00.....................................................................................................................29

The Home........................................................................................................................29 SI 01120.200 Information on Trusts, Including Trusts Established Prior to January 01, 2000, Trusts Established with the Assets of Third Parties, and Trusts Not Subject to Section 1613(e) of the Social Security Act .......................................31 SI 01130.100 The Home Exclusion...........................................................................32

Trust Policy.....................................................................................................................38 Age 65..............................................................................................................................38 Transfers to Trusts of Payments Continuing Past Age 65................................................38 Revised policy - Disabled Individual...............................................................................39

SI 01120.203 Exceptions to Counting Trusts Established on or after January 1, 2000............................................................................................................................39

Transfer of Resources – Deemors.................................................................................41 SI 01150.110 Period of Ineligibility for Transfers on or After 12/14/99...................42

Transfer of Resources – Disclaiming an Inheritance..................................................43 SI 00830.550 Inheritances..........................................................................................43 PS 01805.035 New York

PS 17-027 Would inheritance count as a resource in New York for the purposes of Supplemental Security Income if the claimant renounced her inheritance rights?................................................................................................45

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Transfers - Spend Down and Alternatives to Trusts...................................................47 Prepayment of ISM and Personal Services Contracts......................................................47

SI 01150.005 Determining Fair Market Value...........................................................48

Transfer of Resources – Exceptions..............................................................................50 SI 01150.121: Exceptions — Transfers to a Trust.....................................................50 SI 01150.122: Exceptions — Transfer of a Home.....................................................52 SI 01150.123: Exceptions — Non-Home Transfers to Certain Family Members.....54 SI 01150.125: Exceptions — Transfers for Purposes Other Than to Obtain SSI......55

Reopening Determinations............................................................................................56 SI 01120.201 Trusts Established with the Assets of an Individual on or after 01/01/00......................................................................................................................57 SI 04070.015 Reopening SSI Determinations............................................................57

Conditional Benefits.......................................................................................................65 SI 01150.200 Conditional Benefits............................................................................66 SI 01150.201 Conditional Benefits Payments...........................................................67

SI 01130.140 Real Property Following Reasonable but Unsuccessful Efforts to Sell It Throughout a 9-Month Period of Conditional Benefits..................................72

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INTRODUCTION

A mystery tour, popular in 20th century England, was a bus trip adventure undertaken when none of the passengers knew where they were going; a concept the Beatles made famous in their 1967 album and film, Magical Mystery Tour. This guided tour of the Social Security Administration’s Program Operations Manual System (POMS) will help reveal those often hidden, subtle or lesser-known policy gems that you may have missed and can employ in your practice.

Distributions From a Trust There are three great rules related to distributing money from a trust as expressed in the following:

HOW DOES MONEY FROM A TRUST THAT IS NOT MY RESOURCE AFFECT MY SSI BENEFITS?

Money paid directly to you from the trust reduces your SSI benefit. Money paid directly to someone to provide you with food or shelter

reduces your SSI benefit but only up to a certain limit. No matter how much money is paid for these items, we subtract no more than $277.00 (in 2019) from your SSI check for the month you receive the items.

Money paid directly to someone to provide you with items other than food and shelter does not reduce your SSI benefits. (Items that are not "food or shelter" include medical care, telephone bills, education, entertainment, etc.)

Source - SPOTLIGHT ON TRUSTS -- 2019 Edition, available as part of Understanding SSI at www.ssa.gov.

In our first stop we will see how those rules interact with other Supplemental Security Income (SSI) income and resource provisions to provide guidance and some not so obvious ways to make distributions from a trust.

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Effective Dates: 04/30/2018 - Present TN 52 (04-18)

SI 01120.201 Trusts Established with the Assets of an Individual on or after 01/01/00

CITATIONS: Social Security Act as amended, Section 1613(e)

P.L. 106-169, Section 205

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I. Policy for disbursements from trusts

1. Trust principal is not a resource

If the trust principal (or a portion of the trust principal) is not a resource, disbursements from the trust (or that portion) may be income to the individual, depending on the nature of the disbursements. Regular rules apply to determine when income is available.

a. Disbursements that are income

Cash paid directly from the trust to the individual is unearned income. We treat disbursements from the trust to the trust beneficiary’s personal debit card the same as cash disbursements. We count the disbursement as unearned income for the month the disbursement is received or added to the debit card.

If disbursements from the trust to third parties result in the beneficiary’s receiving non-cash items (other than food or shelter), the non-cash items are in-kind income if the items would not be a partially or totally excluded non-liquid resource if retained into the month after the month of receipt. For instructions on receipt of certain non-cash items, see SI 00815.550.

For example, if a trust buys a car for the beneficiary and the beneficiary's spouse already has a car that is excluded for SSI purposes, the second car is income in the month of receipt, since it would not be an excluded resource in the following month.

b. Disbursements that result in receipt of in-kind support and maintenance

Food or shelter received as a result of disbursements from a trust to a third party is income in the form of in-kind support and maintenance (ISM) and is valued under the presumed maximum value (PMV) rule. For instructions pertaining to the PMV rule, see SI 00835.300. For rules pertaining to a home, see SI 01120.200F.

c. Disbursements that are not income

Disbursements from the trust that are not cash to the individual or are third party payments that do not result in the receipt of support and maintenance are not income. Such disbursements may include, but are not limited to, those made for educational expenses, some travel expenses, therapy, medical services not covered by Medicaid, phone bills, recreation, and entertainment (see SI 00815.400.).

Disbursements made from the trust to a third party that result in the beneficiary’s receipt of a non-cash item (other than food or shelter) are not income if the non-cash item would become a totally or partially excluded non-liquid resource if retained into the month after the month of receipt. For instructions on receipt of certain non-cash items, see SI 00815.550.

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For example, a trust purchases a computer for the beneficiary. Since we would exclude the computer from resources as a household good in the following month, the computer is not income. For instructions on household goods, personal effects, and other personal property, see SI 01130.430.

Funds transferred from the trust into an account established by the trust beneficiary under the Achieving a Better Life Experience (ABLE) Act are excluded from income to the trust beneficiary. For treatment of deposits into an ABLE account, see SI 01130.740.

d. Disbursements for credit card bills

If a trust pays a credit card bill for the trust beneficiary, whether the individual receives income depends on the list of itemized charges on the bill. If the trust pays for food or shelter items on the bill, we will generally charge the individual with ISM for those items up to the PMV. If the bill includes non-food, non-shelter items, the individual does not receive income as a result of the payment, unless the items received would not be totally or partially excluded non-liquid resources the following month.

EXAMPLE: If the credit card bill includes restaurant charges, payment of those charges results in ISM. If the bill also includes the purchase of clothing, payment for the clothing is not income.

e. Administrator-managed prepaid cards

Administrator-managed prepaid cards, such as True Link cards, are a type of restricted debit card that can be customized to block the cardholder’s access to cash, specific merchants, or entire categories of spending. Typically, the trustee is the account owner and administrator, and the trust beneficiary is the cardholder. To evaluate the income and resource implications of trust disbursements to administrator-managed prepaid cards, we must determine who owns the prepaid card account.

If the trustee is the owner of the prepaid card account:

Whether the trust beneficiary receives income from trust disbursements depends on the type of purchase reflected in the card statement. Treat purchases in the following manner:

o If the administrator-managed prepaid card is used to obtain cash, such as at an ATM, the withdrawal counts as unearned income.

o If the administrator-managed prepaid card pays for food or shelter items, such as charges at a restaurant, the individual will generally be charged with ISM up to the PMV.

o If the administrator-managed prepaid card pays for non-food, non-shelter items, such as for clothing at a department store, the individual usually does not receive income unless the item received would not be a totally or partially excluded non-liquid resource the following month.

The administrator-managed prepaid card is not the trust beneficiary’s resource.

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If the trust beneficiary is the owner of the prepaid card account:

Count all disbursements from the trust onto the card as unearned income; and

Count any unspent balance on the card as a resource as of the beginning of the month after funds are loaded onto the card.

f. Disbursements for gift cards and gift certificates

Consider gift cards and gift certificates purchased by the trust for the individual’s use to be cash equivalents. If the individual can use a gift card or certificate to buy food or shelter (such as a restaurant, grocery store, or VISA gift card), it is unearned income in the month of receipt. Any unspent balance on the gift card or certificate is a resource beginning the month after the month of receipt. If the store does not sell food or shelter items (such as a flower shop or electronics store), but the card does not have a legally enforceable prohibition on the individual’s selling the card for cash, then it is still unearned income. For general policy on gift cards and gift certificates, see SI 00830.522.

g. Reimbursements to a third party

Reimbursements made from the trust to a third party for funds expended on behalf of the trust beneficiary are not income. In addition, reimbursements from the trust to pay a credit card belonging to a third party for purchases made for the trust beneficiary are not income.

Existing income and resource rules apply to items that a trust beneficiary receives from a third party. If a trust beneficiary receives a non-cash item (other than food or shelter), it is in-kind income if the item would not be a partially or totally excluded non-liquid resource if retained into the month after the month of receipt. If a trust beneficiary receives food or shelter, it is income in the form of ISM.

h. Disbursements transferred into an ABLE account

Funds transferred from the trust into an account established by the trust beneficiary under the ABLE Act are excluded from income to the trust beneficiary. For treatment of deposits into an ABLE account, see SI 01130.740.

In-kind Support and Maintenance (ISM) The second great rule of distributions states that money paid directly to someone to provide you with food or shelter reduces your SSI benefit. In order to avoid the trap of ISM or to use its rules to your client’s advantage, you must first achieve a mastery of the minutia of ISM policy. The place to start is with these gems:

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There are only two major rules for ISM-counting, the VTR Rule and the PMV Rule; and

There are only 10 items that receipt of result in ISM-counting. Effective Dates: 05/13/2011 - Present TN 66 (05-11)

SI 00835.001 Introduction to Living Arrangements and In-Kind Support and Maintenance

CITATIONS:

Social Security Act as amended, Section 1612(a)(2)(A) ;

Regulations - 20 CFR 416.1130

A. Policy on living arrangements and in-kind support maintenance

In-kind support and maintenance (ISM) is unearned income in the form of food or shelter, or both. The Social Security Act (the Act) considers ISM, along with other forms of unearned income, when determining supplemental security income (SSI) eligibility and payment amounts. We use two rules to determine the value of ISM an individual receives:

1. the Value of the One-Third Reduction (VTR) rule, discussed in SI 00835.200; and

2. the Presumed Maximum Value (PMV) rule, discussed in SI 00835.300.

NOTE: Based on a change in the SSI regulations, beginning 03/09/2005, we do not count receipt of clothing as ISM. For policy and procedures pertaining to in-kind support and maintenance to one person, see SI 00835.400.

1. Value of the one-third reduction (VTR) rule

We reduce the applicable Federal benefit rate (FBR) by one-third when an individual or couple:

Lives throughout a month in another person's household; and Receives both food and shelter from others living in that household.

(For a detailed explanation of the VTR, see SI 00835.200).

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2. Presumed Maximum Value (PMV) rule

When a beneficiary or couple is eligible for payment and the VTR does not apply, use the PMV rule to determine the value of ISM received. The amount of the PMV is equal to one-third of the Federal benefit rate for an individual or couple, plus $20. If the individual or couple successfully rebuts the PMV, value the ISM at the current market value (CMV) or the actual value (AV), whichever is less. (For a detailed explanation of the PMV rule, see SI 00835.300 and for information about rebutting the PMV, see SI 00835.320).

NOTE: When the VTR rule applies in any one month, the PMV rule cannot apply in the same month.

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SI 00835.465 ISM and Households - Household Costs

CITATIONS:

Regulations 20 CFR 416.1133(c)

D. Policy — what are household costs

1. List of applicable items

When computing household operating expenses for inside ISM or the CMV of household costs for outside ISM, the following 10 items are the only ones used in the applicable computations:

Food Mortgage (including property insurance required by the mortgage holder) Real property taxes (less any tax rebate/credit) Rent Heating fuel Gas Electricity Water Sewer Garbage removal

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Temporary Absences The next policy gem is temporary absences. If an individual meets the requirements to be considered temporarily absent from their permanent living arrangement, SSA will count any ISM received as if the individual was living in his or her permanent living arrangement. Any ISM received while temporarily absent does not count. So, if a trust pays for a temporarily absent individual’s hotel and food during a vacation, those payments do not result in the receipt of ISM. There are also temporasry absence consideration associated with the home starting on page 29.


SI 00835.040 Temporary Absence from a Federal Living Arrangement (LA)

A. When to use instructions to determine temporary absence from a federal LA

To determine whether an eligible or ineligible claimant is temporarily absent from a federal LA, unless the claimant qualifies for continuation of benefits because of temporary institutionalization for any portion of the same confinement; refer to instructions in SI 00520.140.

B. Definition of absence and permanent LA

1. Absence

An absence means being physically away from a permanent LA, whether that living arrangement is a household or an institution, for at least 24 hours.

2. Permanent LA

A permanent LA is the place where a claimant lives or, for purposes of this section, on rare occasions, it may refer to one or more members of an individual's household.

EXAMPLE: Mrs. Kay is temporarily absent from her home while in the hospital for three weeks. When she entered the hospital, her permanent LA was with her husband, son, and mother in an apartment her mother rented. While she was in the hospital, her husband and son moved to a new apartment. Mrs. Kay intends to join her husband and son when the doctor at the hospital releases her. Even though Mrs. Kay does not intend

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to return to the same physical residence, she still intends to return to her permanent LA; i.e., the home she shares with her husband and son.

C. Policy for temporary absence from a federal LA

1. Conditions for a temporary absence

a. General rule

A temporary absence exists if a claimant:

has been in his or her permanent LA for at least one full calendar month prior to his or her absence; and

intends to, and actually does, return to the permanent LA in the same calendar month he or she leaves or in the next month.

b. Exceptions

Under certain circumstances, there are no limits on the length of a temporary absence and the claimant is not required to return. The exceptions are:

temporary absence of a child from a federal LA due to school attendance, per instructions in SI 00835.042; and

temporary absence from a federal LA, due to confinement in a medical facility where Medicaid pays more than half the cost of care, per instructions SI 00835.043.

2. ISM during a temporary absence

During a temporary absence of ISM, we:

continue to value ISM as if a claimant were physically in his or her permanent LA; and

do not count ISM a claimant receives during the temporary absence.

Exceptions:

SI 00835.042A.2. ISM during a temporary absence due to school attendance SI 00835.043B.2. ISM during a temporary absence due to medical confinement

D. Procedure for development for temporary absence from a federal LA

1. Assumption of temporary absence

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Assume, absent evidence to the contrary, that an absence was temporary if:

you learn of it after the claimant returned to his or her prior residence; and the reported duration of the absence does not exceed a calendar month.

It is not necessary to document the allegations or your decision.

2. Assumption not applicable

If the sections in SI 00835.040D.1. do not apply, to determine whether an absence is, or was temporary; if it is material to your LA or ISM determination, refer to instructions in SI 00835.041 through SI 00835.043.

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Smart Use of ISM Payments From a Trust

Just because payment for food and/or shelter by a trust results in counting the food and shelter received as income for SSI purposes, you should not be afraid to allow for discretionary payment of food and/or shelter by the trust if it may result in a better life situation for the trust beneficiary. The first inclination may be to prohibit any distributions for food and/or shelter because it will reduce the amount of the SSI check. And by no means should the trust state that the trust will pay for food and/or shelter needs and risk the trust being considered a support trust. However, there may be distinct benefits to allowing a trustee to make discretionary payments for food and/or shelter, as the situation may require. In fact, the way the rules function, it would be malpractice to impose too restrictive rules on a trustee. Let’s see how permissive distributions may be beneficial to a beneficiary.

Example: In the case of two similarly situated individuals who both receive SSI and have received personal injury settlements. The settlement funds have been placed in a special needs trust that allows continued SSI eligibility. The trust drafted by Attorney A contains language that permits the trustee to make distributions to third parties to pay for the needs of the trust beneficiary, except that he may not make distributions for food and/or shelter that would reduce the SSI benefit. However, the trust drafted by Attorney B permits discretionary distributions for food and shelter. Neither beneficiary has other sources of income. Let’s see how that may play out.

Attorney A’s Trust Attorney B’s Trust Beneficiary’s payments from his monthly SSI check

Shelter $500 $0 Food $271 $0 Trustee’s payments for beneficiary’s food and shelter from trust

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Shelter $0 $2500 Food $0 $500

Trustee’s total distributions for food and shelter

$0

$3000

Reduction in the beneficiary’s monthly SSI check due to trust disbursements

Federal Benefit Rate (FBR) $771 $771 Reduction due to ISM

counting under the presumed maximum value (PMV) rule

$0

($277) Net SSI check to beneficiary $771 $494 Beneficiary’s available lifestyle From trust $0 $3000 From SSI $771 $494 Total lifestyle $771 $3494

What are some of the things that a trustee must consider in determining whether to make distributions for food and shelter and how much to distribute?

First and foremost, the trustee should be sure to maintain SSI and Medicaid eligibility. There may be certain circumstances such as eligibility for SSDI benefits or the receipt of other earned or unearned income valued at or above the PMV that would make trust disbursements for food and/or shelter and the resultant reduction in benefits due to ISM valued at the PMV inadvisable. Such distributions should be curtailed or the amount of the distribution reduced to coordinate with the receipt of other income and maintain eligibility, even the receipt of one dollar.

Note: The PMV is rebuttable, in other words, if the value of the food and shelter received is worth less than the PMV, the individual will be charged with the actual value of the food and shelter. Therefore, a reduction in the amount of the distribution may still permit a distribution to be made while maintaining eligibility for benefits.

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Income Rules

The next three sections of POMS provide other income rules that interact with the third great rule on distributions;

Money paid directly to someone to provide you with items other than food and shelter does not reduce your SSI benefits. This is true if the payer is a trust or other third party that is reimbursed by a trust.

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Generally, payments for services that are not considered as shelter costs (e.g., electric, gas or heating fuel, water sewer or garbage collection) do not result in the receipt of income for SSI.

Receipt of items that would be considered a partially or totally excluded nonliquid resource in the month following the month of receipt are not income for SSI. For example, this could be a car, computer, furniture, medical assistive devices or a host of other items that may useful to the beneficiary. A list of excluded resources can be found at SI 01110.210.

There is a little known income exclusion that provides that the first $30 per quarter of earned income or the first $60 per quarter of unearned income (if not otherwise excluded by another income exclusion) received infrequently or irregularly is excluded. Infrequent income is defined as income that an individual receives only once during a calendar quarter from a single source, and which the individual did not receive in the month immediately preceding that month or in the month immediately subsequent to that month, regardless of whether or not those payments occur in different calendar quarters. Income is considered to be received irregularly if an individual cannot reasonably expect to receive it.

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SI 00815.550 Receipt of Certain Noncash Items

CITATIONS: Regulation - 20 CFR 416.1103(j)

A. Policy

The value of any noncash item (other than an item of food or shelter) is not income if the item would become a partially or totally excluded nonliquid resource if retained into the month after the month of receipt.

B. Reference

List of items excluded from resources, SI 01110.210.

C. Examples

1. Receipt of a specially equipped van

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Eddie Glyndon is a disabled child living in his parents' household and confined to a wheelchair. A local church accepts donations from the community and purchases a van specially equipped with a wheelchair lift to transport Eddie. The church gives the van to Eddie's parents. Since the van is their only vehicle and will become an excluded nonliquid resource in the month after the parents receive it (see SI 01130.200A.3.), the value of the van is not income to Eddie's parents for deeming purposes.

2. Receipt of shelter

Ethel Gibson, an SSI recipient, is given the home she lives in by her son. The value of this gift is income to Mrs. Gibson because the house provides her with shelter. The value of the gift is capped at the PMV according to the rules in SI 00835.300.

3. Receipt of a partially excluded resource

Stan Kowalski, an SSI recipient, receives a new car valued at $6,000 from his brother. Since a portion of the value of the car ($4,500) will become an excluded nonliquid resource in the next month, the value of the car is not income to Mr. Kowalski.

NOTE: This example reflects the automobile resource exclusion policy in effect through March 2005 (See SI 01130.200C for the automobile exclusion policy beginning April 2005).

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SI 00815.400 Bills Paid By a Third Party

CITATIONS:

Regulation - 20 CFR 416.1103(g)

A. Policy

Payment of an individual's bills (including supplementary medical insurance under title XVIII or other medical insurance premiums) by a third party directly to the supplier is not income. However, anything received in kind as a result of the payment is income if it is food or shelter.

B. Examples

1. Third party payment results in ISM

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The daughter of Mrs. Harper, an SSI recipient, pays the grocer for food delivered to her mother. Although the payment to the grocer is not income, Mrs. Harper receives ISM in the form of food, subject to the PMV (SI 00835.300).

2. Third party payment does not result in income

Joshua Hall, an SSI recipient, is unable to pay his phone bill so his sister pays the phone company with her own money. Neither the payment to the phone company nor the telephone service received as a result of the payment is income because it is not food or shelter.

C. References

Gifts received as a result of another's payment of bills, SI 00830.520. Rules on when and how to count in-kind support and maintenance (ISM)

received as a result of vendor payments by a third party, SI 00835.360. Instructions on vendor payments which are a form of certain home energy

assistance or support and maintenance assistance, SI 00830.605.

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SI 00810.410 Infrequent or Irregular Income Exclusion CITATIONS:

Social Security Act, §1612(b)(3) as amended by P.L. 108-203, §430; 20 CFR 416.1112(c)(2), 416.1124(c)(6), 416.1161(a) and 416.1161(c)

A. Definitions

1. Infrequent income beginning September 8, 2006

Income is considered to be received infrequently if an individual receives it only once during a calendar quarter from a single source and the individual did not receive that type of income in the month immediately preceding that month or in the month immediately subsequent to that month, regardless of whether or not these payments occur in different calendar quarters.

2. Infrequent income prior to September 8, 2006

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Income is considered to be received infrequently if an individual receives it no more than once in a calendar quarter from a single source.

3. Irregular income

Income is considered to be received irregularly if an individual cannot reasonably expect to receive it.

4. Single source of income

a. Earned income

A single source of earned income is an employer, a trade, or a business.

b. Unearned income

A single source of unearned income is an individual, a household, an organization or an investment. Examples of a single source of unearned income are as follows:

A household in which an individual lives is a single source even if the household composition changes due to a move by the individual or by other household members (see SI 00810.410F.2.).

An organization is the Federal Government, a single State or local government, a business or corporation, a charitable agency, or a similar entity which provides an individual with income.

An investment is a single financial account, life insurance policy, rental property, or any other resource providing a return to its owner. Two separate accounts, even if with a single financial institution, are two different investments.

5. Two payments from a financial institution – not a single source

An individual may occasionally receive an irregular interest payment by reason of a financial institution's own internal “housekeeping” rules. For example, a bank's rules may require an extra payment when someone closes an account or there may be a special “adjustment” payment due to a change in the accounting system or to closing the books at the end of a fiscal year. These kinds of irregular payments are from the financial institution itself and not from an individual's account with that institution. Therefore, they do not cause a regular (but infrequent) interest payment from an account to be considered “frequent” in that one quarter (see SI 00810.410F.3.).

NOTE: Determinations involving sources of income are only necessary when determining whether income is infrequent (see SI 00810.410F.1. and SI 00810.410F.2.).

6. Types of unearned income

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For purposes of this exclusion, types of unearned income are those listed in SI 00830.160, SI 00830.210 through SI 00830.555 and in-kind support and maintenance (ISM) as described in SI 00835.000.

7. Outside ISM – not a type of unearned income

For only the purposes of this exclusion, outside ISM should be treated as if it is the corresponding type of unearned income listed in SI 00830.210 through SI 00830.555 (e.g., gift, child support). It requires evaluation of contributions from each source separately if frequency is at issue.

B. Policy – general

1. The exclusion

We exclude income which is received either infrequently or irregularly. In order to be excluded, the income need only be one or the other (infrequent or irregular).

2. Application of the exclusion

a. Applicable to both earned and unearned income

Benefits payable beginning July 1, 2004

This exclusion applies to earned and unearned income up to the limits in SI 00810.410C. and SI 00810.410D.

Benefits payable prior to July 1, 2004

This exclusion applies to both earned and unearned income provided the total of each does not exceed the limits in SI 00810.410E. We excluded all infrequent or irregular earned and/or unearned income or none of it, depending on the amount involved.

b. Limit as it applies to couples

The dollar amount of the exclusion does not increase even if both an eligible individual and spouse (eligible or ineligible) have infrequent or irregular income.

When determining whether income received by an eligible couple meets the definition of “infrequent,” consider each individual’s income separately. If both members of a couple receive a paycheck of $400 only in February, both paychecks are considered infrequent. The exclusion is applied to the first paycheck received.

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c. To whom applicable

The exclusion is applicable to income received infrequently or irregularly by an eligible individual, eligible or ineligible spouse, ineligible parent(s), and ineligible children.

3. Unearned income – specific considerations

In evaluating frequency of receipt of unearned income, we look at receipts of the same type of income from a single source.

C. Policy – benefit payments beginning September 8, 2006

Beginning September 8, 2006, infrequent income is defined as income that an individual receives only once during a calendar quarter from a single source, and which the individual did not receive in the month immediately preceding that month or in the month immediately subsequent to that month, regardless of whether or not those payments occur in different calendar quarters.

We exclude the following amount of income, which is received either infrequently or irregularly:

The first $30 per calendar quarter of earned income; and The first $60 per calendar quarter of unearned income.

NOTE: If an individual begins receiving a recurring payment (e.g., a social security check) in the third month of a quarter, the payment does not meet the definition of infrequent because it will be received in the following month, even though the following month is in another quarter. The same would be true if the recurring payment ended in the first month of a quarter, but had been received in the prior month in another quarter.

D. Policy – benefit payments between July 1, 2004 and September 7, 2006

Between July 1, 2004 and September 7, 2006, infrequent income was defined as income that an individual received no more than once in a calendar quarter from a single source.

We exclude the following income which is received either infrequently or irregularly:

The first $30 per calendar quarter of earned income; and The first $60 per calendar quarter of unearned income.

NOTE: If an individual begins receiving a recurring payment (e.g., a social security check) in the third month of a quarter, the payment does meet the definition of

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infrequent. It does not matter that the individual receives the payment in the following month, since that month is in another quarter. The definition in effect during this period only requires that the payment be received no more than once in a calendar quarter from a single source. Also, a recurring payment that ends in the first month of a quarter meets the definition of infrequent.

E. Policy – benefit payments prior to July 1, 2004

We exclude income which is received either infrequently or irregularly provided the total of such income does not exceed:

$10 per month of earned income; and $20 per month of unearned income.

NOTE: The definition of “infrequent” during this time period is the same as in SI 00830.420D.

F. Examples of types and sources of unearned income

1. Each of two types of income from a single source is infrequent

In July 2004, an individual's friend repays, with interest, money the individual had loaned him. The interest income is $50. In August 2004, the same friend gives the individual a gift of some football tickets with a value of $100. The individual has received two different types of income — interest and a gift — from the same source. Evaluating each receipt separately, we see that each can qualify separately as infrequent. The first $60 is excludable even though the total received exceeds $60. The infrequent or irregular income exclusion would reduce the $50 interest income in July to zero and the remaining $10 exclusion would reduce the value of the tickets to $90.

2. Inside ISM from two households is not infrequent

An individual lives in one household at the beginning of a calendar quarter and receives inside ISM. In the second month of the quarter, he/she moves to a different household from which he/she also receives ISM. Since we consider both households to be a single source, the ISM does not qualify as infrequent.

3. Regular source makes unexpected payment

An individual has a savings account that pays interest of $15 in the second month of each quarter. The interest has been routinely excluded as infrequent as the individual has no other infrequent or irregular income.

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In 2003, without any advance notice to depositors, the bank changes its accounting system. As a result, in June the individual receives a $2.03 one-time payment in addition to his/her regular $15 interest payment in May.

The bank does not intend to interrupt its usual quarterly interest schedule, so the CR correctly views the one-time payment in June as being from a separate source than the regular quarterly payments; i.e., it is a bank adjustment. Therefore, the regular $15 payment is still excludable as infrequent while the unexpected $2.03 payment is irregular. The total is within the $20 limit in the month of receipt and is excludable.

NOTE: A similar situation exists when SSA makes an AERO payment during a month each year in addition to the regular recurring title II check. Since an AERO payment cannot reasonably be expected or budgeted for, it meets the definition of irregular income and is subject to the $60 infrequent or irregular income exclusion beginning July 1, 2004.

4. ISM and institution

An individual was confined in jail on May 31st and released on August 15th. The CR correctly values the food and shelter received by Mr. Hamilton from the jail at the PMV for all months June through August. The ISM cannot be excluded as irregular because the individual could have reasonably expected to receive the food and shelter while incarcerated. The income cannot be excluded as infrequent income because the ISM was received in consecutive months. The fact that the individual was ineligible for SSI in June and July is not material to the irregular and infrequent determination.

5. Receipt of same type of income from more than one source

The individual receives wages from three different employers during September 2008. He receives $60 from Kmart on September 1, $75 from Wal-Mart on September 5, and $100 from a Mobil gas station on September 20.

He received no wages in July, nor did he receive wages in August or October 2008 (the months preceding and following the month he received wages). Consider all three-wage payments infrequent income. Apply the $30 earned income exclusion to the Kmart wages since the individual received the Kmart wages first.

NOTE: If the exclusion exceeds the amount of the wages received first, apply the remainder of the exclusion to the wage received second. We apply the exclusion to wages in order of receipt until the wages reach the exclusion limit or there are no more wages in the month.

G. Process – identifying infrequent or irregular income

1. Unearned income

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a. Benefit payments beginning September 8, 2006

If someone receives unearned income

and then its

receipt is

no more than once in a calendar quarter from a single source

received the same type of income in the month preceding or following that month even if it is in another calendar quarter,

not infrequent.

no more than once in a calendar quarter from a single source

did not receive the same type of income in the month immediately preceding or immediately following that month, but in a separate calendar quarter,

infrequent.

no more than once in a calendar quarter from each of several sources

it is the same type of income in each instance,

infrequent.

more than once in a calendar quarter from the same source

it is a different type of income in each instance,

infrequent.

more than once in a calendar quarter from the same source

it is the same type of income in each instance,

not infrequent.

any number of times in a calendar quarter

the individual could not reasonably have expected or budgeted for it,

irregular.

any number of times in a calendar quarter

the individual could reasonably have expected or budgeted for it (even if the individual did not know the exact amount),

not irregular.

. . . . .

2. Earned income

a. Benefit payments beginning September 8, 2006

Whensomeonereceivedearnedincome thenitsreceiptis

no more than once in a calendar quarter from a single source or from each of several sources and did not receive the same type of income in the month immediately preceding or immediately following that month in a different calendar quarter

infrequent.

no more than once in a calendar quarter from a single source or from each of several sources, and received the same type of income in the month immediately preceding or immediately following that month

not infrequent.

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Whensomeonereceivedearnedincome thenitsreceiptis

(even if the payment occurs in a different calendar quarter)

more than once in a calendar quarter from a single source or from each of several sources,

not infrequent.

any number of times in a calendar quarter and the individual could not reasonably have expected or budgeted for it,

irregular.

any number of times in a calendar quarter and the individual, could reasonably have expected or budgeted for it (even if the individual did not know the exact amount),

not irregular.

. . . . .

H. Process – applying the exclusion

1. Benefit payments beginning July 1, 2004

The following process is for any earned income but only for unearned income which is not subject to other exclusions.

When someone receives infrequent or irregular

then this exclusion

unearned income applies to the first $60 of infrequent or irregular unearned income received in a calendar quarter.

earned income applies to the first $30 of infrequent or irregular earned income received in a calendar quarter.

unearned and earned income

applies to the first $60 of infrequent or irregular unearned income and the first $30 of infrequent or irregular earned income.

. . . . .

I. Procedure – general

1. Initial claims

a. Infrequent

If income is regular but may qualify for exclusion as infrequent, evaluate its receipt over the quarter of filing, including any months prior to filing.

b. Irregular

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If income may qualify for exclusion as irregular, evaluate the predictability of its receipt beginning with the month of application.

2. All situations

a. Individual’s allegation

Obtain a statement signed or recorded on a DROC concerning the type, amount, frequency, or predictability of income. The statement, or similar information on the SSI application or redetermination form, is sufficient documentation. Absent evidence to the contrary, accept the individual's allegation.

b. Evidence disagrees with allegation

If there is evidence which disagrees with the individual's allegations, develop and document under the appropriate income rules.

J. Procedure – amount of income for benefit payments beginning July 1, 2004

1. Earned income

Determine all of the earned income received on an infrequent or irregular basis during the calendar quarter and exclude the first $30. If the first infrequent or irregular earned income received results in PSY N01 (excess income) in a month, the $30 exclusion must still be applied to this income even if the PSY remains N01. Similarly, if the first infrequent or irregular earned income is received in a month of non-pay during the quarter (e.g., NO4, N22, etc.), the $30 exclusion must still be applied to this income which was received first.

2. Unearned income

Determine all of the unearned income received on an infrequent or irregular basis during the calendar quarter and exclude the first $60. If the first infrequent or irregular unearned income received results in PSY N01 (excess income) in a month, the $60 exclusion must still be applied to this income even if the PSY remains N01. Similarly, if the first infrequent or irregular unearned income is received in a month of non-pay during the quarter (e.g., N04, N22, etc.), the $60 exclusion must still be applied to this income which was received first.

. . . . .

O. Reference

SI 00830.050, Relation of the infrequent/irregular to other income exclusions

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____________________

UsingTrustsWithABLEAccountsandVice‐Versa The enactment of the Stephen Beck Jr., Achieving a Better Life Experience Act at the end of 2014 provided trustees/beneficiaries/practitioners with probably the most useful tool in decades. I cannot imagine a situation where it would not be advantageous for a special needs trustee and beneficiary to have an ABLE account to use in conjunction with the trust. Transfers From a Trust to an ABLE Account/Income Avoidance The POMS explicitly permits transfers from a special needs or pooled trust to an ABLE account up to the annual contribution limit ($15,000 for 2019). The benefit to this arrangement is that a transfer that would otherwise count as income is excluded from income. Furthermore, if those same funds are subsequently disbursed from the ABLE account to directly pay for housing (shelter) expenses, the shelter received does not count as income in the form of in-kind support and maintenance. The use of an ABLE account provides a legal way to “launder” money to avoid income counting for housing expenses. Of course, any other expenditure for an item that qualifies as a Qualified Disability Expense is also excluded. Support Payments Likewise, the use of a trust with an ABLE account provides a method to avoid income counting for support payments such as child support or alimony. If a support payment is paid directly into an ABLE account, the payment is income because the ABLE account owner is the person legally entitled to receive that payment. Even if paid directly into the ABLE account, the individual is considered to have constructively received the payment prior to deposit into the ABLE account. However, if support payments are irrevocably assigned to a trust (a court order is deemed to be an irrevocable assignment), the payment is not income when deposited into the trust. The support payment can then be transferred into an ABLE account for the use of the trust beneficiary, avoiding income counting upon receipt, and if used correctly, avoiding income counting upon expenditure. Effective Dates: 04/30/2019 – Present TN 75 (04-19)

SI 01130.740 Achieving a Better Life Experience (ABLE) Accounts

Citations: Public Law 113–295 The Stephen Beck, Jr., Achieving a Better Life Experience Act (ABLE Act) – Enacted December 19, 2014

. . . . .

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C. When to exclude ABLE account contributions, balances, earnings, and distributions

1. Exclude contributions as income

A payment made into an ABLE account constitutes a contribution. Consider the contribution made by the person to whom the funds belong or are due. Exclude contributions to an ABLE account from the income of the designated beneficiary. Excluded contributions include rollovers from a member of the family’s ABLE account to an SSI applicant, recipient, or deemor’s ABLE account:

NOTE: The fact that a person uses his or her income to contribute to an ABLE account does not mean that his or her income is not countable for SSI purposes as it normally would be. Income received by the designated beneficiary and then deposited into his or her ABLE account is income to the designated beneficiary. For example, an applicant, recipient, or deemor can have contributions automatically deducted from his or her paycheck and deposited into an ABLE account. In this case, include the income used to make the ABLE account contribution in the applicant, recipient or deemor's gross wages.

a. First party contributions

A contribution made by the designated beneficiary into his or her ABLE account is not income to the designated beneficiary. However, income received by the designated beneficiary and deposited into his or her ABLE account is income to the designated beneficiary. That is, the income is income in the first instance, but the contribution is not income.

An individual cannot use direct deposit to avoid income counting.

So, when a payment that belongs or is due to the designated beneficiary is direct-deposited into his or her ABLE account, the payment is considered to be received by the designated beneficiary, it is counted as income to the designated beneficiary as it otherwise would be, the designated beneficiary is considered the contributor for ABLE purposes, and the ABLE contribution is not considered income to the designated beneficiary.

Examples of payments that might be direct-deposited into an ABLE account, but still are counted as income as they otherwise would be, include:

Wages; Benefit payments (Title II, Veterans Administration, pensions, etc.); and Mandatory Support payments (child support or alimony).

b. Third party contributions

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A third party contribution is not income to the designated beneficiary. Third party contributions are contributions made by persons other than the designated beneficiary. Further, third party contributions are made with funds that do not otherwise belong, or are not otherwise due, to the designated beneficiary; that is, they are made with the third party’s funds. Accordingly, an ABLE contribution by a person other than the designated beneficiary is treated as a completed gift.

NOTE: “Completed gift” refers to the IRS definition for gift-tax rules, not the definition of a gift in SI 00830.520. For ABLE, we exclude third party contributions, regardless of their status as a gift for SSI purposes.

A transfer of funds from a trust, of which the designated beneficiary is the beneficiary and which is not considered a resource to him or her, to the designated beneficiary’s ABLE account generally will be considered a third party contribution for ABLE purposes because the contribution is made by a person or entity other than the designated beneficiary (namely, the trustee) and because the designated beneficiary does not legally own the trust. You may seek guidance from your regional trust lead if you have questions regarding the trust transfer to an ABLE account.

. . . . .

4. Do not count ABLE account distributions as income

A distribution from an ABLE account is not income but is a conversion of a resource from one form to another. See SI 01110.600B.4.

Do not count distributions from an ABLE account as income of the designated beneficiary, regardless of whether the distributions are for a QDE not related to housing, for a housing expense, or for a non-qualified expense.

. . . . .

D. When to count ABLE account balances and distributions

. . . . .

2. Count retained distributions for housing expenses or expenses that are not QDEs as a resource

A distribution from an ABLE account is not income, but is a conversion of a resource from one form to another. For more information see SI 01110.600B.4.

Count a distribution for a housing expense or for an expense that is not a QDE as a resource, if the designated beneficiary retains the distribution into the month following

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the month of receipt. If the designated beneficiary spends the distribution within the month of receipt, there is no effect on eligibility. However, apply normal SSI resource counting rules and exclusions to items purchased with funds from an ABLE account.

EXAMPLE: Retained distribution intended for housing expenses is a resource

Amy takes a distribution of $500 from her ABLE account in May to pay a housing expense for June. She deposits the $500 into her checking account in May, withdraws $500 in cash on June 3, and pays her landlord. This distribution is a housing expense and part of her checking account balance as of June 1, which makes it a countable resource for the month of June.

3. Count previously excluded distributions used for a non-qualified purpose or housing expense

Count the amount of funds used for a non-qualified expense or housing expense as a resource as of the first moment of the month in which the funds were spent if the designated beneficiary uses the distribution (that was previously excluded per SI 01130.740C.5.a. in this section) for a non-qualified purpose or a housing expense.

If an individual’s intent to use the funds for a QDE changes at any other time, but he or she has not spent the funds, count the retained funds as a resource as of the first of the following month.

a. Example of a previously excluded distribution used for a non-QDE

Sam takes a distribution of $25,000 from his ABLE account in May for an assistive technology and related service. He pays a $10,000 deposit. While waiting for the service to be completed, Sam takes a trip to a local casino in July where he loses $1,000 of his ABLE distribution gambling. The $1,000 he lost gambling is a countable resource in July. The other $14,000 Sam retains is an excluded resource while it meets the requirements of SI 01130.740C.5.a. in this section.

b. Example of a previously excluded distribution used for a housing expense

In June, Jennifer takes a $7,000 distribution from her ABLE account to pay an educational expense that is a QDE. Her educational expense is due in September. However, she has to make a $750 advance rent payment to her landlord for her college apartment in August. She uses some of the distribution she took in June to make the rent payment – a housing expense. The $750 is a countable resource in August. Exclude the remaining $6,250 of the retained distribution while it continues to meet the requirements of SI 01130.740C.5.a. in this section.

c. Example of a change of intent on the use of a distribution

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In June, Jennifer takes a $7,000 distribution from her ABLE account to pay an educational expense that is a QDE. Her educational expense is due in September. In August, Jennifer gets a job offer and decides not to return to school. The $7,000 becomes a countable resource in September because she no longer intends to use it for an educational expense that is a QDE, unless Jennifer re-designates it for another QDE or returns the funds to her ABLE account prior to September.

____________________Effective Dates: 04/30/2018 - Present TN 52 (04-18)


CITATIONS:

Social Security Act as amended, Section 1613(e) P.L. 106-169, Section 205

J. Policy for earnings on and additions to trusts

1. Trust principal is not a resource

d. Assignment of income

A legally assignable payment to a trust or trustee is income for SSI purposes, unless the assignment is irrevocable. If the assignment is revocable, the payment is income to the individual legally entitled or eligible to receive the payment. For example, child support or alimony payments paid directly to a trust or trustee because of a court order are considered irrevocably assigned and thus not income. Also, Survivor Benefit Plan (SBP) payments assigned to a special needs trust are not income because assignment of SPB annuities is irrevocable.

For examples of payments that are not assignable by law, see SI 01120.201J.1.c. in this section.

____________________

The Home Exclusion

There are a number of policies associated with the home exclusion that interact with trust policy that may be advantageous to a trust beneficiary receiving SSI.

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An eligible individual does not receive ISM in the form of rent-free shelter while living in a home in which he or she has an ownership interest. Accordingly, a trust beneficiary with an “equitable ownership interest in the trust principal” does not receive rent-free shelter (ISM).

The purchase of a home by a trust for the trust beneficiary establishes an equitable ownership interest for the trust beneficiary, the purchase results in the receipt of ISM, in the form of shelter, in the month of purchase. This ISM is valued at no more than the presumed maximum value (PMV).

Even if the trust beneficiary has an ownership interest in the home that he or she resides in, and is not receiving ISM in the form of rent-free shelter, the purchase of the home or payment of the monthly mortgage by the trust is a disbursement from the trust to a third party that results in the receipt of ISM in the form of shelter.

If the trust, whose principal is not a resource, purchases the home outright and the trust beneficiary lives in the home in the month of purchase, the home is income in the form of ISM, and reduces the trust beneficiary's payment no more than the PMV in the month of purchase only, regardless of the value of the home.

If the trust, whose principal is not a resource, purchases the home with a mortgage and the trust beneficiary lives in the home in the month of purchase, the home would be ISM in the month of purchase. Each of the subsequent monthly mortgage payments results in the receipt of income in the form of ISM to the trust beneficiary living in the house, each valued at no more than the PMV.

If the trust pays for repairs, maintenance, improvements, or renovations to the home, such as renovations to the bathroom to make it handicapped accessible, installation of a wheelchair ramp or assistive devices, or replacement of a roof, the trust beneficiary does not receive income. Disbursements from the trust for improvements increase the value of the resource and, unlike household operating expenses, do not provide ISM.

If an individual is temporarily absent from the home he or she owns, the home continues to be excluded as long as,

If the individual is in an institution, a spouse or dependent relative is living in the home.

If not institutionalized, the individual intends to return to the home or

If the house is co-owned, sale of the home would cause undue hardship, due to loss of housing for the co-owner.

If the individual has left his or her home due to domestic abuse, the individual has not established a new principal place of residence or otherwise has taken action rendering the home no longer excludable.

____________________

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Effective Dates: 06/07/2018 – Present TN 57 (05-19)

SI 01120.200 Information on Trusts, Including Trusts Established Prior to January 01, 2000, Trusts Established with the Assets of Third Parties, and Trusts Not Subject to Section 1613(e) of the Social Security Act

F. Policy for home ownership and purchase of a home by a trust

1. Home as a resource

If the trust is a resource to the individual, the property at issue is subject to exclusion as a home under SI 01130.100. Even though the trust holds legal title to the property, the individual, as trust beneficiary, still has an (equitable) ownership interest in it. Therefore, the property’s possibly being excluded as a home under SI 01130.100 likely will depend on whether the property serves as the individual’s principal place of residence.

If the trust is not a resource to the individual, then the property also is not a resource to the individual, regardless of whether the property serves as the individual’s principal place of residence (that is, regardless of possible exclusion as a home under SI 01130.100), because the property is part of the trust principal that is not a resource to the individual.

2. Rent-free shelter

An eligible individual does not receive ISM in the form of rent-free shelter while living in a home in which he or she has an ownership interest. Accordingly, an individual with an “equitable ownership interest in the trust principal” does not receive rent-free shelter (see SI 01120.200F.1. in this section).

3. Receipt of income from a home purchase

Because the purchase of a home by a trust for the trust beneficiary establishes an equitable ownership interest for the trust beneficiary, the purchase results in the receipt of ISM, in the form of shelter, in the month of purchase. This ISM is valued at no more than the presumed maximum value (PMV). For ISM to one person, see SI 00835.400.

Even if the trust beneficiary has an ownership interest in the home that he or she resides in, and is not receiving ISM in the form of rent-free shelter (because shelter is rent-free

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when no household member has any ownership interest in, or rental liability for, the residence, see SI 00835.370B.1.). The purchase of the home or payment of the monthly mortgage by the trust is a disbursement from the trust to a third party that results in the receipt of ISM in the form of shelter (see SI 01120.200E.1.b. in this section).

a. Outright purchase of a home

If the trust, whose principal is not a resource, purchases the home outright and the trust beneficiary lives in the home in the month of purchase, the home is income in the form of ISM, and reduces the trust beneficiary's payment no more than the PMV in the month of purchase only, regardless of the value of the home (see SI 01120.200E.1.b. in this section).

b. Purchase by mortgage or similar agreement

If the trust, whose principal is not a resource, purchases the home with a mortgage and the trust beneficiary lives in the home in the month of purchase, the home would be ISM in the month of purchase. Each of the subsequent monthly mortgage payments results in the receipt of income in the form of ISM to the trust beneficiary living in the house, each valued at no more than the PMV (see SI 01120.200E.1.b. in this section).

c. Additional household expenses

If the trust pays for other shelter or household operating expenses, these payments are income in the form of ISM in the month of the trust beneficiary’s use. For computations of ISM from outside the household, see SI 00835.350. For countable shelter expenses, see SI 00835.465D.

If the trust pays for repairs, maintenance, improvements, or renovations to the home, such as renovations to the bathroom to make it handicapped accessible, installation of a wheelchair ramp or assistive devices, or replacement of a roof, the trust beneficiary does not receive income. Disbursements from the trust for improvements increase the value of the resource and, unlike household operating expenses, do not provide ISM. For computations of ISM from outside the household, see SI 01120.200E.1.c. in this section.

____________________


SI 01130.100 The Home Exclusion

Social Security Act 1613; 20 CFR 416.1210; 20 CFR 416.1212

A. Definitions

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1. The home

An individual’s home is property in which he or she has an ownership interest and that serves as his or her principal place of residence. It can include:

the shelter in which he or she lives; the land on which the shelter is located; and related buildings on such land.

2. Principal place of residence

An individual's principal place of residence is the dwelling the individual considers his or her established or principal home and to which, if absent, he or she intends to return. It can be real or personal property, fixed or mobile, and located on land or water.

3. Dependent relative

a. Dependency may be of any kind (e.g., financial, medical, etc.).

b. Relative means:

child, stepchild, or grandchild; parent, stepparent, or grandparent; aunt, uncle, niece, or nephew; brother or sister, stepbrother or stepsister, half brother or half sister; cousin; or in-law.

4. Equitable ownership

An “equitable” ownership interest in property can result from personal considerations or from:

making mortgage payments; making or paying for additions to a shelter; or making improvements to a shelter.

(For the definition of equitable ownership, see SI 01110.515A.2.b.)

5. Shared ownership

Shared ownership of property means that two or more people own it concurrently. For information regarding different types of shared ownership, see SI 01110.510.

B. Policy for excluding the home

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1. Exclusion of the home

An individual's home, regardless of value, is an excluded resource. For the definition of a home, see SI 01130.100A.1.

2. Exclusion of the home includes land on which the shelter is located

For purposes of excluding “the land on which the shelter is located” (see SI 01130.100A.1), it is not necessary that the individual own the shelter itself.

EXAMPLE: If an individual lives on his or her own land in someone else's trailer, the land meets the definition of a home and is excluded. However, if the individual does not own the shelter, it is necessary to consider whether the shelter results in in-kind support and maintenance (ISM) (e.g., rent-free shelter). For information on rent-free shelter, see SI 00835.370.

3. Exclusion of the home includes adjoining property and related buildings

a. Land

The home exclusion applies not only to the plot of land on which the home is located, but also to any adjoining land. Land that adjoins the home plot is land not completely separated from the home plot by land in which neither the individual nor his or her spouse has an ownership interest.

Easements and public rights of way (e.g., utility lines, roads, etc.) do not separate other land from the home plot.

b. Buildings

The home exclusion applies to all buildings on excluded land.

4. General rule for property that no longer serves as the principal place of residence

Property ceases to be the principal place of residence as of the date that the individual left it with no intention of returning. Such property, if not excluded under another provision, is included in determining countable resources as of the first moment of the first day of the following month.

5. Exceptions to the general rule for property that no longer serves as the principal place of residence

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Even if the individual leaves the home with no intention of returning, the property remains an excluded resource for as long as:

a. a spouse or dependent relative of the individual continues to live there while the individual is institutionalized; or

b. its sale would cause undue hardship, due to loss of housing for a co-owner of the property; or

c. an individual leaves his or her home due to domestic abuse and has not:

Established a new principal place of residence (for the definition of principal place of residence, see SI 01130.100A.2.); or

Taken action to render the home no longer excludable.

EXAMPLE: Due to domestic abuse, on February 9 a recipient leaves the home in which she lived and has shared ownership and moves into her mother’s home. She does not intend to return to the home. The recipient submits evidence of domestic abuse to the field office (FO). On October 20, the recipient “closes” on a second home (i.e. a sale is completed and the property is officially transferred into her name). Despite her absence and continued ownership interest in the first home, the first home is an excluded resource through October.

The FO must determine whether the first home is a resource effective November 1 (e.g. whether the recipient has the legal authority to sell without consent of a co-owner and whether a co-owner consents or refuses to sell). If the FO determines the first home is a resource, it is a countable resource, unless excluded under another provision (e.g. undue hardship), effective November 1 because the recipient established a new principal place of residence. The second home meets the definition of a “home" and thus is an excluded resource.

EXAMPLE: Due to domestic abuse, on January 24 a recipient leaves the home in which he lived and has shared ownership. He does not intend to return to the home. The recipient submits evidence of domestic abuse to the FO. On February 5, the recipient's wife also vacates the home because she is not financially able to maintain the household expenses. Instead of returning to the home, the recipient develops a rental agreement and rents out the home to a couple effective February 15. Despite his absence and continued ownership interest in the home, the home is an excluded resource through February.

The FO must determine whether the home is a resource effective March 1 (e.g., whether the recipient has the legal authority to sell without consent of a co-owner and whether a co-owner consents or refuses to sell). If the FO determines the home is a resource, it is a countable resource effective March 1, unless excluded under another provision (e.g. undue hardship), because the recipient’s action (i.e. to rent the residence) renders the home no longer excludable.

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For information on the different types of shared ownership, see SI 01110.510. For information on assets that are not resources, see SI 01110.115.

C. Procedure for initial claims

.....

7. How to develop absences from the home

a. Summary of development

1. If the individual is in an institution, determine whether a spouse or dependent relative is living in the home (see SI 01130.100C.7.b.).

2. If no spouse or dependent relative is living in the home, or if the absence is for a reason other than institutionalization, determine:

whether the individual intends to return to the home (see SI 01130.100C.7.c.); and

if not, whether the sale of the home would cause undue hardship, due to loss of housing to a co-owner (see SI 01130.130).

NOTE: If a previously undeveloped absence from the home has ended, assume that the individual always intended to return. The absence, regardless of duration, will not affect the home exclusion.

3. If the individual has left his or her home due to domestic abuse, determine whether the individual has established a new principal place of residence or otherwise has taken action rendering the home no longer excludable.

b. Spouse or dependent relative development

Obtain the individual’s statement either signed or recorded on the DROC screen as to:

whether anyone is living in the home while the individual is in the institution; if so, how that person is related to the individual, if at all; and if related (except for the individual's spouse), how that person is dependent on

the individual, if at all.

Absent evidence to the contrary, accept the allegations.

c. “Intent to return” development

If the individual has left his or her home but intends to return to it, see SI 01130.100E. for the necessary development.

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NOTE: “Intent to return” development applies only to the continued exclusion of property which met the definition of the individual's home prior to the time the individual left the property. For the definition of “home,” see SI 01130.100A.1.

d. Domestic abuse development

If the individual has left his or her home due to domestic abuse, see SI 01130.100F. for the necessary development.

D. Procedure for posteligibility development

. . . . .

If the individual has left his or her home but intends to return to it, see SI 01130.100E.

E. Procedure for “intent to return” development

1. Obtain statement

Obtain the individual’s statement either signed or recorded on the DROC screen as to:

when and why he or she left the home; whether he or she intends to return; and if he or she does not intend to return, when that decision was made.

If the individual has a representative payee, obtain the “intent” statement from the payee either signed or recorded on the DROC screen.

This statement governs the “intent to return” determination unless the statement is self- contradictory (see SI 01130.100E.2. through SI 01130.100E.3.).

2. Self - contradictory statement

Consider a statement to be self-contradictory if it contains conflicting or unclear expressions of intent.

Examples of self-contradictory statements:

“Sometimes I want to go home and sometimes I don't.”

“I intend to go home but I also want to stay here.”

“Yes, I want to go home, but I really don't know if I should.”

3. Factors not to consider

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Do not consider other factors, such as the individual's age, physical condition, or other circumstances when determining intent to return home. Assuming the individual is mentally competent, age, mental capacity, and physical condition are not factors in evaluating the individual's statement of intent.

EXAMPLE: The recipient is 93 years old and in the intensive care unit of a hospital. She tells the field representative that her doctor believes she may not be able to leave the hospital and return home. However, she states that she intends to return to her former residence as soon as she is well enough to leave the hospital. Based on her statement, “intent to return home” is established.

EXAMPLE: The recipient's home was partially destroyed by fire. He does not know when the necessary repairs will be completed. In the meantime, he is living with his sister. He states that he intends to return to the former residence as soon as possible. Based on his statement, “intent to return home” is established.

4. Obtaining more information if needed

If the individual's statement of intent is self-contradictory, contact someone who knows the situation, such as a physician, family member, or close friend or relative, to clarify the situation.

TrustPolicyAge65 On April 09, 2019, SSA issued TN 56 (04-19) to POMS Section SI 01120.203. This transmittal revised to longstanding policy that an individual attains age 65 on the day preceding their 65th birthday. The new policy states that for special needs trusts, an individual attains age 65 on the anniversary date of his or her birth. TransferstoTrustsofPaymentsContinuingPastAge65

Generally, additions to or augmentations of a trust after age 65 are not subject to the Special Needs Trust exception. Such additions may be income in the month added to the trust, depending on the source of the funds and may count, as resources, in the following months under regular SSI trust rules.

Additions or augmentations do not include interest, dividends, or other earnings of the trust or any portion of the trust meeting the special needs trust exception. If the beneficiary’s right to receive payments from an annuity, support payments, or Survivor Benefit Plan (SBP) payments is irrevocably assigned to the trust, and such assignment is made when the trust beneficiary was less than 65 years of age, SSA will treat the payments paid to a special needs trust the same as payments made before the individual attained age 65. This is the case because upon irrevocable assignment, the trust becomes

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the owner of the right to receive future payments, considered a resource. The value of future payments is considered in the valuation of the resource.

Revisedpolicy‐DisabledIndividual When the SSI Trust POMS rewrite was issued in April 2018 (TN 53 (04-18)), Section SI 01120.203B.4. titled “Disability” required:

To qualify for the special needs trust exception, the individual whose assets were used to establish the trust must be disabled for SSI purposes under section 1614(a)(3) of the Act at the time the trust was established.

In cases where you need to develop for disability (for example, a special needs trust beneficiary files for SSI aged benefits), obtain a disability determination from the disability determination services (DDS) following procedure in SI 01150.121D.2. Develop disability as of the date on which the trust was established (unless you need to develop for an earlier period for another purpose).

If DDS determines that the trust beneficiary was:

disabled as of the date the trust was established, the special needs trust meets the disability requirements for exception; or

not disabled as of the date the trust was established, evaluate the trust under instructions in SI 01120.201. Since the trust provisions take precedence over the transfer provisions (see SI 01150.201D.5.), depending on the terms of the trust, the trust may count as a resource or the transfer penalty may apply (see SI 01150.121.).

In June 2019, SSA issued revised instructions under TN 58 (06-19), that changed the applicable date for consideration of when the individual must be determined to be disabled from “the date the trust was established” to “the date on which the trust’s resource status could affect the individual’s SSI eligibility.” They also added two examples to explain this policy change.


SI 01120.203 Exceptions to Counting Trusts Established on or after January 1, 2000

B. Policy for special needs trusts established under section 1917(d)(4)(A) of the Act before December 13, 2016

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1. General rules for special needs trusts established prior to December 13, 2016

The resource counting provisions of section 1613(e) do not apply to a trust that:

contains the assets of an individual who is under age 65 and is disabled; is established for the benefit of such individual through the actions of a

parent, grandparent, legal guardian, or court; and provides that the State(s) will receive all amounts remaining in the trust

upon the death of the individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State(s) Medicaid plan(s).

NOTE: Although this exception is commonly referred to as the special needs trust exception, the exception applies to any trust that meets the above requirements, even if it is not titled a special needs trust.

CAUTION: A trust that meets the exception to counting for SSI purposes under the statutory trust provisions of section 1613(e) must still be evaluated under the instructions in SI 01120.200 to determine if it is a countable resource. If the trust meets the definition of a resource (see SI 01110.100B.1.), it will be subject to regular resource-counting rules.

2. Under age 65

To qualify for the special needs trust exception, the trust must be established for the benefit of a disabled individual under age 65. For special needs trusts, an individual attains age 65 on the anniversary date of his or her birth. The special needs trust exception does not apply to a trust established for the benefit of an individual age 65 or older. If the trust was established for the benefit of a disabled individual prior to the date the individual attained age 65, the exception continues to apply after the individual reaches age 65.

3. Additions to trust after age 65

Additions to or augmentations of a trust after age 65 (except as outlined below) are not subject to this exception. Such additions may be income in the month added to the trust, depending on the source of the funds (see SI 01120.201J.) and may count as resources in the following months under regular SSI trust rules.

Additions or augmentations do not include interest, dividends, or other earnings of the trust or any portion of the trust meeting the special needs trust exception. If the beneficiary’s right to receive payments from an annuity, support payments, or Survivor Benefit Plan (SBP) payments (see SI 01120.201J.1.e.), is irrevocably assigned to the trust, and such assignment is made when the trust beneficiary was less than 65 years of age, treat the payments paid to a special needs trust the same as payments made before

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the individual attained age 65. Do not disqualify the trust from the special needs trust exception.

4. Disabled

To qualify for the special needs trust exception, the individual whose assets were used to establish the trust must be disabled for SSI purposes under section 1614(a)(3) of the Act as of the date on which the trust’s resource status could affect the individual’s SSI eligibility.

In cases where you need to develop for disability, obtain a disability determination from the disability determination services (DDS) following procedure in SI 01150.121D.2. Develop disability as of the date on which the trust’s resource status could affect SSI eligibility.

If DDS determines that the trust beneficiary was:

disabled as of the date the trust's resource status could have affected SSI eligibility, the special needs trust meets the disability requirements for exception; or

not disabled as of the date the trust's resource status could have affected SSI eligibility, evaluate the trust under instructions in SI 01120.201. Since the trust provisions take precedence over the transfer provisions (see SI 01120.201D.5.), depending on the terms of the trust, the trust may count as a resource or the transfer penalty may apply (see SI 01150.121.).

Example Scenario 1: Mark, a special needs trust beneficiary whose trust was established in 2015, applies for SSI Aged benefits in 2019. Even though disability is not a requirement for SSI Aged benefits, we must develop disability as of Mark's SSI application date in 2019 for purposes of the Medicaid trust exception.

Example Scenario 2: Sally has a special needs trust that was established in 2010 when she was 10 years old. At the time, she was not eligible for SSI Child benefits because of her deeming parents' income and resources. However, she applies for SSI Adult benefits in 2018. We must develop disability as of Sally's SSI application date in 2018. 2010 is not relevant because the trust did not present as a resource issue until the SSI application date in 2018.

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TransferofResources–Deemors

When Congress passed the Omnibus Budget Reconciliation Act of 1993 and subsequently the Foster Care Independence Act of 1999 (P.L. 106-169), they intended that the self-settled trust provisions and the transfer of resources provisions to work hand

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in hand. However, there are provisions that can be used to avoid the provisions of either statute.

For example, POMS SI 01150.110.E. permits a deemor to transfer away their assets without penalty. In the case of personal injury/medical malpractice cases that often settle for large amounts for the injured child, but the parents have a derivative claim for 10-20% of the child’s settlement (e.g., $200,000 of the child’s $1 million) so they are in danger by deeming to the child’s SSI and SSI-related Medicaid. The exception allows them to gift it away, with a third party (non-Medicaid payback) trust that ends on the child’s 18th birthday, with a reversion back to the parents.


SI 01150.110 Period of Ineligibility for Transfers on or After 12/14/99

A. Introduction

Section 206 of P.L. 106-169 (Foster Care Independence Act of 1999) provides for a period of ineligibility for SSI, up to 36 months, for an individual who transfers resources for less than FMV on or after 12/14/99. This section explains the policies applicable to the period of ineligibility. Use this section if the individual has transferred resources for less than FMV on or after 12/14/99 and does not meet one of the exceptions in SI 01150.121-SI 01150.125.

. . . . .

E. Policy—types of transfers affected

This provision applies to transfers made:

by an individual; by the individual's eligible or ineligible spouse (SI 00501.150); by persons who are co-owners of the resource being transferred; on behalf of the individual by a person acting for and legally authorized to

execute a contract (e.g., a legal representative, a legal guardian, a parent for a minor child, etc.);

by an individual transferring assets which he constructively received (e.g., he/she refused an inheritance).

by an individual transferring assets in the month of receipt (e.g. the transfer of income that would have been considered a resource in the following month, if retained).

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This provision does not apply to transfers made by a deemor unless the deemor is a co-owner of the resource or is the ineligible spouse. For example, the provision does not apply to a resource transfer made by a parent who is a deemor (unless the eligible child and parent are co-owners of the resource).

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TransferofResources–DisclaiminganInheritance In some cases, it may be better for your client to avoid receiving certain income or resource than to have to deal with the formality, expense and complexities of a special needs trust. If, for example, a disabled child’s grandparents did not establish a third party trust for their grandchild in their will, but left her with a cash inheritance, depending on the law in your State, she may be able to disclaim the inheritance without impact on her eligibility for SSI benefits.

The POMS section on inheritances as income, SI 00830.550, states that SSA will follow State law in determining when an inheritance is received. In the POMS section attached below for reference, PS 01805.035 New York, the Regional Chief Counsel found that “[i]t is our opinion that the inheritance and renunciation would not count as a resource or resource transfer for the purposes of SSI. The claimant appears to have properly renounced her inheritance; under New York law, this had the same effect as if the claimant had predeceased her father, and so the inheritance never legally passed to the claimant.”

There are other opinions following this finding. Check your State in the PS section. Please note that there was previously a policy change proposed to not follow State law and determine that a renunciation of an inheritance was a transfer of resource for the purposes of the transfer penalty because the individual had a right to the inheritance prior to taking action to renounce it.


SI 00830.550 Inheritances

CITATIONS:

Social Security Act as amended, Section 1612(a)(2)(D), 1612(a)(2)(E); 20 CFR 416.1121(e), 416.1121(g)

A. Policy

1. Definition

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An inheritance is cash, a right, or a noncash item(s) received as the result of someone's death.

2. Inheritance as Income

An inheritance is a death benefit. See SI 00830.545.

NOTE: Until an item or right has a value (i.e., can be used to meet the heir's need for food or shelter), it is neither income nor a resource. The inheritance is income in the first month it has a value and can be used. (See SI 00810.005.)

3. Inheritance Already a Resource

An inheritance is not income to an individual if the inheritance is something which was considered that individual's resource (either as a member of an eligible couple or through deeming of resources) immediately before the death.

NOTE: The proceeds of a life insurance policy were not a resource before the death. (See SI 00830.545D.)

4. Inheritance of a House

You must value the inheritance of a house, which is used as shelter under the PMV rule in the month of receipt.

B. Procedure

1. General

Follow the instructions at SI 00830.545 pertaining to death benefits.

2. Establishing Date of Receipt

To establish when the inheritance is received, check for regional instructions, which may explain the effect of individual State laws.

If regional instructions do not specify when an inheritance is “received”, assume the individual derives no income until the earliest of:

the date the individual alleges receiving the inheritance (using a statement either signed or recorded on a DROC from the individual or documents in the individual's possession); or

the date the estate is closed (which may be determined by contacting the court or an attorney involved in the closing of the estate).

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____________________ Effective Dates: 12/13/2017 - Present TN 14 (12-17)

PS 01805.035 New York

A. PS 17-027 Would inheritance count as a resource in New York for the purposes of Supplemental Security Income if the claimant renounced her inheritance rights?

Date: December 15, 2016

1. Syllabus

The Regional Chief Counsel (RCC) opinion examines whether K~’s (claimant’s) inheritance from her father’s estate would count as a resource for the purposes of Supplemental Security Income (SSI) if the claimant renounced her inheritance rights, or whether the renunciation would count as a transfer of resources. The RCC concluded that the inheritance and renunciation would not count as a resource or resource transfer for the purposes of SSI.

2. Opinion

QUESTION PRESENTED

You asked whether claimant K~’s (claimant’s) inheritance from her father’s estate would count as a resource for the purposes of Supplemental Security Income (SSI) if the claimant renounced her inheritance rights, or whether the renunciation would count as a transfer of resources.

OPINION

It is our opinion that the inheritance and renunciation would not count as a resource or resource transfer for the purposes of SSI. The claimant appears to have properly renounced her inheritance; under New York law, this had the same effect as if the claimant had predeceased her father, and so the inheritance never legally passed to the claimant.

BACKGROUND

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The claimant’s father, L~, executed his last will and testament on March XX, 1998. The testator died on November XX, 2014. His will was duly filed for probate with the N~ County Surrogate Court in New York State, and is currently in probate. The will named the claimant and her sister, V~, as co-executrixes. The will also left the testator’s residuary estate to the claimant and V~ in equal shares.

The claimant signed a Notice of Renunciation and Renunciation on January XX, 2015, disclaiming and renouncing any and all interest she might have in her father’s estate. This document included a sworn statement that the claimant had not received any consideration in money for the renunciation from any person or persons whose interests might be accelerated. The document was filed with the Surrogate Court on January XX, 2015, along with an admission of service.

ANALYSIS

According to agency regulations, an inheritance of cash or other liquid assets or any real or personal property would be considered a resource if the individual owns it and could convert it to cash to be used for his support and maintenance. 20 C.F.R. § 416.1201(a). An inheritance is not considered a resource until the month after the month it meets the definition of income. POMS SI 01120.215(A)(1). The regulations define “income” as “the receipt by an individual of any property or service which he can apply…to meeting his basic needs.” 20 C.F.R. § 416.120(c)(2). Accordingly, the agency will count unearned income at the earliest when an individual receives it, when it is credited to an individual’s account, or when it is set aside for an individual’s use. 20 C.F.R. § 416.1123(a). When and whether an inheritance is received, that is, when the claimant has a usable ownership interest over his inheritance such that the agency will consider it a resource, is largely a question of state law. See, e.g., POMS SI 00830.550(B)(2) (“To establish when the inheritance is received, check for regional instructions which may explain the effect of individual State laws.”).

In New York, real or personal property generally passes immediately upon the testator’s death. N.Y. Est. Powers & Trusts Law § 2-1.11(b)(2)(A); see also POMS NY 01120.215(A)(2). However, a beneficiary may renounce all or part of his interest within nine months of the effective date of disposition of the interest, in writing, signed and acknowledged by the person renouncing, and by filing such writing in the office of the clerk of the court having jurisdiction over the will. N.Y. Est. Powers & Trusts Law § 2-1.11(c)(2).[1] The renunciation must be accompanied by an affidavit of the renouncing party that he has not received and is not to receive any consideration in money for such renunciation from a person or persons whose interest is to be accelerated, unless payment of such consideration has been authorized by the court. Id. A renunciation filed in accordance with these procedures is irrevocable. Id. at § 2-1.11(h).

Filing a renunciation “has the same effect with respect to the renounced interest as though the renouncing person had predeceased the…decedent” and “[s]uch renunciation is retroactive to the creation of a disposition.” N.Y. Est. Powers & Trusts Law § 2-

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1.11(e). The term “disposition” includes a disposition created under a will. N.Y. Est. Powers & Trusts Law § 2-1.11(b)(1).

Based on this language, the claimant validly renounced her inheritance from her father’s estate. The claimant signed a written renunciation, dated January XX, 2015, and filed this with the office of the clerk within nine months of her father’s death, accompanied by the appropriate affidavit. The renunciation had the same effect as though the claimant had predeceased her father, and therefore the inheritance never legally passed to the claimant. As such, the inheritance never became “income” under the regulations, and would not be considered a resource or resource transfer for the purposes of SSI.

CONCLUSION

It is our opinion that the inheritance and renunciation do not count as a resource or resource transfer for the purposes of SSI. The claimant properly renounced her interest and, under New York law, this renunciation had the same effect as if the claimant had predeceased her father. The inheritance, therefore, never legally passed to the claimant.

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Transfers - Spend Down and Alternatives to Trusts

Prepayment of ISM and Personal Services Contracts

In some cases an individual may receive some type of income that, if retained, would cause ineligibility for SSI due to excess resources over the $2,000 limit. On one hand the amount may be too high to deposit into an ABLE account (in excess of the $15,000 annual contribution limit), but not high enough to go through the expense of establishing a special needs trust or just not cost effective to maintain and administer a trust. In this case, there are alternatives to a trust that, in conjunction with an ABLE account, or apart from it, can be used to maintain SSI eligibility.

Hidden within the Transfer of Resources POMS at SI 01150.005 is a provision for valuing noncash compensation received for a resource transfer. Under this provision, an individual can prepay for in-kind support and maintenance at its full current market value for the length of time prepaid. For example, an individual who received $60,000 could prepay their rent or mortgage ($1,000 per month) for 5 years (60 months). If the actual cost increased over time, the individual would still get credit for full compensation.

Alternatively, an individual could enter into a personal services contract that could be prepaid. For example, an individual could enter into an attendant services contract with a provider organization at a cost of $100 a day for two years ($73,000).

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SI 01150.005 Determining Fair Market Value

A. Introduction

This section provides instructions for determining whether a claimant or recipient (or spouse, if any) received fair market value (FMV) for a resource transferred on or after 12/14/99. If a claimant or recipient (or spouse, if any) transfers a resource for less than FMV on or after 12/14/99, the claimant or recipient may be subject to a period of ineligibility for SSI. If the claimant or recipient (or spouse, if any) received FMV for the transferred resource, the period of ineligibility does not apply. It is not necessary to make FMV determinations for resources transferred before 12/14/99.

B. Definitions

The following definitions apply for purposes of determining whether an individual has received FMV in exchange for a transferred resource.

1. Fair market value

FMV is the current market value (CMV) of a resource at the time the resource transfers. The CMV of a resource is the going price that it can be reasonably expected to sell on the open market in the geographic area involved.

2. Compensation

Compensation is the cash or other valuable consideration provided in exchange for the resource. Compensation can include real or personal property the individual received in exchange for the resource. Compensation also may include in-kind support and maintenance or services to be provided to the individual because of the transfer. Compensation also may include assumption of the transferor's legal debt.

3. Uncompensated value

Uncompensated value (UV) is the difference between the CMV of a resource and the amount of compensation the individual received in exchange for the resource.

4. Uncompensated value for jointly owned resource

The UV of a jointly owned resource is the difference between the CMV of the transferor's interest in the resource and the amount of compensation the transferor received.

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C. Policy for determining the compensation amount

We use the following policy when determining the amount of compensation a claimant or recipient (or spouse, if any) receives in exchange for a transferred resource.

1. The agreement sets amount

We based the value of compensation received on the agreement and expectations at the time of transfer or contract for sale, if earlier.

Example 1: Determining compensation amount

A purchaser agreed to pay an eligible individual $10,000 in 10 installments of $1,000 each, but has thus far paid only $7,000. The compensation is $10,000.

Example 2: Determining compensation amount

A purchaser agreed to provide nursing services valued at $3,000, but to date has not provided any of the services. The compensation is $3,000.

2. Date compensation received

A transferor receives compensation when he or she receives something of value pursuant to a legally binding agreement (e.g., a contract, a bill of sale, a deed) that was in effect at the time of transfer. The transferor may actually receive the compensation before, at, or after the actual time of transfer.

3. Value of noncash compensation

a. General rule for noncash compensation

We value noncash compensation at its CMV at the time of transfer or contract for sale, whichever is earlier. The value of compensation is the gross value paid or to be paid. Expenses attributed to the sale do not reduce the value of the compensation.

b. In-kind support and maintenance (ISM)

We value compensation received in the form of ISM at its full CMV (monthly or annually depending upon the agreement) multiplied by the length of time for which it is to be provided under the agreement. We do not cap the value of the compensation at the value of the one-third reduction (VTR) or presumed maximum value (PMV).

Example: Determining whether ISM applies

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Mr. Thomas transfers $30,000 cash to his sister based on a written contract that she would provide him with food and shelter for 5 years. The sister values the food and shelter at $500 per month. The CR develops Mr. Thomas' living arrangements and determines that he has a flat fee arrangement with his sister and required to pay $500 per month. The food and shelter for 5 years is worth $30,000 (5 years x $6,000 per year). Therefore, Mr. Thomas received FMV for the $30,000 he transferred. ISM is not counted because the Mr. Thomas has prepaid for his food and shelter with the $30,000 he transferred. For procedure on determining an individual’s contribution toward household operating expenses, see SI 00835.480D.

NOTE: Using the same facts as in the preceding example, assume that the CR is conducting a redetermination 2 years later and the sister providing the ISM alleges that the value of the food and shelter she provides has increased to $650 per month. Since Mr. Thomas entered into an agreement that the $30,000 covered his food and shelter for 5 years, do not re-open the LA/ISM determination due to breakpoints that may occur in that household such as an increased flat fee charge. Assume that the individual is not getting ISM for the duration of the 5 years unless the individual moves from that household to a new residence.

c. Value of services provided to the transferor

We determine the value of services provided to the transferor based on the CMV of the services (monthly or annually) and their frequency and duration under the agreement.

Example: Determining the value of services

In exchange for $9,000 cash, the individual contracts for yard maintenance services for 5 years. The maintenance company charges $150 per month ($1,800 per year). Five years of maintenance at $1,800 per year equals $9,000.

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Transfers of Resources – Exceptions In the POMS SI 01150 section, there are five sections that provide for specific exceptions to the transfer of resources penalty. Each exception is different and has specific requirements that must be met. You should become familiar with all of them. Exceptions — Transfers to a Trust Effective Dates: 07/12/2010 - Present TN 12 (08-00)

SI 01150.121 Exceptions - Transfers to a Trust

A. Policy — Exception for transfers to a trust

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The period of ineligibility for transferring a resource at less than fair market value does not apply to an individual in the following situations.

1. The Trust is a Countable Resource

The period of ineligibility does not apply to an individual who transfers resources to a trust if either of the following is true:

the portion of the trust attributable to the transferred resources is a countable resource of the individual (i.e., the trust is countable as a resource for purposes of determining SSI eligibility). (See SI 01120.200.)

the trust would be considered a countable resource but for the undue hardship provision applicable to trusts.

2. Transfers to a Trust for Disabled or Blind Child

The period of ineligibility does not apply to an individual who transfers a resource to a trust established for the sole benefit of the individual's child of any age who is blind or disabled. This includes trusts qualifying as “Medicaid trust exceptions” in SI 01120.200 ff. (i.e., trusts established under Section 1917(d)(4)(A) and (C) of the Social Security Act).

3. Transfers to a Trust for a Disabled or Blind Individual Under Age 65

The period of ineligibility does not apply to an individual who transfers a resource to a trust established for the sole benefit of an individual including himself or herself who is under age 65 and is blind or disabled. This includes trusts qualifying as “Medicaid trust exceptions” in SI 01120.200 ff. (i.e., trusts established under Section 1917(d)(4)(A) and (C) of the Social Security Act).

B. Policy — Transfers to trusts where exception does not apply

In the following situations related to trusts, the exception does not apply:

1. The Trust is not a Countable Resource

If the trust is not countable as a resource, money or property transferred by the individual into the trust is a transfer of resources that is subject to the period of ineligibility unless one of the exceptions in SI 01150.121A.2. or SI 01150.121A.3. applies.

2. Disbursement Made from the Trust not for the Individual

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If a disbursement is made from a trust that is counted as a resource (or would be counted as a resource but for the undue hardship provision applicable to trusts), and the disbursement is not made to the individual or for his/her benefit, then the disbursement is considered a transfer of resources for less than fair market value. Such a transfer of resources is subject to the period of ineligibility. The date of the disbursement is considered the date of the transfer. See SI 01120.200 ff. for discussion of disbursements from trusts.

3. No Disbursement Can be Made From the Trust

If the individual takes action so that no disbursement can be made from a trust that is counted as a resource to the individual for any reason, this action causes the trust to no longer be counted as a resource. Therefore, such an action is considered a transfer of resources for less than fair market value. Such a transfer of resources is subject to the period of ineligibility. The date of the action restricting disbursements is considered the date of the transfer.

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Exceptions — Transfer of a Home Effective Dates: 12/24/2013 - Present TN 12 (08-00)

SI 01150.122 Exceptions — Transfer of a Home

A. Policy — Exceptions for transfer of a home

1. Transfer to a Spouse or Child

The period of ineligibility for transferring a resource at less than fair market value will not apply if the individual or individual's spouse transfers title to a home to his/her:

spouse (including a separated spouse); or child under age 21 regardless of student or marital status; or child of any age or any marital status who is blind or disabled.

2. Transfer to a Sibling

The period of ineligibility for transferring a resource at less than fair market value will not apply if the individual or individual's spouse transfers title to a home to a sibling of the transferor:

who has ownership interest (including life estate and equitable ownership) in the home; and

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who was residing in the transferor's home for at least 1 year immediately before the date the transferor becomes institutionalized.

NOTE: See SI 01150.122B for discussion of “residing in transferor's home” as it applies to this exception. See SI 01150.122D for discussion of “institutionalization as it applies to this exception. See SI 01110.500 for discussion of the types of ownership.

3. Transfer to a Son or Daughter

In addition to the exception for the children listed in SI 01150.122A.1., the period of ineligibility will not apply if the individual or the individual's spouse transfers title to a home to a son or daughter who:

was residing in the transferor's home for at least 2 years immediately before the date the individual becomes institutionalized; and

who provided care to the individual which permitted the individual to reside at home instead of in an institution.

NOTE: See SI 01150.122B for discussion of “residing in transferor's home” as it applies to this exception. See SI 01150.122C for discussion of “providing care” as it applies to this exception. See SI 01150.122D for discussion of “institutionalization” as it applies to this exception.

B. Policy — Residing in the transferor's home

For the purpose of determining whether the individual qualifies for the transfer of a home exception, the home must have been transferred to a person who resided in the transferor's home. A person resides in the transferor's home if it is that person's primary place of residence. We follow the same criteria that are used to determine an eligible individual's place of residence when determining the FLA and ISM (SI 00835.020).

C. Policy — Providing care for the transferor

The transfer of a home exception requires that the son or daughter (who received the transferred home) provided care that enabled the transferor to reside at home instead of in an institution or facility. Such care is substantial but not necessarily full-time care. A son or daughter is providing care for purposes of this exception if he/she does most of the following for the transferor on regular basis:

prepares meals; shops for food and clothing; helps maintain the home; assists with financial affairs (banking, paying bills, taxes); runs errands; provides transportation;

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provides personal services; arranges for medical appointments; assists with medication.

NOTE: The issue of providing care needs to be developed only when the resource is transferred to a son or daughter who is not blind or disabled, and who resides with the transferor for at least 2 years prior to the transferor becoming institutionalized.

D. Policy — Institutionalization

For purposes of the transfer of a home exceptions, the following individuals are considered to be institutionalized:

an individual who is an inpatient in a nursing facility; an individual who is an inpatient in a medical treatment facility and for whom

Medicaid payments are made based on a level of care provided in a nursing facility;

an individual who is eligible for home or community based services under a waiver granted under section 1915(c) or (d). (See SI 01310.207.)

NOTE: An individual who meets one of these 3 criteria is considered institutionalized for purposes of this exception regardless of the FLA determination (e.g., FLA-A vs. FLA-D).

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Exceptions — Non-Home Transfers to Certain Family Members Effective Dates: 12/24/2013 - Present TN 12 (08-00)

SI 01150.123 Exceptions — Non-Home Transfers to Certain Family Members

A. Policy — Exception for non-home transfers to certain family members

The period of ineligibility for transferring a non-home resource at less than fair market value does not apply if the resource was transferred to:

the transferor's spouse (including a separated spouse); or another person for the sole benefit of the transferor's spouse; or the transferor's child of any age who is blind or disabled.

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NOTE: The period of ineligibility also does not apply if the resource is first transferred to the transferor's spouse and the spouse subsequently transfers it to another individual for the sole benefit of the spouse.

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Exceptions — Transfers for Purposes Other Than to Obtain SSI Effective Dates: 12/24/2013 - Present TN 12 (08-00)

SI 01150.125 Exceptions — Transfers for Purposes Other Than to Obtain SSI

A. Policy — Transfer for purpose other than to obtain SSI

Section 206 of P.L. 106-169 (Foster Care Independence Act of 1999) provides an exception to the period of ineligibility if the individual transferred the resource exclusively for a purpose other than to obtain SSI benefits.

B. Policy — Rebuttable presumption that resource was transferred in order to obtain SSI benefits

If an individual gives away resources or sells resources for less than fair market value (FMV), there is a rebuttable presumption that the resources were transferred for the purpose of establishing or maintaining eligibility for SSI.

The presumption is rebutted only if the individual provides convincing evidence that the resources were transferred exclusively for a purpose other than to become or remain eligible for SSI.

If the individual had some other purpose for transferring the resource, but an expectation of establishing or maintaining SSI eligibility was also a factor, the period of ineligibility would apply.

C. Policy — Convincing evidence

The individual must provide convincing evidence that the transfer of resources was exclusively for a purpose other than to qualify for SSI benefits. A statement, either signed or recorded on a DROC, by the individual is not, by itself, convincing evidence. Examples of convincing evidence are:

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Documents showing that the transfer was not within the individual's control (e.g., was ordered by a court); or

Documents establishing that, at the time of the transfer, the individual could not have anticipated SSI eligibility (e.g., the individual became disabled following a traumatic accident, but was not disabled at the time the transfer occurred); or

Documents which verify the unexpected loss of other resources or income which would have precluded SSI eligibility (e.g., a divorce which results in loss of income or resources provided by a spouse); or

Documents establishing that, at the time of the transfer, the transferred resource would have been an excluded resource under SSI rules (e.g., documents that establish the type of resource, the value, the date of transfer, etc.).

D. Examples — Transfer for purpose other than to obtain SSI

The following are examples of situations that, while not conclusive, may indicate that the transfer was made exclusively for some purpose other than to qualify for SSI.

After the transfer there is a traumatic onset (e.g., traffic accident) of disability or blindness that leads to SSI eligibility;

After the transfer, there is a diagnosis of a previously undetected disabling condition that leads to SSI eligibility;

After the transfer, there is an unexpected loss of other income or resources (including deemed) which would have precluded SSI eligibility;

In the month of the transfer, the transferred resource would have been excludable for SSI purposes (SI 01130.050);

In the month of transfer, total countable resources would have been below the $2,000 resource limit ($3,000 for a couple) even if the individual had retained the transferred resource;

The transfer was court-ordered (provided the individual took no action to petition the court to order the transfer);

The resources were given to a religious order by a member of that order in accordance with a vow of poverty.

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ReopeningDeterminations One of the existing policies highlighted in the SSI Trust POMS rewrite of April 2018 was the policy on reopening. This longstanding policy is not well known. Reopening allows an individual to question the correctness of a previous determination by SSA. The request to reopen must be in writing and received within the following time frame:

Within 2 years of the initial determination if there is good cause found. Within 1 year of the initial determination if there is not good cause.

For policy on good cause, please see SI 04070.010F.5.

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CITATIONS:

Social Security Act as amended, Section 1613(e) P.L. 106-169, Section 205

.....

K. Posteligibility changes in trust resource status

. . . . .

3. Reopening trust determinations

The field office (FO) may receive a request by any party to the determination, including SSA, questioning the correctness of the trust determination. The request to reopen a determination must be in writing and within the applicable time limit. See SI 04070.015.

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SI 04070.015 Reopening SSI Determinations

A. Policy – When the Question of Reopening Will Arise

Receipt of a request by any party to the determination or representative of a party questioning the correctness of the determination or the most recent appeal step must be:

in writing; and within the applicable time limit.

Although SSA is not legally required to reopen a determination or decision when the claimant requests it (even if he/she makes the request within 1 year of the notice of initial determination), it is SSA's policy to consider the request in all cases and to decide if reopening is appropriate. Consider all requests to reopen. In such situations, evaluate all the evidence in the file together with any evidence the individual may submit. The

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consideration of a request to reopen merely initiates a threshold review of the claims file, but does not constitute a reopening (see SI 04070.005A.8. for the definition of “threshold review”). If reopening and revision are found to be appropriate, then proceed to reopen.

1. New SSI Application

If filing a new SSI application within the administrative finality period after an initial determination on a prior application, see SI 04070.015B.2.b.

2. Receipt of “new and material evidence”

Receipt of “new and material evidence” or other information that indicates a prior determination or decision may be in error. The receipt of new and material evidence initiates reopening, even if the final result is not changed.

3. Discovery of an error

Discovery of an error on an SSA record; e.g., transposed digits on an income entry.

4. Threshold Review

Threshold Review (see section SI 04070.005A.8.) is a preliminary review of a claims file to determine whether or not a determination or decision should be reopened without further investigation or development. It precedes any reopening and revision that may occur in any case. This can occur after a claimant requests a reopening or when SSA initiates a reopening on its own.

5. The Claimant supplies evidence

If the claimant brings documentation and alleges that it was not in the file when the initial determination was made, review the evidence in the folder together with the evidence that has been supplied by the claimant.

a. The evidence duplicates evidence already in the file

If any of the evidence that was supplied by the claimant duplicates any of the evidence already contained in the folder, it is not new and material evidence. Return it to the claimant and explain why you will not use it to reopen or revise the determination. If all of the evidence that the claimant supplies duplicates evidence in the folder, review the evidence in the folder to ensure that it supports the determination and that there are no clerical errors. If so, use Form SSA-L8165-U2 (SSI Notice of Decision) to prepare a notice to the claimant explaining why you are not reopening the prior determination—DO NOT INCLUDE APPEAL RIGHTS in the notice, since the decision not to reopen is an act of administrative discretion and is not appealable.

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b. There is evidence that does not duplicate evidence already in the file

If any part of the evidence that the claimant has supplied does not duplicate evidence contained in the folder, review it to ensure that it is material to the determination. If any part of that evidence is not material to the determination, return it to the claimant and explain why you are not using it to reopen and revise the determination. If any of the evidence is material to the determination, accept it and incorporate it into the folder. Make a note in writing describing the new and material evidence and describing the error or possibility of error in the prior determination. This is “affirmative action in writing,” and you have now reopened the prior determination. This does not ensure that the determination will be revised.

6. The claimant alleges new evidence

If the claimant brings in no new evidence, but alleges new evidence that he or she claims will change the determination, ask the claimant for a description of the new evidence and obtain as much of the available information as possible from the person who has the new evidence.

a. The new evidence duplicates evidence already in file

If all the evidence clearly only duplicates evidence that is already in the file and/or is clearly not material to the determination, review the evidence in the folder to ensure that it supports the determination and that there are no clerical or other errors. If so, use Form SSA-L8165-U2 (SSI Notice of Decision) to prepare a notice to the claimant explaining why you are not reopening the prior determination—DO NOT INCLUDE APPEAL RIGHTS in the notice, since the decision not to reopen is an act of administrative discretion and is not appealable.

b. The new evidence does not duplicate evidence already in file

If any of the evidence does not appear to duplicate evidence that is already in the file and if it appears that it is material to the determination, obtain the name, phone number and address of the individual who has the evidence. Advise the claimant of their responsibility of obtaining and providing SSA with the new evidence. Appeal rights will be appropriate when you advise the claimant of your decision to revise the determination.

B. Policy – Affirmative Action In Writing

Affirmative action in writing is a writing that questions the correctness of a prior determination or decision. Affirmative action in writing will take the process beyond a threshold review and initiate a reopening.

1. Requirements for Affirmative Action in Writing

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a. By an SSA employee or resulting from an SSA business process

It must be by an SSA employee or as the result of an SSA business process; e.g., a computer matching run, which results in an alert.

b. In writing

It must be in writing. It can be a Report of Contact (RPOC), DROC, or DWO1 screen annotation, an alert (e.g., resulting from an interface alert, etc.), a statement from a party to the determination or decision (SSA-795), a redetermination form with a specific question annotating the possibility of error in some manner, or a Quality Assurance (QA) report. It must identify an error or a possibility of an error in a specific case.

IMPORTANT: Mere discovery of an error or possibility of an error is not sufficient—it must be documented in writing.

c. Conscious and deliberate questioning in a specific case

It requires a conscious and deliberate questioning of the correctness of a prior determination or decision in a specific case either by a person or as a result of a computer alert. It does NOT apply to

a class of cases, or the date that a redetermination (RZ) is initiated.

2. Types of Affirmative Action in Writing Include:

a. Output

These are SSIRD's, SSID's, alerts, listings or other printouts, etc., generated by special systems queries or runs that are designed to identify and record errors or potential errors. System runs include, but are not limited to MEF, SSR, IRS and other interfaces. For interface alerts, we establish the date of affirmative action in writing in accordance with the instruction contained in SI 02310.005C.5. – Interface Operations and Related Issues. Otherwise, we establish the date of affirmative action in writing as follows:

If the output includes a run date, we use that date as the date of affirmative action in writing.

If there is no run date, but there is a query date, we use the query date.

If there is no query date or run date, use the date of the alert or diary on the SSR. For procedures regarding interface alerts, see SI 04070.015C.

b. Subsequent Application

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A subsequent application is an application which is filed after the notice of an initial determination on a prior application which has been less than fully favorable. It can be considered an affirmative action in writing provided that the new application is comprised of substantially the same issues and time period as the prior application. The initial determination of the first application may be reopened and revised if a favorable determination is made on the second application and if eligibility is established under administrative finality rules for a time period covered by the first determination.

If there is good cause to reopen (see SI 04070.010F.5.), the application under consideration must have been filed within 2 years after the notice of the initial determination on the prior application. If good cause does not exist, the application under consideration must have been filed within 1 year after the date of notice of the initial determination on the prior application.

NOTE: If a protective filing date is established (see SI 00601.015 – Protective Filing – General and GN 00204.010 – Protective Filing), the protective filing date is the date of affirmative action in writing.

c. Report of Contact

This can be a SSA-1719B, DW01 entry, RPOC, the MSSICS DROC, or other report or statement in which the SSA employee indicates the prior determination might be incorrect.

The affirmative action in writing date is the date the record was established.

d. Form SSA-795

We can use a form SSA-795 or other statement, letter, MSSICS DPST, etc., from the claimant, his or her representative payee, representative, or another individual that could be interpreted as questioning the correctness of a prior determination.

The affirmative action in writing date is the date the FO or other SSA component noted the form or the envelope as received, either by date stamp or otherwise.

e. Redetermination Form

We can use any redetermination form (e.g., SSA-8202, SSA-8202-OCR, SSA-8203-BK, DW01 screen annotation, or MSSICS statement for determining continuing eligibility, etc.) on which the claimant or his or her representative payee or representative expressly questions the correctness of the prior determination. The treatment of MSSICS screens as affirmative action(s) in writing should be explained and dated.

The affirmative action in writing date is the date the FO or other SSA component noted the form or envelope as received, either by date stamp, DW01 or MSSICS screen annotation, or otherwise.

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f. Quality Assurance (QA) Report

We can use a QA or assessment report concerning an erroneous or potentially erroneous prior determination or decision.

The affirmative action in writing date is the date that the QA or other SSA employee questioned in writing the earlier determination or decision.

g. Financial Institution's Report

We can use any financial institution's report or a combination of reports from several financial institutions showing account balances and/or interest.

Except as noted, we use the date that the report or envelope was annotated as received by the FO or other SSA component, either by date or otherwise as the affirmative action in writing date. All issues based on information from the report receive the same date.

IMPORTANT NOTE: If the request resulted from an alert generated by an IRS interface run, see SI 04070.015C.1. This also applies to alerts on printouts which are generated by special runs (e.g., to identify potential errors related to a type of interest or bank account). If the request resulted from an indication that a payment or payments may be in error (e.g., a recipient notifies SSA of a previously unknown bank account by signing an SSA-795), use the date SSA learned of and documented the possibility of the error.

h. Development

Development of an issue can raise another issue, which in turn, results in reopening. For example, while developing income from a resource, the CR learns that the recipient underwent a change in living arrangement that resulted in an overpayment.

We use the date that the new issue was first documented in the file. Most likely, this will be a different, later date from the date of affirmative action in writing for the original issue.

i. DOC Transfers of Redeterminations

We use the date the redetermination is transferred from the WB DOC to the field office on the e8202 website. DOC transfer redeterminations that are accreted to PEODS electronically are not affirmative action(s) in writing.

3. Special Situations with Affirmative Action in Writing

a. More Than One Date of Affirmative Action in Writing

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If there is more than one date of affirmative action in writing, use the earliest possible date. If the dates are more than 6 months apart, the rules concerning diligent pursuit may apply. (See SI 04070.040 – Revising SSI Determinations)

b. No Ascertainable Date of Affirmative Action in Writing

If there is no ascertainable date of affirmative action in writing, use the date of current review as the date of affirmative action in writing. (See the examples in SI 04070.015D.)

C. Procedure – Action to Be Taken After Affirmative Action in Writing or Request By Claimant

After affirmative action in writing is established, take action promptly, including but not limited to:

Annotating the MSSICS DW01 screen, or the Modernized Development Worksheet (MDW) screen; and

Beginning the investigation and development or reconciliation of such action.

Keep a copy of the affirmative action in writing in file for documentation.

1. Processing Interface Alerts

When processing interface alerts:

Use diaries and alerts resulting from interface runs to obtain information about income or resources that affect eligibility or payment amount (e.g., notice of accounts in financial institutions from IRS interface runs), that may constitute resources to recipients and can also be sources of income if they are interest-bearing. Both the income and resource issues resulting from the information identified on the alert will have the same affirmative action in writing date. (See SI 02310.005C.5. – Interface Operations and Related Issues)

Determine the date of affirmative action in writing. See section SI 04070.015B.3.

D. Examples of Reopenings

1. Good Cause to Reopen Exists - Subsequent Application Filed Within Two Years

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On June 19, 2003, the claimant files an application for SSI benefits as an aged individual, and is eligible on the claim. He filed a previous application which had been denied for excess resources by a notice of initial determination dated February 6, 2002. He never appealed that determination.

Although he has not alleged on the current application that the prior determination was incorrect, your development turned up new and material evidence that the resources which supported the prior determination actually belonged to another individual and were not available for the claimant's maintenance and support.

Because good cause exists, reopen and revise the initial determination on the prior application. The prior determination preceded the date of the current application, which represents the date of affirmative action in writing, by less than 2 years.

2. Good Cause to Reopen Does Not Exist — Subsequent Application Filed More Than One Year after Prior Determination (Example of Threshold Review)

Same facts as Example 1 except that there is no basis for finding good cause (i.e., no new and material evidence, error on the face of the evidence or clerical error).

Because the date of the prior determination preceded the date of the current application (the date of affirmative action in writing) by more than one year and there is no basis for finding good cause, you may not reopen and revise the prior determination.

3. Application Following Denial by ALJ

On August 2, 2003, the claimant files a subsequent application for SSI benefits as an aged individual and is found eligible. The notice of initial determination denying him benefits on a prior application because of excess income was dated June 16, 2002. He appealed, and his first claim was ultimately denied by an ALJ on January 18, 2003.

In developing the current claim, you find out that a decimal was misplaced in developing the prior application, making it appear that his monthly income was $2,900.00 when it was really $290.00. Because he waived his right to personal appearance before the ALJ, neither the claimant nor the ALJ caught the error.

You cannot reopen and revise the prior decision, because it was made by the ALJ. Make a determination based on the current application and effectuate it. Then, forward the folder to the Hearing Office where the decision on the prior application was made under cover of a memorandum explaining the error. This will provide an opportunity for the ALJ to reopen and revise the earlier decision.

4. Application Following ALJ Denial - More Than 2 Years after Previous Initial Determination

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Same facts as Example 3. except that the prior initial determination was dated June 16, 2001 and the prior ALJ decision was dated January 18, 2003.

Do not forward to the ALJ, even though the ALJ decision was made less than two years before the current application was filed (August 2, 2003), because the prior initial determination (June 16, 2001) preceded the date of the current application (the date of affirmative action in writing) by more than 2 years.

5. Protective Filing Date within Two Years after Prior Initial Determination

The claimant filed an application for SSI benefits as an aged individual on July 6, 2003. Because of a signed, written statement, a protective filing date of June 21, 2003 is established, and the claim is allowed.

You learn that the claimant had filed a previous application which was denied on June 30, 2001. Your investigation uncovers new and material evidence that clearly establishes eligibility at least as of the date of the prior application. He never appealed the prior initial determination.

Reopen and revise the prior determination, since the protective filing date is the date of affirmative action in writing and the previous initial determination preceded it by less than 2 years.

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ConditionalBenefits Conditional benefits is a little know and little used policy that permits individuals who have excess nonliquid resources that would normally prevent receiving SSI payments to receive payments while trying to sell the excess resource(s). Conditional benefits can apply to applicants trying to establish eligibility, recipients trying to maintain eligibility and also to deemors whose resources impact another person’s eligibility. Conditional benefits are refundable meaning the have to be repaid upon disposition of the excess resource. Waiver provisions do not apply to conditional benefits overpayments. They are also time limited. They can be paid for up to 3 months (with one 3-month extension for good cause) for personal property. They can be paid for 9-months for real property. After a 9-month conditional benefits period, the excess real property will continue to be excluded from resources and regular (nonrefundable) SSI benefits can be paid as long as reasonable efforts to sell continue and they individual remains otherwise eligible. Several sections of instructions follow that you should make yourself familiar with.

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SI 01150.200 Conditional Benefits

CITATIONS:

Act as amended in 1987, section 1613(b); 20 CFR 416.1240-1245

A. Background for conditional benefits

1. Excess nonliquid resources

People with excess nonliquid resources cannot receive Supplemental Security Income (SSI) benefits even if they meet all other eligibility requirements. As a result, they may have little or nothing to live on while they try to dispose of the excess resources.

2. The conditional benefits provisions

The Commissioner of Social Security has statutory authority to prescribe the period(s) within which, and the manner in which, to dispose of various kinds of property. Regulations describe the conditions under which we can make SSI payments while an individual attempts to dispose of property. Such payments are overpayments to be repaid from the proceeds of the sale. Conditional benefits provisions may apply to:

applicants (new claims), recipients (postentitlement cases), and deemors (in both new and postentitlement situations).

However, when the excess resources are in the form of real property which cannot be sold for certain specified reasons (undue hardship or unsuccessful reasonable efforts to sell), the owner can receive regular (not conditional) benefits.

B. Policy on receiving conditional benefits

1. Conditional benefits rule

An individual (or couple) who meets all nonresource eligibility requirements, but fails to meet the resources requirement due solely to excess nonliquid resources, can receive SSI benefits for a limited period of time.

Such payments based on a “conditional” exclusion of the excess nonliquid resources, are available if the individual or couple (or deemor) meets both of the following conditions:

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a. Countable liquid resources do not exceed the statutory limits. The resources not included in the disposition cannot exceed $2,000 for an individual or $3,000 for a couple; and

NOTE: For purposes of conditional benefit payments there is no limit on the value of the total countable nonliquid resources.

b. The individual or couple agrees in writing to:

o sell excess nonliquid resources at their current market value (CMV) within a specified period as seen in SI 01150.201A.1.; and

o use the proceeds of sale to refund overpayments of conditional benefits. For more details on overpayments see SI 01150.202.

2. Undue hardship for joint resident owner

We treat excess real property as an excluded resource not requiring disposition under a conditional benefits agreement for so long as:

the property is jointly owned; and its sale would cause undue hardship due to loss of housing to the other owner(s).

If undue hardship no longer applies because the joint owner moves, dies, etc., the individual may be eligible for a conditional benefits period.

For additional information related to undue hardship, see SI 01130.130.

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SI 01150.201 Conditional Benefits Payments

A. Policy for duration of period

1. Disposal and exclusion period

a. Beginning date

The disposal period and exclusion period for excess nonliquid resources begins:

after the adjudicator determines that the individual meets all nonresource eligibility requirements (including a final disability or blindness decision, or presumptive decision, if applicable); and

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NOTE: A Disability Determination Service (DDS) early alert to a Field Office (FO) for a proposed finding of disability is not sufficient. Do not defer development of potential conditional benefits cases.

on the date SSA “accepts” the individual's signed written agreement, i.e., Form SSA-8060-U3 (Agreement to Sell Property). Acceptance of the agreement occurs on the date the individual receives written notice that the agreement is in effect. Written notice is sent once all nonresource eligibility requirements are met. (For Notice Language, see SI 01150.210B.2.).

NOTE: The date of acceptance is 5 days from the date on the notice unless the individual can prove otherwise. If the written notice is handed to the individual, the date of acceptance is that date.

b. Basic periods

The basic periods for the disposal of excess nonliquid resources are:

9 months for real property; 3 months for personal property.

c. Ending date

The disposal and exclusion period ends at the earliest of the following:

sale of the property; the month after the month continued reasonable efforts to sell end, (absent good

cause); the individual's submission of a written request for cancellation; countable resources, even without the conditional exclusion, fall within the

applicable limit (e.g., the individual depletes liquid resources); or the individual has received a full period of conditional benefits including any

allowable extension.

2. Extension for good cause

We permit one 3-month extension for disposition of personal property for good cause. A more complete explanation of good cause is at SI 01150.201B.4.

3. Payment period

We pay conditional benefits only for full calendar months. Thus:

the first month of a payment period depends on whether it is a new application or a postentitlement action. For a new application the first month of payment is the second month after the month in which the disposal or exclusion period begins.

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This is because we do not pay benefits in the E02 month, which is the month of effective filing. To review the month of effective filing, see SI 00601.009. For postentitlement cases, the first month of payment is the month following the beginning of the disposal and exclusion period; and

the last month of a payment period is the month in which the disposal and exclusion period ends.

EXAMPLE 1: Mr. Jones, an SSI recipient, inherits a speedboat from his Uncle George. Mr. Jones’ disposal and exclusion period for his recreational boat begins on May 12 when Mr. Jones receives written notice that his agreement to sell is in effect. He sells the boat on July 20, which ends the disposal and exclusion period. He is eligible for conditional benefits for June and July, the 2 full months whose first moments fall within the disposal and exclusion period. If no sale occurred, the basic period ends on August 11, and he receives conditional benefits for the 3 months of June, July, and August assuming no extension of the disposal and exclusion period for good cause was granted.

EXAMPLE 2: On December 12, Mr. Wright, an aged applicant, files for SSI benefits. During the interview he states that the only property he owns, other than his house, is a vacant lot located 80 miles away that he inherited years ago. Mr. Wright states that he would really like to sell the vacant lot and asks if there is a way he could receive SSI until he does. The Claims Representative (CR) determines that Mr. Wright meets all other entitlement factors except, that the vacant lot puts him above the resource limit, and the CR explains all the conditions for receiving conditional benefit payments. Mr. Wright recognizes this as an opportunity to sell the lot and receive SSI until the sale is complete. On December 18, he signs the SSA-8060 U3 (Agreement to Sell Property) in the Social Security Office. The CR tells him he is eligible beginning January 1, but will not receive his first payment until February 1 because the E02 month applies. Mr. Wright has 9 months after the beginning of the disposal and exclusion period to sell his excess property. Therefore, he must sell the property by September.

4. Interruptions in the conditional benefits period

a. Suspensions

If we suspend an individual's eligibility during a conditional benefits period, the months of suspension do not count toward the applicable time limit.

Upon reinstatement, the individual must resume reasonable efforts to sell the excess nonliquid resources within 1 week or lose the conditional exclusion.

b. Terminations

An individual who reapplies for benefits after termination of prior eligibility may be subject to a new conditional benefits period if there are still excess resources.

For additional information regarding suspensions, and terminations, see SI 02301.001.

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B. Policy related to reasonable efforts to sell or buy

1. Reasonable efforts to sell excess nonliquid property

The individual must make reasonable efforts to sell excess nonliquid property by taking all necessary steps to sell it through media serving the geographic area in which the person lives or, if different, where the property is located.

2. Reasonable efforts to sell real property

a. Within 30 days of signing a conditional benefits agreement, the owner must:

o list the property with an agent; or o begin to advertise in at least one of the appropriate media; place a “For Sale”

sign on the property (if permitted); begin to conduct open houses or otherwise show the property to interested parties on a continuing basis; or attempt any other appropriate methods of sale such as posting notices on community bulletin boards, distributing fliers, etc.

NOTE: Reasonable efforts must be evaluated in consideration of the individual's circumstances and is not restricted to “traditional” sales methods such as engaging a real estate agent.

b. Except for gaps of no more than 1 week, the owner must maintain efforts of the type listed in SI 01150.201B.2.a (in this section); and

c. The owner must not reject any reasonable offer to buy the property and bears the burden of demonstrating to SSA's satisfaction that he or she rejected an offer because it was not reasonable.

3. Reasonable offer to buy real property

We assume that an offer to buy real property is reasonable if it is at least two-thirds of the estimated CMV unless the owner proves otherwise.

4. Good cause

a. Definition

Good cause exists when circumstances beyond an individual's control prevent his or her taking the required actions to accomplish reasonable efforts to sell.

b. Significance of good cause

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Without good cause, failure to meet the criteria outlined in SI 01150.201B.1. or SI 01150.201B.2. (in this section), as applicable, means the individual is not making reasonable efforts to sell the property. Therefore, his or her countable resources include the value of the excess property retroactive to the beginning of the conditional benefits period and he or she owes the resultant overpayment.

With good cause, failure to meet the criteria means that the conditional benefits period continues to run its term.

C. Examples of good cause

1. No offer to buy

The individual makes good faith efforts to sell excess nonliquid resources throughout the disposal period (or is prevented from doing so by circumstances beyond his or her control) but receives no offer to buy them.

2. Reliance on an offer that does not result in a sale

A legitimate or apparently legitimate offer to buy an excess nonliquid resource halts further efforts to sell it for a prolonged period of time, and the prospective buyer subsequently cannot or will not complete the purchase.

3. Escrow begins but closing does not take place within disposal period

The individual accepts an offer to buy real property, and escrow begins, which precludes acceptance of another offer. Closing (at which full or partial payment and transfer of title are exchanged) does not take place within the disposal period.

4. Incapacitating illness or injury

The individual becomes homebound or hospitalized for a prolonged period, due to illness or injury, and cannot take the steps necessary to sell the resource or to arrange for someone to sell it on his or her behalf.

5. Part-owner dies

A part-owner of a resource dies, and administration or probate of the estate delays efforts to sell the resource (assuming that the property continues to be a resource).

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SI 01130.140 Real Property Following Reasonable but Unsuccessful Efforts to Sell It Throughout a 9-Month Period of Conditional Benefits

A. Policy Principles

1. Exclusion

Real property that an individual has made reasonable but unsuccessful efforts to sell throughout a 9-month period of conditional benefits will continue to be excluded for as long as:

the individual continues to make reasonable efforts to sell it; and including the property as a countable resource would result in a determination of

excess resources.

2. Distinction Between This And The Conditional Benefits Exclusion

If the property is later sold, benefits paid during the 9-month conditional benefits period are subject to recovery as overpayments. Benefits paid as a result of this exclusion are not subject to recovery as overpayments of conditional benefits.

3. Resumption Of The Exclusion After A Period Of Suspended Payments

If payments are suspended for reasons unrelated to this exclusion and are later reinstated, the exclusion will resume upon such reinstatement if the individual resumes making reasonable efforts to sell the property within one week of such reinstatement.

4. No Resumption Of The Exclusion After Termination Of Eligibility

If eligibility is terminated for any reason, this exclusion will not resume upon a new application for benefits. Before the property can again be excluded under this provision, the individual must make reasonable but unsuccessful efforts to sell it throughout a new 9-month period of conditional benefits.