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Social Security Benefits for Non-Disability Practitioners

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Social Security Benefits for Non-Disability Practitioners

This program will focus on the intersections between Workers Compensation Benefits, Personal Injury Benefits, Estate Planning, and Family Law with Social Security Disability Benefits. The Program will focus on the ways in which these areas of law intersect and how holistic lawyering and collaboration can better serve clients and even reduce your bottom line.

Transcript

- Hi, my name is Maren Miller Bam I'm a social security disability attorney, and I own Salus Disability Law. Today I'm presenting on social security benefits for non-disability practitioners. This program will feature the intersection of social security disability benefits with a number of practice areas, including family law, bankruptcy, personal injury, and workers' compensation. we'll also include some information on estate planning, especially when dealing with individuals with disabilities. In order to best understand how social security benefits impact your practice area, it's critical to understand just the basics of social security in general. Social security disability benefits really come in two different forms. There is SSI benefits which are sometimes referred to as supplemental security income, SSI, or Title XVI Benefits. Then there are social security disability benefits, which are sometimes called DIB or D-I-B, SSDI, or Title II Benefits. Supplemental security benefits are a needs-based benefit program. They're often called a program of last resort. These benefits are the only benefit program available to children based upon their own medical impairments. There are some other benefits that children can receive through the social security administration, but none of those benefits are based on their individual disabilities. SSI benefits are subject to income and resource limits under 20 CFR 416.1100 and 20 CFR 416.1205. Specifically an individual eligible for SSI benefits cannot have more than $2,000 in resources. For an eligible couple the limit is $3,000. The income rules can become very complex and there are different rules for earned income that's income based on work and unearned income, income from other sources. There are deeming rules, meaning there are exclusions for certain income types. There are two to one rules where $2 earned only reduces benefits by a dollar and there are exclusions for noneligible individuals living within a home. And ineligible spouse and eligible children get certain amounts of income that are deducted from the calculation. The resource rules focus primarily on cash resources, but also include non-cash assets, such as houses, cars, other motor vehicles, things like burial plots, life insurance policies, stocks, bonds, et cetera. The rule for $2,000 is not just limited to cash benefits. There are two main exclusions that are important for most people though. The home you live in and a single vehicle. Anything else is counted as a resource. Most individuals who receive SSI benefits are insured through Medicaid for their medical insurance. Social security disability benefits are not a needs-based program. They're not considered an entitlement because they are based on an individual's work and earnings history. And they're funded through that individual's FICA taxes. Social security has what's called a 2040 rule. This is under 20 CFR 404.130. This rule essentially means that somebody needs to have worked five outta the last 10 years or 20 outta the last 40 quarters. This rule ensures that somebody not only has an extensive work history, but also a recent one to be eligible for benefits. The only real income rules that are available for this program are earnings from work. Disability is fundamentally opposed to the concept of work. Social security defines disability as an individual who has a medical impairment that prevents their ability to engage in employment at a substantial gainful level. That level is, generally speaking, denoted by a dollar figure. It's 1350 in gross earnings for 2022. So anyone, regardless of the severity of their impairments, who earns more than that, based on their work is not disabled. Most recipients who receive social security disability benefits are eligible for Medicare. Medicare has significant waiting periods post eligibility though. under 20 CFR 404.315, an individual is not eligible for Medicare benefits until they've been found disabled by social security for 24 months. Additionally, social security disability benefits have what's called a five-month waiting period. The first five months of eligibility are unpaid. So that basically means after somebody's approved for disability benefits, they have to wait five months before that their first payable month. And they have to wait 29 months before they can get Medicare. The first intersection we want to discuss is the impact of social security benefits on family law. Family law, generally speaking, is going to focus on a few main topics. Divorce, custody, and child support obligations. So we'll really dive into the impact of child support on SSI benefits, the needs-based program. We'll talk about the intersection of child support and SSDI benefits. We will talk about some key considerations before you sign the divorce paperwork. We'll also talk about the marriage rules for individuals receiving SSI benefits or disabled adult child benefits, which is a subcategory of the SSDI program. The first topic is child support when the child receives SSI benefits. So if in your custody, you have a child under the age of 18, who is eligible to get child support from a former spouse or the child's parent. This is the kind of considerations we want to walk through. Social security relies primarily on the regulations which are derived from the Social Security Act. However, when they are working through some of these exclusions, most of the people within the agency rely upon the POMS, which is an internal document that further breaks down the regulations. It is technically not binding in and of itself, but so long as it does not conflict with the regulations, it's often the protocol followed. So with that POMS: SI 00501.010 states that child support is unearned income to a child receiving SSI benefits. One third of the amount received is excluded from deeming. Okay, so what does that mean? When we first talked about SSI, this is a needs-based program and any income can reduce somebody's SSI benefits. So what that means is if a child is receiving SSI benefits and their parent is receiving child support on their behalf or a guardian is receiving child support on their behalf, that child support counts as income that reduces their SSI benefits. Social security policy though is that one third of that is excluded. So if somebody is due a thousand dollars a month in child support, one third of that, so $333.33 is excluded. The remaining amount is deducted from the child's SSI benefits. There's some interesting exceptions to this rule. If child support is paid to the state and a child is in the custody of the state, meaning generally speaking that they're in foster care or a juvenile facility, then that is not deemed as income to the child. It basically allows social security to pay the state the full SSI amount. And the parent has to pay child support to the state. There's also an important difference between child support payments that are paid on time and child support arrearage payments. So a child support arrearage payment does not have the one third income exclusion. If the parent retains the funds and does not give them to the child, think reimbursement for the parent covering expenses in the past, the money is income to the parent, not the child. If the money is given to the child, it is income and has no exclusion. This scenario that they're contemplating here is typically after the child is already an adult. So this isn't, if somebody falls one month behind, and then pays it the following month, the rules would still apply but the way this is written, it's thinking about after a child turns 18 and their parent catches up and reimburses the other parent for this, the way the money is counted changes depending on whether or not the parent retains the funds as a form of reimbursement, or they pass it along to the child. The key thing to consider here is that child support will reduce a disabled child, so a child with disabilities approved for SSI benefits under the age of 18, their benefits will be reduced based on a child support obligation. What happens to child support when a parent is receiving SSI? So if a custodial parent receives SSI benefits, the needs-based disability benefit program, the income from child support is excluded unless it is the arrears we mentioned previously and retained by the parent, if it's arrears and not retained by the parent, it is likewise not income. If a non-custodial parent receives SSI benefits, this is not income for child support purposes and cannot be garnished to pay child support. So this is a key point. If a former spouse or a parent of a child does not have custody, and they are an SSI recipient, that is not counted in the vast majority of states and social security will not garnish from it to fulfill a child support obligation. The rules are different for child support when parents are receiving SSDI benefits. So the primary place that this intersects with family law is really when a non-custodial parent receives SSDI benefits. because family law is a state-based law. Not everything is consistent. But we can look to kind of the vast majority of the rules. And social security has a section on their website to really outline this. So if you go to ssa.gov/disability/family, you can get an understanding of how child support obligations work when a non-custodial parent receives SSDI benefits. Most states count this as income when calculating a child support obligation. So a non-custodial parent is unable to work and their only source of income is SSDI, this is the non needs-based social security disability program. That program allows an individual to claim, as auxiliaries, their dependence. Social security defines dependence in a number of different ways, but for the purpose of this assume minor children, even who don't reside with them. This would increase the non-custodial parents benefit up to 150% or 180% of their current benefit amount. That is then used to calculate the child support obligation. And these auxiliary payments are sent to the child, or to the custodial parent on behalf of the child. As we mentioned, SSI does not allow for a garnishment of those benefits to fulfill a child support obligation. The rules are different for SSDI. Under POMS: GN 02410.215 garnishments can be made for SSDI benefits, and the way they're done, it's the lesser of the state maximum or the maximum under the Consumer Credit Protection Act, the CCPA. This is under 15 USC 1673 subsection b. And it's based on the law of the state where the beneficiary resides. So if your client receives SSDI, it is important to have good documentation so that their child support obligation is based on their actual income and not their potential earnings. Many states have rules that potential earnings policy for intentionally unemployed or underemployed individuals. An SS D I approval can help get around the allegation of being intentionally unemployed or underemployed. And receiving these benefits actually allows for an increase in auxiliary payments that can be used to make a child support obligation. The next key topic is really marriage, divorce, and survivorship. According to social security's COLA information, so they adjust the cost of living on a yearly basis, an eligible individual can receive $841 per month in SSI benefits. This is the needs-based program. But an eligible couple that's two individuals who are both disabled, who do not have the work credits for SSDI, so they are both receiving SSI can only receive a combined total of $1,261 in a month. So it's important to note here that if there are two unmarried individuals residing together, sharing rent, sharing expenses, they can each get $841 in SSI per month. So long as they don't have any other type of reductions. If they marry, they lose approximately $400 in income each month. This is one of a number of rules where social security and marriage don't mesh well. A few other things to consider. If your child who you have custody of receives SSI payments, so those are the payments based on that child's disability, they're needs-based, and you remarry, the step-parent's income is deemed to the child and will reduce, or even potentially disqualify your child from benefits. This is critical to note because typically in family law, a step-parent doesn't have a child support obligation. So if, for example, an individual's not working. If I'm not working and have a small child who's disabled and I'm not working because care takes up all of my time. I can apply for SSI benefits for them. They meet the medical criteria. They will get approved. Given that I'm not working and likely have no other income or resources, my child will receive their full SSI benefits. However, if I get married and that individual is working, even if they are not providing support for my child, social security counts that income against my child's eligibility. These are some important considerations to protect your child's livelihood and your own livelihood if you're considering marriage. For many social security programs, a spouse can collect benefits off of an ex spouse's earnings record if the marriage lasted for 10 years. Good place to look this up is on SSA's website. They have a section called SSA planning website for divorced spouses. without appearing sexist, the way this program was initially built, it contemplated a scenario where one spouse worked and was the breadwinner, and the other spouse stayed at home and often raised the family and took care of the home. In those circumstances, upon full retirement, the working spouse would have eligibility. The non-working spouse would not have eligibility. So social security has created a system where if one spouse works and the other doesn't, the spouse that didn't work can receive an amount equal to 50% of what the working spouse is eligible for without detracting from the working spouse. However, there are a number of scenarios where this type of relationship existed and a divorce happens. Those individuals are not hung out to dry and ineligible for collecting that 50% whether it's via disability or in the future retirement. But the marriage had to last for 10 years. There is a subcategory of SSDI benefits called disabled adult child benefits. This is a benefits program for individuals who are between the ages of 18 and 22, who have a disability that prevents them from working. This program, if an individual is found disabled by the age of 22, allows them to essentially latch onto their parents' SSDI eligibility so long as that parent fits one of three categories. They're deceased, they're retired and collecting social security benefits, or they are disabled in collecting social security benefits. If that is the case, this individual can receive up to 50% of the amount that that parent is receiving, or that parent would have been eligible for had they been alive without reducing the parents' benefits. This is a great protection for children with congenital conditions, often things that have lasted since birth, where you know that their ability to go out in the workforce may not happen. This program is really important because an individual who gets these benefits gets SSDI, so there are no income guidelines, there are no resource guidelines, and there are no real limitations on their ability to get the healthcare they need. They'll be eligible ultimately for Medicare. But there's one key component to this, that disabled adult child is only eligible so long as they're unmarried. If they get married, their eligibility goes away. They still may be eligible for SSI. If they've had any work credits, they may be eligible for SSDI on their own earnings record, but marriage can have a negative ramification. So as you can see, social security has a number of different rules when marriage is involved in terms of eligibility for other benefits programs, getting reduced benefits because of marriage or ultimately getting kicked off the benefits you desperately need. It's critical to consult a disability practitioner. If any party in a divorce or custody matter is getting social security benefits to make sure you're not setting anyone up for problems down the road, and that you are maximizing the amount of support that can be received. The next section focuses on social security and debt forgiveness. This section will focus on managing debt when you can't work using bankruptcy or student loan forgiveness programs. The first part is bankruptcy and social security benefits. According to the American Journal of Public Health, medical bills are the number one reason people declare bankruptcy in the United States. So if you are a bankruptcy practitioner, there's a likelihood that your client needs social security benefits, or is already on them. There are few different rules about what can happen if somebody is looking to go through the bankruptcy proceeding. Under 20 CFR 404.970, social security benefits generally cannot be garnished for bankruptcy. 31 CFR part 212 was promulgated in 2013 and creates a process for banks to follow for garnishment when federal benefits such as SSDI and SSI are commingled with other income. The best practice tip, if you have an individual who is going through the social security process and has not received benefits yet is to ensure that they do not put their social security money in with other funds. It appears that the rules are trying to ensure that people don't get into a huge mess with commingling, but the safest practice is if your client is going through social security process, they need to have a separate bank account that they can receive their back pay in. Many social security cases take years, can take as many as two years. During that time, somebody will be accruing back pay. Social security handles back pay in two ways, they send either an electronics benefits card or they put in the bank account you list on your initial application. First step, don't list one on your initial application, or reach out to social security and remove that account. Your best option is likely to take the money on the electronic benefits card. Use the part of your first check to open a bank account, and then get it deposited in there, separate and away from any other funds. Challenges. It can be difficult. You can't have an open bank account without money in it. So you can't have one sitting ready and waiting for that social security money without it having potentially commingled funds there. So the best thing to do is don't provide social security with bank account information, take the electronic benefits card, use that money to set up an account and then get your back pay deposited there. For some individuals who get an overpayment of their social security benefits, these can be caused by a wide array of reasons, including working and earning too much money while receiving benefits, electing continuing benefits. So continuing to get your benefits paid to you while you fight against social security ceasing your benefits. This is a cessation. And since where they say you're no longer disabled, or frankly, miscalculations of income for SSI purposes, living rent free can reduce SSI benefits. You won an award or a lottery. You got income somewhere and didn't calculate it correctly. Any of these things can cause an overpayment. While social security has their own process for waiving or disputing through a reconsideration overpayments. They also can be dealt with in bankruptcy. Chapter seven, bankruptcy allows SSA overpayments to be discharged in full. So long as the benefits were not received through fraud. Chapter 13, basically treats this as a typical unsecured debt and has the same rules for fraud. There's another way that individuals deal with debt if they become disabled. And this is student loan debt. So unlike the medical debt or other debt, somebody could accrue because they're unable to work. Student loan debt has its own process. A total and permanent student loan discharge is one way for a disabled individual to reduce or eliminate their student loan debt. Federal student aids, disability discharge website contains really all the information you need to apply for disability-based student loan forgiveness. Typically student loans cannot be discharged in bankruptcy, but for individuals receiving disability benefits from either the social security administration or the VA, they can be eligible for a total and permanent discharge. According to US Department of Education press release over 323,000 borrowers will automatically be found eligible using a shared data tool with the VA and the social security administration. So who is eligible? Social security disability recipients who have a review cycle of five to seven years. This is not on a typical social security notice, and you have to actually contact social security to get this information. They have it in their system every case is flagged for a review cycle based on the likelihood of medical improvement. Any veteran who is a hundred percent service connected disabled suffers from a total and permanent disability is eligible. And then doctor approved individuals. Sometimes individuals are not financially eligible for social security disability, meaning they don't have the work credits for one, and they may not be financially needy for the SSI program. In these instances, a doctor can go through the process, provide medical documentation that their patient will be disabled for a period of at least five years. So looking at the social security recipients, we've basically covered this does not matter if it's social security disability, or supplemental security income. So SSDI or SSI, but you need to be in that five to seven year review cycle. Doctor certified. These are the main criteria. Has lasted for at least 60 months. So it's lasted for five years, expected to last five years could result in death. The loans that are eligible for this are William D. Ford Direct Loans FFEL loans or Federal Family Education Loans, Federal Perkins Loans, and anything through the TEACH Grant Program. So basically this is mostly all federal student loans. For the application process. This is just according to the application website. Student loan payments stop after an application is filed. Garnishments may not stop, but they will stop if your application is approved. This process is very fast. It usually takes about 30 days. I've done a number of these with some of my clients, and this is actually accurate data from a government agency. It really is very quick. I don't think we've had any take longer than 60 days. If an application is incomplete, it can take longer. They typically ask you for the information, they don't just deny you. We had one application that needed a social security number input in a second spot. They asked us for the information and went right through with processing for an approval. If you are denied, there are appeal options. It's critical for people to know, though, if they are approved, there's a three-year look back period. So from approval for the next three years, you will be monitored. And there's a few things that you are restricted on. You cannot work and earn more than the federal poverty guidelines in your state for an individual. If you have more than one person in your family, you can never go above the federal poverty guidelines for a family of two. Even if you have 10 people in your household. Your work and earnings matter. You also cannot take out new student loans during that period of time. There's a potential you may not be able to ever take them out but definitely for the first three years. The next intersection we're going to cover is personal injury and SSDI/SSI benefits and why it's critical to protect your settlement. So the first thing to kind of understand is how a personal in injury settlement is calculated. According to the alllaw.com a personal injury settlement factors are basically the following. Missed work time or other lost income. Pain, and other physical suffering. permanent physical disability or disfigurement. Loss of family, social and education experiences. And emotional damages resulting from any of the above. While it can be pretty simple to add up the damages and the money spent and money lost based on not working. There's not always a precise way to put a dollar figure on pain and suffering or on the missed experiences and lost opportunities. That's where using something called the damages formula comes in. And this is where personal injury attorney spend a lot of time calculating out the best way to account for this. Alllaw.com had this very simple, straightforward breakdown so I'm relying there. The formulas can change based on practitioners, states have different roles, but generally speaking these are some of the kind of key criteria looked at in a personal injury case. So how does this intersect with social security benefits? First, let's talk about how it would impact somebody who's already receiving social security benefits. If an individual is getting SSDI benefits, the non-needs-based program, there will be no impact. There are no assets or income limitations for SSDI. This is not wages or earnings. So it doesn't go to that concept of substantial gainful activity or SGA we previously talked about. However, if the individual is receiving SSI benefits, there is the potential for an impact. Specifically, somebody getting SSI benefits will be reduced based on income. So SSI benefits are going to likely make somebody ineligible the month they're received it will count as income. Any amount over $2,000 held in the following month and retained going forward counts as a resource that would make somebody ineligible. The individual would have to spend down their benefits to get their SSI reinstated. They need to do so within a year to be reinstated. Otherwise they have to go through the entire application process for SSI again and prove medical disability. So can you get a personal injury settlement and social security benefits? The short answer is yes, you can. And there's a number of reasons that working on these things side by side is useful. Many states have provisions for free medical records for individuals pursuing social security. If you're using holistic lawyers who share information, it's a great way for your personal injury attorney to get the medical information they need without having to rack up a number of costs that ultimately you're responsible for at the end of your case. It can also be useful because social security can prove that this condition is disabling, prevents employment. It removes that dispute from the personal injury case. If one side is saying, it's really not that bad, they can go back to work, we're not paying for loss of wages going forward, yeah, the first three months they needed to get this surgery, but now they're better. A finding of disability provides evidence that that's untrue. It also can allow a personal injury attorney to hold out for a higher settlement. Somebody has financial stability. You can take as long as necessary to pursue the best outcome for somebody. One possible detriment, though, is it can decrease the value of some of the payments. If they're saying somebody's not working. So you want to be reimbursed for those lost wages, but you now have this other source of income. It could be used in a way where they say, well, the loss isn't as great because you have this over here. That may be true, but that finding of disability is likely more valuable because you can demonstrate this loss of wages long term, even if there is a small offset from this income you're receiving. Also getting the insurance that comes through social security can ensure that the testing and medical treatment or even medical opinions needed can be affordable to a person pursuing a personal injury claim. Also, just from a perspective of serving your client well, an individual who is working likely earned significantly more than they'll ever receive from SSDI or SSI money. So the amount of those benefits is a significant setback for them. A settlement gives them an opportunity to be made whole. We mentioned here, one topic that's going to carry over into the next section, which is personal injury. And SSI can get really messy. There are workarounds. And that really comes into this estate planning section. So this is an intersection really between three practice areas. Disability benefits, personal injury and estate planning, where you can do what is best for your client if you collaborate. So this section is going to focus on a state and tax planning for SSI recipients. So we're really looking at those needs-based disability recipients. And what we're doing is protecting eligibility for those SSI benefits through effective financial planning. I don't love case studies, but I'm going to give one because I firmly believe a state planning is of the utmost importance if you have children that suffer from disabilities, if you have siblings that suffer from disabilities, even if you think you have virtually no assets and just a ton of debt, it is of the utmost importance to set up an estate plan. I say that as somebody who is not an estate planning attorney. Here's an example of what happened to one of my clients. I had a homeless client who was found disabled by the social security administration. We spent about two years proving his disability. He was only eligible for SSI, the needs-based program. After an approval for benefits, they find that your medically disabled, but the SSI program then does a financial determination. SSDI doesn't have this step because they're already eligible. So my client had an appointment with social security to determine financial eligibility. Frankly, I had no concerns about this. He was homeless at the time. So he would have no reductions for free room and board. And he was receiving state-based assistance, which is essentially an exemption, unless he has a payback agreement. This should pretty much demonstrate his financial neediness. So he attended what's called a perk or a pre effectuation appointment and was found to be over resourced or over the resource limit. As we talked about, if you have more than $2,000 in resources outside of the home you live in and a car, you are not eligible. We get a notice in the mail. It doesn't explain what resources my client supposedly had, but after hours of digging and multiple phone calls to social security, I eventually found out that is estranged mother, who he had had no contact with passed away and was living in Florida. My client was in Washington state. His mom had no will. So her estate went into probate and her trailer. That was run down, became an attributed resource to my client. He would be eligible for SSI once probate was complete and he and his his five siblings sold the trailer so long as they sold it for fair market value, he spent his proceeds down and documented them and then could get his benefits. Now think about this. This individual had a disability that prevented work, but we were expecting that he was going to have the ability to manage a probate when he could not afford to hire an attorney. He had no connection with his family and lived as far across the continental United States as you can get. All for a trailer that likely had minimal value. To make matters worse, some of his siblings were fighting over who the trailer was supposed to go to. So it was wrapped up in probate and he could not just simply sell this piece of property and get his benefits. It took me six months to convince social security to exclude this as a resource, social security has an exemption that a resource has to be something that they can actually access. So, because this was tied up in probate and he had no way to access it, we were able to finally get an exclusion. But this caused tremendous harm to my client. He didn't receive any benefits for those six months. He was very stressed. So this is why I believe estate planning has to go hand in hand with anything related to disability benefits. There are a few financial planning tools that can be used to prevent these kinds of problems for your family members, for your client's family members. The first is a special needs trust. They're sometimes called a supplemental needs trust. They can be called d4A trust. The main criteria is this needs to be for the benefit of the beneficiary. The beneficiary is the disabled person. That disabled person cannot have any direct access to the funds. And it becomes an excluded resource for SSI and Medicaid purposes. There are really two main types of special needs trust. First and third party. So first party special needs trust is sometimes called a self settle trust. And it has to be established by the parent, a grandparent guardian or the court. States can vary on this, but this is the general rule. So this is exactly what should be used for personal injury settlements. This can be used for divorce settlements. If a spouse is on SSI and they are getting divorced, and there are assets that need to transfer. Special needs trust is the way to go. The person does not have a parent guardian or grandparent alive or available, they can go to the court and ask for this to be set up. The key requirement is that it needs to be irrevocable. And it needs to include a Medicaid payback provision. A third party special needs trust is established by the donor. Anyone who was leaving funds to the beneficiary that disabled individual often receiving SSI is the donor. They establish this. It usually comes into effect after that person's death, it can be revocable or irrevocable, but there's a caveat. So sometimes somebody sets this up while they're alive and the rest of their will will funnel into it after they passed away. If that's the case and it's available while they're alive, it can be revocable, but only by the donor, the beneficiary can never revoke this. So it has to be irrevocable from the beneficiary's perspective. After the donor passes away, it has to become irrevocable. Medicaid Payback Provision is not required because of who funded this one. And it's often used for inheritance or family assistance to the disabled individual. Generally speaking, basically anything can be funded through a special needs trust, but for where somebody lives or resides or food, those are supposed to be covered by SSI benefits. Everything else is allowed, but you cannot distribute the funds directly to the beneficiary. You have to make the purchase on their behalf. So you purchased the cell phone, the trustee purchases the cell phone, the trustee purchases the cell phone plan, the trustee purchases the trip, that's how it has to work to become an excludable resource. There's another workaround, which is an ABLE account. Ssa.gov spotlight an ABLE accounts provides a really clear overview of this program. In December, 2014, the Achieving a Better Life Experience Act became law. The designated beneficiary needs to be found disabled by the age of 26. And the individual can only have a single account. Typically anyone can contribute to an ABLE account. They cannot exceed the gift tax exemption from the IRS of $15,000. But if the beneficiary is working, they themselves can contribute up to the federal poverty level for a single individual in their state from their earnings. Distributions are any withdrawal from the account and can be to or for the benefit of the beneficiary. The reason I like ABLE accounts is there's a lot more flexibility and a lot more autonomy for the beneficiary. They can actually have direct access, also as a savings vehicle for themselves. That if they are an individual who has a disability, they're on benefits long term, but maybe they can work part-time and they're trying to build the most autonomous life possible. This account is the one to pick. It also has a very broad list of what can be, the funds can be spent on. Education, housing, transportation, employment and training support, assistive technology, health, prevention and wealthiness, financial management and administrative services, legal fees, expenses for ABLE account oversight and monitoring, funeral and burial expenses, basic living expenses, virtually anything can be covered through an ABLE account. Thinking in terms of planning for a rainy day is critical when you're working with individuals with disabilities. As you can see a divorce settlement may require a special needs trust. A personal injury settlement may require the same. I've even worked with a family where a payment of child support was going into adulthood because the child was disabled would never work. And the individual was on SSI benefits. They didn't want him to get kicked off SSI benefits. So the court actually ordered that the parent fund an ABLE account up to the maximum amount as their payments so that the individual would get SSI. It helps protect their health insurance and their eligibility in the future. The last key intersection is workers compensation and social security benefits. In 2003, SSA found that 17% of social security disability insurance claims had an intersection with workers' compensation. This constituted 1.3 million beneficiaries. The intersection between workers' compensation and social security benefits is most lawyers' worth nightmare. As most attorneys have gone to law school to avoid math, this is where things can get very complicated. Typically speaking workers' compensation and SSI don't intermix because SSI recipients often haven't had a long or recent work history and it's a needs-based program. So if you can receive benefits through workers' compensation, then you're not going to be eligible for SSI, most likely, I would say 99% of the time. So what is the difference? Under 404 CFR 1505 the law defines disability as the inability to do any substantial gainful activity by reason of any medically determinable physical or mental impairment, which can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months. So that's social security's definition of disability. It essentially breaks down to a few pieces. You have a medically determinable impairment, it can be physical or mental. It needs to meet a durational requirement, at least a year, or will result in death. And it prevents work. That's substantial gainful activity piece. You cannot work. And in 2022, earn more than 1350 gross in a month. According to SSA spotlight on workers' compensation, workers' compensation is state based benefits. So I didn't want to go down the rabbit hole of trying to define this state by state since the presentation is really about social security. So I'm going to just do a broad stroke definition of what this is. It provides benefits to workers who are injured on the job, or have a work-related illness. Benefits through these programs include medical treatment for the work-related conditions and cash payments that part partially replace lost wages. Temporary total disability benefits are paid while the worker recuperates away from work. If the condition has lasting consequences after the worker heals, permanent disability benefits may be paid. In the case of a fatality, the worker dependents receive survivor's benefits. So let's break that down. Temporary total disability is where somebody may have a very serious impairment that they hope with a surgery will resolve itself. So they pay the person their full benefit amount based on being completely unable to work while they go through the recovery period, with the hope they recover, they return to work. Some people get conditions that will last forever. Some of those are permanent and disabling fully. Some of them are permanent, but only partially disabling. This is a fundamental difference. Social security requires something to be fully disabling, essentially preclude all types of employment. There's that small caveat for a small amount of earnings. Worker's compensation does not require that something is permanent or last a year or more, can last short stint or a long period of time, and it can be fully disabling to partially disabling. The main requirement is that it needed to be related to something that happened on the job. So the biggest thing is, can you double dip? According to SSA's worker's compensation spotlight an offset for concurrent receipt of workers' compensation was contained in the original 1956 Social Security Disability Program. It was eliminated in 1958 and then reinstituted in 1965. the 1965 Social Security Amendments required that disability insurance benefits be reduced, so that the combined amount of workers' compensation and social security disability benefits do not exceed 80% of the workers' average current earnings, the combined payments after the reduction, however, will never be less than the amount of total social security disability benefits before the reduction. So if somebody's average current earnings are less than their full social security amount, they get their full social security amount, and it's divided how it's paid between the two programs. Most cases, it's the opposite. 80% of their average current earnings exceeds social security and it's combined between the two. The way they calculate your average current earnings based on this spotlight page on SSA.gov's website is done in a few different ways. And it's based on what's most favorable. The average monthly wage on which the unindexed disability primary insurance amount is based is one way. The average monthly earnings from the covered employment, and self-employment during the highest five years, since 1950 or the average monthly earnings in the calendar year of highest earnings from covered employment during the five years ending with the year in which disability began. So it could be the most recent five years and they find your highest month. And then they average the monthly earnings from that highest year. Or it could be five consecutive years at any period in time. And they average those. So they find your five highest years. They don't have to be your most recent ones. Or they take your average monthly waged based on your primary insurance amount and how that was calculated. And that's kind of a more complicated social security transaction. So if you cannot fully double dip and exceed this 80% or get your 80% from worker's comp over here and your full social security amount, which agency pays what? The short answer is it depends. According to SSA.gov's worker comp spotlight reverse offsets exist in 16 states and Puerto Rico. The omnibus reconciliation act of 1981 put an end to this. Anyone that had one in place was allowed to keep it. If it wasn't in place, they couldn't add it. So when the law came into effect in 1965, the social security disability benefit would not be reduced if the state worker's compensation law or plan provided for reduced reverse offset. This means that basically the person gets their full social security amount and the state makes up the difference to the 80%. Most of the burden is on the federal government, social security make the payments. In the 34 other states, the traditional offset method occurs. What happens is SSDI benefits are reduced by the workers' compensation amount. So, and they use that most favorable formula that I kind of highlight it previously. And we'll walk through it one more time. So basically in these 34 other states, the person is paid workers' comp first and SSDI is reduced based on how much is paid for workers' compensation. Social security uses one of three formulas, and they call them the average monthly wage formula, the high five formula, or the high one formula. So social security uses your average index, monthly wages to calculate your benefit amount, and they use your whole 35 year work history. So that was what they were referring to when they talked about that indexed amount, that's how they would calculate your retirement benefits. They look at your full work history. The high five formula uses the average monthly wages from your five highest paid consecutive years. Or the high one formula just looks back at the last five years period, and then takes one year if that was the best and uses that year. So there's really a number of different ways that they can find what your best amount of money is. And then it's up to 80%. And part of that comes from the state through workers' compensation. Part of it comes from the federal government through social security. 16 states in Puerto Rico, social security pays out first, worker's comp makes up the difference. 34 states, the state pays out first, social security makes up the difference. So the main things to take away from this presentation is really look for the intersections. If your practice area involves somebody who has a disability contact a disability practitioner. You don't want to do something that can harm your client. Don't say we don't need an estate plan just because we have very few assets. Even that trailer can ruin somebody's life. Don't let your client sign for a divorce when they've never ever worked. And it's nine years and 11 months of marriage. Wait that extra month get a continuance there's benefits to be had. Frankly, the other side doesn't really lose anything as a result. If you are trying to figure out child support, contact a social security attorney, there's a way to do that that best protects the child. And ultimately at the end of the day, that's the goal. Similarly, personal injury settlements, there is a way to get disability benefits to use those records, to use those opinions, to use those findings, to help get the settlement your client deserves, and to use estate planning tools to make sure the person can capitalize on both. Thank you all for your time today.

Presenter(s)

MMB
Maren Miller Bam
Owner
Salus Disability Law and the Disability Benefits Deadline Initiative

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