By: Scott Robertson, Spring 2018 HeLP Legal Services Clinic Student Intern
Social Security disability claims can take a long time to process. Thus, in a lot of cases where a client is awarded Supplemental Security Income (SSI) benefits based upon disability, the Administrative Law Judge will award past due disability benefits back to the date when the initial application was filed. Unfortunately for the client, back payment funds may only be used for certain expenses and the Social Security Administration (SSA) requires that a benefits payee substantiate each purchase made with the funds. This restrictive policy, along with other quirks in the process of obtaining and using the back pay can be frustrating, confusing, and generally troublesome for clients.
When a client receives a fully favorable decision, the benefits granted will often be paid back to the month after the client initially applied for SSI. Since most decisions can take anywhere from three months to fifteen months or more, the award could consist of a considerable amount of money. When the back pay owed is more than three times the maximum monthly SSI benefit amount, the client will be paid in three partial-installment payments. The first payment will be followed by a second payment in six months, and a final payment after yet another six months. In order to receive these payments, the client must open a dedicated bank account strictly for the back pay funds. The account must be separate from the account used for the regular monthly benefit payment as other funds cannot be commingled with the funds in the dedicated account.
The back payments may only be used for certain expenses related to the disability. Although a client may wish to spend the funds on a new vehicle or to pay a mortgage, the SSA has strictly limited the usage of back pay funds to expenses for medical treatment, education or job skills training, personal needs or assistance, special equipment, housing modifications, therapy or rehabilitation, or other items or services approved by the SSA. Thus, it would be wise to seek a physician’s statement defending purchases or to seek pre-approval from the SSA itself before making an expenditure. By obtaining a medical professional’s written statement of the need for the purchase or by getting advance approval from the agency itself, the client forgoes the potentially hazardous practice of making the expenditure and hoping that the SSA agrees that it is related to the disability on an acceptable level.
Each year following the award of back pay, the SSA will send the client an “Accounting Statement” form to keep track of how the money is spent. Within the form, the client must provide receipts, bank statements, and a detailed expense record of how the funds were spent and the impact the expenditures had on the client’s disability. Thus, it is very important to advise clients to keep a detailed record of all expenditures and to be prepared to provide a thorough explanation, along with any evidence, as to how each purchase relates to the disability. Unfortunately, if a client is found to have misused the funds, the SSA may impose civil monetary penalties and may require repayment on a dollar-per-dollar basis.
These guidelines and restrictions on SSA back pay expenditures can be very disheartening for clients. It is not easy to tell a financially insecure client that money is on the way but that it can only be used for limited expenditures. But, by proactively informing the client of the three separate payments the SSA uses to disperse the funds over time, the necessary dedicated bank account, the potential difficulties in spending the funds in an approved manner, and the consequences of misusing the funds, an attorney can soften the blow of the client figuring all of this out alone. Once this information has been disclosed, the attorney can assist the client in creating a records system and expenditure process that promotes accountability to the SSA while still serving the client’s need to use the funds in assuaging the difficulties of living with a disability.