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Social Security Disability News: October 2010

Social Security Disability News

October 2010

Update to the Hearing Loss Listing

The Social Security Administration has issued final rules revising the Listing of Impairments for hearing loss. The final rules will become effective August 2, 2010.

Note that the Listings serve two purposes. Meeting or equaling a Listing is typically very difficult, especially for cases requiring an appeal to the hearing level. However, the Listings also provide guidance on how to document an impairment and verify its impact on functional capacity, and these are the core issues in every disability claim.

Paper Benefit Checks to End With Change to Direct Deposit or Direct Express

The Treasury Department has issued a Notice of Proposed Rulemaking that signals the end of using mailed checks for benefit payments.

Claimants who file an initial application on or after March 1, 2011, will have a choice of direct deposit into their bank account or the new debit card, called "Direct Express." For all other beneficiaries, paper checks by mail will continue to be available until March 1, 2013. After that date, all beneficiaries will be required to choose either direct deposit or the Direct Express card, and the same rules will apply to fee payments to attorneys and eligible non-attorney representatives.

The Treasury has offered the Direct Express option since April 2008, allowing enrollees to have their Social Security or SSI benefits automatically deposited in a Direct Express account, with debit card access to their funds at teller machines and financial institutions nationwide. While Direct Express has proven popular, Social Security has targeted only those individuals, including the "un-banked," receiving benefits through the mail by check. In fact, Direct Express has features that many beneficiaries with bank accounts also should consider.

First, unlike bank accounts, Direct Express funds cannot be frozen or garnished by creditors, since Social Security and SSI funds in a Direct Express account are no longer commingled with other funds on deposit at a bank. Direct Express has no credit checks or minimum balance requirements, and there are no overdraft fees or bounce loans because an attempt to make an excessive debit withdrawal is simply declined. There is no account maintenance fee. Withdrawing cash at a teller window carries no charge. Withdrawals also are free at more than 56,000 designated ATM locations, including specified banks and 7-Eleven stores.

Direct Express not only prevents the risk of lost or stolen checks, but the beneficiary is also relieved of the need to cash a benefit check in one lump sum, and the un-banked can avoid expensive check-cashing fees.

The growing tendency of banks to use Social Security and SSI benefits for fees and overdrafts is causing some beneficiaries to cancel direct deposit. Banks even use these benefits to collect charges for handling garnishment orders and freezing the account. These gaps in the exempt status of federal benefits are the subject of proposed regulations.

Probation and Parole

A U.S. Court of Appeals has recently ruled that the Social Security Administration's policy on probation and parole violations is unlawful. Clark v. Astrue, 602 F.3d 140 (2nd Cir. 2010).

The court held that the Social Security Administration must demonstrate by a preponderance of the evidence that a claimant or beneficiary is violating a condition of probation or parole before denying or suspending benefits. The court rejected the Commissioner's argument that the mere existence of a warrant is equivalent to a determination that a condition of probation or parole has been violated.

Updated Social Security Administrative Law Judge Data

The "Hearings and Appeals" home page on the Social Security Administration web site includes a link to Public Use Files, including fiscal year Administrative Law Judge Disposition Data that are updated regularly. See www.ssa.gov/appeals.

Other Public Use Files also provide interesting data, including:

  • The average time for adjudicating a request for hearing. (Lansing, MI is the worst at 25 months; Ponce, PR and Huntington, WV are the best at 7 months.)
  • Hearing office workload data. (Birmingham, AL has the highest backlog at 11,700 cases; Ponce, PR has the lowest at 321.)
  • Hearing office dispositions per Administrative Law Judge per day. (Honolulu has the highest at 3.66; Miami has the lowest at 1.35.)
  • Hearing office average processing time. (Middlesboro, KY is the best at 261 days; Anchorage, AK is the worst at 652 days.)
  • Hearings held. (Atlanta has the highest number with 5,876 from October 1, 2009 to May 28, 2010; Honolulu has the lowest number for any office open for the entire period, 336.)

A Disability Issue in Retirement Claim Strategies

In April 2000 a law was enacted eliminating the work test after full retirement age. Anticipating a problem for spouses, Congress added a "file and suspend" option to the Act. This "file and suspend" option cured the following problem:

A spouse cannot file a claim until the worker files a claim. In the past, a worker would file a claim but receive zero benefits due to excess earnings. Since the worker's claim was on file, the spouse could start benefits on the worker's account. Also, the worker accumulated delayed retirement credits (DRCs). However, once the work test ended, however, a worker wishing to accumulate DRCs would have to delay filing a claim, blocking a spousal claim on the worker's account.

Then retirement planners noticed an interesting option unrelated to file and suspend. A worker reaching full retirement age can delay filing a retirement claim. This blocks a spousal claim on the worker's account, but then the worker can file an application restricted in scope to spousal benefits on the spouse's account. The worker gets half of the spouse's retirement rate for four years while accumulating DRCs on the worker's own account. Since the spouse is also receiving full benefits, total family income justifies building the worker's account by 8% per year until the worker reaches age 70. Then, at age 70, the worker begins DRC-enhanced benefits and the spouse may also shift to the worker's account if the resulting spousal benefit is higher.

However, due to a quirk in the law, the spousal-only strategy is not available to disability benefit recipients. By law, every disability claim is converted to a retirement claim at full retirement age. There is no provision for voluntary claim termination. Withdrawing the retirement claim would require the repayment of all disability and Medicare benefits previously received. Therefore, as a result of the automatic conversion, the former disability beneficiary cannot delay a retirement claim and file only for spousal benefits. The only option is to suspend benefits to earn DRCs.

It is inequitable that a disability entitlement prevents a worker from selecting only spousal benefits at full retirement age. The automatic conversion was intended to smooth the transition from disability to retirement benefits, but has had the side effect of lessening retirement options for the disabled. Congress could fix this issue easily, by adding an opt-out provision to the conversion.

Garnishment: Child Support and Alimony

The Consumer Credit Protection Act limits the amount the Social Security Administration can take out of a Title II retirement or disability benefit for court-ordered child support or alimony. The amount depends on whether the person is supporting a spouse or dependent child other than the party whose support has been ordered. If there are such dependents, the garnishment limit is 50%; otherwise, the limit is 60%. Both percentages may be increased by 5%, to 55% and 65%, if the beneficiary owes more than 12 months of back payments.

This federal statute sets a maximum, but the court order must also be valid under the state law of the debtor's domicile. Social Security makes an independent review, and may decline to honor the portion of a support order which SSA finds is impermissible. This Social Security Administration review will occur most often where State A issues a support order and the debtor is now residing in State B..

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