TN 15 (11-05)

A. Policy - General

A claimant may agree to deposit money into a trust or escrow account at his/her representative's request. The account ensures at least partial payment of a representative's fee after SSA authorizes it.

A representative may establish a general trust or escrow account for funds he/she receives from several claimants. SSA will not, however, honor a request to deposit a claimant's first check or any other monies directly into a trust or escrow account. Form SSA-1560. (Petition For Authorization To Charge And Collect A Fee For Services Before The Social Security Administration).

Form SSA-1560 includes a question about funds the representative holds in a trust or escrow account received toward payment of the claimant's fee. Otherwise, SSA does not routinely inquire as to the existence of an escrow account prior to making direct payment to the representative and will reduce the direct payment amount by the amount in the escrow account only if the representative previously had provided information regarding the amount held in escrow.

NOTE: In addition, if the claimant has a bank account and SSA is aware that the appointed representative has access to the funds in the account either by signing or co-signing a check or withdrawal slip, and SSA is not paying the fee directly to the representative, SSA should not honor a request to deposit the claimant’s benefits into that account. In such an arrangement, the representative can effectively receive direct payment while circumventing the statutory direct payment provisions. (See GN 02402.085 – Unacceptable Requests for Direct Deposit; and GN 02410.001, Assignment of Benefits.)

B. Policy - Establishing the Account

Pursuant to SSR 82-39, a representative may establish a trust or escrow account to ensure the payment of all or part of his/her fee provided the following conditions are met:

• the claimant willingly enters into the trust or escrow agreement and willingly deposits the money in the trust or escrow account;

• none of the money in the account is paid to the representative until SSA has authorized a fee and then only in an amount up to, but not exceeding, the authorized fee; and

• the representative promptly returns to the claimant any funds in the account in excess of the authorized fee. (See GN 03970.025 for procedures if the representative does not refund excess funds to the claimant.)

C. Policy - Effect on Withheld and/or Direct Payment Amount

1. Direct Payment Amount - Fee Petition Process

Funds in a trust or escrow account have no effect on the amount SSA withholds (i.e., SSA will withhold 25 percent of title II and/or title XVI past-due benefits when the representative is eligible for direct fee payment). See GN 03920.017C., Direct Payment to Representatives – Title II Cases; GN 03920.017D., Direct Payment to Representatives – Title XVI Cases; GN 03920.030, Representative's Fee – Title II Past-Due Benefits; and GN 03920.031, Representative’s Fee - Title XVI Past-Due Benefits,

Funds in a trust or escrow account may reduce the amount of direct payment a representative receives from a claimant's past-due benefits. This occurs when the sum of 25 percent of past-due benefits withheld and the funds in the trust or escrow account exceeds the authorized fee (GN 03930.060D. describes the procedure).

EXAMPLE: The authorized fee is $2,500, the withheld amount is $3,500, and the escrow account is $1,000. SSA must release $2,000 to the claimant and directly pay the attorney $1,425.00 [the balance of the attorney's authorized fee, $1,500, less the “user fee” (see GN 03920.019, Assessment on Representatives Who Receive Direct Payment)], because $1,500 plus the amount in escrow, $1,000, equals the authorized fee. GN 03920.017E.1. and GN 03920.017E.2. provide procedures for calculating the direct payment amount when the representative’s fee is authorized through the fee petition process and there are funds in an escrow account.

2. Direct Payment Amount - Fee Agreement Process

a. Title II or Title XVI Only

If the case is a title II or title XVI only claim, funds in a trust or escrow account may reduce the amount of direct payment a representative receives from a claimant's past-due benefits. When the funds in an escrow account reduce the amount SSA will pay directly to the representative, we calculate the user fee after we determine the effect of the escrow fund on the amount payable directly to the representative from the withheld benefits.

b. Concurrent Titles II and XVI

In concurrent cases, funds in a trust or escrow account will not reduce the amount of direct payment a representative receives from a claimant's title II past-due benefits, unless the title II fee is the maximum fee allowed. SSA will not reduce the direct payment amount because SSA may authorize an additional fee amount for the title XVI portion of the claim.

When SSA authorizes an additional fee based on the title XVI past-due benefits, funds in a trust or escrow account may reduce the amount of direct payment a representative receives from those benefits. If SSA did not deduct the maximum user fee from fee paid from the title II benefits, we calculate the user fee, after we determine the effect of the escrow fund on the amount payable directly to the representative from the withheld title XVI benefits.

EXAMPLE: The administrative law judge issued a favorable decision on concurrent titles II and XVI claims and approved the fee agreement between the claimant and the representative, who is eligible for direct fee payment. The total authorized fee is $5,200 and the escrow amount is $500. SSA withholds twenty-five percent of the claimant’s past-due title II benefits. $4,500 for direct fee payment and pays the representative $4,425 after deducting the maximum “user fee.” Twenty-five percent of the claimant’s title XVI past-due benefits and the amount available for direct fee payment is $700. SSA subtracts the $500 escrow amount from the $700 authorized fee balance, directly pays $200 to the representative from the claimant’s title XVI past-due benefits, and releases the balance of the withheld title XVI past-due benefits to the claimant. Because SSA has already deducted the maximum “user fee,” SSA does not deduct any assessment from the $200 payable to the representative from the tile XVI past-due benefits. GN 03920.017E.3. and GN 03920.017E.4. provide procedures for calculating the direct payment amount when the representative’s fee is authorized through the fee agreement process and there are funds in an escrow account.

D. Policy - Disclosure and Documentation

If SSA has a question about a trust or escrow agreement or about a representative's refund to a claimant, SSA will request and a representative must provide SSA a copy of the trust or escrow agreement and/or proof that the representative returned to the claimant funds in the account in excess of the authorized fee.