SI 02006: Windfall Offset and Effect on Title XVI Payments
TN 14 (03-98)
1. Deduction of Representative Fees from Title II Income
It is longstanding SSI policy to deduct the expenses of obtaining income from that income before counting it in the SSI eligibility and payment computations. See SI 00830.100. In all title II and title XVI offset cases these expenses include any attorney or nonattorney representative fees that apply to the title II benefits, even if part of the fee is determined based on title XVI past-due benefits. These expenses may also include out-of-pocket expenses that are not part of the fee but are paid by or billed to the claimant.
2. Amount of Fee
The income adjustment is based on the amount of the authorized fee, not the amount withheld from the title II benefits or the amount actually paid.
3. Waived Fee
If the representative waives all or part of the fee, do not adjust income based on the waived fee/portion of fee.
4. Timing of Income Adjustment
When it is known that a representative is involved in an offset case, the FO should maintain control of the case until the fee amount is determined and the title II income adjusted. The FO may learn of the authorized fee at any of several points in the effectuation of the claim. Note that there can be no adjustment of the Title II income until after the amount of the fee is determined.
NOTE: SI 02006.200A.4 refers solely to adjusting title II income by the amount of the authorized representative fee. You can complete the windfall offset computation without knowing the fee amount. See MSOM BUSSR 002.016 C for instructions on computing windfall offset in this situation.
When the title II retroactive benefits are less than the total of the offset amount and the 25% withheld for the fee, neither the PC nor the FO can finalize any offset computation until they learn the fee amount.
5. Result of Income Adjustment
If the adjusted title II income changes for months within the offset period, depending on the timing of the adjustment, the result may be an SSI underpayment or reduction in the amount of a previously determined overpayment, or a change in the offset amount applied against the retroactive title II benefits.
B. Procedure — Determination of amount of representative fee
1. Determine Type of Fee Arrangement (Petition or Agreement) and Status of Representative
Refer to the AUTH segment, FST field of the supplemental security record (SSR) to determine whether the case is a fee petition or agreement case and the status of the fee processing. See SM 01601.490. If this information is not shown on the SSR, check the SPECIAL MESSAGE and ATTY FEE fields on the MBR and the claims clearance and appeals screens on MCS. If sufficient information is not on the MBR or MCS, then check the claims file for a copy of a fee agreement or a copy of an SSA-1560-U4 which is used to file for fee approval in a fee petition case.
NOTE: If these records do not contain sufficient information, the field offce can also contact the representative's office directly.
If none of these sources provide the facts that are needed, contact the MOD in the PSC/ODIO.
2. Fee Petition Process
SSA or a U.S. District Court must authorize the representative's fee under the fee petition process. The Office of Hearing Operations (OHO) (an ALJ or the Appeals Council), the District Court, and a PSC/ODIO can process the representative's petition for a fee.
25% of the past-due Title II benefit is withheld for direct payment of the fee. Effective with determinations made July 1, 1991 and later, this 25% is calculated before any adjustment for windfall offset. The 25% withheld may exceed the specified dollar amount of the fee cap shown in GN 03940.003A.3.
Beginning February 28, 2005, 25% of past due Title XVI payments will be withheld for direct payment of the fee. See GN 03930.000 for instructions in cases where 100% of the past due Title XVI payment may be withheld. The 25% withheld may exceed the specified dollar amount of the fee cap shown in GN 03940.003A.3.
3. Fee Agreement Process
A fee agreement is a written statement signed by the claimant and his/ her appointed representative specifying the fee the representative expects to charge and collect and the claimant expects to pay for services the representative provides in pursuing the claimant's benefit rights in proceedings before SSA.
The amount of the fee is limited to the specified dollar amount of the fee cap shown in GN 03940.003.A.3., or 25% of the past-due benefit for Title II and Title XVI, whichever is less. However, note that even when a fee agreement is in place the representative can request review and authorization of a higher fee. See GN 03940.001D.1.
In concurrent claims, “past-due benefits”for fee determination purposes includes title II and title XVI past-due benefits.
As with fee petition cases, 25% of the Title II and Title XVI past-due benefit is withheld. The 25% may exceed the specified dollar amount of the fee cap shown in GN 03940.003A.3. See GN 03940.000 for instructions in cases where 100% of the past-due Title XVI payment may be withheld.
NOTE: A number of questions have been received concerning the propriety of adjusting title II income by the amount of a fee that has been calculated in part based on title XVI past-due benefits. It is appropriate to make this adjustment, since the fee is considered a single fee. Under the fee petition process, which was the only process available for many years, the authorized fee in concurrent cases makes no distinction between services performed for title II versus title XVI and is all used to adjust the title II income. Similarly, under the fee agreement process there is no distinction made in the authorized fee between services performed for title II versus title XVI, and the entire fee must be used to adjust the title II income. The fact that the amount of past-due title XVI benefits figures in the calculation of the authorized fee amount does not alter this requirement.
C. Procedure — Retroactive Title II income
1. Adjustment and Correction of Retroactive Title II Income
Subtract allowable expenses from the first and subsequent amounts of related income until no expense balance remains. (This may require adjustment of income for more than 1 month.) Follow these steps:
Determine the first month that any retroactive title II benefits would have been paid if paid when due and how much they would have been. Deduct the authorized fee from the first-month title II benefits.
If any of the authorized fee remains, do the same for the second month that any title II benefits were regularly due and for the following month(s) until no fee balance remains.
NOTE: Continue to adjust title II benefits for the total fee even if it is necessary to adjust current title II benefits in addition to all of the retroactive title II benefits in order to use up all of the fee. (See SI 02006.201C., Tolerances.)
This adjustment of title II benefits may result in a portion of the title II remaining in the last month of adjustment. If so, the remaining amount for that month is title II income.
For months (in the windfall period) after the authorized fee is exhausted, use as title II income the benefits in the amounts they would have been paid if paid when due.
See SI 02006.220 for examples of this adjustment and how to record the results.
2. Adjusted Title II Income and Retroactive Months of Possible SSI Eligibility
Determine if title II income adjusted per SI 02006.200C.1. above applies to any of the months of SSI eligibility based on all factors of eligibility except income.
a. No Overlap With Months of SSI Eligibility
If all months of adjusted title II income precede the first month of SSI eligibility, the adjusted title II income does not affect SSI for any of the months that fall within the period of retroactive title II benefits. The adjusted income could only change SSI status for the month(s) of receipt of retroactive title II benefits (prior month accrual—PMA—month). In this situation, see SI 02006.201 below.
b. Months with Adjusted Title II Income Overlap Months of Possible SSI Eligibility
If any month of adjusted title II income is a month of possible SSI eligibility, determine SSI eligibility and payments for all affected months.
NOTE: Generally, this will be done by deleting the offset and reposting.
Under RMA, a change in countable income for 1 month can affect payment in a later month (or 2 later months when a transitional computation cycle begins with the month of the change). Therefore, a change in the title II income for either of the last 2 months that fall in the period of retroactive title II benefits can change SSI payments in the months after that period.
The changed title II income generally causes underpayments for affected months. Because of previously processed income changes, the net effect of a revised determination using less or no title II income can be to reduce an overpayment amount previously determined.
Reevaluate each affected month to determine the total underpayment from changes for months that fall in the period of retroactive title II benefits. See SI 02006.201.