POMS Reference

GN 00504: Suspensions for Payee Development and Other Payee Actions

TN 9 (03-97)

A. Policy

1. General

Title II and title XVI claims should be processed to payment as soon as all factors of entitlement or eligibility are met. If a payee is needed but unavailable when the claim is ready to be processed, current benefits must be immediately paid directly to the incapable beneficiary unless one of the exceptions listed in GN 00504.105A.2.a. and GN 00504.105A.2.b. exists. We can release retroactive benefits only when necessary to meet current needs. Because of the sensitivity of these situations, it is important to document the payee issue on the title II/XVI systems as described below. (Prior to paying benefits directly to an incapable beneficiary, obtain an SSA-11 as instructed in GN 00504.105B.2.)

NOTE: Section 205(j)(2)(D) and 1631(a)(2)(B)(viii) of the Social Security Act state that we “defer” benefits on initial awards and “suspend” benefits in postadjudicative situations. In this subchapter, the word “suspend” may be used for either situation.

2. Exceptions to Immediate Payment

Exceptions to immediate payment are:

  1. 1 - Month Suspension Restriction - Benefits can be suspended for a maximum of 1 month while a payee is being developed if direct payment to the incapable beneficiary would cause the beneficiary “substantial harm.” However, no delay is permitted for certain California residents. (See GN 00504.105A.3.)
     
    Substantial harm means that direct receipt of funds by the beneficiary would cause physical or mental injury to the beneficiary. In making the determination, consider whether the risk of physical or mental injury would be more injurious than the risk of not having money for basic needs.

    NOTE: Substantial harm is presumed to exist for beneficiaries described in b. below because they must have a payee. (Substantial harm is not a consideration for certain California residents. See GN 00504.105A.3.)
     
    In initial awards, the 1-month period begins on the day payment could have been made had there not been a payee issue. For postadjudicative actions, the 1-month period begins the date the suspension is transmitted or the date the FO learns of the suspension if it resulted from a systems interface (e.g., a check returned because the payee died).
     
    The Agency's policy is to pay benefits even when a payee is being sought. Pending payee development, the beneficiary must be paid directly if at all possible.
     
    Remember, we can suspend benefits for only 1-month based on a finding of substantial harm. If a payee cannot be found within 1-month, we must initiate direct payment to the beneficiary while payee development continues (unless the beneficiary meets the criteria shown in GN 00504.105A.2.b.).

  2. Required Suspension - Benefits must be suspended pending payee selection for beneficiaries who are:

    The Social Security Act and/or regulations prohibit these individuals from being paid directly, so the 1-month restriction does not apply. However, you should resolve the payee issue as quickly as possible.

NOTE: Beneficiaries who are age 15 to 18 can be paid directly on an interim basis even if they do not meet the criteria in GN 00502.070.

  1. Drug Addiction and Alcoholism (DAA) Condition
     
    Effective with applications filed 7/1/96 or later, only those individuals with a DAA condition who are found to be incapable will be paid through a representative payee. Capability development for these individuals follows the same rules as for other beneficiaries; direct payment is not precluded. In order to suspend benefits pending payee development, substantial harm must be found. However, these individuals are excepted from the 1-month limit on suspension. Once substantial harm is found and benefits are suspended, benefits can remain in suspense until a payee is appointed. If benefits are suspended, you must use extreme caution in ensuring that the beneficiary will not be harmed by an extended period of nonpayment.

    REMEMBER: Direct payment to an individual with a DAA condition is not prohibited; you can make direct payment if appropriate.

3. California Residents

Suspensions based on “substantial harm” ARE NOT applicable to residents in California. The United States District Court in Sacramento ruled that SSA must pay benefits directly to adult (at least age 18) residents of California who need, but do not have, a payee.

The Briggs ruling stated that direct payment of current benefits must be made immediately to an adult beneficiary unless he/she is legally incompetent or is disabled and medically determined to be a drug addict or alcoholic (i.e., substantial harm is presumed to exist). All other types of incapable adult beneficiaries must be paid directly. Therefore, the 1-month restriction policy does not apply to any legally competent adult unless he/ she is receiving disability benefits and drug addiction and/or alcoholism is material to the disability determination.

B. Procedure

1. Documenting Substantial Harm

Support any finding (not presumed) of “substantial harm” with written documentation on the Report of Contact Details screen (MS INTRANETERPS 016.002) on the eRPS or on a Report of Contact (RC) if the application is not on eRPS. (Throughout this chapter, “RC” refers to a report of contact OR an Report of Contact Details screen.)

For title II cases, use the CIPM screen to enter a Special Message on the MBR that substantial harm was established as well as the reason for suspense. If the beneficiary is being paid directly as an interim measure, enter that information also. (See MSOM RSDHI 001.001 .)

For title XVI cases, use the SSR Remarks field described in SM 01301.841 to enter the same type of information.

IMPORTANT: The Agency's policy is to continue payments to beneficiaries currently receiving their checks directly while developing payee issues, unless direct payment is precluded.

2. Direct Payment to an Incapable Beneficiary

Take the following 8 steps when direct payment to an INCAPABLE beneficiary is required.

NOTE: In the following instructions, substitute “a new application” for “an SSA-11” in initial claims situations where the beneficiary did not file the claim. The beneficiary must file a claim if we are paying him/her directly at the time of initial payment. (See GN 00204.003.)

 

STEP ACTION

1

  • Obtain an SSA-11 and initiate payment of current benefits directly to the beneficiary.

  • Using CIPM, document the situation in the Special Message field of the MBR on title II cases.

  • Use the Remarks field to document the situation on title XVI cases (see GN 00504.105B.1.).

  • Also, show “Interim Direct Payment” in the Report of Contact Details screen on the eRPS application so that the PC and other users will know the reason an SSA-11 is being received. (See MS INTRANETERPS 016.002 ).

NOTE: You may wish to obtain the SSA-11 when contacting the beneficiary to obtain information to make the substantial harm determination.

2

  • If benefits were suspended, verify that all factors of entitlement/eligibility continue to be met (see GN 02602.040).

  • For title XVI, conduct a redetermination before reinstating payments if the case has been in suspense over one calendar month (see SI 02301.210).

3

  • Ensure that benefits due in the current month are paid immediately.
     
    CAUTION: Do not release any retroactive benefits unless the funds are needed to meet the beneficiary's current needs (e.g., food, shelter, clothing, medical care, etc.). In this situation, release only the portion needed to meet current needs, and document the file on the RPRC with pertinent information. (If eRPS is used, and all retroactive benefits are not being paid, follow MS INTRANETERPS 001.006 (22-C) and treat the case as a systems limitation.)

  • Refer title II cases to the PC for processing if retroactive benefits must be withheld.
     
    NOTE: This is necessary because the Title II Redesign (T2R) which processes payee selections will release all benefits. (See MS INTRANETERPS 012.002 for information on the relationship between eRPS and T2RD.) (Consider using the Critical Payment System (CPS) to pay benefits immediately when appropriate.)

  • For title XVI cases, withhold the retroactive payments by using the U TAC following instructions in SM 01311.355.

  • Prepare a manual notice advising the recipient that the retroactive benefits are being withheld. Include the following in the notice: “We are withholding payments for MMYY to MMYY until we decide the best way to make payments.”

4

Continue payee development and diary for a 90-day followup to assess how the beneficiary is handling his/her own funds (e.g., are basic needs being met).

5

  • If a payee has not been located after the first followup, diary for a second followup in another 90 days and reassess how the beneficiary is handling his/her own funds.

  • Diary for a third followup in another 90 days and continue direct payment without additional followup if it appears the beneficiary has been using the benefits to meet his/her needs. Consider the beneficiary capable at this point. Otherwise, continue followup contacts until a payee is appointed.

  • Summarize on an RC the results of each followup contact and the decision to continue direct payment.

6

Follow the notice policies and procedures described in GN 00503.100 through GN 00503.130 if a suitable payee is found.

7

Develop for the release of retroactive benefits, if appropriate (see GN 00603.070.).

8

If direct payment is continuing with no additional followups per Step 5, release the accrued benefits to the beneficiary. Develop what method of payment would be in the beneficiary's best interests (see GN 00603.070 through GN 00603.090).

C. Examples of Substantial Harm Determinations

The following are examples of substantial harm determinations:

1. Substantial Harm Not Established

A claim is approved for a title II or XVI claimant who suffers from a mental impairment. During the interview, it becomes obvious that the beneficiary will need a payee; however, one has not been found when the claim is ready to be adjudicated. While the CR believes that the beneficiary may not use the money wisely, there is no indication that direct receipt of the funds would cause physical or mental injury. In fact, suspending benefits could result in the beneficiary having no food.

Since the CR has determined that substantial harm would not result from direct payment, he/she should make direct payment and continue payee development. Input the payee issue on the MBR/SSR per prior instructions (e.g., “UTL PYE-DIR PAY PENDING PYE DEV”). Also, input “Interim Direct Payment” on the Report of Contact Details screen of eRPS.

2. Substantial Harm Established

You are unable to find a payee for a 67 year old retirement beneficiary who is an alcoholic. Based on contacts with the doctor and beneficiary, you determine that the beneficiary has been hospitalized recently for his drinking. Paying the beneficiary directly will cause injury, so you may establish that substantial harm could result.

Suspend payment based on the substantial harm rule (documenting your decision on an RC) while you develop for a payee. Remember, if a payee is not found in 1 month, direct payment must be initiated. Input the reason for suspense to the MBR per prior instructions (e.g., PYE REFUSES TO SERVE-SUB HARM EST). Also, once direct payment is initiated, input “Interim Direct Payment” on the RPRC screen of eRPS (MS INTRANETERPS 016.002 ).

D. References

  • Title II - Critical payment system, SM 00635.000, RS 02801.000.

  • eRPS processing of payee applications, MS INTRANETERPS 001.001 to MS INTRANETERPS 030.007 .