Funds in a Dedicated Account
and Misuse of Funds
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Advocates Guide to
SSI Dedicated Accounts
With Congress's enactment of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 the way past due SSI benefits were paid to
children and how those monies may be used changed dramatically. Pub.L.No. 104-193, 110
Three major changes were involved.
- Past due benefits must be paid in installments.
- Past due benefits must be placed in a special account with certain restrictions.
- Benefits in these special accounts are restricted in how they can be spent.
However, regular current monthly benefits can be used for current maintenance,
such as food, shelter, and clothing. 20 C.F.R. § 416.640.
Past Due Benefits
Paid in Installments
What are past due benefits? Generally, they are benefits
that were unpaid but accrued prior to the month when the payment was made or that accrued
during a suspension. POMS SI 01130.601B.2. In most cases these are the benefits that
accrue while the appeal is going on.
When anyone is due past due SSI benefits and the amount due is more than 12 times the
monthly benefit rate ($6,948 for 2005), those past due benefits must be paid in
installments. There can be no more than three installments. The installments must be six
months apart. 42 U.S.C. § 1383(a)(10), 20 C.F.R. § 416.545(b).
Under narrow exceptions the past due benefits can be paid at one time or in larger
amounts. If an SSI recipient has an impairment that is expected to result in death within
12 months or if the SSI recipient is currently ineligible or would likely remain
ineligible for 12 more months, installment payments are not required. 42 U.S.C. §
1383(a)(10)(C), 20 C.F.R. § 416.545(c).
Two situations exist when the first two installments can be increased by the total
debts and expenses, which are not reimbursed by a public assistance program:
- The recipient has outstanding debt for food, clothing, shelter, medically necessary
services, supplies, equipment or medicine.
- The recipient has current or anticipated expenses in the near future for medically
necessary services, supplies, equipment, or medicine, or the purchase of a home.
42 U.S.C. § 1383(a)(10)(B)(iii), 20 C.F.R. § 416.545(d).
When a child under the age of 18 is eligible for past-due SSI benefits, those benefits
must be deposited into what Social Security calls a "dedicated account." 42
U.S.C. § 1383(a)(2)(F), 20 C.F.R. § 416.546. However, when the amount due does not
exceed six times the federal benefit rate ($3,474 for 2005), no dedicated account is
required. 42 U.S.C. § 1383(a)(2)(F)(i)(II), 20 C.F.R. § 416.546(a), SI 01130.601A.1.
Thus, those past-due benefits are not subject to the restricted spending requirements
Any subsequent past-due benefits received which are more than six times the federal
benefit rate must also be deposited into this account. However, any other past-due
benefits less than this amount may be, but are not required to be, deposited into the
account. 20 C.F.R. § 416.546(b), SI 01130.601A.2.
Generally, no other benefits can be deposited into this "dedicated account."
This would include monthly SSI benefits, Social Security benefits of any kind, and SSI
underpayments less than the federal benefit rate. However, an underpayment that is equal
to or exceeds the federal benefit rate and is not greater than six times the federal
benefit rate can be deposited into the account at the discretion of the payee. 20 C.F.R.
§ 416.546(b), SI 01130.601A.2.
Generally, savings are a resource. When individuals have resources over $2,000, they
are not eligible for monthly benefits. 20 C.F.R. § 416.1201, 416.1205. Funds in a
dedicated account are not counted as a resource. 20 C.F.R. § 416.1247, SI 01130.601C.1.
In addition, interest earned from the dedicated account is also excluded from the resource
and income limitations. 20 C.F.R. § 416.1247, 416.1124(c)(20). However, if non-eligible
funds are put in the account, the resource and income limitation would apply to all funds.
20 C.F.R. § 416.1247(a).
Funds in a dedicated account must remain in the account until all funds are depleted or
benefits are terminated. This is true even after a child reaches the age of 18. 42 U.S.C.
§ 1383(a)(2)(F)(i)(IV), 20 C.F.R. § 416.640(e)(5).
Using Funds in the
All funds in a "dedicated account" are restricted in how they can be spent.
These funds must be used only for the benefit of the child and only for the following
1. Medical treatment.
3. Job skills training.
4. If related to the child's impairments; personal needs assistance; special equipment;
housing modification; and therapy or rehabilitation.
5. Other items or services related to the child's impairments that SSA finds
42 U.S.C. § 1383(a)(2)(F)(ii)(II), 20 C.F.R. § 416.640(e)(2).
"Dedicated account" funds may not be used for basic maintenance cost (i.e.,
food, clothing, shelter, and personal items) not related to the child's impairments. GN
00602.140B.4. The representative has the responsibility to explain why and how an item or
service relates to the child's impairment for any items except medical treatment,
education or job skills training. 20 C.F.R. § 416.640(e)(2)(iii). Social Security
personnel will decide on a case-by-case basis whether the expenditure is related to,
results from, or would improve the child's condition. POMS GN 00602.140C.2. The following examples contained in GN00602.140C.2 are not inclusive and are only a
guide for items or services that are related to a child's impairment.
- Personal aids used to facilitate living and learning, such as assistive technology for
communication and mobility or modified instructional materials.
- Special foods for children with special dietary needs.
- Special clothing, such as orthopedic shoes, or adult-sized pants with snap crotch for
older incontinent children.
- Increased electrical bills from needed, frequently operated mechanical devices.
- Specialized daycare and therapeutic recreation such as special summer camps or special
- Food and veterinary care for a guide dog or other assistive animal.
- Repair of wall, carpets or furnishings that have been damaged or worn by a disabled
- Counseling, crisis intervention services, respite care, and therapeutic foster care,
when not covered by health insurance or a public service program.
- Repayment of past debt, including self-reimbursement by a creditor payee for those items
or services that were related to the child's impairment and benefited the child.
- Attorney fees incurred in pursuit of the child's disability claim.
- Household furnishings, appliances, and changes in utility services related to the
child's disability, such as air conditioning for an asthmatic child, a washing machine for
an incontinent child, or installation and maintenance of a phone line to insure ready
access to a needed service.
- Household renovations where the current conditions adversely affect the child's health,
such as insulating a home for a child with a respiratory or cardiovascular condition that
is aggravated by extremes of cold or heat, or a separate bedroom for a child with
emotional disabilities who requires a structured setting.
- Special play and recreational equipment related to the impairment.
- Computers and related accessories and software to promote learning, cognition, and other
- Transportation expenses incurred in getting the child to training classes, therapy
sessions, doctors' appointments, etc. This includes bus or cab fare or, in some cases, the
purchase of a vehicle.
The following are sample payee requests and how SSA treated
- A request for moving expenses to move from an apartment to a rented home because the
apartment manager advised the lease would be terminated due to frequent noisy outbursts
from the disabled child. The moving expense is approved because the autistic child's
outbursts are related to the impairment.
- A request to purchase a van which is specifically equipped to accommodate a wheelchair
needed by the disabled child. The child requires transportation for therapy sessions
several times a week. The payee provided a treatment history along with a letter from the
child's doctors indicating the treatments would continue indefinitely. The request is
approved because it enables the child to attend impairment related therapy sessions. A
specially equipped vehicle is not required. A reasonable expenditure would be justified if
it was required to take a disabled child to medical treatment, therapy or school.
- A request is made for a purchase of a new pair of shoes for the disabled child. This
request is denied as the shoes are not related to the child's impairment. However, if the
payee can demonstrate that special clothing, such as orthopedic shoes, is required because
of the child's impairment, the expense should be allowed.
- A request is made for closing costs and down payment on a used trailer and lot. The
family, including a mother and two siblings of the disabled child, has been living in a
home with lead based paint throughout the house and a contaminated water supply. The local
health department requires that the family leave the house as soon as possible. The
request is approved because homelessness is eminent without the purchase. In addition to
the exception for eminent homelessness, there can be other situations where the purchase
of a home or a lot and trailer would be justified based on the child 's impairment. For
example, substandard housing which adversely impacts the child's health with respect to
the impairment could also justify the expenditure.
- A request is made for reimbursement of monies paid for the child's nonprescription
medications and transportation to medical sources during the pendency of the child's
application and evidence of these expenses is submitted. This request is approved because
repayment of debts for medical treatment, education or job skills training, or other
expenses related to the impairment is an appropriate expenditure.
- A request is made for payment of respite care expenses (i.e., child care
expenses) to enable the parent to shop and take care of personal business and to provide a
short break from caregiving responsibilities. The expense should be limited to the actual
cost of the child care and not the expense of shopping, movie, etc.
- A request is made for educational expenses for tuition at a private school for the
disabled child. This request is approved because it is an expense for education.
- A request is made for the purchase of a computer, monitor, printer, and educational
software. It is explained that the child has learning disabilities and is a good candidate
for computer-assisted learning. The child's school is consulted and assists in the
selection of software and price quotes for the hardware. Although not the lowest priced
computer, it appears reasonable and the payee explains that it is necessary to run the
software and to avoid obsolescence. This request is approved as the computer and related
software are education related.
POMS GN 00602.140D.
Since the expenditures from a dedicated account are restricted greatly and are subject
to individual approval by Social Security, it is recommended that any questionable expense
be approved by Social Security. Both approvals and denials of proposed expenditures from
dedicated accounts are initial determinations and have appeal rights. POMS GN00602.140C.6.
and Misuse of Funds
When a payee knowingly uses dedicated account funds for expenditures not permitted,
Social Security will determine that there has been a "misapplication" of funds.
42 U.S.C. § 1383(a)(2)(F)(ii)(III)(aa). When funds are misapplied Social Security will
seek payment from the payee in the amount equal to the amount misapplied. 20 C.F.R. §
416.640(e)(4). This is an initial decision with appeal rights. POMS GN 00602.140B.5.
Misapplication is different from misuse. Misuse occurs when a payee uses funds for a
purpose other than the use and benefit of the beneficiary, while the misapplication of
funds, though not permitted, can benefit the beneficiary. Misused funds that are returned
go back to the dedicated account. Misapplied funds are returned back to Social Security's
The Bottom Line for Advocates
Make sure your client understands the purpose of the "dedicated account" and
the restrictions. Advise all such clients to:
- Open a dedicated account as required;
- Not commingle funds in the account;
- Use funds only as specified in the examples;
- If not clear, request SSA's opinion on the expenditure;
- Keep detailed records and receipts of all expenditures;
- Report to SSA on the expenditures and deposits in the dedicated account;
- Remind them that the payee will be personally responsible for "knowing"
misapplication of funds. (With SSA's increased debt collection powers this can be a
serious problem for parents that will not go away.)
Any backpayments of less than six times the monthly payment rate ($3,474) need not be
deposited into the dedicated account. Depositing into the account will only have the
effect of restricting the use of the funds.
If a parent's request for a pre-approval of a needed expenditure has been denied or not
acted upon promptly, review the POMS and advocate on behalf of the parent or other payee.
Be prepared to advocate on behalf of clients who have made expenditures that could be
within the criteria for legitimate expenditures, but have been deemed by SSA to be a
knowing misapplication. Remember, such determinations could have long term debt collection
ramifications for the parent. If these initial determinations are not appealed at the
time, it will be unlikely they can be in the future.
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