WHAT IS A DEDICATED ACCOUNT?
Dedicated account (n.): A separate bank account into which the Social Security Administration (SSA) deposits retroactive, or past-due, Supplemental Security Income (SSI) benefit payments.
On the surface, this sounds straightforward enough. Imagine that John (a fictive client, age 8) applied for SSI in January 2018 and was denied. John’s mother sought legal representation from the CDP, and at his June 2019 hearing the judge found him disabled, thereby approving him for SSI. So, eighteen months stand between the date of John’s initial application and SSA’s approval. John’s monthly benefit is $200, so he is able to collect eighteen times that – $3,600 – in retroactive benefits. This is a victory, to be sure.
But there’s a catch: the $3,600 is relegated to John’s dedicated account. This means that he cannot use that money on just anything, because the dedicated account comes with a host of regulations. Not only does SSA mandate the type of bank account into which this money must be deposited, but once the money is deposited there, it must be spent by a certain person, in a certain way.
First, the only person who may spend that money is John’s representative payee. The representative payee (usually the child’s mother) is also the person who must open the account in the first place. It must be a checking, savings, or money market account – which means it cannot be in the form of mutual funds, stocks, bonds, trusts, or certificates of deposit. Also, the title must show that the child owns the funds, including interest.
Once John’s mother opens his account, she can only use those funds in two ways: 1) for John’s medical treatment or 2) for John’s education or job skills training. Sometimes it can also be used for personal needs assistance, rehabilitation therapy, special equipment, and other sorts of expenditures that are squarely for the child’s well-being. However, dedicated account money may not go toward food, clothing, or shelter; only regular monthly SSI benefits may be used for those. (Exceptions may be made in cases where the family is facing eviction, but those exceptions must be explicitly granted by SSA.)
Social Security monitors dedicated accounts keenly. The representative payee must complete an annual report on dedicated account expenditures (as well as a report on the use of regular monthly SSI funds), and for this reason, the representative payee must keep receipts and bank statements. This expense record is crucial.
Often the representative payee believes that s/he is performing these tasks according to what the SSA has stipulated: John’s mother, for instance, understands that any withdrawal from the dedicated account must go toward something for John that is related to his disability. However, she does not understand just how narrowly Social Security defines what that “something” is. Then she experiences a harsh wake-up call:
John’s disability means that he has trouble sleeping, so his mother uses dedicated account funds to purchase a breathable comforter ($100) for his bed. However, she does not realize that this expenditure requires asking for SSA’s approval first. So, after having dutifully recorded the price of the purchase and submitting her report to the SSA (without SSA’s written approval of the purchase), she is shocked to find out that the comforter is apparently a misapplication of funds, and that she must return the $100. Again, dutifully, she does what SSA asks, believing that this money will simply go back into John’s dedicated account. However, repaid misapplied funds go straight to the Treasury; John has just lost $100 of his benefits permanently.
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HOW IS THE CHILDREN’S DISABILITY PROJECT ADDRESSING THIS ISSUE?
Situations like this occur all the time: the representative payee, believing that she is acting according to both her child’s best interest and Social Security’s mandates, gets charged with misapplying dedicated account funds – and ultimately the disabled child gets punished for the payee’s unknowing “mistakes.” The Children’s Disability Project noticed this unjust trend. Not only are regulations on dedicated accounts far too stringent, but field officers (FO) are highly subjective in their decisions about whether those funds are being used lawfully. Moreover, SSA does not adequately convey to representative payees that they ought to get written approval from a FO for every expenditure. The only warning SSA gives is that the representative payee must be prepared to explain any expenditure and how it relates to the child’s disability. Well, John’s mother explained; the issue was that SSA was dissatisfied with her explanation.
Since its founding in 2007, the Children’s Disability Project has taken steps to change this flawed policy. In 2008, CDP created the Saving and Spending Workbook, which offers guidance to representative payees as they track their dedicated account expenditures. In May 2017, Northeastern University School of Law Professor Mary O’Connell wrote an article (featured here on our blog) entitled “Supplemental Security Income’s ‘Dedicated Account’: A Debunked Urban Legend and Twenty Years of Waste.” In 2018, a California parent group reached out to CDP and Professor O’Connell as a fellow body fighting the dedicated account, thereby broadening our network of anti-dedicated account advocacy. In 2019, CDP worked with Disability Law Center’s Linda Landry, Esq. and Professor O’Connell to draft a letter to the Social Security Advisory Board about suggested policy changes. The Board reviewed the recommendations and acknowledged the serious problems with administering Dedicated Accounts. However, they want to conduct further studies on this matter.
In addition to these initiatives, CDP has represented many clients who have had trouble accessing their dedicated account. Though John’s story is fictive, the following case, which is presently open with CDP, is real – and just one of several dedicated account cases that the CDP is currently handling. To conclude, here is Deidre’s story (excerpted from the CDP’s letter to the Social Security Advisory Board):
Deidre is a 22-year-old young woman who began receiving SSI benefits in October 2010 when she was 13. Her disabilities included depression, atopic dermatitis, psoriasis, obesity and learning disabilities. By the time Deidre’s claim was finally processed by SSA, she was owed approximately 31 months of retroactive benefits (March 2008 application). Deidre’s mother, Brenda, served as Deidre’s representative payee until Deidre was 21. Brenda also has disabilities including depression, anxiety, bipolar disorder, and a learning disability. Brenda had a long work history until she suffered an incapacitating injury. Brenda currently receives SSDI benefits.
In 2010, CDP successfully represented Deidre on her SSI claim. Six years later, Brenda contacted CDP. Although Deidre was receiving monthly SSI benefits, she had only received one disbursement of $2,113.20 from her much needed dedicated account funds, which totaled over $10,000.
After she graduated from high school, Deidre wanted to attend Quincy College (QC) to study business. Brenda asked SSA to release funds from the dedicated account for Deidre’s tuition and school supplies, but SSA refused, claiming that there had been both an overpayment to Deidre’s account and a misapplication of funds by Brenda. At her mother’s urging, Deidre registered for classes and attended QC with some student aid (partial tuition) while Brenda struggled to purchase books with Deidre’s monthly SSI and Brenda’s SSDI benefits. In June of 2016, Brenda contacted CDP for help with accessing Deidre’s dedicated account. By that time, however, the semester had ended and Deidre had failed her classes because she did not have the books and supplies she needed to keep up with the assigned work. Together, we contacted SSA, and Deidre, Brenda and CDP attended a meeting at the Social Security office concerning the release of the retroactive funds. We soon learned that Brenda understood that as long as she used the dedicated account funds for Deidre’s education, health and physical well-being she was in compliance with SSA’s rules. A review of Deidre’s SSA file revealed that despite a tedious and complex process spanning approximately three years (2010 – 2013), and requiring the completion of multiple forms and numerous trips to SSA, only one disbursement from the dedicated account had been made. The results were disastrous for Brenda and Deidre.
On September 29, 2010, prior to opening Deidre’s dedicated account with her local bank, Brenda signed a “Statement of Claimant or Other Person,” a standard one page description of the dedicated account. Brenda took the agreement to mean that she could use the dedicated account money for any expenses related to Deidre’s impairments, as long as all purchases made were for Deidre. In 2011, a disbursement of $2,113.20 was made from the dedicated account and Brenda used the money for necessary items for Deidre, such as larger clothing, low calorie food for weight loss, hair treatments, and school supplies. On April 14, 2011, Brenda signed a “Representative Payee Report of Benefits and Dedicated Account” form, which was completed by a FO staff member. On February 6, 2013, Brenda signed a dedicated account “Use of Funds Statement,” again completed by FO staff. In the “Use” statement Brenda described her purchases for Deidre along with the cost of each item and provided receipts. The next day, February 7, 2013, Brenda received a notice from SSA alleging misapplication. Brenda contacted SSA and on February 22, 2013 signed a statement drafted by SSA agreeing to repay the $2,113.20, despite the fact that all of this money had been spent for Deidre’s needs. Brenda began paying SSA $50 per month, until she could no longer afford the payment. All of these payments were returned to the U.S. Treasury and not to Deidre’s dedicated account.
Despite SSA’s claim of overpayment and misapplication of funds, in 2016, after speaking with the SSA district manager, we were able to get SSA to release funds for books, a laptop and tuition for Deidre’s upcoming college semester. After the 2016 release of funds, the local SSA office experienced a staff change. The new claims representative assigned to Deidre’s case refused to release any further tuition payments until the alleged overpayment and misapplication issues were resolved. The FO staff change and the refusal to release further funds is a clear example of FO staff’s subjective interpretation and application of the dedicated account rules (i.e., FO staff person #1 will approve an item and FO staff person #2 will deny the same item). CDP, representing Deidre, appeared before an Administrative Law Judge (ALJ) to challenge SSA’s actions in Deidre’s case and to request that SSA be ordered to release funds held in Deidre’s dedicated account (approximately $8,000 in retroactive SSI) for payment of her tuition, books, school supplies and other necessary expenses. In his decision, the ALJ waived the full amount of the alleged overpayment, finding that Brenda and Deidre were not at fault, and that no misapplication had occurred. The ALJ ordered that the balance in the dedicated account be released. The ALJ further found that all monies spent on items for Deidre were necessary.
Deidre’s case illustrates the many pitfalls associated with administering the dedicated account. According to the ALJ, SSA staff did not properly apply the concept of “other” allowable expenses such as hair treatments and larger clothing; SSA did not do enough to ensure that the representative payee had a clear understanding of the many restrictions on the use of the dedicated account; and SSA failed to timely release funds. Though she was entitled to the funds in her dedicated account, the restrictions and the bureaucracy surrounding that account meant that it profoundly failed Deidre. Only eight years later – after Deidre had abandoned her dream of attending college – were the funds released, and then only by court order. Most children receiving SSI cannot access legal advocates. For them, the dedicated account often means that funds which are supposed to be used to accommodate their disabilities are, in essence, forfeited. Cases like Deidre’s – which, sadly, are commonplace – prove that the dedicated account rule needs to change.
It is an ongoing mission of the CDP to track dedicated account cases and continue pushing for policy change.