Sections 206(d) and 1631(d)(2) of the Social Security Act (Act) require us to charge an assessment, or "user fee," to recover administrative costs associated with the direct payment of fees. Specifically, section 206(d)(2)(A):

• •

  Caps the user fee at a flat-rate dollar amount or 6.3 percent of the fee payment, whichever is lower, effective September 1, 2004; and

• •

  Adjusts the flat-rate dollar amount based on annual cost-of-living adjustments rounded to the next lowest $1 beginning December 1, 2006.

This user fee applies whenever we certify for payment an administrative or court-awarded fee from the claimant's past-due benefits. We will apply the user fee cap in effect at the time of payment.

For more information on the fee payment date, see GN 03920.001.

In a favorably decided Title II or Title XVI claim with past-due benefits withheld for direct payment, we will:

• •

  Deduct the user fee from the amount of the authorized fee and pay the remainder of the authorized fee to the representative(s) or any eligible entities assigned direct payment. For information on the representative’s fee from Title II past-due benefits, see GN 03920.030B. For information on the representative’s fee from Title XVI past-due benefits, see GN 03920.031B.;

• •

  Explain the user fee and authorized fee to the claimant in the notice of award and fee authorization notice;

• •

  Recover any outstanding prior overpayment to the claimant; and

• •

  Release any excess withheld funds to the claimant and any affected auxiliary beneficiary if we include the affected auxiliary beneficiary’s benefits in calculating the past-due benefits for fee purposes.

We release any excess withheld funds, if any, to a claimant, affected auxiliary beneficiary, or eligible spouse, unless any of the following exceptions apply:

• •

  There is another representative who is eligible for direct payment and has not yet been paid,

• •

  Concurrent Title II and Title XVI cases in which offset has not yet occurred,

• •

  Cases with Federal court involvement, or

• •

  Cases with a timely request for administrative review still pending.

Dual entitlement claims involve more than one type of benefit under the same title (e.g., entitlement to Title II disability insurance benefits (DIB) based on a claimant's own Social Security number (SSN), as well as Title II child's benefits based on a parent's SSN). Concurrent claims involve benefits under more than one title (e.g., entitlement to Title II disability insurance benefits as well as eligibility for Title XVI supplemental security income).

When processing dual entitlement claims, we will authorize fees for a representative’s services on behalf of a claimant, an affected auxiliary beneficiary in a Title II claim, or an eligible spouse in a Title XVI couple’s claim that results in entitlement or eligibility for benefits or an increase in benefit payments.

If notified of the amount in an established trust fund or escrow account before we make the direct payment, we will first subtract the escrow amount from the authorized fee and afterward calculate the user fee based on the remaining authorized fee that we will directly pay. For information on fees and trust or escrow accounts, see GN 03920.025.

We round to the nearest cent when calculating the user fee. For more information on our rounding policy, see RS 00601.020B.

Recipients of direct payment cannot directly or indirectly charge or seek reimbursement of user fees from the claimant. For information on the prohibition of reimbursement of the user fee from claimants, see Section 206(d)(4) of the Act.

If technicians become aware of an attempt to charge or obtain reimbursement of the user fee from a claimant, refer the matter to OGC as a possible fee violation, as explained in GN 03970.017B. (Field Office (FO)) or GN 03970.017C (Payment Center (PC)).

Under the fee agreement process, we apply the user fee in equal shares to each representative receiving direct payment without regard to their affiliation.

We do not deduct a user fee for anyone who:

• •

  Waives their fee;

• •

  Waives direct payment of their fee; or

• •

  Is ineligible for direct fee payment.

For information on a fee waiver or waiver of direct fee payment, see GN 03920.020.

Under the fee petition process, when we authorize fees at the same time for multiple representatives, we pay the authorized fee minus a proportional amount of the user fee to each representative eligible for direct payment at the time we make the payment. If the authorized fees exceed the withheld amount, the PC for Title II and the FO for Title XVI claims must distribute (i.e., prorate) the withheld past-due benefits amount among the eligible representatives in proportion to the fee authorized for each representative and prorate the user fee accordingly. Under the fee petition process, when we authorize fees at different times for multiple representatives, prorate the user fee as explained in GN 03930.066D.2.b.

EXAMPLE: Barbara submits a Title II only claim with two appointed representatives, Diana and Nancy. At the hearing level, the administrative law judge (ALJ) issues a fully favorable decision, resulting in past-due benefits of $22,400, but disapproves the fee agreement. After receiving the favorable decision, Diana and Nancy each submit a fee petition to the ALJ. The ALJ reviews their fee petitions and authorizes $3,540 for Diana and $2,360 for Nancy for a total of $5,900 in fees. We must determine each representative’s share of the user fee.

In Title II auxiliary and Title XVI couple’s cases, the user fee cap applies to the total fee we pay from past-due benefits withheld from the primary claimant and any affected auxiliary beneficiary or Title XVI eligible spouse not independently represented. We pay the authorized fee from the primary claimant’s withheld past-due benefits first and deduct the user fee accordingly.

When the user fee assessed from the primary claimant's Title II past-due benefits is less than the user fee cap, we will deduct either 6.3 percent of the direct payment or the remaining cap amount, whichever is lower, from any fee paid from the auxiliary beneficiary or eligible spouse’s past-due benefits. We will deduct a user fee from each successive fee payment until the total user fee we have collected equals the user fee cap in effect on the date of the payment.

EXAMPLE 1: Stacy filed concurrent Title II and Title XVI claims. Stacy appointed Robert as the representative. At the reconsideration level, we issued a favorable determination. At the same time, we processed a claim for Stacy’s child, who lives in the same household as Stacy and does not have independent representation. Robert timely submitted a fee petition, and we authorize a fee of $7,000.

EXAMPLE 2: Chris files a Title II only claim. Chris appoints Matt as their representative. Chris and Matt signed a fee agreement that sets the fee at the lesser of $7,200 or 25 percent of Chris's past-due benefits. At the hearing level, the ALJ issues a favorable decision, which results in $3,200 in past-due benefits for Chris. The ALJ reviews and approves the fee agreement. Later, Chris's two children file claims based on Chris's SSN and are not independently represented.

EXAMPLE 3: Rachel filed a Title XVI only claim and appointed Adam as the representative. At the hearing level, the ALJ issued a favorable decision. The ALJ approved the fee agreement between Rachel and Adam, who is eligible for direct payment. Because of Rachel’s Title XVI eligibility, Rachel’s spouse, Mike, who does not have a representative and has been receiving Title II and Title XVI benefits for several years, receives an additional Title XVI retroactive payment.

If the affected auxiliary beneficiary in a Title II case or eligible spouse in a Title XVI couple’s case is independently represented, we will apply separate user fee caps to:

• •

  The fee we pay to the primary claimant's representative(s) and the fee we pay to the affected auxiliary beneficiary's representative(s) (or to any eligible entity to which a representative assigned direct payment); or

• •

  The fee we pay to each spouse's representative(s) (or any eligible entity to which a representative assigned direct payment) in a Title XVI couple’s case.

In a Title II case, we will deduct the user fee when we directly pay fees to the representative(s) of the primary claimant, and we will apply a separate user fee when we pay fees to the representative(s) of the auxiliary beneficiary in a Title II case. The user fee deducted from fees paid to the primary claimant’s representative(s) will not affect the user fee deducted from fees paid to the representative(s) of the independently represented auxiliary beneficiary because their claims are separate.

The user fee deducted from the fee we pay to the representative of one spouse in the Title XVI couple’s case does not affect the user fee we deduct from the fee we pay to the representative of the other spouse in the Title XVI couple’s case.

The same process applies whether we are directly paying representatives or entities to which representatives assigned direct payment.

For more information on withholding when an auxiliary beneficiary is independently represented, see GN 03920.035B.

EXAMPLE 1: Sue filed a disability claim under Title II and appointed Robert as the representative. At the reconsideration level, we issue a favorable determination and approved Sue and Robert's fee agreement. At the same time, Calvin, Sue's divorced spouse appoints James to independently represent him in an auxiliary claim for spouses benefits and both sign their own fee agreement. Since Calvin is independently represented by James, we approve their timely submitted fee agreement and authorize a fee to James based on Calvin's pat due benefits.