The KEEPS Prepaid MasterCard (KEEPS card), provided by Binder & Binder for direct deposit of benefit payments, does not transfer or assign control of payments. The enrollment agreement to accept the debit card for direct deposit of benefit payments has no provisions authorizing Binder & Binder to access or make withdrawals from the beneficiary’s KEEPS card account. The beneficiary is the only person with access to the card for withdrawals.

This KEEPS card agreement, as provided by Binder & Binder, does not create an assignment of benefits.

QUESTION

The Kentucky Area Director’s Office has asked whether a request made by the Binder & Binder Law Firm (Binder & Binder) on behalf of a claimant to have the Social Security Administration (SSA) add a prepaid debit card as the direct deposit information for the claimant creates an improper assignment of benefits under the Social Security Act (Act).

OPINION

Based on the information provided, the request to add this prepaid debit card as the direct deposit information for the claimant does not appear to create an improper assignment of benefits or assignment-like situation.

BACKGROUND

According to the information provided, Binder & Binder has asked on behalf of its client that SSA add a KEEPS Prepaid MasterCard (KEEPS card) as the client’s direct deposit information for the purposes of receiving Social Security benefits. The KEEPS card issuer’s website notes purported advantages for disability law firms to recommend the KEEPS card to their clients, such as recovering up to 95% of up-front costs, recovery of fees paid to clients by mistake, leverage to generate new business, and ways to build the law firm’s business and increase its bottom line. See KEEPSAmerica, Disability Lawyers & Advocates,www.keepsamerica.com/practices/disability-lawyers-advocates/ (last visited March 5, 2014). However, the information provided shows the KEEPS card issuer has informed a District Office in New Port Richey, Florida, that: the KEEPS cards issued to beneficiaries are not accessible by Binder & Binder for any reason; only the beneficiary has access to the card; and Binder & Binder receive no fees for referring claimants to the Keeps card. This information comports with information previously provided by the KEEPS card issuer to the Tupelo, Mississippi District Office. See Program Operations Manual System (POMS) PR 04505.027.A.2 (PR 14-031).

Binder & Binder provides a form to claimants that the claimant can use to request a KEEPS card and that instructs the claimant to submit the form to Binder & Binder or to the card issuer. This enrollment form does not authorize Binder & Binder to access the beneficiary’s KEEPS card account nor does it state that enrollment for a KEEPS card account is required. Neither the representative fee agreement between Binder & Binder and the beneficiary, nor the appointment of representative form provided have provisions authorizing Binder & Binder to access or make withdrawals from the beneficiary’s KEEPS card account.

DISCUSSION

Section 207 of the Act protects a beneficiary’s right to receive and use title II benefits by prohibiting the assignment of benefits. See Act § 207; POMS GN 02410.001.C; POMS GN 02402.045.A. Section 207 states in pertinent part:

The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

Act § 207(a). Section 1631(d)(1) of the Act states that the provisions of section 207 apply to Part B of title XVI of the Act. See POMS GN 02410.001.C. An assignment is the transfer of the right to, or payment of, benefits to a party other than the beneficiary. See POMS GN 02410.001.B.1. Section 207 protects a beneficiary’s right to receive benefits directly and use them as he or she sees fit. See POMS GN 02410.001.C. Therefore, SSA cannot directly pay benefits to anyone other than the beneficiary or his representative payee except in specific situations not applicable here. See POMS GN 02410.001.D.1.

The POMS also states SSA must avoid assignment-like situations, which include situations where the beneficiary shares control of the funds with a person or entity that has an interest in collecting money from the beneficiary. See POMS GN 02410.001.D.2. For example, SSA considers it an assignment-like situation where deposits are made into an account from which the beneficiary’s representative has the power to withdraw funds to collect his fee directly from the account. See POMS GN 02410.001.D.2

As of March 1, 2013, all title II beneficiaries and title XVI recipients not eligible for an exemption must select a form of electronic payment by either direct deposit or the Direct Express® debit card. See POMS GN 02402.001.A. Direct deposit payments can go to several types of accounts, including prepaid card accounts at acceptable financial institutions. See POMS GN 02402.030.A.1, B.1. In the past, an SSA district office in Mississippi determined the KEEPS card qualifies as an acceptable type of account from an acceptable financial institution and nothing in the information provided in this case undermines that conclusion. See POMS GN 02402.030.D, E; POMS PR 04505.027.A (PR 14-031). However, before approving a direct deposit account, SSA must determine whether use of the account creates an assignment of benefits or an assignment-like situation. See POMS 02402.045.B, C; POMS GN 02402.085.A, POMS GN 02410.001.D.

Here, depositing a beneficiary’s benefits into a KEEPS card account does not create an explicit assignment of benefits because the KEEPS card account is solely in the beneficiary’s name. See POMS GN 02410.001.D.1. Additionally, based on the information provided, depositing a beneficiary’s benefits into a KEEPS card account does not create an assignment-like situation. There is no evidence in this particular case that the beneficiary shares control of the funds with any person or entity; the evidence provided shows that only the beneficiary has access to and control of the KEEPS card account to which the benefits would be deposited. POMS GN 02410.001.D.2.

We recognize that we have found other arrangements involving a KEEPS card account to violate the anti-assignment provisions of the Act. See POMS PR 04505.027.A (PR 14-031). However, the facts in that instance are distinguishable from the facts in this case. In the previous case, the law firm also included an addendum to their fee agreement that authorized the law firm to withdraw funds directly from the claimant’s KEEPS card account, theoretically before the beneficiary would have an opportunity to exercise control over the benefits. See id. Here, the information provided does not include any such addendum to the fee agreement and none of the documents provided contain provisions that would authorize Binder & Binder to have access to or withdraw funds directly from the beneficiary’s KEEPS card account.

CONCLUSION

Based on the information provided, permitting the direct deposit of benefits on the KEEPS card in this case would not create an assignment or assignment-like situation prohibited by section 207 of the Act.

Mary A. Sloan

Regional Chief Counsel

By: ___________________________

Christopher Yarbrough

Assistant Regional Counsel

The order to withhold received from the Kentucky Cabinet for Health and Family Services meets SSA’s definition of “legal process” brought by a State agency administering a program under a State plan to enforce NH’s legal obligation to provide child support.

The social security Act defines “legal process” as any writ, order, summons, notice to withhold, or other similar process in the nature of garnishment. Legal process may include, but is not limited to, an attachment, writ of execution, income execution order, or wage assignment.

The order seeks to recover unpaid child support from NH and was issued by the Kentucky Cabinet for Health and Family Services in accordance with Kentucky Revised Statute § 405.470, which authorizes the Kentucky Cabinet for Health and Family Services to collect delinquent child support.

Question Presented

You asked whether a document entitled “Order to Withhold” from the Kentucky Cabinet for Health and Family Services, which was not specifically designated as a “garnishment” order and which requested wage and asset information of the number holder, was sufficient to enforce a garnishment of the number holder’s benefits.

Opinion

For the reasons set out below, the Order to Withhold from the Kentucky Cabinet for Heath and Family Services is a valid State garnishment order to collect delinquent child support payments from the number holder.

Background

According to the information provided to us, the Elizabethtown, Kentucky, Social Security field office received an “Order to Withhold” from the Kentucky Cabinet for Health and Family Services referencing Curtis, the number holder (NH). The order is dated June 23, 2009, and is signed by Carolyn , a designee of the Secretary of the Kentucky Cabinet for Health and Family Services. The order explains that NH is in arrears for unpaid child support in the amount of $6,467.47 for the period from June 8, 2004, through May 31, 2009. The order asks the Social Security Administration (SSA or Agency) to answer by identifying any disposable earnings or liquid assets of NH of which the Agency is in possession. The order states that fifty percent of any disposable earnings must be withheld and/or one hundred percent of any liquid assets must be withheld until the indebtedness is recovered. The order states that upon request, these withheld assess must be delivered to the Cabinet of Health and Family Services. The order is based on a court or administrative order that became final on May 17, 1996.

Discussion

The United States Supreme Court in Philpot v. Essex County Welfare Board, 409 U.S. 413, 415-17 (1973), stated unequivocally that section 207 of the Social Security Act (Act) imposes a broad bar against the use of any legal process to reach Social Security benefits. Under this provision,

(a) The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

(b) No other provision of law, enacted before, on, or after the date of the enactment of this section, may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section. Act § 207.

However, through section 459 of the Act, Congress specifically referenced section 207(a) to create an exception under which the Government consents to garnishment of Social Security benefits to collect child support and alimony. More specifically, section 459 states that with respect to a notice to withhold income to enforce an obligation of an individual to provide child support or alimony, SSA “shall be subject to the same requirements as would apply if the entity were a private person, except as otherwise provided in this section.” Act § 459(b). These requirements include not only complying with the withhold requirements of garnishment orders, but also with “any other legal process brought, by a State agency administering a program under a State plan approved under this part or by an individual obligee, to enforce the legal obligation of the individual to provide child support or alimony.” Act § 459(a) (emphasis added). The Act sets out types of statutorily prescribed procedures each State must have in effect to increase the effectiveness of the program which the State administers for child support enforcement. Act § 466. That section includes procedures under which liens arise by operation of law against real and personal property for amounts of overdue support owed by a noncustodial parent who resides or owns property in the State. Act § 466(a)(4)(A).

Social Security benefits are subject to “legal process” brought through a State court to enforce a legal obligation to provide child support or alimony. Policy Operations Manual System (POMS) GN 02410.200(B); see also Act § 466 (setting out statutorily prescribed procedures to increase the effectiveness of child support enforcement). The POMS define “legal process” as any writ, order, summons, notice to withhold, or other similar process in the nature of garnishment. Legal process may include, but is not limited to, an attachment, writ of execution, income execution order, or wage assignment. Id. The legal process may be issued by a court of competent jurisdiction, an authorized official pursuant to a court order or State or local law, or a State agency authorized to issue income withholding notices pursuant to State or local law. Id.

The Secretary of the Kentucky Cabinet for Health and Family Services may collect delinquent child support by issuing an order to withhold and deliver earnings or property of any kind which belong to the debtor parent. Ky. Rev. Stat. Ann. § 405.470 (2009). An order to withhold and deliver the assets of the debtor parent may be personally served or mailed by certified mail to any person in possession or control of the debtor parent’s property. Ky. Rev. Stat. Ann. § 405.480 (2009). The order must set out the basis for, as well as the amount of the support debt. Id. Any person who is served with an order to withhold and deliver the debtor parent’s property must answer the order within twenty days of receipt. Ky. Rev. Stat. Ann. § 405.490 (2009). The person in possession of the debtor parent’s property must withhold the property in accordance with the Secretary’s instructions and deliver it to the Cabinet. Id.

Here, the order to withhold from the Kentucky Cabinet for Health and Family Services meets SSA’s definition of “legal process” brought by a State agency administering a program under a State plan to enforce NH’s legal obligation to provide child support. See Act §§ 459(a), 466; POMS GN 02410.200(B). Although the order does not specifically state that it is a garnishment order, the order is a legal process in the nature of garnishment. See POMS GN 02410.200(B). The order seeks to recover unpaid child support from NH and was issued by the Kentucky Cabinet for Health and Family Services in accordance with Kentucky Revised Statute § 405.470, which authorizes the Kentucky Cabinet for Health and Family Services to collect delinquent child support. See id. Because the order is a notice to withhold income or assets to enforce NH’s child support obligation, SSA should process the order pursuant to its procedures for processing garnishment orders. See Act § 459(a).

Conclusion

In sum, the Order to Withhold issued by the Kentucky Cabinet for Health and Family Services is a valid order of garnishment for purposes of collecting child support payments owed by NH. SSA should comply with the order. POMS GN 02410.210 sets out instructions for processing garnishment orders.

Mary A. Sloan

Regional Chief Counsel

By: ___________________________

Richard V. Blake

Assistant Regional Counsel