Basic (08-05)

PR 07210.035 New York

A. PR 09-066 Niagara Lutheran Home PNA and Cost of Care DEBT

DATE: March 5, 2009

1. SYLLABUS

An organizational payee is not required by law to deduct a personal needs allowance ("PNA") from a Title II check for the beneficiaries. The organizational payee may use the beneficiaries' conserved funds to reimburse itself for outstanding cost-of-care debts so long as the beneficiaries' current needs and reasonably foreseeable needs are being met. If payee is a Title XIX facility, it also does not need SSA approval to collect the beneficiaries' past debts so long as it allocates two month's PNA to the beneficiaries' resident accounts. If the payee is not a Title XIX facility, it must establish the validity of the debt and seek SSA approval to reimburse itself as a creditor payee.

2. OPINION

You asked us to review whether Niagara Lutheran Home ("NLH"), an organizational representative payee, may reimburse itself with monies from their Title II beneficiaries' conserved funds and monthly PNA allowances for outstanding cost-of-care debts owed to them. NLH is not required by law to deduct a personal needs allowance ("PNA") from a Title II check for the beneficiaries. NLH may use the beneficiaries' conserved funds to reimburse itself for outstanding cost-of-care debts so long as the beneficiaries' current needs and reasonably foreseeable needs are being met. If NLH is a Title XIX facility, it also does not need SSA approval to collect the beneficiaries' past debts so long as it allocates two month's PNA to the beneficiaries' resident accounts. If NLH is not a Title XIX facility, it must establish the validity of the debt and seek SSA approval to reimburse itself as a creditor payee. With respect to Title XVI beneficiaries for whom NLH is payee, NLH is required to provide PNA each month to those beneficiaries.

BACKGROUND

You note that during a triennial review of NLH, the SSA representative padre cadre learned that a number of beneficiaries (mostly Title II recipients) received both SSA and non-SSA benefits. You state that the beneficiaries' family members receive other non-SSA benefits. You further note that the beneficiaries' family members are supposed to turn over the non-SSA benefits to NLH for cost-of-care expenses but that these families have not done so. As such, you indicate, that the beneficiaries have acquired an ongoing monthly debt to NLH for their cost-of-care. As a result of the beneficiaries' families' unwillingness to use non-SSA benefits for cost-of-care, NLH has stopped providing beneficiaries their PNA. In addition, NLH has begun using some of the beneficiaries' conserved funds towards payment for the debt owed for their cost-of-care expenses. NLH stated that the beneficiaries' families granted them permission to use the PNA funds towards the debt.

ANALYSIS

With regard to the Title II beneficiaries residing at NLH, there is no federal regulation which requires that PNA must be deducted from Title II benefits. The POMS notes that when a beneficiary is institutionalized, SSA's policy is that the representative payee must set aside a minimum of $30 per month to be used for the Title II beneficiary's personal needs or saved on his behalf. POMS GN 00605.067D.3, POMS GN 00602.010. The POMS, however, does not cite to any legal authority that supports the policy that $30.00 may be deducted from a Title II check.

Federal regulations and state law suggest that PNA was developed under the structure of the Title XVI program. The regulations at 20 C.F.R. § 416.640(c) require that, when an SSI recipient resides in an institution that receives more than 50 percent of the cost of the recipient's care from Medicaid, any SSI payment due the recipient must be used only for the personal needs of the recipient. The SSI payment due such a recipient would be the reduced payment of $30 per month under 20 C.F.R. § 416.211(b) and 416.414. Thus, 20 C.F.R. § 416.640(c) essentially requires the representative payee to use the $30 per month reduced SSI payment as a PNA. However, the corresponding regulations at 20 C.F.R. § 404.2040 are silent on whether Title II beneficiaries are entitled to PNA.

As such, NLH's practice of retaining Title II beneficiaries' PNA does not violate any laws since legal authority does not indicate that a PNA must be deducted from Title II benefits and given to the Title II beneficiary. As we have stated in the past, the issue of whether PNA must be deducted from Title II benefits is within the purview of the policymakers.

Of paramount importance is that NLH must ensure that each beneficiary's current maintenance and foreseeable needs are met before they may use a beneficiary's funds to satisfy a past debt. 20 C.F.R. §§ 404.2040, 404.2045, 416.640, 416.645; POMS GN 00602.030, POMS GN 00602.010. NLH may use the beneficiaries' conserved Title II funds to pay their outstanding cost-of-care debts so long as their current needs and reasonably foreseeable needs are met.

Also, since NLH serves as both a creditor and payee for its residential beneficiaries, NLH is required to obtain Social Security Administration ("SSA") approval before it may use beneficiaries' monies for self-reimbursement. POMS GN 00602.030. Specifically, NLH must provide the appropriate evidence to SSA to show that it may collect the cost-of-care debts owed by its residential beneficiaries, unless it is a Title XIX facility. POMS GN 00602.030. For example, if NLH is requesting payment of past charges for care and maintenance, SSA should obtain a bill or statement of the amount owed. Id. The statement should designate the months for which care was provided and the monthly customary charges.

If NLH is a Title XIX facility, under SSA's POMS guidelines, it must allocate two month's PNA to the beneficiary's resident account prior to using any conserved funds to pay cost-of-care debts. Id. The payee then may use remaining funds to pay for past care and maintenance without obtaining SSA approval. Id.

Further, it is not within SSA's jurisdiction to collect non-SSA monies from beneficiaries' families to pay for their cost-of-care debts. Thus, SSA would not be involved in any matter between NLH and the families.

CONCLUSION

NLH is not required by law to deduct a personal needs allowance ("PNA") from a Title II check for the beneficiaries. NLH may use the beneficiaries' conserved funds to reimburse itself for outstanding cost-of-care debts so long as the beneficiaries' current needs and reasonably foreseeable needs are being met. If NLH is a Title XIX facility, it also does not need SSA approval to collect the beneficiaries' past debts so long as it allocates two month's PNA to the beneficiaries' resident accounts. If NLH is not a Title XIX facility, it must establish the validity of the debt and seek SSA approval to reimburse itself as a creditor payee.

Mary A. S~
Acting Regional Chief Counsel
By: _______________
Kristina C~

B. PR 09-028 RP Site Review: Seaview Manor

DATE: December 3, 2008

1. SYLLABUS

The opinion in this case examines whether or not a representative payee may distribute a beneficiary's personal needs allowance to the beneficiary in a monthly lump sum. The opinion also examines whether the representative payee must maintain a beneficiary's funds in an interest-bearing account. The opinion finds that the representative payee should refrain from distributing a beneficiary's personal needs allowance in one lump sum without ensuring that the funds are used for personal needs and without keeping records of those expenditures. The opinion also recommends that the payee maintain records of how beneficiaries' monies are expended and submit said records to SSA upon our request. In addition, the opinion recommends the payee invest the beneficiaries' funds in interest-bearing accounts because the funds are the property of the beneficiaries.

2. OPINION

You asked us whether this representative payee may distribute a beneficiary's personal needs allowance ("PNA") in one monthly lump sum. You also asked us whether Seaview Manor, an adult home serving as a representative payee, was required to maintain their beneficiary's funds in interest-bearing accounts. We recommend that Seaview Manor, in accordance with its oversight and accounting obligations under SSA's regulations, refrain from their practice of distributing PNA in one monthly lump sum without ensuring that the funds are used for personal needs and without keeping records of those expenditures. Regarding your second question, SSA laws do not mandate that a beneficiary's funds be placed in an interest bearing account. However, we recommend that representative payees invest beneficiary's funds in interest-bearing accounts because the funds are the property of the beneficiary and this is the preferred means of investment.

BACKGROUND

You note that the SSA representative payee cadre recently conducted a site review of Seaview Manor. The SSA cadre raised two concerns after their review: (1) Seaview Manor has been distributing their beneficiaries' PNA in one lump sum and (2) Seaview Manor does not maintain beneficiaries' funds in interest bearing accounts. Seaview Manor cited to a September 20, 2005 memorandum from their legal counsel, Jane B. B~, in support of their position that PNA may be distributed in one lump sum. Ms. B~ stated in a memorandum to her nursing home clients that she spoke to the undersigned on August 3, 2005, and that the undersigned advised her that adult homes acting as representatives payees would not be required to "oversee the prudence or appropriateness of the resident's expenditures of the personal needs allowance." Memorandum of Jane B. B~ ("B~ Memo"). That is incorrect. In a letter dated November 16, 2005, we noted that SSA regulations require adult homes acting as representative payees to maintain oversight over the use of SSA monies by a beneficiary. See letter dated November 16, 2005. We also stated that representative payees should be able to comply with both SSA's representative payee requirements and New York State law when monitoring beneficiaries' use of their PNA.

ANALYSIS

As reflected in OGC's opinion dated August 2, 2005, PR 07210.035 New York, a representative payee has a responsibility to use benefits in a manner and for the purpose that the payee determines to be in the best interest of the beneficiary. 20 C.F.R. §§ 404.2035, 416.635. SSA's regulations also require representative payees to act in the best interest of the beneficiary by ensuring that the beneficiary's current maintenance is provided for. 20 C.F.R. §§ 404.2040(a), 416.640(a). Current maintenance includes costs incurred in obtaining food, shelter, clothing, medical care and personal comfort items. Id. When a beneficiary is institutionalized, SSA's policy is that the representative payee must set aside a minimum of $30 per month ($360 per year) to be used for the beneficiary's personal needs or saved on his behalf. POMS GN 00605.067D.3. Personal needs items include (but are not limited to): clothing; grooming aids; room furnishings; and recreational items such as radios, televisions, movie tickets, candy, etc. POMS GN 00605.067F.

While a representative payee can distribute PNA in a lump sum, a representative payee is not permitted to merely hand over the PNA to a beneficiary. SSA appoints a representative payee so that the payee can oversee how the beneficiary expends his SSA monies. The payee is also responsible for accounting for the use of the benefits. 20 C.F.R. §§ 404.2035, 416.635. The site review report prepared by the Queens Rep Payee Cadre revealed that Seaview Manor does not keep any records of resident transactions. As such, this action violates SSA laws which require that a representative payee maintain information that demonstrates how it expends SSA monies received by its beneficiaries. 20 C.F.R. §§ 404.2025, 404.2035, 416.625, 416.635.

New York Social Services Law ("N.Y. Soc Serv")§131-o(1) provides that an individual who is "receiving residential care" and receiving benefits under the program of additional state payments shall be entitled to a monthly personal allowance out of such benefits. The law further states that the allowance "shall be made directly available to the individual for his own use in obtaining clothing, personal hygiene items, and other supplies and services for his personal use not otherwise provided by the residential facility." N.Y. Soc Serv §131-o(1). Seaview Manor relies on this State law to support its practice of distributing PNA to beneficiaries in a lump sum payment.

As reflected in the letter sent to Seaview Manor's counsel, Ms. B~, we informed her that a representative payee must maintain oversight of how a beneficiary uses his or her PNA. Seaview Manor, as representative payee, should ensure that its beneficiaries are using their PNA for their personal needs on items consistent with those stated in both POMS GN 00605.067F and N.Y. Soc Serv §131-o(1). Seaview Manor should not allow the beneficiary to "waste" the funds on expenses that are not in the beneficiary's best interests. If Seaview Manor insists that the state statute requires an unfettered lump sum distribution of the PNA upon request, thereby prohibiting the representative payee from supervising the expenditures and accounting for them, then we believe there would be a conflict between federal and state law. Under the Supremacy Clause of the United States Constitution, any state law that would interfere with or is contrary to federal law will not stand. Courts have found implied conflict pre-emption where it is impossible for a private party to comply with both state and federal requirements or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. See Beulah Johnson v. Brian J. Wing, et al., 12 F. Supp. 2d 311, 317 (S.D.N.Y. 1998); see also, Perez v. Campbell, 402 U.S. 637, 651-52 (1971).

Regarding the issue of whether SSA requires adult home operators serving as representative payees to maintain their beneficiary's funds in interest-bearing accounts, we recommend that representative payees invest the beneficiary's funds in interest-bearing accounts because the funds are the property of the beneficiary. While this procedure is not mandatory, SSA strongly recommends this action. Pursuant to 20 C.F.R. § 404.2045(b), SSA's regulation specifically provides that the preferred investment for beneficiary funds is an interest-bearing account. The site review report revealed that beneficiaries' PNA is deposited into an account entitled "Seaview Manor's Special Account." The site review report indicated that this account does not individually list the recipients' names or provide for any method to separate the client's funds. Seaview Manor needs to comply with SSA's policy that multiple beneficiary funds may be placed in a single collective account only when each beneficiary is given a subaccount that identifies beneficiary ownership. Also, if interest is earned on the account, the interest must be pro-rated and properly distributed to show that the interest is the property of the rightful beneficiary. 20 C.F.R. § 404.2045(b) and(c).

CONCLUSION

We conclude that Seaview Manor must maintain oversight over the use of SSA monies by a beneficiary and should refrain from distributing a beneficiary's PNA in one lump sum without ensuring that the funds are used for personal needs and without keeping records of those expenditures. We also recommend that Seaview Manor maintain records of how beneficiaries' monies are expended and submit said records to SSA upon our request. In addition, we also recommend that Seaview Manor invest the beneficiaries' funds in interest-bearing accounts because the funds are the property of the beneficiaries.

Mary Ann S~
Acting Regional Chief Counsel
By: _______________
Kristina C~

C. PR 05-208 Organizational Representative Payee's Distribution of PNA for Rockaway Manor

DATE: August 2, 2005

1. SYLLABUS

There is no conflict between SSA law and New York Social Services Law § 131-o because a representative payee can comply with its oversight and accounting responsibilities under SSA's regulations without violating the state statute. In the event that the representative payee interprets the state statute to require a lump-sum distribution upon request of personal needs allowance ("PNA") funds with no oversight or accounting allowed, the representative payee would violate its federal representative payee obligations. Federal law is supreme to state law where there is a conflict. Accordingly, the representative payee is required to comply with SSA regulations.

2. OPINION

You asked us to review whether a conflict exists between SSA law and a New York State statute that applies to residential care facilities. One representative payee that is also a residential care facility believes that the State statute requires it to distribute personal needs allowance ("PNA")funds for a beneficiary's personal needs or personal comfort items in one monthly lump sum. As explained below, we do not believe that there is a conflict between SSA law and New York State law because the state law should not be interpreted to prohibit the representative payee from supervising and accounting for expenditures made from the PNA. Accordingly, we believe that the representative payee can comply with its oversight and accounting obligations under SSA's regulations and POMS without violating the state law. Should a representative payee interpret the state law to prohibit the representative payee from meeting its oversight and accounting obligations under SSA's regulations and POMS, then we believe there would be a conflict with SSA law. Under such circumstances, the representative payee must follow SSA law, which is supreme to state law under the United States Constitution.

BACKGROUND

The Flatbush FO conducted a payee review of a congregate care facility, Rockaway Manor, in Rockaway, New York. The Rockaway Manor is an adult home and a Level II congregate care facility. Upon review, it was noted that the beneficiaries residing in Rockaway Manor received monthly PNAs of approximately $130. The facility contended under state law that they were required to distribute the monthly PNA in one lump sum if the beneficiary so requested. You note, however, that SSA policy requires the payee to manage these funds and if necessary not "hand-over" the entire amount all at once.

ANALYSIS

1.SSA Regulations

SSA's regulations set out the following specific representative payee responsibilities:

Responsibilities of a representative payee.

A representative payee has a responsibility to-

(a) Use of the payments he or she received only for the use and benefit of the beneficiary in a manner and for the purpose he or she determines, under the guidelines of this subpart, to be in the best interests of the beneficiary;

(b) Notify us of any event that will affect the amount of benefits the beneficiary receives or the right of the beneficiary to receive benefits;

(c) Submit to us, upon our request, a written report accounting for the benefits received;

(d) Notify us of any change in his or her circumstances that would affect performance of the payee responsibilities; and

(e) In cases in which the beneficiary is an individual under age 18 (including cases in which the beneficiary is an individual whose low birth weight is a contributing factor material to our determination that the individual is disabled), ensure that the beneficiary is and has been receiving treatment to the extent considered medically necessary and available for the condition that was the basis for providing benefits.

20 CFR §§ 404.2035, 416.635.

SSA's regulations also require representative payees to act in the best interest of the beneficiary by ensuring that the beneficiary's current maintenance is provided for:

Use of benefit payments.

(a) Current Maintenance. We will consider that payments we certify to a representative payee have been used for the use and benefit of the beneficiary if they are used for the beneficiary's current maintenance. Currentmaintenance includes costs incurred in obtaining food, shelter, clothing, medical care and personal comfort items.

20 CFR §§ 404.2040(a), 416.640(a)(emphasis added).

When a beneficiary is institutionalized, SSA's policy is that the representative payee must set aside a minimum of $30 per month ($360 per year) to be used for the beneficiary's personal needs or saved on his behalf. POMS GN 00605.067D.3. Personal needs items include (but are not limited to):

Clothing;

Personal articles such as cosmetics, grooming aids, etc;

Room furnishings such as quilts, pictures, recliner, etc.;

Recreational items such as radios, musical instruments, televisions, bicycles, photo albums, cassette player, etc;

Special medical expenses or equipment (i.e., not supplied by the care facility or by State/Federal programs) such as hearing aids, eyeglasses, special wheelchairs, etc.;

Miscellaneous items such as movies, restaurant meals, candy, magazine subscriptions, etc.

POMS GN 00605.067F.

The representative payee is not permitted to merely hand over the PNA to the beneficiary, though. As set out in 20 C.F.R. § 416.635 above, the representative payee is responsible for using the benefits in a manner and for the purpose that the payee determines to be in the best interest of the beneficiary. The payee is also responsible for accounting for the use of the benefits. Accordingly, the payee must maintain at least some oversight over how the PNA is spent and be able to account to SSA for the use of the PNA.

New York Social Services Law ("NY Soc Serv")§131-o(1) provides that:

1. Each individual receiving family care, residential care or care in a school for the mentally retarded, or enhanced residential care..., and who is receiving benefits under the program of additional state payments pursuant to this chapter while receiving such care, shall be entitled to a monthly personal allowance out of such benefits...

2. The personal allowance. . .shall be made directly available to the individual for his own use in obtaining clothing, personal hygiene items, and other supplies and services for his personal use not otherwise provided by the residential facility.

NY Soc Serv §131-o(2).

As a Level II congregate care facility, Rockaway Manor is subject to the requirements of New York Social Services Law § 131-o.

As discussed above, Rockaway Manor reads § 131-o to require that it distribute the beneficiaries' PNA in one lump sum if so requested. We understand that Rockaway Manor does not exercise any oversight of the use of the benefits that it distributes as a PNA and does not maintain any receipts or information to account for the use of the benefits that it distributes in this manner. Apparently Rockaway Manor reads the language in § 131-0(2) ("The [PNA]...shall be made directly available to the individual for his own use...")to mean that the representative payee can exercise no supervision or control over the PNA. Rockaway Manor's interpretation of § 131-0 clearly conflicts with the representative payee's obligations under SSA's regulations.

We do not believe, however, that the state statute requires a lump sum distribution upon request with no oversight of, or accounting for, the use of the benefits. The purpose of the PNA under § 131-o is to ensure that beneficiaries have some funds to pay for personal needs after paying for the cost of their institutional care. Accordingly, we believe the above-quoted language in § 131-0(2) should not be read to absolutely restrict the payee from exercising any oversight or control over the use of the PNA. Rather, it restricts the PNA from being used to pay for the cost of the beneficiary's institutional care.

We believe Rockaway Manor can comply with both SSA's representative payee requirements and NY Soc. Serv. § 131-0 by overseeing the use of the beneficiaries' PNAs and ensuring that they are used for personal needs or personal comfort items that are in the best interest of the beneficiaries. The organizational payee should not allow the beneficiary to "waste" the funds on expenses that are not in the beneficiary's best interests.

In order to prevent such waste from occurring, the representative payee may require a beneficiary who is requesting a lump sum payment in an amount greater than would be expected for the item he or she is purchasing, to reveal his or her intended use of the funds prior to disbursement. When the representative payee considers the intended use of the PNA to not be in the beneficiary's best interest, the representative payee should not release the funds. This practice will permit the representative payee to maintain oversight over the management of the beneficiary's money and to be able to account for the expenditures in accordance with SSA policy.

If the representative payee insists that the state statute requires a lump sum distribution of the PNA upon request, thereby prohibiting the representative payee from supervising the expenditures and accounting for them, then we believe there would be an effective conflict between federal and state law. Under the Supremacy Clause of the United States Constitution, any state law that would interfere with or is contrary to federal law will not stand. Courts have found implied conflict pre-emption where it is impossible for a private party to comply with both state and federal requirements or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. See Beulah Johnson v. Brian J. Wing, et al., 12 F. Supp. 2d 311, 317 (S.D.N.Y. 1998); see also, Perez v. Campbell, 402 U.S. 637, 651-52 (1971). Rockaway Manor, thus, would have to follow SSA's representative payee requirements.

CONCLUSION

We believe there is no conflict between SSA law and New York Social Services Law § 131-o because we believe a representative payee can comply with its oversight and accounting responsibilities under SSA's regulations without violating the state statute. In the event that the representative payee interprets the state statute to require a lump-sum distribution upon request with no oversight or accounting allowed, the representative payee would violate its federal representative payee obligations. Federal law is supreme to state law where there is a conflict. Accordingly, the representative payee is required to comply with SSA regulations.

/s/
Kristina C~
Assistant Regional Counsel


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/1507210035
PR 07210.035 - New York - 03/26/2009
Batch run: 04/25/2016
Rev:03/26/2009