The following terms are used in this subchapter:

1. a. 

   Beneficiary—this term is used generically in this subchapter to refer to both Title II beneficiaries and Title XVI recipients. Title II and Title XVI (or Supplemental Security Income [SSI]) are specified when an instruction applies to only one type of benefit.

2. b. 

   Current Maintenance—customary institutional charges, expenditures for items that will aid in the beneficiary's recovery or release from the institution, and items that will improve the beneficiary's condition while in the institution. This definition is used in this subchapter to refer to institutionalized beneficiaries only.

3. c. 

   Personal Needs Allowance (PNA)—money that is set aside each month for the individual needs of institutionalized beneficiaries. While this concept originated as a term used for residents of Medicaid facilities, the Social Security Administration (SSA) has extended the term to include any resident of any type of institution, regardless of Medicaid status. The PNA may not be used for customary institutional charges.

4. d. 

   Personal Needs Expenditures —items purchased for the beneficiary using the PNA.

The reduced rate payable for Title XVI beneficiaries residing in a Medicaid institution must be used only as the beneficiary's PNA. SSA has extended the policy of using this Title XVI reduced rate amount only for personal needs to beneficiaries residing in any type of facility, e.g., hospitals, nursing homes, group homes, etc. Payees should set aside a minimum of $30 per month to spend on personal needs expenditures. If a payee does not manage funds in the best interests of the beneficiary, SSA must consider suitability.

The PNA may not be used for customary institutional charges or past due debt incurred at the facility. Payees for Title II beneficiaries covered by Medicaid should monitor conserved funds balances, so they do not exceed the Medicaid resource limits.

If a beneficiary is receiving care in a State, Federal, or private institution not receiving Medicaid funds on behalf of the beneficiary, the payee should give the highest priority to the beneficiary's current maintenance costs. After paying the current maintenance costs and allocating the PNA, payees should conserve or invest any remaining benefits. Proper use can include temporarily maintaining the beneficiary's residence outside the institution.

Payees for SSI beneficiaries should not limit conserved funds balances to any ceiling lower than the SSI resource limit. This is because payees should not restrict themselves from making substantial personal needs expenditures or from saving transitional funds to use in the event of a beneficiary's discharge or transfer. At the same time, payees should use funds in a timely fashion and monitor high balances to ensure conserved funds never exceed the SSI resource limit, which could result in an overpayment or loss of benefits.

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  For information on conserved funds, see GN 00603.001.

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  For more information on SSI resource limits and how they relate to eligibility, see SI 01110.003 A.2.

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  For information on the distinction between assets and resources, see SI 01110.100.

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  For a listing of exclusions see SI 01110.210.

NOTE: A qualified organizational payee (i.e., fee-for-service) cannot collect a fee from an institutionalized beneficiary’s PNA or conserved funds, see GN 00506.230A.2.

When a beneficiary resides in an institution, the payee should allot a reasonable share of benefits for the institution's customary charges. The payee should consider an institution's customary charges and the beneficiary's other current needs. The payee should allocate at least $30 per month for the PNA. If a payee does not manage funds in the best interests of the beneficiary, SSA must consider suitability.

A payee should not pay an amount for customary charges in excess of the legal maximum charges established by individual State law. The Regional Office (RO) should discuss questionable charges with State administrators who have oversight of institutions. Generally, the legal maximum charge relates to the cost of operation. Do not assume there is one rate for all beneficiaries. Rates can vary, depending on the State:

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  Charges may vary between beneficiaries receiving or not receiving some form of public assistance.

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  Some States set the charges for beneficiaries in institutions serving individuals with intellectual disorders considerably lower than for beneficiaries in state mental hospitals serving individuals with mental disorders.

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  Some States do not charge for care of certain types of beneficiaries, for example, children with intellectual disorders.

States often adjust rates for beneficiaries who do not have sufficient income or resources to cover the charges set by State law. States often consider more than one factor to arrive at an adjusted rate. The beneficiary's income is always an important consideration. Methods used to arrive at an adjusted rate can vary, depending on the State:

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  In some States, the institution makes an agreement with the beneficiary, or the beneficiary's representative, stating the amount the beneficiary will pay.

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  In some States, the State determines the charge by a rate schedule based on individual or family income.

The difference between the legal maximum charge and the amount institutions collect varies, depending on the State:

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  The beneficiary pays the adjusted rate, and the State waives, or "forgives" immediately, the difference between that amount and the legal maximum charge. The beneficiary is not legally liable beyond the amount agreed upon;

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  The beneficiary is liable for the full amount of the legal maximum charge indefinitely, as an unpaid debt owed the State. In such a State, if a beneficiary ever inherits money or has some windfall, State law obligates the beneficiary to pay the unpaid debt; or

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  The State removes the beneficiary's legal liability for the remaining charges after a certain number of years.

Institutions may set a standard allocation for each beneficiary's current needs. However, allocations may vary, depending on the institution:

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  Institutions that do not have a standard allocation usually have a maximum amount that may be spent during an established period; for example, weekly, monthly, etc.

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  In some institutions where there is no standard allocation, the social service staff in combination with the medical staff determine the level of spending for each beneficiary.

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  Some institutions may use a fixed procedure or individualized spending plan, which permits beneficiary withdrawals or expenditures as long as funds are available.

Payees should not use benefits to purchase items normally provided by the facility or covered under a State or Federal program. If the payee used SSA funds to purchase these items, the payee must apply for funding from the programs that normally provide such items and reimburse the beneficiary’s account upon receipt of the funds and provide proof to SSA.

If the care-providing facility complains that the payee is not contributing toward the cost of care, contact the payee for an explanation. If the payee's handling of charges is improper use of benefits or adversely affects the beneficiary, consider a change of payee action and evaluate the payee's continued suitability. Develop fully and follow the rules for payee selection (see GN 00504.100).

SSA encourages payees to use good judgment in determining appropriate personal needs expenditures. All purchases should reflect a personal evaluation of the beneficiary's situation and needs and should help the beneficiary keep contact with the outside world and preserve their sense of individuality. For residents who are unable to make purchases on their own behalf or to verbally express their needs, the institutional staff should evaluate and recommend appropriate personal needs expenditures. Beneficiaries can accrue the PNA over multiple months to make an expenditure.

Some examples of acceptable personal needs expenditures are:

When there are unpaid charges at the time of discharge, State law or regulations may require certain procedures for recovering funds. Procedures may vary according to the type of account. For more information, see GN 00602.030.

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  A Title XIX institution can reimburse itself from past-due benefits, only after ensuring that two months of $30 PNA ($60 total) are available.

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  Other institutions may have the option to charge some amount from conserved funds and past-due benefits, with SSA approval, if enough conserved funds are available for the beneficiary's current and foreseeable needs. Non-Medicaid institutions must provide the appropriate evidence to SSA. SSA should consider State law, regulations, and policy governing disposition of funds to ascertain whether States charged appropriately.

After a beneficiary leaves a State institution, the institution sometimes continues to serve for a period as representative payee. For instance, an institution may continue to serve as payee during a trial period, while evaluating the success of a discharge. If the beneficiary is living more independently, SSA should re-evaluate capability, per GN 00502.055. Depending on the payee and circumstances, the payee may:

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  Mail a fixed amount directly to the beneficiary; or

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  Forward the entire Social Security check to the custodian, with the understanding that a specified amount is for care and maintenance. The payee should ensure that the custodian allocates at least $30 for the beneficiary’s PNA.

Upon discharge, the payee may collect funds to cover charges for the last month the beneficiary resided in the institution. The payee cannot continue to use current benefits to recover unpaid charges.