TN 12 (08-00)
SI 01150.126 Exceptions — Undue Hardship
Section 206 of P.L. 106-169 (Foster Care Independence Act of 1999) provides for an exception to the period of ineligibility if not getting SSI benefits would create undue hardship for the individual. If none of the other exceptions apply, it is necessary to determine whether benefits are payable based on undue hardship before applying the period of ineligibility to the individual.
B. Policy — When undue hardship exists
1. General Rule
For purposes of this provision, undue hardship exists if:
the individual alleges that failure to receive SSI payments would deprive the individual of food or shelter; and
the individual's total available funds (income and liquid resources) do not equal or exceed the full Federal benefit rate (FBR) plus the applicable federally administered State supplement, if any, due for his/her living arrangement for the month that undue hardship is alleged.
2. Loss of Shelter
For purposes of this provision, an individual would be deprived of shelter if:
he/she would be subject to eviction from the current residence if SSI benefits were not received; and
there is no other affordable housing available, or there is no other housing available with necessary modifications for a disabled individual.
3. Couples Cases
When determining total available funds for an eligible couple or an individual with an ineligible spouse, use:
the couple's FBR and the federally administered State supplement (eligible couple rate), if any, due for their living arrangement; and
the total available funds of both spouses.
4. Eligible Child Cases
When determining total available funds for an eligible child, use:
the individual FBR and the federally administered State supplement, if any, due for the child's living arrangement; and
the total available funds of the child including any income and resources deemed from the parents.
NOTE: To determine the FBR and State supplement rates to use, see SI 01150.111D.
C. Policy — When to consider undue hardship
On an initial claim or a posteligibility case, undue hardship always should be considered if the individual has transferred a resource for less than fair market value and none of the other exceptions to the period of ineligibility apply. Before denying a claim or stopping benefits, always consider whether benefits may be payable under the undue hardship exception. Explain to the individual that benefits may be payable based on undue hardship. If the individual alleges undue hardship, make a determination and document the file. If the individual does not allege undue hardship, a determination is not required, but document the file (SI 01150.126E.).
D. Policy — Determining the individual's total available funds
For purposes of determining the individual's total available funds in a month, the following are counted:
All countable and excludable income (except SSI and items that are not income per SI 00815.000 ff.);
The actual value of in-kind support and maintenance (ISM) up to the value of the one-third reduction (VTR) or presumed maximum value (PMV).
NOTE: Receiving ISM is not conclusive evidence that undue hardship does not exist.
All liquid resources (both countable and excludable) as of the first moment of the month being considered except for a designated burial fund (SI 01130.410) or a dedicated account (SI 01130.601). See SI 01110.300 for definition of liquid resources.
SSI benefits retained from a prior month are counted as a resource for purposes of determining an individual's total available funds.
NOTE: The transferred resource is not counted when computing the total available funds.
E. Procedure — Determining undue hardship in initial claims
Use this procedure to develop undue hardship for initial claims.
1. Period to Develop
If a disability determination services (DDS) determination is required, determine that the individual meets or is likely to meet the requirements for SSI based on undue hardship in the month of filing or the following 2 months before sending the case to the DDS (SI 01150.112B.). It is not necessary to fully document your determination of undue hardship before sending a case to the DDS.
If the case is medically allowed, or it does not require a DDS determination (e.g., an aged claim or T2 adoption), fully develop undue hardship for the month of filing through the month the claim is being adjudicated.
Develop undue hardship for the following 6 months if the individual is currently eligible based on undue hardship, and the individual alleges that undue hardship will continue. This determination for future months is done in lieu of contacting the individual every month to evaluate undue hardship.
NOTE: Do not develop undue hardship for the month of transfer because the period of ineligibility always begins the month after the transfer.
2. Obtain Individual's Signed Statement
Using the DPST screen on MSSICS (MSOM MSSICS 022.008 ) or an SSA-795, obtain the individual's signed statement. The statement should cover the month of filing through the month of adjudication and the following 6 months if the individual will continue to be paid SSI based on undue hardship. The statement should include the individual's allegation that:
lack of SSI payments would cause loss of food or shelter; and
the individual expects to be under the total available funds limit for the next 6 months (if the individual will be paid based on undue hardship for future months); and
the individual agrees to report promptly any changes in income and resources; and
the individual understands that he/she may be overpaid if the total available resources exceed the limit for undue hardship for any month.
NOTE: If the individual alleges that other income is expected sooner than 6 months, adjust the tickle date for recontacting the individual based on the month the other income is expected (SI 01150.126F.).
3. Determine Income and Liquid Resources
Verify the individual's income and resources using appropriate documents (e.g., bank statements, master beneficiary record (MBR), award letters).
Determine the individual's total available funds for each month under consideration by adding the total income for the month and total liquid resources for the same month (SI 01150.126D.). Determine resources as of the first moment of the month.
For the future months assume, based on the individual's signed allegation, that income and resources will stay below the limit through the month that SSA will recontact the individual.
4. Compare With Applicable Benefit Rate
Compare the individual's total available funds with the full FBR (FLA/A) plus the federally administered State supplement applicable to the individual's living arrangement for each month under consideration.
Determine that undue hardship does not exist for any month in which the total available funds equal or exceed the applicable benefit rate.
Determine that undue hardship exists for any month in which the total available funds are less than the applicable benefit rate and the individual has alleged that lack of SSI payments would cause loss of food or shelter, and no evidence is uncovered that contradicts that allegation.
5. Document the Undue Hardship Determination
Document the file with your determination of whether the individual qualifies for payments based on undue hardship.
On MSSICS, document the determination by answering the appropriate questions in the Property/Cash Given or Sold (RGIV) page. You may include a statement in a DROC or the File Documentation Notes section of the page, such as “Undue Hardship established for MM/YY through MM/YY.”
On paper-processed cases, document the determination on a Report of Contact. Include a statement such as “Undue Hardship not found for MM/YY through MM/YY.”
If the individual does not allege undue hardship, document that, as appropriate, on the MSSICS DROC or the Property/Cash Given or Sold page, or on a Report of Contact.
Use the EVID screen to record the evidence used to verify the total available funds (e.g., bank statements, evidence verifying monthly income).
See SI 01150.112 or SI 01150.113 for instructions for adjudicating the claim.
NOTE: Undue hardship is a month-by-month determination. Be alert for cases in which undue hardship may exist in some but not all months during the life of the application.
6. Examples of Undue Hardship Determinations
Example 1: Mr. Johnson files for SSI aged benefits on 7/5/00. He lives in his brother's household in a State that does not pay a federally administered State supplement. He transferred a resource on 5/15/00 and the uncompensated value will result in a period of ineligibility of 14 months (6/00-7/01). Mr. Johnson alleges that not getting SSI benefits would cause him undue hardship. Mr. Johnson's SSI application indicates that his only monthly income is ISM valued at $170.66 (the VTR). His only liquid resource is a savings account with a 7/1/00 balance of $1,200. The claims representative (CR) adds Mr. Johnson's income and resources ($170.66 + $1,200 = $1370.66).
Because his total available funds ($1,370.66) exceed the FBR ($512), Mr. Johnson does not meet the undue hardship test for 7/00. The CR inquires about Mr. Johnson's expected expenditures and Mr. Johnson alleges that he is not likely to spend enough of his savings in 7/00-9/00 to be within the limit for undue hardship. Therefore, since Mr. Johnson will not meet the requirements for undue hardship in the filing month or the following 2 months, the CR denies the claim and issues a manual denial notice on 7/12/00.
Example 2: This example uses the same case facts as Example 1. Mr. Johnson returns to the field office on 9/4/00 and files a reconsideration alleging that he has spent $1,000 of his savings in 8/00 to pay bills. The CR documents the spend down per SI 01150.007 and determines that on 9/1/00 Mr. Johnson's bank account balance was $200. For 9/00 his total available funds are $370.66 ($170.66 ISM + $200 savings). His total available funds are less than the FBR ($512).
The CR documents the file with Mr. Johnson's allegation that he will not be able to pay for his food and shelter in 9/00 and in future months without SSI. The CR determines that Mr. Johnson qualifies for benefits based on undue hardship for 9/00, and will continue to be eligible based on undue hardship for at least the next 6 months. On 9/7/00, the CR effectuates payments for Mr. Johnson starting in 10/00 (9/00 is the E02 month). The CR also diaries the case for 6 months to recontact Mr. Johnson to determine if he still qualifies for benefits based on undue hardship.
F. Procedure — Recontacting individual to determine whether undue hardship continues
1. When to Use This Procedure
Use this procedure when you need to develop whether the individual continues to meet the requirements to receive benefits based on undue hardship.
NOTE: Under the transfer of resources provision, an individual can be ineligible for SSI for up to 36 months. But, that individual could be paid SSI benefits for some or all of those 36 months based on undue hardship. To determine whether the individual continues to meet the undue hardship requirements, it will be necessary to recontact the individual at regular intervals. See SI 01150.112D. for instructions for setting a diary to recontact the individual.
2. Period of Ineligibility is 6 Months or Less
If the individual is subject to a period of ineligibility of 6 months or less, and is getting SSI based on undue hardship, recontact the individual in the final month of the period of ineligibility to determine whether he/she was due benefits for each month of the period.
3. Period of Ineligibility is Longer than 6 months
Recontact the individual every 6 months and again in the final month if the individual is subject to a period of ineligibility longer than 6 months and is getting SSI based on undue hardship. At the adjudicator's discretion, for periods of ineligibility of 6 to 12 months, recontact may be scheduled for the halfway point and the final month.
Example: The field office (FO) determines that the individual is subject to an 8-month period of ineligibility due to a resource transfer. The FO further determines that the individual meets the requirements for SSI payments based on undue hardship. The FO diaries the case for 4 months to determine if the undue hardship requirements continue to be met. Then the CR diaries the case for the 8th (final) month of the period.
4. Documenting Whether Undue Hardship Has Continued
When the individual is recontacted:
Obtain the individual's allegation that SSI was needed to prevent the loss of food or shelter for any months not covered by the previous allegation.
Verify the individual's income and resources for any months not previously verified using appropriate documents (e.g., bank statements, MBR, award letters).
Determine whether the total available income and resources in any of the months was over the limit for undue hardship payments. For any month that the individual's total available funds were over the limit, undue hardship does not apply.
If undue hardship continued throughout the period of ineligibility, continue payments and see SI 01150.112D. for instructions for tickling the case for the next update.
If undue hardship did not continue throughout each month, do an input to suspend payments for the months in which undue hardship requirements were not met (SI 01150.112D.) and issue a manual notice (SI 01150.150).
G. Procedure — Determining undue hardship for past months in posteligibility cases
Use this procedure for posteligibility cases when:
the individual transferred a resource for less than fair market value (FMV);
none of the exceptions in SI 01150.121-SI 01150.125 apply;
the period of ineligibility includes past months for which SSI benefits have already been paid.
1. Step One
Assume that the individual needed the SSI payments in order to obtain food and shelter.
Develop for each month of the past period whether the individual was below the total available funds limit for undue hardship (SI 01150.126B.).
Determine that undue hardship existed for each month that the individual was below the limit for total available funds.
If the individual was not below the total available funds limit for each month, go to step 2.
2. Step Two
If the individual does not meet undue hardship for months in the past period under Step 1, it is necessary to take into account the effect that not receiving SSI would have had on the individual. Therefore, for each past month in the ineligibility period, subtract the amount of SSI paid in that month from the liquid resource total before determining whether the total available funds were below the undue hardship limit for that month.
Example: During a redetermination on 7/5/00, it is determined that Mr. Smith transferred a resource that resulted in a period of ineligibility that began in 3/00 and continues through 11/00. It is necessary to establish whether Mr. Smith meets the requirements for undue hardship to determine if he was due the SSI payments for 3/00-6/00.
Mr. Smith provides evidence that he received $300 of Title II benefits each month from 3/00-6/00. He had no other income in these months except his SSI checks of $232. The CR determines that Mr. Smith's liquid resources were $600 on 3/1/00, $350 on 4/1/00, $300 on 5/1/00 and 6/1/00, and $500 for 7/1/00. Mr. Smith lives in a State that does not pay a federally administered State supplement.
For 3/00, Mr. Smith's other income (Title II of $300) plus his liquid resources ($600) = $900 which exceeds the undue hardship limit ($512 in this case). The CR considers the effect that not getting SSI would have by subtracting $232 from $900 which results in total available funds of $668 for 3/00. Since $668 still exceeds the undue hardship limit of $512, Mr. Smith is ineligible for 3/00 (an overpayment).
For 4/00, Mr. Smith's other income ($300) plus his liquid resource balance ($350) = $650. From $650 the CR subtracts the $232 SSI payment which results in total available funds of $418. This balance is below the undue hardship limit of $512. Therefore, Mr. Smith is eligible for 4/00 based on undue hardship.
For 5/00 and 6/00, Mr. Smith continues to meet the undue hardship requirement. The CR adds the other income ($300) plus the liquid resource balance ($300) and subtracts the $232 SSI payment which results in a balance of $368 for both 5/00 and 6/00. Thus, Mr. Smith is eligible for both months.
For 7/00 (the current month), Mr. Smith does not meet the undue hardship test. His other income ($300) plus his bank balance ($500) minus the $232 SSI payment leaves a balance of $568 which exceeds the limit for undue hardship.
What is not income, SI 00815.001 ff.
Liquid resources, SI 01110.300
Burial funds, SI 01130.410
Dedicated account, SI 01130.601
Spend down of cash, SI 01150.007
Determining the period of ineligibility, SI 01150.111
MSSICS DPST screen, MSOM MSSICS 022.008