SSR 82-23: SECTIONS 1602 and 1612(a) (42 U.S.C. 1381a and 1382a(a)) SUPPLEMENTAL SECURITY INCOME -- UNEARNED INCOME -- DISABILITY BENEFITS
20 CFR 416.1102 and 416.1121(a)
- The claimant applied for Supplemental Security Income (SSI) benefits as a disabled individual. His disability resulted form an accident, which occurred on June 19, 1980. The claimant has received $95.00 per week in disability benefits from an insurance company since the date of the accident. When the Social Security Administration (SSA) determined that the claimant was ineligible for SSI benefits because his income exceeded the statutory limit, he appealed. The claimant alleged that he had filed a third party action against the person he claims was responsible for his accident. If the claimant is successful in his lawsuit, the insurance company, which has filed a lien under applicable State law against the proceeds of any recovery from a third party by the claimant, will be entitled to recover the full amount of the disability benefits that it has paid to the claimant. Because of the lien, the claimant contended that the weekly payments made to him by the insurance company constituted a loan and thus should not be considered income for SSI benefit purposes. Held, the payments made to the claimant by the insurance company did not constitute a loan because, under section 1612(a)(2)(B) of the Social Security Act (the Act) and 20 CFR 416.1121(a), those payments were considered unearned income. Consequently, the claimant was ineligible for SSI benefits because his income exceeded the statutory limit.
The general issue is whether the claimant was eligible for SSI benefits as defined in the Act. The specific issue is whether the disability payments made by an insurance company can be considered a loan or must be counted as unearned income under title XVI of the Act.
The claimant, who became disabled on June 19, 1980, as a result of an accident, applied for and was determined to be entitled to a period of disability and Disability Insurance Benefits. He was also found to be disabled for SSI purposes.
The claimant has been receiving $95.00 per week in disability benefits from an insurance company since his accident. The insurance company has filed a lien, pursuant to Section 277 of the New York State Insurance law, against the proceeds of any recovery from a third party by the claimant. The claimant and his attorney have stipulated that they have filed a third party action against the person they claim was responsible for the claimant's accident. In the event that the claimant is successful in this lawsuit, the insurance company will be entitled to recover the full amount of the disability benefits that is has paid to the claimant.
The claimant and his attorney both contended that the weekly disability benefits paid to the claimant constituted a loan because of the lien. If the claimant is awarded money damages, the insurance company will be paid the amount of its lien. Therefore, it is the claimant's contention that since his disability benefits are subject to repayment if his lawsuit is successful those benefits should not be considered income and thus he should be eligible for SSI benefits.
Section 1602 of the Act provides that each aged, blind, or disabled individual who is determined to be eligible on the basis of income and resources shall be considered an eligible individual for SSI benefits under title XVI of the Act.
Section 1612(a) of the Act provides that income means both earned income and unearned income.
Section 1612(a)(2)(B) of the Act provides that unearned income includes any payments received as an annuity, pension, retirement, or disability benefit, including veterans' compensation and pensions, workmen's compensation payments, old-age, survivors, and disability insurance benefits, railroad retirement annuities and pension, and unemployment insurance benefits.
Section 416.1102 of Regulations No. 16 provides that income is anything a person receives in cash or in kind that a person can use to meet his or her needs for food, clothing, or shelter. In-kind income is not cash, but is actually food, clothing, or shelter, or something a person can use to get one of these.
Section 416.1121(a) of Regulations No. 16 provides that some types of unearned income are annuities, pensions, and other periodic payments. This unearned income is usually related to prior work or service. It includes, for example, private pensions, Social Security benefits, disability benefits, veterans benefits, worker's compensation, railroad retirement annuities, and unemployment insurance benefits.
The law and regulations are quire clear and precise in providing that any disability benefits paid to a claimant are considered unearned income, and if total countable income (including disability benefits) exceeds the amount stated in the law, the claimant is ineligible for SSI benefits. Therefore, SSA concluded that the payments made by the insurance company to the claimant did not constitute a loan, but were disability benefits, even though the insurance carrier has a lien against the proceeds of any recovery from a third party by the claimant. Consequently, the disability benefits that were paid to the claimant must be counted as unearned income for SSI benefit purposes. Accordingly, SSA concluded that the claimant was not eligible for SSI benefits because his income exceeded the statutory limit.