Other Influences on Personal Allowance

Social Security Payments and Overpayments

Retroactive Payments
A person may receive a lump sum from SSA for benefits that the person was eligible for in prior months. This is called a retroactive Social Security or SSI benefit due to an underpayment. Sometimes SSA will request a repayment because the person received too much money, called an overpayment. Addressing overpayments and underpayments is complicated by SSA and Medicaid rules, as well as OPWDD policies. Financial Benefits & Entitlements Assistance & Management offers a series of courses entitled “Benefits and Entitlements,” which briefly covers lump sum payments, overpayments and underpayments. Training information and registration is available through the Statewide Learning Management System at https://nyslearn.ny.gov 

In the month that a retroactive benefit is received, how it is handled depends on what type of benefit it is. Social Security retroactive benefits are countable income during the month of receipt. SSI retroactive benefits are not counted as income during the month of receipt.

For Social Security retroactive benefits, the agency must provide the correct personal allowance for the month and bill the appropriate rent. If the person owed their residential provider agency money from previous months and the retroactive payment was due to administrative delay, the agency may request prior approval from SSA to repay the past-due debt. Retroactive payments due to administrative delay may be used to repay the past-due debt without prior approval from SSA if the individual lives in a Title XIX facility (ICF, DC or SRU). The retroactive payment must be reported to the person’s Medicaid district, which will determine the Net Available Monthly Income (NAMI) for the month it is received. Mental Hygiene Law establishes special rules for people who live in State-Operated residential settings. The local Revenue Support Field Office can provide advice in these instances.    

For SSI retroactive payments, the agency can only bill the lump sum if they recently applied for SSI or a change in representative payee and could not bill for rent until the SSI payments started (administrative delay). In this case, the agency can request prior approval from SSA to bill the standard rent amount for each month from the date of the SSI eligibility or admission into the residence, whichever is later. The agency must make sure that the individual’s personal allowance for that period is set aside before any billing can occur. 

Retroactive Social Security and SSI benefits are excluded by Medicaid and SSI as a countable resource for 9 months after the month in which the lump sum is received. The person can spend or protect the retroactive payment during this period. If the sum is too large to spend during the 9-month exemption period, OPWDD encourages the use of a First Party Payback Trust with provisions for the person's supplemental needs (Supplemental Needs Trust or SNT). This legal device will protect the resource while allowing the person to have access to the money for their personal wants during their lifetime. More about trusts and burial agreements can be found in the Benefit Development Resource Guide.  After the 9-month exemption period ends, if the remaining funds from the lump sum have not been protected in an exempt resource, they become a countable resource. Like any other resource, it must be reported to SSI and Medicaid if it puts the person over the resource limit for either program.

SSI Overpayments
Sometimes, a person is paid more SSI than they are entitled to receive. This is called an overpayment. Saved personal allowance funds can be used to repay an SSI overpayment. The person must receive their full monthly personal allowance amount for the month before the repayment is made and the repayment must not affect the person’s ability to meet their current or foreseeable future personal wants. If the person or their Representative Payee (RP) believes they were not overpaid, an appeal should be filed with the Social Security office. Social Security rules require that the person who is repaying the funds be the person who is responsible for the overpayment; therefore, if a previous RP was responsible for the overpayment or Social Security made an error, you should file an appeal with the Social Security office. If the person or RP cannot afford to repay the overpayment, they can request a waiver of the overpayment. It is suggested that you request the waiver before using conserved funds to repay. 

An individual who is overpaid SSI due to unreported wages can repay the SSI overpayment from conserved wages, but cannot be billed rent from the conserved wages once the SSI is suspended.

Earned Income

The residential agency director may sometimes receive wages on behalf of individuals who are employed. If the person receives their wages directly, regulations require the agency to help the person manage their money when they are incapable of handling their own funds. The agency should help them obtain wages, deposit funds into their accounts, and pay rent. The agency should work with the person to teach them money handling and management skills, including the responsibility to pay debts. The agency cannot force the individual to take specific action with their wages, such as requiring direct deposit or turning over their wages to residential staff. There should be documentation in the file that money management has been discussed. 

If the residential agency is the representative payee, it must report wages to the Social Security Administration for SSI beneficiaries and to the Medicaid district for Social Security beneficiaries. If the person does not have a representative payee, they must report their wages. The person may need assistance from the residential staff or the care manager to perform the required reporting.  

If the person does not want to share the amount of their earnings with the agency, this can create problems. The agency cannot report to benefit-paying agencies as required, and may not be able to properly calculate the person’s personal allowance. If this occurs, the agency should try to obtain the information directly from the employer; authorization to release the information to the agency may be needed to do this. Document any problems and note that money management was discussed. 

For individuals receiving SSI, the amount of their SSI benefit may be reduced based on the amount of their monthly countable wages. Personal allowance can come from both unearned and earned income. The representative payee must document the sources of a person’s income each month, including calculation of the earned income exclusion, and proof that they received the full statutory personal allowance amount from their countable income. Refer to the Earned Income Exclusion and Examples of Calculations sections for more information.

Rent and Provider Payments
The portion of wages that is countable may be used to pay an individual’s rent or the family care provider payment after the personal allowance amount is given to or set aside for the person. 

Documentation of Earned Income
The residential agency must document income received by the people they serve.  The documentation for earned income the agency is holding for a person may be in the form of a deposit in the personal account or residential ledger. 

Agency Responsibilities

It is not always clear what is covered by the agency rate, what the agency is required to pay for, and what can be paid for with personal allowance. Each agency must have a list of the services and items covered in its rate pursuant to NYCRR 635.9 Provision of Required Supplies and Services. It is a Class A misdemeanor to use personal allowance to pay for services or items the provider is supposed to pay for or supply. One area that leads to many questions is medical expenses. 

Medical Expenses
ICFs, DC’s, SRU’s, IRAs, CRs, OPWDD certified schools for the developmentally disabled, specialty hospitals and sponsoring agencies of family care homes are responsible for all necessary medical and dental expenses not covered by Medicaid, Medicare, or other health insurance. When the agency is also the representative payee, State regulations prohibit using personal allowance for medical expenses, even with the person’s permission, unless they meet the exceptions for excess resources or a Medicaid spend-down. This protects the person’s resources from abuse.

Although personal allowance expenditures should reflect the person’s preferences, that rule is secondary if a specific prohibition appears elsewhere in the regulations. Regulations apply when the agency is the payee and when they are managing any amount of money received from the payee or person they serve. These regulations do not apply to outside payees (e.g., a relative) or to people who receive their benefits directly. 

The agency is responsible for paying co-pays and deductibles, which are medical expenses. This includes those required by private health insurance plans, even if the person pays the premium from their wages. If a person chooses, on their own, to go to a provider that does not accept Medicaid and makes the arrangements independent of agency staff, the individual’s personal funds may be used to pay for the co-pays and deductibles. If a parent or advocate chooses to take an individual to a non-Medicaid participating provider, and the agency has not provided prior agreement, the person who made the decision is responsible for paying them. The agency may choose to pay these costs, but it is not a requirement. It is important that agency staff be involved in making decisions about medical providers and that families understand the impact of making decisions without prior agreement.

The agency is responsible for all medically necessary dental procedures. If an individual chooses to purchase items that are purely cosmetic, they may use personal allowance. 

A dental bridge may be considered purely cosmetic by Medicaid. The agency must document the denial and appeal the decision before using personal allowance to purchase the bridge. If the appeal upholds the decision that the procedure is purely for cosmetic purposes, this should be documented so that it is clear the procedure is not considered medically necessary. Under these circumstances, if the person’s current and foreseeable wants are met, the individual may choose to use personal allowance to purchase the item. 

Example 1 - Medical Expenses
Jennifer needs eyeglasses. Eyeglasses are typically paid for by Medicaid, Medicare, or other health insurance. If Medicaid, Medicare, or other health insurance does not cover the cost of the eyeglasses, the agency is responsible to pay because they are medically necessary. Personal allowance cannot be used to pay for medically necessary items or services. 

Jennifer receives a pair of eyeglasses paid for by Medicaid but does not like the style. She wants to purchase a second pair of designer frame eyeglasses, because she prefers how they look. Since Jennifer chooses to have an additional pair of glasses, her personal allowance funds may be used to pay for the additional pair since it is not medically necessary to have a second pair of glasses with the same prescription. Using personal allowance funds for a second pair of eyeglasses that are not medically necessary must be supported by the person’s PEP and there must be documentation that it is the person’s choice to purchase the second pair. However, if she requires separate glasses for reading and distance, they are medically necessary and personal allowance cannot be used for the additional pair with a different prescription. If health insurance does not cover the medically necessary second pair, the agency must pay for them. 

Example 2 - Medical Expenses
Jeff would like to have some of the hair on his body removed. He does not like the idea of waxing as he heard it is uncomfortable. His mom was pleased with her dermatologist and results recently and has found that laser hair removal is more permanent. Since hair removal is cosmetic and Jeff is choosing it, he may use his personal allowance to pay for the laser appointments and treatments. 

Medical Expenses Exceptions

If a person is ineligible for Medicaid only because their countable resources exceed the Medicaid level, the excess amount of the person’s saved personal allowance funds may be spent on medical bills. Once the person’s countable resources have decreased to the Medicaid resource level, spending of the person’s funds on medical expenses must end. A Medicaid application should be filed as soon as the person is under the Medicaid resource level. Keep receipts and documentation for medical expenses, as Medicaid will conduct a resource review before granting eligibility for the person. Contact the local Medicaid district for further information about “resource spenddowns”. 

Excess countable income may be used for medical bills in certain circumstances (e.g., Medicaid spenddown). A person residing in a CR or IRA may use excess countable income to pay their Medicaid spenddown or to pay for medical expenses. Once the person has met the Medicaid spenddown, Medicaid should pay for all other medical expenses for the month. If the person receives a medical service that is not reimbursable by Medicaid and has already met the Medicaid spenddown, the residential agency is responsible for paying for the service. Detailed information regarding the Medicaid spenddown program is provided in OPWDD’s “Benefits and Entitlements” training course. Training information and registration is available through the Statewide Learning Management System at https://nyslearn.ny.gov/.