Social Security Benefits and Related Health Benefits: The Basics for Family Law Practitioners

Monday, July 16, 2012

It’s important for family law practitioners to have a basic working knowledge of disability benefits from Social Security to avoid unintended effects on those benefits and the related health benefits.  This article is too short to include all the details of these highly regulated programs and the rules change from time to time.  The purpose of this article is to provide information on the framework of these benefits to enable practitioners to spot potential issues for research and inquiry.

The first step is to ascertain whether the client or any family member receives benefits from Social Security.  The second step is to determine which benefit the individual receives.  This is important because the effect of alimony, child support, or property partition will vary greatly depending on the type of benefit from Social Security. 

Social Security Insurance Benefits   

The Social Security Administration (SSA) is a federal agency that administers two different cash benefit programs for elders and persons with disabilities: the Social Security Insurance benefits; and the Supplemental Security Income benefits.  The Social Security Insurance program is the older of the two programs, enacted under Title II of the Social Security Act in the 1930s.  These “Title II” programs pay monthly cash benefits to insured adult workers who have reached retirement age or who meet the SSA’s disability or blindness standard. The Social Security Disability Insurance (SSDI) benefit program is the Title II program available to workers under Full Retirement Age who meet the SSA’s disability or blindness standard. It provides cash benefits for disabled and blind workers who have a recent employment history.  The Retirement Insurance Benefit (RIB) program is the Title II program available to retired workers.

Title II benefits are not needs-based and have no income or asset test for eligibility.  The wage earner must have earned “insured status” in order to be eligible for an SSDI or RBI benefit.   Insured status is earned by working in “covered” work and earning “quarters of coverage” (QCs).  The monthly cash benefit paid by the SSDI program is essentially based on the amount of time worked and the amount of earnings in “covered” work.   The worker’s base benefit is called the “primary insurance amount” (PIA).  Each January, the SSA determines whether a cost-of-living increase should be applied to current Title II benefits.  To qualify for SSDI, an individual must meet the SSA’s disability or blindness standard and must be “currently insured,” i.e., must have earned a certain number of quarters of coverage in proximity to the date of onset (generally twenty out of the last forty calendar quarters). 

Certain family members may be eligible for dependents’ or survivors’ benefits on the wage record of an insured wage earner. The wage earner must be eligible for an SSDI or RIB benefit, or, the insured wage earner must be deceased for the dependent to receive a benefit.  The dependent/survivor must file an application for the dependents’ or survivors’ benefit. Generally, dependents’/survivors’ benefits based on disability can be paid retroactively for up to one year, while other dependents’/survivors’ benefits vary in potential retroactivity from up to nine months to none.   Among eligible dependents and survivors are the following:  parents caring for dependent children (under age 16) of the wage earner;   certain spouses, divorced spouses, widows, or widowers;   disabled adult children of a wage earner who are age eighteen or older and who have met the adult disability standard since prior to age twenty-two;  unmarried dependent minor children of the wage earner.  

Receipt of dependents’ benefits does not affect the benefit amount of the wage earner. The SSA determines a “family maximum” to cap the total benefit amount payable to a wage earner and the wage earner’s dependents.   Dependents’ benefits are paid out of the amount remaining after payment of the wager earner’s monthly benefit.  If that amount is not sufficient to pay all dependents their full benefits, the SSA will reduce each dependent’s benefit pro rata.

Under Massachusetts law, receipt of Title II dependent’s benefits on the obligor’s wage record should result in the obligor receiving a credit against his/her child support obligation.   Rosenberg held that such a credit is reasonable because the dependent’s benefits derive from the wage earning record of the now-disabled obligor and that the same reasoning applies whether the obligor’s benefit is SSDI or RIB.  

Summary: Title II Benefits

Because Title II benefits are insurance and not needs-based benefits, receipt of alimony or child support does not affect income eligibility for these benefits – whether the benefit is an adult’s SSDI or RIB or a dependent’s benefit.   Neither is partition of marital property a concern as there is no asset limit for eligibility for Title II benefits.  In addition, obligors who are receiving a Title II insurance benefit (e.g., SSDI or RIB) may be eligible for a credit on their child support amounts if their children are receiving dependents’ benefits on their wage records.

Medicare

Medicare is a national health insurance program administered by the federal government for people with disabilities and seniors.  The Medicare program was enacted in 1965 as Title XVIII of the Social Security Act.  Individuals who receive an SSDI or a dependent’s or survivor’s benefit based on disability are eligible for Medicare. However, eligibility does not begin until the individual has received the Title II benefit for 24 months.  Retroactive periods of eligibility count toward the 24-month period.   No application is necessary because eligibility occurs automatically in month 25 of eligibility. Individuals age 65 and older  and individuals with End Stage Renal Disease (ESRD)  are also eligible for Medicare and may need to file an application.

Medicare eligibility does not have income limits or resource limits.  Medicare is similar to Title II benefits in that it is not a needs-based program.  There are no income or asset tests for eligibility.   The Medicare benefit is for the individual.  Medicare does not have family coverage.  Rather each Medicare beneficiary must meet the age, receipt of Title II disability benefits or ESRD qualifying criteria.

Medicare Part A covers hospital bills, nursing facilities, hospice care and home health services.   For most beneficiaries, Part A is premium free. Individuals receiving a Title II disability benefit or retirement benefit do not have to pay for Part A and are required to accept this coverage. Seniors with insufficient quarters of coverage are charged a premium for Part A and may choose whether or not to purchase it.

Medicare Part B covers most outpatient care.  Medicare B charges a monthly premium which is $99.90 in 2012. Enrollment in Medicare B is optional.   Individuals with incomes above $85,000 and couples with incomes above $170,000 pay a higher premium.   Premium penalties are charged to individuals who declined Part B when they became eligible and were not covered by a group insurance plan based on current employment. 

Medicare Part C provides coverage through a private managed care plan.  These plans, known as Medicare Advantage plans, provide the coverage of Medicare A and Medicare B.  An individual must have both Medicare A and Medicare B to enroll in Medicare C.  Enrollment is voluntary and there may be an additional monthly premium.

Medicare Part D provides prescription drug coverage.  Medicare Part D went into effect on January 1, 2006.  An individual must have either Medicare A or Medicare B to enroll in a Medicare Part D plan.  The Part D benefit is provided through private insurance companies.  Part D charges monthly premiums which vary from plan to plan.  Delayed enrollment can result in a higher monthly premium, unless the individual had creditable coverage.

Enrollment in Medicare is limited to certain periods.  There is an initial enrollment period when someone first becomes eligible, an annual open enrollment period and special enrollment periods with differing criteria for Part B and Part D.   Individuals who miss their initial enrollment period and are not eligible for a special enrollment period, will have to wait for the annual enrollment period to join Medicare.

Medicare’s coordination of benefit rules decide which insurer pays first when there is more than one payer.  Determination of the primary payer depends on the reason for Medicare eligibility, the nature of the other insurance and sometimes on the size of the employer who is providing the insurance.

Summary:  Medicare

Like Title II benefits, eligibility for Medicare benefits is not affected by receipt of alimony or child support or by a property partition.  If there is an order for an obligor to provide health insurance to a Medicare beneficiary, it is advisable to consider Medicare’s enrollment rules and coordination of benefit rules to understand the effect of this insurance on the Medicare benefit.

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Nancy Lorenz is a senior attorney in the Elder Health and Disability Unit at Greater Boston Legal Services.  She is a graduate of Cornell University and Northeastern University School of Law.  Ms. Lorenz practiced family law for several years.  Since 1984 she has concentrated her practice in the areas of access to health care and disability benefits for low income clients.  She has significant litigation experience in Medicaid, Medicare, and Social Security matters.  She also frequently trains both advocates and consumers in these areas.

Linda L. Landry has 30 years of legal experience with Social Security benefits.  The first 10 years were spent in a Massachusetts legal services program.  For the past 20 years she has worked at the Disability Law Center (DLC) in Boston. At the DLC she engages in impact and policy work on a variety of matters,  while providing backup, support, technical assistance and co-counseling to a statewide project of attorneys and advocates who represent individual Social Security and SSI disability benefits claimants.  She writes and presents on a variety topics for numerous local and national audiences.  She received the NOSSCR Distinguished Service Award in 2006 and the Massachusetts Bar Association Equal Access to Justice Award in 2011.