by: Thomas D. Begley, Jr.

The Social Security Administration has made a number of clarifications to the POMS effective in 2010.  These include the following:


1.1.      Designated Beneficiary

The designated beneficiary is the individual who is to receive the benefit of the funds in the account.  The designated beneficiary can be changed to a member of the beneficiary’s family.  SSA has clarified that funds in a Coverdell ESA are excluded from the resources of the designated beneficiary of the account.[1]

1.2.      Contributor

The contributor is any individual who contributes to the Coverdell ESA.  Any donations to the Coverdell ESA are no longer the resources of the contributor beginning with the month after the month the cash is transferred into the account by a contributor who is not the designated beneficiary.[2]

1.3.      Withdrawals

So long as the distribution to the designated beneficiary is used for educational expenses of the designated beneficiary, the distribution is excluded as income in the month of receipt.  If the distribution is retained into the month following the month of receipt, it is an excluded resource of the designated beneficiary for 9 months beginning with the month after the month of receipt.  Any funds retained after the 9-month exclusion period are countable resources of the designated beneficiary beginning with the month following the end of the 9-month exclusion period.

If the designated beneficiary spends any portion of the Coverdell ESA for purposes other than education or no longer intends to use the funds for education, the non-educational portion of the funds are income at the earlier of the month in which the funds are spent or the month in which the individual no longer intends to use the fund for educational purposes.[3]


1.4.      Sole Contributor is Designated Beneficiary

When a designated beneficiary receives a distribution from a Coverdell ESA in which he or she is the sole contributor, the distribution is a conversion of a resource and if it is retained into the month following the month of receipt, it is a countable resource.[4]

1.5.      Rollover

If funds in a Coverdell ESA are rolled over to a member of the designated beneficiary’s family, the rollover constitutes a transfer of resources for SSI purposes.[5]

1.6.      Exclusion of Dividends and Interest

Dividends and interest earned on a Coverdell ESA are returns on capital investments and are excludable from income for SSI purposes.[6]


2.1.      Excess Non-Liquid Resources

People with excess non-liquid resources are ineligible for SSI, even if they meet all other eligibility requirements.  However, SSI can make payments while the individual attempts to dispose of the property.

2.2.      Conditional Benefits Rule

Such payments are known as conditional benefits.[7] The countable liquid resources must not exceed the statutory limits (i.e., $2,000 for an individual or $3,000 for a couple) and the individual or couple must agree, in writing, to sell the excess liquid resources at their current market value within a specified period and use the proceeds of sale to refund overpayments of conditional benefits.[8]

2.3. Hardship

Excess real estate is an excluded resource not requiring disposition, if the property is jointly-owned and the sale would cause undue hardship due to loss of housing to the other owner.[9]

2.4. Periods for Disposition

The basic periods for the disposal of excess non-liquid resources are:[10]

  • 9 months for real property
  • 3 months for personal property

One 3-month extension is permitted for disposition of personal property for good cause.[11]

2.5. Reasonable Efforts

The individual must make reasonable efforts to sell excess non-liquid property by taking all necessary steps to sell it through media serving the geographic area in which the person lives or, in the case of real property, where the property is located.[12] In the case of real estate, within 30 days of signing a conditional benefits agreement, the owner must list the property with an agent or begin to advertise in at least one of the appropriate media; place a “for sale” sign on the property; begin to conduct open houses or otherwise show the property.[13] The owner must accept a reasonable offer.  SSA assumes that an offer to buy real property is reasonable if it is at least two-thirds of the estimated CMV, unless the owner proves otherwise.[14]



SSA has implemented a change in the processing of fugitive felon cases as a result of litigation.  To be barred from serving as payee, the warrant must be issued for one of the following offenses:  Escape from Custody, Flight to Avoid prosecution, and Flight-Escape.

3.1. Persons Barred from Serving as Representative Payee


  • Felons
  • Representatives or health care providers
  • Individuals having outstanding felony warrant issued for one of the following three offenses:
  1. Escape from Custody
  2. Flight to Avoid prosecution
  3. Flight-Escape

If the warrant has been satisfied, the prohibition against serving as payee is lifted.[15]


3.2. Persons Who Should Not be Appointed as Representative Payees

Other persons who are poor choices and should not be appointed as payee, unless there is no other suitable alternative, include:

  • Convicted felons
  • Applicants found guilty of representative payee-related fraud
  • Applicants with prior history of misuse
  • Persons who were imprisoned for more than one year
  • Creditors of the beneficiary

3.3. Unsatisfied Felony Warrants

SSA may consider an applicant’s suitability to serve as representative payee, if the individual has an unsatisfied felony warrant, but only if the warrant is issued for one of the following three offenses:  Escape from Custody, Flight to Avoid prosecution, and Flight-Escape.[16]


SSA has added a new section to explain what Residual Functional Capacity (RFC) is and the role of sustained ability in the definition.  The section clearly outlines the proper procedures for a completed RFC assessment based on an inability to sustain a 40-hours work week.  Ordinarily, RFC is an individual’s maximum remaining ability to do sustained work activities:

  • In an ordinary work setting,
  • Or a regular and continuing basis, and
  • For eight hours a day, five days a week or an equivalent work schedule.

However, if a claimant is unable to satisfy a 40-hour work week because of a severe medically-determinable impairment (MDI), the adjudicator or medical consultant must discuss this inability in the RFC.[17]


Payments received under the National Flood Insurance Program (NFIP) are excluded from income and resources.[18]


An individual’s home continues to be excluded, if the individual leaves the home because of domestic abuse so long as the individual has not established a new principal place of residence or taken action to render the home no longer excludable.[19] An individual’s place of residence is the dwelling the individual considers his or her established or principal home and to which, if absent, he or she intends to return (emphasis added).[20]



Generally, disabled youth receiving federal foster care benefits cannot become eligible for SSI until after the foster care payments stop.  SSA policy has been changed so that applications may be accepted up to 90 days before foster care payments are expected to end.[21] Eligibility for foster care payments usually end at age 18.[22]


SSI payments may be suspended when a person fails to provide information needed to determine continuing SSI eligibility and the benefit amount.[23] Social Security has eliminated the requirement of follow up by telephone multiple times and a visit to the home prior to termination of eligibility.


Social Security has made changes with respect to the look and feel of this section.  Generally, it provides that residents of a public institution are generally ineligible for SSI.  However, residents of medical treatment facilities (public or private) may be eligible when Medicaid is paying more than 50% of the cost, but are limited to maximum federal payment of $30 per month.[24]


Historically, SSA has considered an individual to be an employee if the person receiving the services has a right to direct and control the individual and the details and means used to perform those services.  Currently, an individual is considered to be an employee if he or she meets any of the following employee test:[25]

  • Is an officer of a corporation
  • Has the status of an employee under the common law rules (RS 02101.020) or
  • Perform services for remuneration before any person as an:
  1. Agent or commissioned driver
  2. Full-time life insurance salesperson
  3. Home worker
  4. Traveling or city salesperson (when their services are subject to scrutiny and control by the firms)

Under common law, there is a three-pronged test:

  • The individual is subject to control by the person receiving the services
  • The person receiving the services dictates when and where the work is done
  • The person receiving the services dictates how the work is done.

The three categories of evidence and key facts that demonstrate the right to direct and control are:

  • Behavioral control (i.e., worker receives instructions from the business and training from the business)
  • Financial control, the method of payment – worker receives an hourly wage or salary rather than a lump sum payment for a particular task and worker does not have the opportunity for profit or loss, worker does not make services available to the relevant market, worker does not make significant investments, and the worker does not have unreimbursed expenses
  • With respect to the relationship between the parties, factors to be considered are:
  1. Can either business or worker end the relationship before the job is completed?
  2. Employee benefits (beyond monetary compensation)
  3. Intent of parties/written contracts that indicate both parties believe they are in an employer-employee relationship
  4. Worker serves as a business’s regular business activity

[1] SI 01130.460 D 1.

[2] Id. at D 2.

[3] Id. at E 1.

[4] Id. at E 2.

[5] Id. at F.

[6] Id. at H.

[7] SI 01150.200 A.

[8] Id. at B 1.

[9] Id. at B 2.

[10] SI 001150.201 A 1 b.

[11] Id. at A 2.

[12] Id. at B 1.

[13] Id. at B 2.

[14] Id. at B 3.

[15] GN 00502.132 A 1.

[16] Id. at 3.

[17] DI 24510.057 A.

[18] SI 01130.065.

[19] SI 01130.100 B 5.

[20] Id. at  A 2.

[21] DI 25201.011.

[22] Id. at A.

[23] SI 02301.235 A.

[24] SI 00520.001 A 1.

[25] RS 02101.005 C.