When Life Changes, the Social Security Administration Needs to Know


While the Social Security Administration (SSA) frequently conducts reviews to make sure that people who receive Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) are still eligible for those programs, there are also times when a beneficiary is responsible for notifying the SSA of a change. These mandatory reporting events usually occur around major life changes and can often be overlooked.

One of the most important notification requirements is for beneficiaries to tell the SSA if they move. The SSA needs to know where beneficiaries live in order to send important notifications that could affect benefits. If a beneficiary misses a notification that calls for action, it could result in a loss of benefits. In addition, out-of-state moves can radically change the amount of a beneficiary's SSI award because states have different methods of calculating benefits. If a beneficiary moves from a state with a lower cost of living into a state with a higher cost of living and doesn't tell the SSA, the beneficiary could be leaving money on the table.

The death of a beneficiary also triggers an automatic reporting requirement. But on top of this, beneficiaries must also report the deaths of people living with them because the size of an SSI beneficiary's family and the earning power of the people in that family can affect SSI benefits. In certain cases, a beneficiary can receive an increased SSDI benefit when a parent or spouse passes away.

There are some other, less obvious changes that require a beneficiary to file an immediate report. Beneficiaries must report changes in income and assets, including reporting if any assistance the beneficiary was receiving to help pay for bills or housing changes. Marriage and divorce also need to be reported because the SSA factors in spousal income and resources when calculating benefits.

Beneficiaries must also tell the SSA if they become the beneficiary of a special needs trust. This could happen suddenly (when a relative dies and leaves money to the beneficiary in a trust that was previously unfunded) or it could be expected (at the conclusion of a lengthy negotiation over a personal injury settlement). Either way, the SSA should hear about the trust and receive a copy of the document.

According to the SSA's internal rules, a beneficiary is responsible for notifying the SSA in writing of these important changes within 10 days from the end of the month in which the change occurred. So, if a beneficiary moves in January, the beneficiary has until February 10th to let the SSA know. It's important to keep track of correspondence with the Social Security Administration, so the notification should always be sent with some kind of tracking system that requires a signature, like certified mail or express service with a signature.

The actual monetary penalty for failing to file the report itself is very small and is not always assessed, but a much larger problem looms in the background. If the SSA learns of a change in circumstances that would have reduced the benefit received by a person with special needs, then the SSA can recoup the improperly paid benefits from the recipient, and there is no limit to the amount that can be recovered. So, if a beneficiary fails to report a change in circumstances that would have resulted in a $100 reduction in his monthly benefit and the SSA finds out about the change five years later, that beneficiary owes the government $6,000, which can be almost impossible to repay. The end result is a further loss of benefits because the government will garnish the beneficiary's award in order to recover the improperly paid funds. On top of this, the bureaucratic nightmare that ensues when the SSA attempts to calculate the amount owed can take months, or even years, to sort out while the beneficiary is left twisting in the wind, unsure of what the monthly benefit will be moving forward.

Your special needs planner can help make sure that you comply with all of the SSA's reporting requirements. Contact your planner immediately if you have experienced, or expect to experience, any changes like the ones discussed above.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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