Sep 10, 2014

Controversial Pay-Fors In ABLE

     Support has been growing in Congress for the ABLE Act of 2014 (H.R. 647). ABLE stands for Achieving a Better Life Experience. Under ABLE, individuals receiving Supplemental Security Income (SSI) and Medicaid could establish tax favored accounts to cover qualified expenses for medical care, housing and transportation. The accounts would not count against SSI and Medicaid resource limits. There is a chance that ABLE will become law this year.
     The ABLE bill, apart from its "pay-fors", is certainly worthy of passage. However, I would prefer that ABLE be a part of a comprehensive effort to update the income and resource provisions of SSI and Medicaid. I'm not sure about Medicaid but the SSI income and resources provisions in SSI haven't been updated since SSI became law more than 40 years ago. They are ridiculously out of date. As it stands, ABLE is primarily a bill to help the disabled children of middle class and wealthy parents. Those parents could use ABLE accounts to transfer funds to their disabled children. Those who are on SSI and Medicaid seldom have the ability on their own to accumulate assets in an ABLE account.
     The big problem with ABLE is that it would cost money and the House of Representatives is proposing "pay-fors" that would:
  • Eliminate the percentage and dollar cap on the user fee that those representing Social Security claimants pay for processing direct payment of fees for representing Social Security claimants.
  • End the Single Decisionmaker pilot currently used in twenty states.
  • End the Reconsideration elimination pilot currently used in ten states.
     Ending the single decisionmaker and reconsideration elimination pilots would make it more difficult to be approved for disability benefits in the affected states. I don't think there is any substantive opposition to those pilots. Instead of eliminating them, they should be extended to all states. Why should ABLE be used to help middle class and wealthy families at the expense of disability claimants generally?
     Eliminating the percentage and dollar caps on the user fee is a big deal. Already, attorneys and others pay hefty fees to Social Security for the processing of their fees. This would increase those fees to preposterous levels that bear no relationship to Social Security's actual costs. Why would it cost Social Security almost $400 to compute 25% of a claimant's back benefits and authorize a direct deposit?
     I will write more about this later but those who represent Social Security claimants are already under considerable economic stress. Although no statistics have been released, it seems clear to me that fewer claimants are represented now than was the case a few years ago. Representing Social Security claimants is a high overhead, low profit margin business. Reducing the gross income of those who represent Social Security claimants by, perhaps 5%, would reduce their net income by a much higher percentage. Should ABLE be adopted with the elimination of the user fee caps, I expect a downward spiral of Social Security representation. At some point, it's just not worth it any more and we're rapidly approaching that point even without this proposal.
     The "pay-for" in the current House proposal will undoubtedly generate some opposition in the Senate which would endanger ABLE. As difficult as it is to pass any legislation in Washington, I would have thought that House Republicans would have tried harder to find less controversial "pay-fors" assuming they really want to pass ABLE. There aren't many legislative days left in this Congress. It may not take much of a dispute to kill ABLE in this Congress.


Anonymous said...

Here's an even better solution: Cut SSA completely out of paying reps. You want to rep a claimant? Get your $$ from them after we pay them the entire back pay.

Anonymous said...

Can't seem to find elimination of SDM and reinstatement of recon?

Anonymous said...

6:51, Your suggestion is disingenuous--no one pays their attorney AFTER there case is done. That's human nature; that's why you pay a retainer in most types of legal cases. Contingent fees are the only way indigents can afford representation. A better solution is to get SSA out of calculating and paying fees. Just do what insurance companies do--issue the check for past-due benefits in the name of the claimant and attorney. The fee cap and contingent percentage can remain the same.

Anonymous said...

Oops! Poor editing. Second line should be "the" instead of "there."

Anonymous said...

Maybe it is my lack of knowledge, but how would it work issuing the check in the name of the claimant ona attorney for the out of state attorneys? Wouldn't that be a logistical nightmare? Or is that a way to get representation local?

Anonymous said...

"comprehensive effort to update the income and resource provisions of SSI and Medicaid"

RIGHT ON. I have always been of the mind that people should NOT be condemned to STRICT poverty for becoming sick or impaired enough to be considered disabled and not having an insured status.

Anonymous said...

Extending the Single Decision-Maker and No Reconsideration model to other states is a great idea for claimants and their representatives, but it's a terrible idea for SSA. When SDMs approve claims, nobody complains about their lack of medical credentials. When they deny claims, on the other hand, then suddenly they are unqualified. Claimants have successfully challenged ALJ decisions in prototype jurisdictions because there was no "medical opinion" from a bona fide doctor supporting the Listings analysis and RFC assessment.

You can't have it both ways. If you want the higher pay rates that come with having non-medical sources review disability claims, then don't ask to see their medical licenses when they issue unfavorable RFC assessments.

Anonymous said...

This is a serious question: how would elimination of the test program to do away with reconsideration save the agency money? What am I missing?

Anonymous said...

Re: Eliminating the caps on the user fee payment amount and the percentage that SSA may recover -

Some history is needed here. In the 90s SSA proposed getting out of the fee payment business. This caused major heartburn for the representative community. "They" came up with the idea of the user fee. The original legislation called for a percentage cap of 6.3% with no cap on the amount charged to the rep. It also called for a study/audit/report/whatever from an outside group - Deloit if my memory serves me. The results of that would determine the percentage cap after that.

Imagine the surprise/chagrin or even panic when that cost came in at well over 10%! Very quickly it was determined that the 6.3% would remain in effect. So then the reps turned their sights on the user fee itself. So then we got the (then) $75 cap on the amount of the user fee.

I have to take exception to Charles' simplistic explanation of what SSA has to do to pay a rep that should be covered the user fee. It is not just calculating 25% of the past-due benefits and then paying the rep by direct deposit.

To begin with, very few reps use direct deposit. In fact, they raised such a fuss when Treasury mandated that claimants receive their benefits by direct deposit, an exception was included in the Treasury reg for SSA reps.

The costs for SSA also include things like special programing to store the rep's information on the MBR and to be able to automatically calculate some fees - not all but some. There is the time to enter the rep's information - and to deal with the changes in reps that occur. Not all claims involve this, but some of the megafirms change reps 3, 4, or even more times over the course of a claim.

And then there is the problem of the wording of the statute that imposed the cap on the user fee. That cap is NOT per check - it is per claim. So if there are more than one rep to be paid, each pays only their share of the capped user fee. If you paid rep #1 a $3000 fee and collected the $88 user fee, when you pay rep #2 his/her $3000, you can only charge a $44 user fee - and you must refund $44 to rep #1. Do this a few thousand or tens of thousands times a year and the costs of administering the program rise substantially.

There are more problems but these few examples might help you understand the hassle.

Anonymous said...

to 1:40

I love alternative history. Almost nothing of what you said was true.

The SSA may not have liked dealing with attorney fees, but there was never a plan to get out of the business altogether. The reason was that the SSA did not trust attorneys to not overcharge clients. They still wanted to hold onto the money. They certainly did not want to issue a two party check, as every other insurance company does.

The user fee was never the representatives idea. It was a "pay for" that the Agency came up with on its own. The original setting of 6.3% was imposed, with legislation mandating the GAO to evaluate the actual cost of paying the fee. Amazingly, they agreed that this was reasonable. Given that the actual payment of the fee amounts to dividing by 4 and cutting a check, that they concluded the cost was 6/3 % can only be considered bizarre.
The entire change was about the fee petition process that the Agency found burdensome, largely replaced by automatic fee approval where the fee is under a cap, originally set at $4,000.

The problem with firms changing reps is only a problem because the SSA is unable to recognize that there are these things called "law firms" that many attorneys are part of. If they noted the Firm as the rep (Yeah it takes a lot of work to enter the name of the firm and the address) then changing rep problems would be solved.

Reps don't use direct deposit much because the transmittal information on the checks to the bank is not sufficient. Yes, the problem is not SS. The problem is the bank not giving that information on bank statements, online or not. They can get it, but it takes extra work for the bank and some don't react quickly. Since we cannot charge a fee until it is approved, it is a problem when we cannot match the fee to the client quickly. Simply, for now, checks are easier.

But hey. all reps are bad, they do no work, they are overpaid, whatever. I hope you're happy in your world.

Anonymous said...

Bravo, 1:14! Well said and correct on all accounts. If SSA would just allow us to put our law firm down on the 1696, it would save them and us an enormous amount of work. Also, we would love to receive electronic attorney fees. However, we'd have no way of knowing the client file to attach the fee to because the bank does not give us that information. Plus, the Notice of Award letters don't always arrive on time and occasionally contain errors. Regarding the user fee, we don't like it (it makes no logical sense how it is set), but we accept and acknowledge that it is a price of doing business. I'd love to know how much SSA is able to recoup back from the attorney user fee each year.

Anonymous said...

better solution:

social security sends all of the back pay to the claimant. rep then bills the claimant for his fee.

very, very simple. there really is no need for SSA to waste all this time and money paying a bunch of lazy do nothing reps. start earning your $$

Anonymous said...

Better bono!!

Anonymous said...

Most of the solutions proposing that reps collect from claimants are disguised plans to force a cessation of representation of claimants. [Please see comment of 9:43 on 9/10/14.] By the time (at least 2 1/2 to 3 years) that most claimants have received their awards, they are destitute, and debts quickly swallow back payments. If they don't pay their rep, suing them for the fee is not an option because they are judgment-proof from collection. Human gratitude is short-lived, hence retainer fees would be needed, and very few claimants can scrape up enough money for a retainer. As attorneys, we live in the real world with real people, not in the fantasy-world of a bureaucracy.