From National Public Radio:
The thing that got Karen Williams into trouble was that she tried to do the responsible thing and bought a life insurance policy that would pay for her funeral. ...
Williams, who is disabled and doesn’t work, relied upon a little-known federal assistance program — Supplemental Security Income, or SSI, run by the Social Security Administration. ...
Williams, 63, thought her life insurance wouldn’t be used until after she died. She didn’t understand it had a cash value and that she could turn it in and collect $1,900. That was far less than the $10,000 in funeral expenses she bought the policy to cover when she died.
For Williams, the cash value of her policy along with the $260 she had saved in her checking account pushed her over SSI’s $2,000 limit on how much a recipient is allowed in savings and other assets. ...
That $2,000 asset limit hasn’t changed since 1989. If it had kept up over 51 years with inflation, it would be $10,000 today.
“I would have definitely went by the rules,” Williams says. “I didn’t know I was breaking them.”
The penalty was stiff: Williams was kicked off SSI, her primary source of income, and told by Social Security to pay back two years of benefits totaling $20,385. ...
“You’re telling me I owe you $20,000?” Williams remembers thinking in the Social Security office. “I can’t even pay my bills. … Where am I going to live?” ...
Ultimately, she sought out the help of Gregory Burrell, president and CEO of the Terry Funeral Home, an institution in West Philadelphia that has served Black families for generations.
Burrell let Williams turn the policy over to the funeral home.
“We see that all the time,” Burrell, a former president of the National Funeral Directors and Morticians Association, the largest group of Black funeral directors, said of the confusion that caught Williams. “Unfortunately, people don’t know any better. And they’re stressing, and these insurance policies — they’re considered assets.” ...
POMS says she is only responsible for the amount over the resource limit, which would be $160.
ReplyDeleteHas to be more to this story. There is a $1500 burial fund exclusion for SSI so most of the cash value could have been excluded.
ReplyDeleteRead the article and all will become clear.
Delete@9:11
ReplyDeleteThat's as to the income limit, not assets/resources limit.
@11:02
She's not dead so the burial fund exclusion is irrelevant. Her life insurance policy is convertible to cash in the present (at a huge discount, but still enough to put her over the resource limit). If you have the ability to convert a non-monetary asset into cash, SSA considers it a resource.
What's the point of a resource limit if a person has a condition that limits SGA?
ReplyDeleteEither a person can work full time or not.
It has to be some sort of republican driven punishment mechanism.
Because it might be considered against the stated policy of assisting people in poverty and without resources if it’s being awarded to someone who is disabled with a net worth in excess of $1 million.
DeleteThat said, that $2000 limit that is now 30+(?) years old is too low. I’ve seen too many cases ceased because of some surprise payment from a distant relative. I’m not super concerned with someone with $5k-$10k in a bank account abusing the system. I wonder how many SSI recipients would ever get there.
@11:02am....https://secure.ssa.gov/poms.nsf/lnx/0501130425#:~:text=The%20burial%20funds%20exclusion%20may,the%20%241%2C500%20burial%20funds%20exclusion.
ReplyDeleteThe burial funds exclusion may apply. The resource value of the burial contract is equal to the CSV of the life insurance policy, subject to the $1,500 burial funds exclusion.
c. Example
Mrs. White has a burial contract funded by the revocable assignment of ownership of a life insurance policy. The face value of both the burial contract and the life insurance policy is $3,000 and the CSV of the life insurance policy is currently $1,700. The total resource value of Mrs. White's burial contract is equal to the CSV of $1,700.
The burial space exclusion does not apply to Mrs. White's contract (per SI 01130.425C.1.a in this section). However, we can exclude $1,500 of the CSV under the burial funds exclusion. The remaining $200 of the CSV will be considered a countable resource.
I would hardly call SSI a "little-known federal assistance program."
ReplyDeleteJust gonna say a life insurance policy is not a burial contract or a burial policy. Key distinction and reason why cash surrender value counts as resource. And why we used to make people understand they may need to decide to cash their policy out (and use the proceeds for things we were OK with) if they wanted to file and we caught this at the pre-interview (are these done anymore?). No SSI for you until we pauperize you is the underlying policy theme.
ReplyDeleteAt 6:51- that is entirely incorrect. POMS SI 01130.410.
ReplyDeleteWhen designating a countable life insurance policy as a burial fund, the individual typically designates the policy itself rather than the CSV. This is the case because the CSV of a policy is payable only during the lifetime of the individual and thus cannot be used to bury the individual. However, since the CSV is the current resource value of the policy, it is the CSV which is applied toward the burial fund limit when determining countable resources.
•
EXAMPLE 1: An individual owns a life insurance policy that is designated entirely for burial. The policy has a $20,000 FV and a $2,500 CSV. We would apply the $1,500 burial funds exclusion to the $2,500 CSV, and only $1,000 would be a countable resource.
They can designate a policy as burial funds by simply signing a statement in the FO.
@1:10
ReplyDeleteCruelty.