Supplemental Security Income (SSI) computation is cash based, rather than what accountants call accrual based. It's a needs based program so benefits are subject to reduction due to income received. Because it's cash based, it's the income you received at the time, rather than what was owed to you at the time. There's one big exception to this, the Windfall Offset. When a claimant is approved for back benefits for both SSI and a Title II Social Security disability benefit, usually Disability Insurance Benefits, the Windfall Offset is supposed to, in effect, reduce the SSI as if the Title II benefit had been paid at the time it was due, that is, for this one exception, to compute benefits based upon the accrual method.
On its face the Windfall Offset presents obvious difficulties for Social Security but along the way things became Byzantine. Reducing the SSI for the Windfall Offset presented a big potential problem at the time it was passed. If you apply the Windfall Offset to reduce SSI, you often wipe out all SSI benefits. This is a problem because those who are eligible for SSI are categorically eligible for Medicaid. Wipe out the SSI and you've wiped out the retroactive Medicaid entitlement as well. This actually doesn't matter that much for the claimant. They’re never going to be able to pay those bills anyway. However, it matters a lot to hospitals who may be on the hook for hundreds of thousands of dollars of care they've provided the claimant if that claimant doesn't get back Medicaid.
To prevent this Social Security decided to run the offset in the opposite direction. The Title II benefits are reduced by amount by which the SSI benefits should have been reduced if the Title II benefits were paid at the time due. That sounds complicated but throw in the fact that the field office computes the SSI and a Title II payment center computes the Title II benefit and you've got a much more complicated situation. The field office must compute the amount by which the SSI should have been reduced and communicate that fact to the Title II payment center. In case you don't know, Social Security's components aren't good at communicating with each other. The problems don't end there, though. For historic reasons I'm not going into here, the Title II attorney fee is based upon the amount of back benefits before the Windfall Offset. This means it's an artificial figure. That requires an adjustment in the SSI attorney fee so that fee is artificial as well. It's also complicated because the Windfall Offset is supposed to be based upon the amount of Title II benefits after the attorney fee and that's been difficult for Social Security to do. It's led to a couple of class action lawsuits and I'm not sure that Social Security is getting it right to this day. As I said, it's Byzantine.
Isn't it time to cut through this Gordian Knot? By now the vast majority of states have accepted the expansion of Medicaid benefits enacted during the Obama Administration. The rest can do so at any time. This means that the potential for hospitals and providers to be stuck with never being reimbursed for services they've provided is far, far less than it used to be. I say the hell with those benighted states that have refused Medicaid benefits for their low income citizens. Apply the Windfall Offset in a natural way. Reduce the SSI benefits rather than the Title II benefits. This dramatically simplifies Social Security's work. Probably hundreds of thousands of hours of unnecessary work at Social Security each year will end. As far as I'm concerned, the hospitals in the states that have refused the extra Medicaid can complain to their state legislatures rather than Social Security. The agency lacks the resources to protect those hospitals from the folly of their state governments.
To the best of my knowledge, what I'm suggesting doesn't require legislation or even a change in the regulations.
I understand that in theory this could delay first payment of benefits to a claimant from SSI but what I'm seeing now is that those approved for both SSI and a Title II benefit generally receive a monthly Title II payment first anyway. Do as I am suggesting and it's not just one month of benefits paid. It's all the back Title II benefits. That would be far better than the three or four month time frame it's taking Social Security to finish all the Windfall Offset computations in each case. Don't raise any tax issue. The population I'm talking about isn't going to pay taxes on their Social Security benefits anyway.
By the way, kudos to you if you have read my post about this tedious subject to the end. You're a Social Security pro. You may or may not agree with me but you know what I'm talking about. I wonder whether there are any Congressional staffers who get this far.
