AR 86-1(9): Summy v. Schweiker , 688 F.2d 1233 (9th Cir. 1982) Third party payments for medical care or services -- Title XVI of the Social Security Act

(Rescinded 7/5/94)

AR 86-1(9)

EFFECTIVE DATE: 1/23/86

ISSUE:

Whether the payment adjustment made by the Veterans Administration (VA)

under its pension program in recognition of past unusual medical expenses

qualifies as a third-party payment for medical care or services, and

therefore, does not constitute income under the supplemental security

income (SSI) program.

STATUTE/REGULATION/RULING CITATION:

Section 1612(a)(2)(B) of the Social Security Act (42 U.S.C.

1382a(a)(2)(B)); 20 C.F.R. 416.1102; 20 C.F.R. 416.1103(a); 20 C.F.R.

416.1120; 20 C.F.R. 416.1121(a)

CIRCUIT:

NINTH (WASHINGTON, IDAHO, MONTANA, NORTHERN MARIANA ISLANDS, CALIFORNIA,

OREGON, NEVADA, ARIZONA, ALASKA,

HAWAII) [1]

Summy v. Schweiker , 688 F.2d 1233 (9th Cir. 1982)

APPLICABILITY OF RULING:

DESCRIPTION OF CASE:

Evelyn Summy became eligible for SSI in November 1977. In January 1978,

she submitted a claim to the VA with respect to unusual medical expenses

she had incurred in 1977. [2] As

a result of the claim, the VA issued Ms. Summy a check for $286.32. The

Secretary viewed this as unearned income under Section 1612(a)(2)(B) of

the Social Security Act, 42 U.S.C. 1382a(a)(2)(B). Section 1612(a)(2)

provides that "unearned income means all other income, including -- (B)

any payments received as an annuity, pension, retirement, or disability

benefit, including veteran's compensation and pensions, . . ." The

Secretary determined that the payment from the VA combined with Ms.

Summy's other income rendered her ineligible for SSI for the first quarter

of 1978. [3]

Ms. Summy appealed the decision that the VA check represented countable

unearned income to the U.S. District Court for the District of Oregon. The

district court reversed the Secretary. The Secretary appealed the decision

of the district court to the United States Court of Appeals for the Ninth

Circuit. The Court of Appeals affirmed the district court.

HOLDING:

rst quarter

of 1978. [3]

Ms. Summy appealed the decision that the VA check represented countable

unearned income to the U.S. District Court for the District of Oregon. The

district court reversed the Secretary. The Secretary appealed the decision

of the district court to the United States Court of Appeals for the Ninth

Circuit. The Court of Appeals affirmed the district court.

HOLDING:

The Ninth Circuit court held that the additional VA payment represented

medical expense reimbursement and, since 20 C.F.R.

416.1109(a) [4] exempted

third-party reimbursement for medical expenses from income, the VA check

should not result in a reduc- tion of Ms. Summy's SSI payment. The court

reasoned that the VA merely reimbursed Ms. Summy for medical expenditures

previously made over which she had little control. Consequently, the funds

were not actually available, could not have been used by her to meet basic

needs for food, clothing, and shelter, and therefore, did not meet the

definition of income under the Secretary's regulation at 20 C.F.R.

416.1102.

While the court held that reimbursement by VA for unusual medical expenses

was not income which the Secretary could consider when making

determinations of SSI eligibility and payment amount, it limited its

holding to excluding from SSI income only those VA payments which it

determined could qualify as third-party payments for medical care and

services. The court held that the mere fact that an item is "not income"

for VA pension purposes does not mean that the same item is "not income"

for SSI purpos- es. The court further acknowledged the Secretary's right

to require SSI applicants and recipients to furnish proof that particular

receipts or items are not "income" for SSI purposes.

STATEMENT AS TO HOW SUMMY DIFFERS FROM SOCIAL SECURITY

POLICY:

held that the mere fact that an item is "not income"

for VA pension purposes does not mean that the same item is "not income"

for SSI purpos- es. The court further acknowledged the Secretary's right

to require SSI applicants and recipients to furnish proof that particular

receipts or items are not "income" for SSI purposes.

STATEMENT AS TO HOW SUMMY DIFFERS FROM SOCIAL SECURITY

POLICY:

The Social Security Administration (SSA) does not view the additional VA

payments resulting from unreimbursed medical expenses as payments for

medical care. The payments are not made in order to assist the pensioner

in obtaining medical care and are not in any way designated as

reimbursement for medical care. They are therefore available for basic

needs just like any other countable income. Under VA regulations (38

C.F.R. 3.272(g), implementing 38 U.S.C. 503(a)), income used for unusual

medical expenses is not considered in counting an individual's income. The

VA regulatory provision has the effect of reducing an individual's

countable income for VA pension purposes thereby resulting in an increased

VA pension. Thus, an additional VA payment represents an underpayment of

VA benefits due the pen- sioner because his or her actual countable income

is less than the amount originally used to compute the VA benefit.

The SSA's policy recognizes that the nature of an additional VA payment

does not change because it was based on submission of unusual medical

expenses. SSA's view is that a VA supplement predicated on unreimbursed

medical expenses, just as a VA supple- ment based on any other type of

recalculation, represents income available for meeting basic needs within

the meaning of 20 C.F.R. 416.1102.

SSA's policy recognizes that the nature of an additional VA payment

does not change because it was based on submission of unusual medical

expenses. SSA's view is that a VA supplement predicated on unreimbursed

medical expenses, just as a VA supple- ment based on any other type of

recalculation, represents income available for meeting basic needs within

the meaning of 20 C.F.R. 416.1102.

The Ninth Circuit's decision in Summy holds that reim- bursement by

VA for unusual medical expenses incurred by pension- ers qualifies as a

third-party payment for medical care or services and, therefore, is not

available for meeting basic needs and is not "income" for purposes of SSI

eligibility and payment amount.

EXPLANATION OF HOW SSA WILL APPLY THE DECISION WITHIN THE CIRCUIT:

This ruling applies only to cases where the individual resides in

Washington, Idaho, Montana, California, Oregon, Nevada, Arizona, Alaska,

Hawaii or the Northern Mariana Islands at the time of the determination or

decision at any level of administrative review, i.e., initial,

reconsideration, administrative law judge hearing or Appeals Council

review.

When a case involves an individual who has received an additional pension

or compensation payment from the VA as a result of unreimbursed medical

expenses, the additional pension or compen- sation payment from the VA is

not income for SSI purposes.

EFFECTIVE DATE:

Date of Publication

[1] Since Guam does not have an

SSI program, it is not affected by this Acquiescence Ruling.

[2] The VA considers

unreimbursed medical expenditures that exceed 5 percent of the applicable

maximum annual VA payment rate to be unusual. The VA recomputes the

individual's benefits for the year in which such expenditures occur by

reducing countable income by the amount of the unusual expenses and issues

any resulting underpayment to the pensioner.

fected by this Acquiescence Ruling.

[2] The VA considers

unreimbursed medical expenditures that exceed 5 percent of the applicable

maximum annual VA payment rate to be unusual. The VA recomputes the

individual's benefits for the year in which such expenditures occur by

reducing countable income by the amount of the unusual expenses and issues

any resulting underpayment to the pensioner.

[3] Determinations of SSI

eligibility and payment amount were made on a quarterly basis prior to

April 1982. Effective April 1982, such determinations are made on a

monthly basis.

[4] 20 C.F.R. 416.1109(a)

(1980), which exempted third-party reim- bursement for medical expenses

from income, was subsequently revised to clarify SSI policy. The revised

regulation appears at 20 C.F.R. 416.1103(a). As revised, the regulation

exempts "assistance provided in cash or in kind (including food, cloth-

ing, or shelter) under a Federal, State, or local government program whose

purpose is to provide medical care or services."