Woman Receives $211K in Past-Due Disability Benefits

When Elsie Harlow first filed a claim for disability benefits in 1995, the Social Security Administration (SSA) denied her claim. Ms. Harlow fought that decision for 14 years, and this year she finally obtained a favorable decision, collecting $211,223 in past-due disability benefits for the years her claim was pending. Ms. Harlow's case, Harlow v. Astrue (M.D. Fla., Ocala Division, No. 5:07-cv-399-Oc-GRJ, Sept. 24, 2009), illustrates the elaborate lengths some disability applicants must go through in order to obtain benefits that are rightfully theirs, and it also reminds us of an all-too-common dilemma beneficiaries face once they receive their awards.

When Ms. Harlow's original attorney withdrew after the SSA's Office of Hearings and Appeals first denied her claim, she engaged another attorney to represent her. Ms. Harlow agreed to pay her new attorney a 25 percent contingency fee upon the successful resolution of her claim. (In contingency arrangements, attorneys do not get paid unless their clients get paid.) The SSA typically approves these fees so long as they are reasonable, because they encourage attorneys to help low-income clients obtain benefits. After multiple hearings before an administrative law judge, various rulings both for and against Ms. Harlow by the Office of Hearings and Appeals and the Social Security Administration's Appeals Council, and two appeals to a federal district court, Ms. Harlow's attorney finally succeeded in winning her claim and obtaining the $211,223 award of past-due benefits for her in March 2009.

Now that Ms. Harlow has obtained her past-due benefits, her next phone call should be to a local special needs planner. Large settlements and cash awards like the one that she received can play havoc with the recipient's eligibility for "means-tested" disability benefits like Supplemental Security Income and Medicaid. This is because these programs have very stringent asset requirements that require a beneficiary to have almost no money in her name in order to qualify for benefits. In Ms. Harlow's case, she has a limited amount of time to spend down the $211,223 award before it will count against her asset limit, assuming she is enrolled in a means-tested program.

The good news for people in Ms. Harlow's situation is that the government allows beneficiaries to transfer these funds into certain types of special needs trusts without compromising their important government benefits. The type of trust that can be used depends on each individual's circumstances, but in all cases the funds in the trust can be used to supplement a beneficiary's government benefits for the remainder of her life. If funds are left over at the beneficiary's death, they may be subject to a claim for reimbursement from the government, but that drawback is, in most cases, worth accepting when one considers the benefit that the trust provides.

If you or a friend or relative has received, or is about to receive, a large settlement or a past-due benefits payment, you should speak with a special needs planner right away. Find a qualified special needs planner near you.