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Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2016. Informing Social Security’s process for financial capability determination. Washington, DC: The National Academies Press. doi: 10.17226/21922.

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COMMITTEE TO EVALUATE THE SOCIAL SECURITY ADMINISTRATION’S CAPABILITY DETERMINATION PROCESS FOR ADULT BENEFICIARIES

PAUL S. APPELBAUM (Chair), Elizabeth Dollard Professor of Psychiatry, Medicine and Law, and Director, Division of Law, Ethics and Psychiatry, Department of Psychiatry, Columbia University

KAREN E. ANDERSON, Director, Huntington Disease Care, Education and Research Center, and Associate Professor of Psychiatry and Neurology, Georgetown University Medical Center and MedStar Georgetown University Hospital

MARÍA P. ARANDA, Associate Professor, University of Southern California School of Social Work

NANCY BAGATELL, Associate Professor, Division of Occupational Science and Occupational Therapy, University of North Carolina at Chapel Hill

JULIE BIRKENMAIER, Professor, Saint Louis University School of Social Work

NANCY N. DUBLER, Professor Emerita, Albert Einstein College of Medicine; Consultant for Ethics, New York City Health and Hospital Corporation; and Adjunct Professor, Division of Medical Ethics, New York University Langone Medical Center

LAURA B. DUNN, Director, Geriatric Psychiatry Fellowship Training Program and Professor, Department of Psychiatry and Behavioral Sciences, Stanford University

ALAN M. JETTE, Professor of Health Policy & Management, Boston University School of Public Health

DAVID A. LOEWENSTEIN, Director and Professor of Neuropsychology, Department of Psychiatry and Behavioral Sciences, University of Miami Miller School of Medicine

MARC A. NORMAN, Professor, Medical Neuropsychology, and Director, Neuropsychiatry/Epilepsy Clinical Evaluation Program, University of California, San Diego

ELDAR SHAFIR, William Stewart Tod Professor of Psychology and Public Affairs, Department of Psychology and the Woodrow Wilson School of Public and International Affairs, Princeton University

KELLY A. THOMPSON, Thompson Wildhack PLC, Arlington, Virginia

Consultant

ALLEN W. HEINEMANN, Director, Center for Rehabilitation Outcomes Research, Rehabilitation Institute of Chicago

IOM Fellow

KENDALL M. CAMPBELL, Co-Director, Center for Underrepresented Minorities in Academic Medicine, and Associate Professor, Family Medicine and Rural Health, Florida State University College of Medicine

IOM Project Staff

CAROL MASON SPICER, Study Director

FRANK R. VALLIERE, Associate Program Officer

JENNIFER FLAUBERT, Associate Program Officer (since December 2015)

NICOLE GORMLEY, Senior Program Assistant

PAMELA RAMEY-McCRAY, Administrative Assistant

FREDERICK ERDTMANN, Director, Board on the Health of Select Populations

Reviewers

This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report:

Henry Aaron, The Brookings Institution

Sara S. Bachman, Boston University School of Social Work

Denise Burnette, Columbia University School of Social Work

Lisa Dixon, Columbia University Medical Center

Kathryn Edin, Johns Hopkins University

Eric B. Elbogen, University of North Carolina at Chapel Hill School of Medicine

Jason Karlawish, University of Pennsylvania

Kristi L. Kirschner, University of Illinois at Chicago

Daniel C. Marson, The University of Alabama at Birmingham

Barton W. Palmer, University of California, San Diego

Elizabeth K. Rasch, National Institutes of Health

Marc I. Rosen, Yale University School of Medicine

Elyn Saks, University of Southern California Gould School of Law

Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the report’s conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Georges Benjamin, American Public Health Association, and Bradford H. Gray, The Urban Institute. They were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

Preface

The U.S. Social Security Administration (SSA) provides benefits to disabled adults and children, offering vital financial support to more than 17 million disabled Americans. Of that group, approximately 5 million have been deemed—by virtue of youth or mental or physical impairment—incapable of managing or directing the management of their benefits.¹ Hence, a representative payee has been appointed to receive and disburse SSA payments for these beneficiaries to ensure that their basic needs for shelter, food, and clothing are met. Periodically, however, concerns have been expressed about the accuracy of the process by which SSA determines whether beneficiaries are capable of managing their benefits, with some evidence suggesting that underdetection of incapable recipients may be a particular problem.

The importance of creating as accurate a process as possible for incapability determinations is underscored by the consequences of incorrectly identifying recipients either as incapable when they can manage their benefits or as capable when they cannot. Given the importance of individual autonomy in decision making in a democratic society, deprivation of the right to manage one’s money—which ensues from a finding of incapability—represents a serious infringement on liberty that should occur only when absolutely necessary. Conversely, failure to identify beneficiaries who are incapable of managing their funds means abandoning a vulnerable population to potential homelessness, hunger, and disease. Needless to say, neither error is desirable.

___________________

¹ The prepublication version of this report erroneously included a group of nondisabled beneficiaries in the numbers provided in the preceding sentences. These numbers were revised for accuracy.

With support from SSA, the Institute of Medicine (IOM) of the National Academies of Sciences, Engineering, and Medicine convened a committee to evaluate SSA’s capability determination process. In pursuit of that goal, the committee reviewed the relevant professional literatures in several languages, heard testimony from researchers who study the capability determination process and from persons directly involved with it, considered existing assessment tools and their applicability to this process, looked at comparable programs in the public and private sectors in Canada and the United States, and obtained background information and data from SSA on the operation of its system.

Drawing on all of these sources, the committee formulated a number of conclusions and recommendations that it believes can inform and guide efforts to improve the current capability determination process. Most notably, the committee concluded that basing capability determinations on evidence of beneficiaries’ actual performance in meeting their basic needs is superior to office-based assessment of individuals’ financial competence. In such a performance-based process, priority is given to information from persons who are in direct contact with beneficiaries and are in a position to know about their financial performance.

On behalf of the committee, I want to thank all of the individuals who shared their time and expertise during the committee’s information-gathering sessions. Special thanks go to Winthrop Cashdollar at America’s Health Insurance Plans for collecting and compiling information from a number of private companies that provide disability income protection coverage about their procedures for determining when a claimant is not competent to handle disability income benefits. I also extend thanks to the IOM staff members who played a key role in the production of this report, including Rick Erdtmann (board director), Carol Mason Spicer (study director), Frank Valliere (associate program officer), Nicole Gormley (senior program assistant), and Julie Wiltshire (financial associate). Research assistance was provided by Daniel Bearss and Rebecca Morgan. Rona Briere and Alisa Decatur are to be credited for the superb editorial assistance they provided in preparing the final report.

Finally, as committee chair, I want to express my appreciation for the hard work and collegial approaches of all the committee members. I know they share my hope that this report can have a positive impact on the lives of persons with disabilities who may need assistance in managing their benefits.

Paul S. Appelbaum, Chair
Committee to Evaluate the Social Security
Administration’s Capability Determination
Process for Adult Beneficiaries

Contents

ACRONYMS AND ABBREVIATIONS

SUMMARY

1 INTRODUCTION

Context

Clarification of Study Scope

Terminology and Conceptual Model

Study Approach

Report Organization

References

2 REVIEW OF THE SOCIAL SECURITY ADMINISTRATION AND OTHER SELECTED CAPABILITY DETERMINATION PROCESSES

Overview of SSA and Other Selected Programs

Defining the Beneficiary’s Ability to Manage Funds

Triggers for Capability Assessment

Types and Sources of Evidence

Instructions to Informants

Developing Evidence and Determining Capability

Appeals Processes

Review

Summary

References

3 EFFECTS OF APPOINTMENT OF REPRESENTATIVE PAYEES ON BENEFICIARIES

Benefits Associated with the Appointment of a Representative Payee

Risks Associated with the Appointment of a Representative Payee

Use of Benefits as Leverage

The Beneficiary’s Perspective

Minimizing the Impact on Autonomy of Having a Representative Payee

Supported Decision Making

Summary

References

4 ABILITIES REQUIRED TO MANAGE AND DIRECT THE MANAGEMENT OF BENEFITS

Financial Competence

Financial Performance

Preference for Performance in Determining Capability

Mental and Physical Disorders That May Affect Financial Capability

Summary

References

5 METHODS AND MEASURES FOR ASSESSING FINANCIAL COMPETENCE AND PERFORMANCE

Overview of Assessment of Financial Capability

Instruments Designed to Assess Financial Capability

Uses and Limitations of Available Assessment Instruments

Considerations and Challenges in Assessment of Financial Competence and Performance

Summary

References

6 CONCLUSIONS AND RECOMMENDATIONS

Evidence for Determining Financial Capability

Systematic Identification of Adult SSA Beneficiaries at Risk for Financial Incapability

Responding to Changes in Capability Over Time

Innovation and Evaluation

APPENDIXES

A PUBLIC SESSION AGENDAS

B GLOSSARY

C SELECTED FORMS

D BIOGRAPHICAL SKETCHES OF COMMITTEE MEMBERS

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Boxes, Figures, and Tables

BOXES

S-1 Statement of Task

1-1 Statement of Task

1-2 Key Terms Defined

2-1 Training in Capability Determinations for Field Office and Disability Determination Services (DDS) Staff

2-2 Sample Capability Assessment Questions for the SSA Field Office Claims Representatives

2-3 Sample Language for a Notice of a Proposed Rating of Incompetency

5-1 Sample Questions About Financial Competence

FIGURES

S-1 Conceptual model of financial capability

1-1 Conceptual model of financial capability

4-1 International Classification of Functioning, Disability and Health (ICF) framework

TABLES

1-1 Characteristics of Old-Age, Survivors, and Disability Insurance Beneficiaries with Representative Payees, December 2014

1-2 Number and Percentage Distribution of Supplemental Security Income (SSI) Recipients with Representative Payees Receiving Federally Administered Payments, by Eligibility Category and Age, December 2014

1-3 Number and Percentage of Adult Beneficiaries with Representative Payees by Type, December 2014

2-1 Number and Percentage of Adult Social Security Disability Insurance (SSDI), Disabled Adult Children SSDI, and Supplemental Security Income (SSI) (Blind or Disabled) Recipients with Representative Payees, December 2014

2-2 Conditions with Highest Numbers of Incompetency Ratings Within the U.S. Department of Veterans Affairs

2-3 Persons Qualified to Complete the Certificate of Incapability for Service Canada

2-4 Social Security Disability Insurance (SSDI) Claims by Representative Payee Status and Type of Contact Between Beneficiary and Field Office Staff

Annex Table 2-1 Comparison of Social Security Administration and Similar Programs

5-1 Components of Financial Capability Measured by Assessment Instruments

Annex Table 5-1 Characteristics of Common Instruments for Assessing Financial Capability

Acronyms and Abbreviations

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