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Suggested Citation:"Appendix B: Glossary." 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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Appendix B

Glossary

Ability: The power or skill to do something; the quality or state of being able, especially physical, mental, or legal power to perform; competence in doing; natural aptitude or acquired proficiency (Merriam-Webster, 2015).

Capability (U.S. Social Security Administration [SSA]): “Capability refers to a beneficiary’s ability to manage or direct the management of his [or] her Social Security funds. . . . A beneficiary who exercises direct involvement, control and choice in identifying, accessing and managing services to meet his/her personal and other needs is capable and must be paid directly” (SSA, 2015b).

Financial capability: The management or direction of the management of one’s funds in a way that routinely meets one’s best interests.

Financial competence: The financial knowledge and skills one possesses. It includes both financial knowledge and financial judgment (defined below).

Financial incapability: Inability to manage or direct the management of one’s funds in a way that meets one’s basic needs and goals. May be manifest by a failure to demonstrate financial performance, as defined above, routinely.

Financial judgment: Possession of the abilities needed to make financial decisions and choices that serve the individual’s best interests.

Suggested Citation:"Appendix B: Glossary." 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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Financial knowledge: Possession of the declarative and procedural knowledge required to manage one’s finances.

Financial literacy: “The knowledge and skills needed to make sound financial decisions” (Collins, 2013, p. 1).

Financial performance: The degree of success in handling financial demands in the context of the stresses, supports, contextual cues, and resources in the individual’s actual environment. A high degree of financial performance requires not only sufficient levels of financial competence, but also possession of the skills needed to implement financial decisions in everyday life and the opportunity to exercise those skills.

Incompetency (legal): A determination by the courts that an individual is unable to manage his or her affairs as a result of mental deficiency or, sometimes, physical disability. The U.S. Social Security Administration uses the term “legally incompetent” to refer to one subset of beneficiaries who will automatically receive a representative payee.

Lay evidence (SSA): “Lay evidence is anything other than legal or medical evidence, which gives insight into a beneficiary’s ability to manage or direct the management of his/her funds” (SSA, 2015d). Sources of lay evidence may include U.S. Social Security Administration employees; nonprofessionals (e.g., relatives, friends, neighbors); and health care and other professionals (e.g., social workers, occupational therapists, rehabilitation specialists, adult protective services workers).

Legal evidence (SSA): “Legal evidence is one type of evidence that establishes an individual’s ability to handle his/her financial affairs. There must be a court order in place for a finding that an individual is incompetent. . . . The court order must specifically address the beneficiary’s competency or must contain a statement regarding the individual’s ability to handle his/her financial affairs” (SSA, 2015a).

Medical evidence (SSA): “Medical evidence of capability is evidence of a medical nature that sheds light on a beneficiary’s ability to manage or direct the management of funds. The term, ‘of a medical nature,’ means from a physician, psychologist or other qualified medical practitioner who is in a position to provide a meaningful assessment of the beneficiary’s ability to manage funds. . . . Acceptable medical evidence is an opinion offered by a medical professional (e.g., physician, psychologist), based on an examination of the beneficiary” (SSA, 2015c).

Suggested Citation:"Appendix B: Glossary." 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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Representative payee (SSA): “A person designated by the Social Security Administration to receive monthly benefit checks on behalf of a beneficiary who is unable to manage his or her own funds” (SSA, 2014).

REFERENCES

Collins, J. M. 2013. Analyzing the financial capability of people in Wisconsin. Issue briefs: Family financial education 2013-04. http://fyi.uwex.edu/financialseries/files/2013/04/April_2013_Fin_Cap1.pdf (accessed September 11, 2015).

Merriam-Webster. 2015. Ability. Merriam-Webster Dictionary [online]. http://www.merriamwebster.com/dictionary/ability (accessed August 11, 2015).

SSA (U.S. Social Security Administration). 2014. Annual statistical report on the Social Security Disability Insurance Program, 2013. SSA Publication No. 13-11826. Washington, DC: SSA. http://www.ssa.gov/policy/docs/statcomps/di_asr/2013/di_asr13.pdf (accessed August 4, 2015).

SSA. 2015a. GN 00502.005 Direct payment prohibitions. https://secure.ssa.gov/poms.nsf/lnx/0200502005 (accessed August 4, 2015).

SSA. 2015b. GN 00502.010 Capability determination—overview. https://secure.ssa.gov/poms.nsf/lnx/0200502010 (accessed August 4, 2015).

SSA. 2015c. GN 00502.025 Medical evidence of capability. https://secure.ssa.gov/poms.nsf/lnx/0200502025 (accessed August 4, 2015).

SSA. 2015d. GN 00502.030 Lay evidence of capability. https://secure.ssa.gov/poms.nsf/lnx/0200502030 (accessed August 4, 2015).

Suggested Citation:"Appendix B: Glossary." 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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Suggested Citation:"Appendix B: Glossary." 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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Suggested Citation:"Appendix B: Glossary." 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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Page 170
Suggested Citation:"Appendix B: Glossary." 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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Page 171
Suggested Citation:"Appendix B: Glossary." 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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The U.S. Social Security Administration (SSA) provides benefits to disabled adults and children, offering vital financial support to more than 19 million disabled Americans. Of that group, approximately 5.5 million have been deemed – by virtue of youth or mental or physical impairment - incapable of managing or directing the management of their benefits. 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. Failure to identify beneficiaries who are incapable of managing their funds means abandoning a vulnerable population to potential homelessness, hunger, and disease.

Informing Social Security’s Process for Financial Capability Determination considers capability determination processes used by other similar benefit programs, abilities required to manage, and direct the management of, benefits, and effective methods and measures for assessing capability. This report evaluates SSA’s capability determination process for adult beneficiaries and provides recommendations for improving the accuracy and efficiency of the agency’s policy and procedures for making these determinations.

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