TN 17 (03-05)
GN 03940.053 Title II - Fee Agreements – Processing the Assessment
SSA is required to charge an assessment, also called a “user fee” or “service charge,” to an attorney or non-attorney who receives his/her fee via direct payment from SSA. Prior to September 1, 2004, the assessment was 6.3 percent of the direct payment amount. The Social Security Protection Act of 2004 (SSPA) amended section 206(d)(2)(A) of the Social Security Act by:
Capping the assessment at the lower of a flat-rate dollar amount or 6.3 percent of the fee payment, effective September 1, 2004; and
Adjusting the flat-rate cap based on annual cost-of-living adjustments rounded down to the next lower $1. (See GN 03920.019 "Assessment on Representatives Who Receive Direct Payment" for the dollar amount of the flat-rate assessment cap.)
Effective September 1, 2004, the Single Payment System (SPS) processing of the assessment differs depending on the Payment Identification Code (PIC) cluster. The key difference between the two clusters is whether SPS considers paid user fee amounts already on the SPS database when calculating the assessment.
PICs of A, D, E, and W generally are associated with the person who is the primary claimant for purposes of representation (i.e., the person who appointed the representative or on whose behalf the representative was appointed). For these PICs, SPS does not consider paid assessments already on the SPS database.
EXAMPLE: SSA is paying the fee based on a new period of disability, and a user fee amount is on the database. SPS will disregard the previous assessment payment and correctly calculate the assessment.
Most actions are automated because of these defaults, but manual processing will be required in some cases. For example, a child (PIC C) may in fact be the primary claimant for the purpose of representation (i.e., the person who appointed the representative or on whose behalf the representative was appointed). In this situation, SPS may not process the assessment correctly on its own. Refer to GN 03920.019M.2., which identifies manual processing situations.
In this section, the following definitions apply:
1. SPS Online or Online
When we refer to SPS Online or Online, we are referring to the online input screens used to establish or update SPS payments that could not be automated.
2. Fee Payment Date
By the fee payment date (i.e., the date SSA “makes payment” or “pays all or part of the authorized fee”), we mean the date that the Single Payment System (SPS) or the Modernized Supplemental Security Income Claims System (MSSICS) sets the payment in PAID status.
When fee payment is initiated through the Modernized Claims System (MCS), the Manual Adjustment Credit and Award Processes (MADCAP) or MSSICS, the payment date (i.e., the date on which the payment is set in PAID status) is the day or the day after the input action is processed.
When fee payment is issued Online (manually) and set to PAID, the payment date is the day that payment is set in PAID status.
Because SSA personnel must input information instructing the system to make the direct payment, the payment date is not the date of the notice generated in connection with the fee payment. Nor is it the date the Department of the Treasury issues the actual check.
By decision, we mean an initial or reconsidered determination or a decision made by an Administrative Law Judge or the Appeals Council.
D. Process – Approved Fee Agreement
SPS processing of the assessment differs depending on the PIC cluster.
1. PICs A, D, E, and W – MCS and MADCAP Initial Awards
Effective September 1, 2004, for fees SSA pays to a representative, who is eligible for direct payment, based on an approved fee agreement, SPS:
applies the flat rate cap based on the annual cost of living adjustment in calculating the assessment and deducting it from the fee amount payable directly to the representative, regardless of any user fee payments already on the SPS database (i.e., SPS will apply the flat rate cap based on the annual cost of living adjustment without regard to any earlier assessment); and
imposes the flat rate cap based on the annual cost of living adjustment on the first fee SSA pays directly to a representative.
NOTE: GN 03940.053D.3. describes situations in which SSA is paying fees to two or more representatives.
Except for situations identified in GN 03920.019M., no manual intervention is necessary to make direct payment and deduct the capped assessment for initial awards processed through MCS or MADCAP. MCS will automatically include the ATY016 paragraph in the claimant's notice and complete the fill-ins to explain the assessment. For claims processed through MADCAP, the universal text identifier (UTI) for the notice language is now ATY016. (Refer to NL 00720.050 for the fee notice assessment language.)
2. PICs B and C – MCS and MADCAP Initial Awards
When SPS processes direct payment to a representative in conjunction with a B or C award, it will withhold only the difference between the flat rate assessment cap based on the annual cost of living adjustment and the assessment paid amounts on the SPS database, not to exceed 6.3 percent of the fee amount paid from the auxiliary's(ies') past-due benefits. (Refer to GN 03940.053F.3. if SSA paid a portion of the fee from the primary claimant's past-due benefits before September 1, 2004.)
Refer to GN 03920.019M. for situations in which the SPS-calculated assessment must be overridden because the automated SPS process will deduct an incorrect assessment amount.
It is necessary to include language in the fee notice to correctly reflect the assessment situation. When all fee actions on the claim are processed on or after September 1, 2004 and SSA previously withheld an assessment on that claim, in the fee notice, use:
ATY066, when SSA previously assessed less than the flat rate cap based on the annual cost of living adjustment (see NL 00720.050); and
UTI ATY071, when SSA previously assessed the maximum (see NL 00720.050).
3. Payments to Two or More Representatives
When SSA simultaneously pays two or more representatives based on an approved fee agreement, the representatives share the fee equally. SPS divides the assessment by the number of representatives receiving direct fee payment and deducts that amount from each direct fee payment. Multiple representative cases must be processed by SPS Online. UTI ATY065 explains the assessment in the fee notice (see NL 00720.050).
EXAMPLE: SSA favorably decided the claim and approved the fee agreement signed by two attorneys in the same firm. The claimant's past-due benefits totaled $10,800 and the fee under the approved agreement was $2,700. SSA authorized each attorney to charge and collect $1,350 ($2,700 divided by 2). If the flat rate cap based on the annual cost of living adjustment is less than 6.3% of $2,700, the flat rate cap based on the annual cost of living adjustment applies. The attorneys share the assessment equally (i.e., each receives one-half of the total direct payment amount less one-half of the assessment). SSA pays $1,350 less one half of the flat rate cap based on the annual cost of living adjustment to each attorney. UTI ATY065 explains the assessment in the fee notice (see NL 00720.050).
4. Situations Requiring Override of the Automated Assessment
Some situations require manual intervention to override SPS's automated assessment calculation and deduction. These situations are identified in GN 03920.019M.2.
E. Procedure – FO Actions
1. District Office Final Authorization (DOFA) Cases
For DOFA cases, CRs follow existing procedures to process the case through MCS unless there is an MCS processing limitation.
If the claim can not be processed using MCS, prepare a Web 101 or A101. On the BCF/Remarks/Notice (BCRN) screen, enter the benefit continuity factors (BCF); the remark “Fee Agreement Case” and the name and address of the representative(s); and, in the NOTICE field, the MADCAP assessment paragraph for inclusion in the award notice. Refer to GN 03920.019J.2. for the MADCAP paragraphs.
2. Non-DOFA Cases
Follow existing procedures to process non-DOFA claims. If the claim requires special assessment processing (refer to GN 03920.019M.2.), alert the PC by annotating the claim(s) transmittal with “Special Assessment Handling Case.”
F. Procedure – PC Actions
Refer to GN 03920.019M.2. for an explanation of the SPS processing default in situations identified as requiring an override.
1. SPS Assessment Override Unnecessary – DOFA MCS EC Award with a Notice Alert and Non-DOFA A101/Web 101 Award
Except in those situations identified in GN 03920.019M.2., SPS correctly calculates and deducts the assessment when SSA pays a fee. When the case is an initial award processed through MCS, with one representative receiving direct payment, MCS automatically includes ATY016 in the notice. For initial award non-MCS cases that do not require override, request UTI ATY016.
2. SPS Assessment Override Unnecessary – Multiple Representatives
When multiple representatives who are eligible for direct payment are involved, input code “01” (multiple representatives) in the Attorney Payment Indicator field on the ATT screen through MACADE, which will generate a PCACS alert. When you receive the PCACS alert, but not before, process the payments in SPS (see SM 00834.200). SPS will divide the assessment equally between or among the representatives who receive direct payment.
Although SSA sends notice only to the principal representative, request UTI ATY065 to explain the assessment deduction.
3. SPS Assessment Override Necessary – Before September 1, 2004, SSA Paid a Fee on PIC A, D, E, or W – After August 31, 2004, SSA Pays Additional Fee Based on Past-due Benefits Withheld From Auxiliary Beneficiary(ies) (PIC B, C, or both)
Follow the procedure in GN 03940.053F.6. to override the SPS-calculated assessment. Manually calculate the assessment at 6.3% of the fee amount payable or the flat rate cap based on the annual cost of living adjustment, if lower. (See GN 03920.019D. for an explanation of the policy.)
Request UTI ATY016 to explain the assessment deduction applied to the additional fee payment.
4. SPS Assessment Override Necessary – Auxiliary Beneficiary (PIC B or C) Appointed His or Her Own Representative and Direct Payment Previously Made on the Same SSN
Follow the procedure in GN 03940.053F.6. to override the SPS-calculated assessment. Manually calculate the assessment at 6.3% of the fee amount payable or the flat rate cap based on the annual cost of living adjustment, if lower. (See GN 03920.019F.2. for an explanation of the policy.)
Request UTI ATY016 to explain the assessment deduction.
5. SPS Assessment Override Necessary – After August 31, 2004, SSA Paid a Fee on PIC A, D, E, or W and Later Makes Additional Fee Payment Resulting From a More Favorable Decision on the Same or a Prior Application
Follow the procedure in GN 03940.053F.6. to override the SPS-calculated assessment. Recalculate so as to deduct from the current fee payment no more than the difference, if any, between the flat rate cap based on the annual cost of living adjustment and the assessment previously collected. (See GN 03920.019G. for an explanation of the policy.)
Request UTI ATY066 or ATY071 to explain the assessment deduction or why no assessment was deducted.
6. Override SPS Assessment Calculation
To override the SPS-calculated assessment, take the following MADCAP/SPS Online (manual) actions:
Refer to the SPS or PHUS query, as necessary, to determine whether there has been a previous assessment.
Manually calculate the correct assessment.
For MADCAP actions ONLY, input code “03” (standard user fee does not apply) in the MACADE Attorney Payment Indicator field on the ATT screen to put a hold on the fee payment (see SM 00834.200).
The next day, access the SPS Payment Transaction Menu (SPPT) and in the Choose Option field, select 2 – “Update,” to update a previously established representative fee record in payment held status. (This takes you to the Attorney Fee Payment (also for eligible non-attorney payment) (APAY) screen.)
On the APAY screen, if multiple representatives eligible for direct pay are involved, enter the number of representatives in the “Number of Attorneys” field, which will have been pre-filled with “01.” (The completed APAY screen leads to the Payment Action (PACT) screen.) Also change the “Repeat (Y/N) of “N” to “Y” except for the last APAY action, to allow SPS to display another APAY screen after the Payment Action. (Do NOT include a non-attorney who is eligible for direct payment in the “Number of Non-attorneys” field.)
On the PACT screen, override the calculated assessment in the “User Fee” field (9-M) with the manually calculated assessment; select Payment Action 1, Issue Check.
Return to SPPT screen. The SPPT screen appearance indicates that the fee will be paid that evening.
Refer to MSOM SPECPAYSYS 001.001 and SM 00834.000 for guidance on using SPS.