AR 86-16(2): Damon v. Secretary of Health, Education and Welfare, 557 F.2d 31 (2nd Cir. 1977) -- Child Benefits: Support of Child Adopted After Worker's Entitlement to Benefits -- Title II of the Social Security Act

ISSUE:

Whether payments to foster parents by the State of Vermont on behalf of a foster child are public assistance to the child or compensation to the foster parent which can be considered the foster parent's income in determining whether the one-half support requirement of Section 202(d)(8)(D)(ii) of the Social Security Act is met.

STATUTE/REGULATION/RULING CITATION:

Section 202(d)(8)(D)(ii) of the Social Security Act (42 U.S.C. 402(d)(8)(D)(ii)); 20 C.F.R. 404.366(b)

CIRCUIT:

SECOND (CONNECTICUT, NEW YORK, VERMONT)

Damon v. Secretary of Health, Education and Welfare, 557 F.2d 31 (2nd Cir. 1977)

: This ruling applies to determinations or decisions at all administrative levels (i.e., initial, reconsideration, administrative law judge hearing and Appeals Council).

DESCRIPTION OF CASE:

Loren E. Damon, having lived with his foster parents, Mr. and Mrs. Damon, for 15 years, was adopted by them several months after Mrs. Damon became entitled to retirement benefits. His application for child's insurance benefits on her earnings record was denied when the administrative law judge (ALJ) found that the foster child payments to Mr. and Mrs. Damon from the State of Vermont were public assistance to the child and that because those payments constituted more than one-half of Loren's support during the year prior to the date Mrs. Damon became eligible for Social Security "old age" benefits, the requirements of Section 202(d)(8)(D)(ii) were not met. The child appealed to the United States District Court for the District of Vermont which upheld the Secretary's decision. On further appeal by Loren, the United States Court of Appeals for the Second Circuit reversed and remanded for a determination of the amount of benefits due the claimant.

HOLDING:

The Court of Appeals held that in the State of Vermont, foster care payments to foster parents are not to be treated as support from the State of Vermont to the child, but as property of the foster parents.

Therefore, for purposes of entitlement to Social Security benefits, these payments may constitute contributions by the foster parents to support of a child.

STATEMENT AS TO HOW DAMON DIFFERS FROM SOCIAL SECURITY POLICY:

Section 202(d)(8)(D)(ii) of the Social Security Act (42 U.S.C. 402(d)(8)(D)(ii) and 20 C.F.R. 404.366(b) require that a child adopted after the worker's entitlement to Social Security benefits must have lived with the worker and have received at least one-half support from the worker for the year immediately before the month the worker became entitled to Social Security benefits. The Social Security Administration considers payments to a foster parent on behalf of the foster child to be payments for the child's support from a public assistance agency. Where, as in the instant case, payments from public assistance agencies exceed one-half of the support provided to the child, the entitled adopting parent does not meet the one-half support requirement.

The Court of Appeals noted that Vermont Statutes define foster care as "care of a child, for a valuable consideration," and that the Regulations of the Vermont Department of Social Welfare refer to foster care as "purchased." The Court concluded that the plain letter of the law required it to construe the payments to a foster parent as the foster parent's property and not as public assistance to the adopted child. Under this construction, the application of the payments by the foster parent to the foster child's needs constitutes support by the foster parent from the parent's income and not support by a public assistance agency.

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

This ruling applies only to cases where the child resides in a State in the Second Circuit (New York, Connecticut, or Vermont) and the State law treats foster care payments as payments to the foster parent and not assistance payments to the child at the time of the determination or decision at any administrative level of review, i.e., initial, reconsideration, administrative law judge hearing or Appeals Council.

In a claim for child's benefits under Section 202(d)(8)(D)(ii) of the Social Security Act (42 U.S.C. 402(d)(8)(D)(ii)), where the worker was receiving payments as a foster parent for a foster child whom the worker adopted after the worker became entitled to Social Security benefits, the payments are to be treated as income of the foster parent in determining whether such parent contributed one-half of the adopted foster child's support of purposes of Section 202(d)(8)(D)(ii).

EFFECTIVE DATE:

Date of Publication

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