Quake Victims Find Catch-22 in Regulations Covering Aid : Red tape: The poor and elderly are receiving emergency relief funds. But that could prevent them from getting their regular SSI payments.

The story is familiar: Two federal agencies set out to help the poor and elderly but wind up getting in each other’s way.

This time, the problem comes from conflicting regulations of the Federal Emergency Management Agency and the Social Security Administration.

At risk are victims of last October’s Northern California earthquake who could lose their monthly Supplemental Security Income payments this summer if they keep their federal relief money too long.

SSI payments go to elderly or disabled people with low incomes and less than $2,000 in “resources” or savings for a single person, $3,000 for a married couple.

The monthly checks typically add $200 or $300 to recipients’ Social Security benefits for a combined maximum of $690 per person per month. They can be cut off if the recipients’ savings exceed the “resource limits.”

The problem is, SSI recipients are now getting thousands of FEMA dollars to pay rent or replace lost possessions.

For now, the SSI checks continue to flow because Social Security rules do not count emergency relief money as “resources” until nine months after the recipient has put it in savings.

But those on SSI run two risks--keeping their FEMA grants past the nine-month deadline, and allowing their savings to grow too large because of their additional income from emergency aid.

Conflicting rules appear to cover the nine-month deadline. The federal law that allows FEMA to provide disaster relief also says the relief money should at no time be counted as a resource. But Social Security spokesman Virgil Kocher said that agency’s lawyers believe SSI may nevertheless be withheld based on a FEMA grant that is kept longer than nine months.

Ellen Pirie, director of Senior Citizens’ Legal Services in Santa Cruz, said the first to suffer may be those who lost their homes in the quake and now get free temporary housing or rent money from FEMA.

Tenants who usually spend SSI money on rent are now able to save most of their checks, which can easily add up to more than $2,000 over several months, Pirie said.

She said there is no way to avoid having SSI money counted as a resource except to spend it. So Pirie’s staff advises clients to buy large items like furniture or pay off old debts.

But some don’t think much of that idea.

Lynn Garrett, manager at the Garden Senior Residence in Santa Cruz, where 19 quake refugees are living in free temporary lodgings provided by FEMA, said her tenants on SSI would rather save their money until they find apartments.

“They don’t really want to spend that money on furniture until they know where they’re going to live,” she said.

A 79-year-old woman forced to vacate her room at a Northern California downtown hotel because of quake damage complained bitterly that the bureaucratic rules have “made liars out of us.”

She’s worried about her more than $3,000 in savings, SSI checks and a FEMA grant because the money is growing as she lives in a temporary shelter provided by FEMA while she looks for an apartment.

“It’s already in the bank, so there’s no way to hide it,” she said. “I’ll give some to my son and say I’m repaying a loan.”

FEMA’s Don Wegars argued that disaster grants should not normally endanger SSI qualifications because they are designed to be spent immediately.

In fact, FEMA housing grants, renewable for up to 18 months of rent, must be returned if they are not used for housing within a few weeks, he said.

But Pirie said people who do not understand how grants are dispensed may not realize for months that they have broken an agency’s rules.

For example, she said, it is easy to confuse the two main types of grants: FEMA housing relief and Individual/Family Grants, which come from state and federal funds and are meant to replace or repair property.

“I haven’t seen a client yet who realized that there are two different entities here or where the checks came from,” she said. “It could be a fairly simple system, but there’s no explanation ever given.”

Pirie also said Social Security officials could easily cut off some clients’ SSI money by mistake because they have no systematic way of knowing whether a bank account contains exempt emergency grants.

Pirie said she feared many SSI recipients would not catch the error and would simply accept a cutoff.