OVERPAYMENTS. Basic Benefits Training Disability Law Center November 2017

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1 OVERPAYMENTS Basic Benefits Training Disability Law Center November WHAT IS AN OVERPAYMENT? The amount SSA paid to an individual that was more than the amount SSA should have paid the individual. The overpaid amount is a debt owed to the United States Government. GN ; 20 CFR (a); , WHAT IS A LEGALLY DEFINED OVERPAYMENT (LDO)? Payment was made (certified to the Treasury) and received by the designated payee; Over a period of time (at least 1 month); and More than the correct amount was paid. SI

2 HOW OVERPAYMENTS HAPPEN Earned income not reported or not entered into SSA system Fluctuations in countable earned income SSI excess resources SSI living arrangement changes SSDI work related cessations (SGA) medical cessations 4 POSSIBLE SSA MISTAKES Did not impose deductions timely Did not suspend benefits timely Did not reduce benefits timely Did not terminate benefits timely GN OVERPAYMENT RESOLUTION Continuous, ongoing process Begins when a debt is detected. Ends when SSA accounts for the entire amount by: Recovery (through refund, adjustment of payments, or installment payments); Waiver; or Determination that the debt either did not exist, or is uncollectible. SI

3 WHAT IS NOT AN OVERPAYMENT? Presumptive disability/blindness payments which would have been correct if the disability/blindness determination would have been favorable. An overpayment results if presumptive payments were incorrect because of the nondisability factors (excess income, SGA, resources, L/A). Payments due the recipient but misused by a representative payee (rep payee is overpaid, the beneficiary is not). SI RIGHTS OF OVERPAID/LIABLE BENEFICIARIES Appeal the determination of overpayment AND their liability for repayment; At any time request that repayment of all or part of the overpayment be waived or the rate of repayment be changed; Offer a compromise settlement to repay a substantial amount of the overpayment. SI (H) 8 LIABILITY FOR OVERPAYMENTS Current/former SSI/SSDI recipients Auxiliaries (spouse, child eligible on the same earnings record) 20 CFR Representative Payees Estate of a Deceased Recipient or Spouse The determination of liability for repayment is an initial determination subject to appeal. SI

4 LIABILITY FOR OVERPAYMENT- REPRESENTATIVE PAYEE SSA will attempt recovery from: The individual if the overpaid funds were used for her support and maintenance and the rep payee was not aware of the facts causing the overpayment. The representative payee if the overpaid funds were not used for the overpaid individual's S and M. The rep payee is personally liable for repayment of any misused funds. Both the individual and the payee if the overpaid funds were used for the overpaid individual's S and M and the rep payee was aware of the facts causing the overpayment. 10 LIABILITY OF A SPOUSE FOR SSI OVERPAYMENTS If incorrect payments were received for the same period by an individual and eligible spouse, each is individually responsible for repayment of his/her own overpayment as well as for the other member's overpayment. SI SSA will recover against an eligible spouse for the eligible individual's overpayment only if: The eligible spouse was a member of the eligible couple when the overpayment occurred; The eligible spouse and eligible individual were living together when the overpayment occurred; and Recovery from the eligible individual is not possible. SI OVERPAYMENT NOTICE Clear language. Mailed (with SSA-3105) at least 30 days before recoupment starts. Why and When the OP happened Repayment Options and Appeal Rights 20 CFR a, ;GN , SI An overpayment does not exist until the initial notice of overpayment is released. SI

5 PRE-RECOUPMENT REVIEW Opportunity to contest the overpayment determination. Generally there is no recovery until 60 days after SSA notifies the overpaid person. Recovery must stop if a reconsideration or waiver is filed. GN , 20 CFR a and 20 CFR AVAILABLE PROCEDURES -Appeal (Reconsideration Request)-Form SSA-561-U2 or Waiver-Form SSA-632-BK or BOTH (Recon will be processed first) GN (C)(3)) 14 RECONSIDERATION Challenges the fact/amount of the overpayment. Same appeal steps as with application denials. Must be in writing & filed within 60 days of receipt of the notice (+ 5 days for mailing). Good cause for late filing provisions apply. 20 CFR ; ; GN

6 GOOD CAUSE FOR FILING RECONSIDERATION LATE SSA or CMS actions were confusing or misleading; Did not understand the legal requirements; Physical, mental, educational, or linguistic limitations prevented timely filing. Unusual or unavoidable circumstances. 20 CFR ; ; GN NO RECOUPMENT DURING RECONSIDERATION SSA can not start recoupment if a Recon Request is filed within 30 days. Recoupment must stop once a Recon Request has been filed and must not start again until the initial decision. SSA should refund improperly recouped benefits. 20 CFR a (h); (b); GN , SI Termination, Suspension or Reduction of Benefits + Overpayment 2 separate cases 2 separate appeals required Right to Statutory Benefits Continuation (CBC) of medical cessation or reopening/revision. DI

7 WAIVER REQUEST An overpaid individual agrees with the fact/amount of the overpayment but asks to waive repayment. No deadline for filing. If filed within 30 days of receipt of notice, recoupment can t begin until initial waiver decision. 20 CFR ; (d) If SSA started recoupment when a waiver is filed, the waiver will NOT cover benefits already repaid unless the waiver specifically covers the entire overpayment (the person must show that s/he went into debt to repay part of the overpayment). 19 NO RECOUPMENT WHILE WAIVER IS PENDING Recoupment must stop once a waiver request is filed and cannot resume until the initial waiver decision. SSA should refund improperly recouped benefits. Prerecoupment review. Right to a personal conference face-to-face, by telephone, of video conference. 20 CFR ; (a); GN , SI , SI PERSONAL CONFERENCE File review at any time in the waiver process (no later than 5 business days before the conference). GN GN Must be able to get a copy of the OP file without a fee. SI Personal appearance with or without a representative to testify, cross-examine and submit documents; De novo review. 20 CFR ; ; GN

8 PROCESSING A WAIVER REQUEST SSDI cases: An ALJ hearing is the next level of appeal after a personal conference. If there was no personal conference, a Reconsideration is the next level of appeal. 20 CFR (h), , (a)(6). GN SSI cases: Appeal is a Reconsideration whether or not there is personal conference. 20 CFR (f), ; SI B.7 22 WAIVER-WHEN APPLICABLE Recipient is without fault in causing OP, AND Adjustment or recovery would either: Defeat the purpose of the Social Security Act, OR Be against equity and good conscience, or Impede effective administration of Social Security Act because of the amount involved. 20 CFR (a), GN ; SI WHEN SSA WILL FIND FAULT An overpaid SSI/SSDI recipient: Failed to furnish information which s/he knew or should have known was material; or Made incorrect statements which s/he knew or should have known were incorrect, or Did not return a payment which s/he knew or could have been expected to know was incorrect. 20 CFR ,

9 WHAT SSA MUST CONSIDER WHEN DETERMINING WITHOUT FAULT Any physical, mental, educational or linguistic limitations, understanding of the reporting requirements and efforts to report, understanding of the obligation to return payments not due, ability to recognize inconsistencies and evaluate the reasonableness of SSA's actions, experience in dealing with government agencies. understanding of the language used by SSA, misleading information from SSA. 20 CFR , WITHOUT FAULT SSA s fault in causing the overpayment, alone, does NOT relieve an overpaid beneficiary of fault. If the evidence clearly shows the individual did not understand and comply with reporting responsibilities, that individual can usually be found without fault. Resolve any doubt in favor of the individual. GN CFR ; ; SI , SI WHEN SSA WILL FIND FAULT The evidence shows a lack of good faith or failure to exercise a high degree of care in determining whether to report an event that might cause deductions or termination of entitlement. The degree of care varies with the complexity of the circumstances giving rise to the overpayment and the capacity of the beneficiary to realize that s/he is being overpaid. 20 CFR

10 FRAUD REFERRALS SSA will not consider wavier requests if fraud is suspected. FO will make an OIG referral and suspend all development. SSA may reopen an approved waiver if fraud is found later in connection with the overpayment. 28 PRESUMED NO FAULT Reasonable belief that only take-home (net) pay is included to determine SGA; GN Relied upon erroneous information from SSA. GN Unaware that earnings were above SGA due to retroactive pay increase, work at a higher rate than realized. GN Good faith belief that checks were proper after SSA was informed of the SGA earnings. GN CFR ERRONEOUS INFOMRATION FROM SSA An overpaid beneficiary may be assumed to be without fault if the person relied upon erroneous information from an official source within SSA with respect to the interpretation of a pertinent provision of the Act or regulations. 20 CFR a 30

11 OVERPAYMENT AS A RESULT OF INCORRECT BENEFIT RATE OR LACK OF INSURED STATUS A person cannot be charged with knowledge of how benefit rates are computed. When the error results in a payments clearly out of line with what could have reasonably been expected, without fault can be established only be clear and convincing evidence. GN A person is without fault if an overpayment is due to an error in computing insured status. If an earnings record is fraudulent, a finding of without fault cannot be made unless it is clear that the person was not involved in the fraud. GN HOW TO PROVE NO FAULT? Education and work history Mental/physical capacity, ability to understand/ comply with SSA rules Ability to understand/respond to SSA notices What does the individual recall being told about reporting responsibilities during the application, redeterminations and prior requests for reconsideration or waiver of an overpayment? 32 HOW TO PROVE NO FAULT? Did the individual receive any reporting instructions? Were there any other OP on the person s record? Is the change that caused the OP the one that normally would have been covered during a discussion of reporting requirements or is it a unique occurrence? Could a reasonable person conclude that the change was so insignificant as not to affect payment amount or eligibility? 33

12 WHEN COLLECTING OVERPAYMENT WILL DEFEAT THE PURPOSE OF THE ACT? The issue is ability to repay. If SSI or other public assistance benefits involved, SSA presumes that recovery of the overpayment will defeat the purposes of the Act. 20 CFR Food stamps, State medical assistance, unemployment benefits and workers' compensation are not public assistance. GN SSA must consider a monthly budget, all household finances. 20 CFR INABILITY TO REPAY THE OVERPAYMENT Needs substantially all of monthly income to meet ordinary and necessary living expenses (food, clothing, rent, utilities, medical bills, expenses for support of others) GN Assets cannot exceed $3,000 for an individual or $5,000 for an individual and one dependent (+$600 for each additional dependent) GN If any of the overpaid funds are retained recovery will not defeat the purposes of the act. 20 CFR ; ; SI OVERPAYMENT COLLECTION WILL DEFEAT THE PURPOSE OF THE SS ACT Current total income does not exceed: The Federal Benefit Rate (FBR); plus The $20 general income exclusion; plus The $65 earned income exclusion; plus The federally administered State supplementary level. 36

13 ACCEPTABLE EXPENSES TO EVALUATE ABILITY TO REPAY No rigid restrictions on acceptable expenses. Exclude nonessential expenses. Allow such expenses as are consistent with the person's standard of living, but do not allow expenses that help a person maintain a luxurious standard of living that developed as the result of the incorrect payments. Consider any unusual individual circumstances. GN AGAINST EQUITY AND GOOD CONSCIENCE An overpaid beneficiary relinquished a valuable right or changed position for the worse in reliance on SSDI/SSI payments or an overpaid beneficiary lived in a separate household from the overpaid person at the time of the overpayment and did not receive the overpayment. GN Against equity is presumed if there was: Misunderstanding about gross vs. take-home pay. GN Reliance on misinformation from an official source. GN AGAINST EQUITY AND GOOD CONSCIENCE Groseclose v. Bowen, 809 F.2d 502 (8th cir. 1987) expanded the notion of against equity and good conscience. Adopted in 20 CFR Financial circumstances are not material. 20 CFR ; SI , GN

14 ADMINISTRATIVE TOLERANCE An overpaid individual who requested a waiver is without fault and has an overpayment $1, or less recoupment waived. Can be applied to subsequent overpayments (each overpayment counted separately). 20 CFR ; SI If an overpayment results from excess resources of $50 or less, and no indications of fault, waiver granted, even if not requested. 20 CFR ; SI OVERPAYMENT RECOVERY Refund-overpayment is paid in one or several monthly installments. 20 CFR Adjustment- SSA deducts money from the monthly benefit check until the overpayment is repaid. 20 CFR ; , GN YEAR BAR TO ADJUSTMENT OF RECOVERY Recovery by adjustment is barred more than 10 years after a debt accrues when the means to collect by benefit withholding was available but no recovery efforts were initiated. The bar applies to the debt not the debtor. Barring recovery of one debt under the 10-year rule does not relieve the debtor of other debts. Does not apply when cross-program recovery is involved or an unresolved protest or appeal is the cause of SSA's inaction. GN ; HHS Regulation, 45 C.F.R., Section 30.12(a)(4) 42

15 OVERPAYMENT RECOVERY FROM SSI RECIPIENTS Recoupment is limited to the lesser of total monthly SSI or 10 % of the total monthly income (SSI with state supplement and countable income) 20 CFR Where the overpaid beneficiary cannot meet current ordinary and necessary living expenses recoupment may be reduced to less than 10 % up to $1/month. 20 C.F.R OVERPAYMENT RECOVERY FROM SSDI RECIEPIENTS SSA can recover 100% of the monthly benefit. Any part of SSDI benefit needed to repay Medicare Part B (SMI) will be applied to the premium obligation (including any arrearage) before any withholding to recover an overpayment. This adjustment should be automatic. GN When there is no waiver request, SSA will consider a different rate of withholding only at the debtor's request. The installment amount should bear reasonable relationship to the amount owed but should not be less than $10.00 per month. GN OVERPAYMENT RECOVERY FROM SSDI RECIPIENTS Recovery within 12 months or 36 months SSA will grant, without financial development, any request that is at least $10 and would permit recovery within 12 months. If the debtor is receiving another type of cash public assistance (VA service benefits, TANF) SSA should withhold at the rate requested but no less than $10. If a negotiated/requested rate would not permit recovery within 36 months but the debtor has a 100% Medicare Part D subsidy, SSA must grant, without financial development, any request that is at least $10. GN

16 RATE OF WITHHOLDING Amount of withholding is not subject to appeal. If waiver denied because recovery would not cause hardship, SSA will limit withholding to the difference between income and expenses. EXAMPLE: A person is without fault in causing a $7500 overpayment but waiver is denied because the debtor can afford to repay $65 a month without financial hardship. Withholding is limited to $65 monthly. To request lower payments, use the budget portion of the Request for Waiver form to show hardship. GN OVERPAYMENT RECOVERY FROM SSDI+SSI RECEPIENTS When a person receives SSDI and SSI, only 10 % of the SSDI monthly benefit will be withheld to recover the title II overpayment. The 10% withholding rate will apply in concurrent claims unless the overpaid person specifically requests a greater (or lesser) rate of withholding. GN WHEN SSA HAS ATUHORITY TO SETTLE AN OVERPAYMENT Unable (unwilling) to repay within a reasonable time; or Unwilling to repay the full debt and enforced collection is unavailable or is likely to exceed the amount recovered; or Real doubt concerning the Government s ability to prove its case in court either because of the legal issues involved or a dispute as to the facts. GN

17 COMPROMISE SETTLEMENT No authority to compromise if the overpayment is > $100,000 ( goes to DOJ) or if there s fraud. An offer of 80% of the debt will be accepted if SSA has the authority to compromise. GN Finances are not considered in compromise settlements. 20 CFR ; SI ; GN OTHER RECOVERY OPTIONS Offset of Federal Tax Refunds. 20 CFR ; ; GN , SI Administrative Wage Garnishment. 20 C.F.R ; , , GN Administrative Offset through the Treasury Offset Program (TOP) 20 CFR GN , GN Private collection agencies Credit Reporting 20 CFR CRITERIA FOR TREASURY REFUND OFFSET (TRO) The debtor is alive; Not entitled to benefits; Was 18 years or older when the debt was established on SSA's records; The debtor's BOAN (TIN) is on the MBR; The debt is $25 or more; The debtor is not making regular installment payments, or efforts to recover the debt have terminated; The debt is past-due, and legally enforceable. GN ; SI

18 INFORMATION IN THE TRO- PRE-OFFSET NOTICE Amount of the delinquent debt; SSA plans to refer the debt to Treasury for TRO and/or send information about the debt to credit bureaus after 60 days have expired from the date on the notice; No action before the end of that 60-days or if the debtor pays in full, makes regular installment payments, requests waiver, furnishes evidence showing that s/he does not owe all or part of the debt; a Right to review and copy SSA's records about the debt. GN TRO-LEGALLY ENFORCEABLE DEBT It has not been paid in full and recovery has not been waived; A bankruptcy petition is not currently pending in court and the debt was not previously discharged in bankruptcy; The debtor is alive; The debtor is primarily liable. GN SELECTION OF DEBT FOR CREDIT REPORTING The debt must have been paid to a person who was age 18 or older; Unrecoverable ; Owed by a person who is no longer entitled to receive SSDI or SSI; The debtor must be alive; The debtor's BOAN (TIN) must be on the MBR, $25.00 or more and delinquent for no more than 6 years and 6 months SI

19 ADMINISTRATIVE WAGE GARNISHMENT The debtor is alive and not entitled to benefits/medicare based on disability/not using the Ticket to Work: The debt of $200 or more was established after age 18, and is past-due, and legally enforceable ( GN C); The debtor has regular wages; The debtor was not involuntarily separated from employment or, if he was, has been re-employed continuously for at least 12 months; No installment payment arrangements or the debtor failed to make a payment for two consecutive months; No waiver or appeal is pending, and cross Program Recovery is not available. GN ADMINISTRATIVE WAGE GARNISHMENT The SSA decision to use AWG to collect an overpayment debt is not subject to appeal. Individuals may still request reconsideration of the overpayment determination. Since cases selected for AWG are by definition beyond the 60-day period for requesting reconsideration of the debt, the person must prove good cause for late filing. SI AWG DUE PROCESS RIGHTS-60 DAYS NOTICE Review of the Debt. No evidence in the record to show that the debtor does not owe the debt or does not owe it in the amount claimed by SSA or SSA is precluded from collecting it. IMPORTANT: The AWG request for review is not the same as a request for reconsideration of the fact/amount of the overpayment determination. No additional appeal rights exist. Request a Lower AWG Amount Due to Financial Hardship due to materially changed circumstances (disability, divorce, catastrophic illness). No AWG reduction if the overpayment resulted from fraud, an intentional false statement or willful concealment of, or failure to furnish, material information. Inspect and Copy SSA Records About the Debt 57

20 LIMITATIONS ON FILING A CIVIL SUIT TO COLLECT OVERPAYMENTS No question as to the fact or amount of a debt. The debtor's age, mental condition or physical condition Civil suit is not barred by SOL, the complaint must be filed within: 6 years after the right of action accrues (i.e., within 6 years after the time an overpayment determination has been made); or 1 year after a final decision has been rendered in an administrative proceeding, whichever is later. The time limitation will be extended if facts material to the right of action are not and could not reasonably have been known by SSA. GN BANKRUPTCY Automatic stay of collection activity with respect to the debtor, any minor child or legally incompetent adult child with the debtor as the representative payee and any contingently liable person. Binding on SSA, with any repayment limited to the terms of the bankruptcy order. SSA is subject to contempt citations if collection efforts occur after bankruptcy notification. GN ; SI BANKRUPTCY UNDER CHAPTER 7 All existing debts whether or not specifically included in the petition. A debt exists if the payments comprising that debt were made prior to the bankruptcy filing date (a pre-petition debt). It is not necessary for the debt to be identified in the petition or for the debt to have been identified by SSA. If the bankruptcy court issues a discharge order, it will discharge all debts that arose prior to date of filing. If the debtor did not list SSA as a creditor in the bankruptcy petition, in a no assets case, such unlisted debts are discharged. In cases where the debtor had assets, unlisted debts are only discharged if the creditor received actual notice of the bankruptcy in time to file a proof of claim. GN

21 BANKRUPTCY UNDER CHAPTER 13 Applies to only those debts specifically included in the petition. However, at the time of filing the petition, the automatic stay applies to all debts that arose before the filing of the petition not just those listed in the petition. GN SECOND WAIVER REQUEST FOR THE SAME OVERPAYMENT Possible if the claimant was denied a waiver based on ability to repay. Inability to repay is current ability to repay and SSA can consider changed circumstances. A final determination that the claimant was at fault is res judicata, in the absence of grounds to reopen. GN SUBSEQUENT OVERPAYMENTS If an individual is advised of the correct interpretation of a provision, s/he will be found at fault for any subsequent overpayments involving the same provision. GN

22 HOW TO AVOID OVERPAYMENTS Timely report anything that may affect eligibility/benefit amount Keep copies of SSA notices/documents submitted to SSA Know your rights and obligations Contact Benefits Planners if planning to work 64