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GN 02230.040: Non-Entitled Debtors (NED) – Collection of Overpayments from Representative Payees of Deceased Title II Beneficiaries

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  • Effective Dates: 07/01/2016 - Present
  • Effective Dates: 10/31/2017 - Present
  • TN 6 (08-08)
  • TN 9 (10-17)
  • GN 02230.040 Non-Entitled Debtors (NED) – Collection of Overpayments from Representative Payees of Deceased Title II Beneficiaries
  • A. Authorities
  • 1. Foster Care Independence Act (FCIA)
  • The Foster Care Independence Act (FCIA) of 1999 (Public Law 106-169), section 201, requires SSA to establish an overpayment control record under the Social Security Number of payees who received payments after the death of the individual. That section of the law amended Section 204(a)(2) of the Social Security Act (42 USC 404(a)(2)) by adding the following sentence: “If any payment of more than the correct amount is made to a representative payee on behalf of an individual after the individual’s death, the representative payee shall be liable for the repayment of the overpayment, and the Commissioner of Social Security shall establish an overpayment control record under the social security account number of the representative payee.” To meet the requirement of FCIA section 201, SSA created the NED database, which establishes the overpayment control record.
  • 2. Social Security Act
  • The Social Security Act, section 204(a)(1)(A) states that whenever the Commissioner of Social Security finds that more or less than the correct amount of payment has been made to any person under this title, proper adjustment or recovery shall be made, under regulations prescribed by the Commissioner of Social Security, as follows “With respect to payment to a person of more than the correct amount, the Commissioner of Social Security shall decrease any payment under this title to which such overpaid person is entitled, or shall require such overpaid person or his estate to refund the amount in excess of the correct amount.”
  • 3. Social Security Protection Act
  • The Social Security Protection Act of 2004 (Public Law 108-203), section 105, states if, “a representative payee that is not a Federal, State, or local government agency has misused all or part of an individual’s benefit that was paid to such representative payee under this subsection, the representative payee shall be liable for the amount misused, and such amount (to the extent not repaid by the representative payee) shall be treated as an overpayment of benefits under this title to the representative payee for all purposes of this Act and related laws pertaining to the recovery of such overpayments.”
  • 4. Debt Collection Improvement Act (DCIA)
  • Amendments enacted in section 5 of Public Law 103-387 (1994) and the Debt Collection Improvement Act (DCIA) of 1996 (Public Law 104-134), section 31001(z)(2)(A), authorized SSA to use administrative offset, credit bureau reporting, interest and penalty charging, private collection agencies and Federal Salary Offset (FSO) to collect delinquent debts. (Those provisions amended Section 204(f) of the Social Security Act (42 USC 404).)
  • Amendments enacted in section 5 of Public Law 103-387 (1994) and the Debt Collection Improvement Act (DCIA) of 1996 (Public Law 104-134), section 31001(z)(2)(A), authorized SSA to use administrative offset, credit bureau reporting, interest and penalty charging, private collection agencies and Federal Salary Offset (FSO) to collect delinquent debts. (Those provisions amended Section 204(f) of the Social Security Act (42 USC 404)).
  • See Details
  • GN 02201.031 - Collection of Title II Overpayments by Administrative Offset
  • GN 02201.031 Collection of Title II Overpayments by Administrative Offset
  • GN 02201.032 – Reporting Title II Overpayment Debts to Credit Bureaus
  • GN 02201.032 Reporting Title II Overpayment Debts to Credit Bureaus
  • GN 02201.043 – Collection of Title II/Title XVI Overpayments by Federal Salary Offset (FSO)
  • GN 02201.043 Collection of Title II/Title XVI Overpayments by Federal Salary Offset (FSO)
  • NOTE: SSA is not yet using interest-charging, penalty-charging, or private collection agencies. Those tools are scheduled for future development, and their applicability to payees will be determined.
  • In addition, DCIA authorized Administrative Wage Garnishment (AWG). Section 31001(o)(1) amended Chapter 37, subchapter II, of title 31, United States Code (USC), by adding section 3720D to permit Federal agencies to use AWG to recover delinquent nontax debts. In January 2004, SSA’s regulations governing its AWG program became final. Those regulations are in 20 Code of Federal Regulations (CFR) Part 422, subpart E, sections 422.401–422.445. SSA’s final regulations implement 31 U.S.C. 3720D under the guidance provided by the Department of the Treasury at 31 CFR 285.11. This section of DCIA allows us to use AWG to collect overpayments owed by payees. For more detailed information about AWG, see GN 02201.040.
  • NOTE: SSA is not yet using interest-charging, penalty-charging, or private collection agencies. Those tools are scheduled for future development, and their applicability to payees will be determined.
  • 5. Unemployment Compensation Act
  • The Unemployment Compensation Act of 1992 made tax refund offset (TRO) a permanent authority for SSA. The authority to use TRO to collect delinquent debts from payees and other debtors come from 31 USC 3720A. SSA’s regulations in 20 CFR 404.520–404.526 contain the Agency’s rules for using TRO to collect delinquent debts. For detailed information about TRO, see GN 02201.030.
  • B. Background
  • The fully developed NED initiative will enable SSA to identify, record, control, and resolve debts owed by people with no master records. At this time, NED controls payments made to representative payees after the death of a title II beneficiary, and overpayments to representative payees prior to the death of the title II beneficiary for which the payee is responsible. The main benefit of NED is that it gives SSA the capability to use TOP/ECO debt collection tools to collect the overpayments from the payees.
  • The NED initiative will enable SSA to identify, record, control, and resolve debts owed by people with no master beneficiary records. At this time, the NED system controls payments made to representative payees after the death of a title II beneficiary, and overpayments to representative payees prior to the death of the title II beneficiary for which the payee is responsible. The main benefit of NED is that it gives SSA the capability to use TOP/ECO debt collection tools to collect the overpayments from the payees.
  • 1. Criteria for selection
  • Currently, NED identifies and selects both existing and prospective title II overpayments incurred by representative payees of a deceased title II beneficiary. These are debts that have been or will be established on the Recovery of Overpayments, Accounting and Reporting (ROAR) system. For information on the ROAR system, see SM 00610.001.
  • NED identifies and selects both existing and prospective title II overpayments incurred by representative payees of a deceased title II beneficiary. These are debts that have been or will be established on the Recovery of Overpayments, Accounting and Reporting (ROAR) system. For information on the ROAR system, see SM 00610.001.
  • 2. Automated identification and selection of NEDs
  • SSA’s systems conduct the automated identification and selection of NEDs. The system automatically selects the debts and then carries them through the debt collection program. The result is the inclusion of eligible NED debts in the TOP/ECO program, where authorized collection techniques such as TRO, administrative offset, credit bureau reporting, and AWG are used to recover the overpayments.
  • NOTE: NED currently does not provide the capability to load a debt to the NED database manually. Future enhancements to NED will permit manual input to the database.
  • NOTE: NED currently does not provide the capability to load a debt to the NED database manually. Future enhancements to NED will permit manual input to the database.
  • C. Policy of payments to payees of a deceased beneficiary
  • 1. Payments to payees of a deceased beneficiary
  • Payments made to payees after the death of a beneficiary, and overpayments to payees prior to the death of the beneficiary are legally defined overpayments (LDO) for which the payee is responsible. There are some overpayments excluded from NED processing (see exceptions in GN 02230.040D.2). For information on what is and is not an overpayment see GN 02201.001.
  • NOTE: NED payees who are responsible for these LDOs have all of the due process rights afforded to overpaid beneficiaries.
  • NOTE: NED payees who are responsible for these LDOs have all of the due process rights afforded to overpaid beneficiaries.
  • a. Initial overpayment notice
  • Payees receive initial overpayment notices informing them about the debt, requesting repayment in full and providing due process rights. See GN 02201.009.
  • b. Due process rights
  • The initial overpayment notice to the NED payee explains the right to request waiver and the right to request reconsideration of the overpayment determination. For due process rights, see GN 02201.009.
  • Payees receive initial overpayment notices informing them about the debt, requesting repayment in full and providing due process rights. Due Process rights are the right to request waiver and the right to request reconsideration of the overpayment determination. For due process rights, see GN 02201.009.
  • 2. Debt collection tools
  • SSA uses all authorized debt collection tools to collect the overpayments from NED payees. As appropriate, we use billing and follow-up (via the RECOOP system), TOP/ECO tools and benefit withholding, including cross-program recovery, when available.
  • SSA uses all authorized debt collection tools to collect the overpayments from NED payees. We use billing and follow-up (via the RECOOP system), TOP/ECO tools and benefit withholding, including cross-program recovery, when available.
  • 3. Effect of overpayment on continued eligibility to serve as a payee
  • To determine if the NED should serve as a representative payee for other beneficiaries, refer to GN 00502.132.
  • 4. NED in current pay – auxiliary beneficiary
  • In some cases, the NED is in current pay (see GN 02230.040D.5.) and an auxiliary beneficiary is entitled on the NED’s earnings record. Do not collect any NED related overpayment from any auxiliary on the NED’s own record. Do not move the overpayment to any auxiliary’s ROAR record on the NED claim account number. The auxiliaries are not held responsible for repaying this debt.
  • NOTE: NED overpayments can only be collected from his/her benefit payments or his/her estate.
  • NOTE: NED overpayments can only be collected from his/her benefit payments or his/her estate.
  • D. Process
  • 1. Overview of systems process
  • A database was developed to control debts for NEDs. Currently, overpayments made to representative payees of deceased title II beneficiaries are recorded in the database, as well as on the ROAR system. As a result, TOP/ECO selects these NED cases and uses the appropriate debt collection tools to recover the debt from the overpaid representative payee.
  • The NED database currently controls and records overpayments made to representative payees of deceased title II beneficiaries, as well as on the ROAR system. As a result, TOP/ECO selects these NED cases and uses the appropriate debt collection tools to recover the debt from the overpaid representative payee.
  • 2. Identification of NED representative payees
  • NED debts are automatically established on the NED database based on the post entitlement (PE) actions that terminate benefits to the beneficiary because of death. The beneficiary must have had a representative payee who is an individual with an SSN, and not an organizational representative payee.
  • NED debts are automatically established on the NED database. Based on the post entitlement (PE) actions that terminate benefits to the beneficiary because of death. The beneficiary must have had a representative payee who is an individual with an SSN, and not an organizational representative payee.
  • In future releases, NED will expand the type of debts targeted to include all legally defined overpayments (LDO) in MSOM DMS 001.001C, except Medicare (TOE 29), title 16 Cross Program Recovery (TOE 31), Civil Monetary Penalty (TOE 61), and title 8 Cross Program Recovery (TOE 64).
  • The NED database records debts as active or inactive:
  • * An active status in NED means that there is an overpayment balance that can be pursued from the non-entitled debtor.
  • * An inactive status in NED means that the overpayment has been reduced to zero or that the overpayment can no longer be pursued. An inactive status could result from events such as the posting of an additional overpayment to the deceased beneficiary’s record or repayment or other resolution. For more information about NED processing, see SM 00610.090.
  • * An active status in NED means that there is an overpayment balance that can be pursued from the non-entitled debtor. An active status could result from events such as the posting of an additional overpayment to the deceased beneficiary’s record or repayment or other resolution.
  • * An inactive status in NED means that the overpayment has been reduced to zero or that the overpayment can no longer be pursued. For more information about NED processing, see SM 00610.090.
  • 3. Interface with the Recovery and Collection of Overpayment Process (RECOOP)
  • The NED database interfaces with the RECOOP billing system. This interface allows RECOOP to extract data from the NED database for billing purposes. RECOOP reads the NED database, and when necessary updates address information in its records, and sends bills to the most recent address for the payee. For more information about the data interface between RECOOP and the NED database, see SM 00610.095.
  • The NED database interfaces with the RECOOP billing system. This interface allows RECOOP to extract data from the NED database for billing purposes. RECOOP reads the NED database, and when necessary updates address information on the records, and sends bills to the most recent address for the payee. For more information about the data interface between RECOOP and the NED database, see SM 00610.095.
  • 4. Interface with the Treasury Offset Program/External Collection Operation (TOP/ECO)
  • A systems interface has been established between the NED database and the ECO system. NED does not pass any data to ECO. However, ECO does extract data from the NED database. See SM 00610.097 for more information about the data interface between TOP/ECO and the NED database.
  • NED inactivates the ECO record of the deceased beneficiary, which allows for creation of a new ECO record for the liable party (e.g. representative payee) under the same SSN/BIC. Therefore, all updates to ECO will be against the current ECO record for the liable party.
  • NOTE: The NED’s domestic address and phone number can be directly changed in the NED database via the NEDA screen, which provides ECO with the current address. However, this change will not interface with or update the MBR. For more information about the DMS NED process and screens see MSOM DMS 012.001 through MSOM DMS 012.006.
  • NOTE: The NED’s domestic address and phone number can be directly changed in the NED database via the NEDA screen, which provides ECO with the current address. However, this change will not interface with or update the MBR. For more information about the DMS NED process and screens, see MSOM DMS 012.001 through MSOM DMS 012.006.
  • 5. NED in current pay
  • In some cases, after selection, the NED payee is found to be in current pay or becomes entitled to Social Security benefits on an account (either his or her account or someone else’s). This can occur in two circumstances:
  • In some cases, after selection, the NED payee is found to be in current pay or becomes entitled to Social Security benefits on an account (either his or her own account or someone else’s). This can occur in two circumstances:
  • * Systems limitations in the NED selection process, and
  • * Entitlement begins after NED selection
  • ECO looks for entitlement beginning 90 days after NED establishment. If the NED payee is in current pay on another account, the system generates a one-time alert via the Processing Center Action Control System (PCACS). The NED Alert A - Debtor in Current Pay on Another Account is generated in the Debt Management Section of the Processing Center of jurisdiction. For more information about the NED Alert, see SM 00610.070.
  • NOTE: The PSC should take action to establish benefit withholding by using the Establish Offset (OLP) (DROL) screen per instructions in MSOM DMS 006.016 Establish Offset (OLP) (DROL). Input to the DROL screen results in deleting the debt from the ROAR record of the deceased beneficiary, establishing the debt on the claim account number on which the NED is entitled, and starting benefit withholding in the specified amount and month.
  • NOTE: The PSC should take action to establish benefit withholding by using the Establish Offset (OLP) (DROL) screen per instructions in MSOM DMS 006.016 Establish Offset (OLP) (DROL). Input to the DROL screen results in deleting the debt from the ROAR record of the deceased beneficiary, establishing the debt on the claim account number on which the NED is entitled, and starting benefit withholding in the specified amount and month.
  • E. Procedure for debtor inquiries, requests and protests
  • E. Procedure for debtor inquiries, requests, and protests
  • NED payees have the same due process rights as beneficiaries who are overpaid. In addition, the payees make the same requests and have the same questions as overpaid beneficiaries.
  • SSA’s existing overpayment policies and procedures serve to address the inquiries, requests and protests made by NED payees. The following table lists the most likely events and displays the appropriate instructions for FOs, PCs, and TSCs:
  • SSA’s existing overpayment policies and procedures serve to address the inquiries, requests and protests made by NED payees.
  • The following table lists the most likely events and displays the appropriate instructions for FOs, PCs, and TSCs:
  • Event
  • If TOP/ECO not involved, see POMS:
  • If TOP/ECO involved but AWG and FSO not active, see POMS:
  • If TOP/ECO involved and AWG or FSO is active, see POMS:
  • If TOP/ECOinvolved andAWG or FSOis active,see POMS:
  • Request to Repay in Full
  • GN 02210.214A. Debtor Willing to Repay
  • GN 02210.214A. Debtor Willing to Repay
  • GN 02201.041C.1.
  • Debtor Reactions to Collection of Title II Overpayments by Administrative Wage Garnishment (AWG) or GN 02201.044C.1. Debtor Reactions to Collection of Title II Overpayments by Federal Salary Offset (FSO)
  • Debtor Reactions to Collection of Title II Overpayments by Administrative Wage Garnishment (AWG)
  • or
  • GN 02201.044C.1. Debtor Reactions to Collection of Title II Overpayments by Federal Salary Offset (FSO)
  • Request to Repay by Installments
  • GN 02210.214B.
  • Debtor Willing to Repay
  • GN 02210.214B.
  • Debtor Willing to Repay
  • GN 02201.041C.2.
  • Debtor Reactions to Collection of Title II Overpayments by AWG or GN 02201.044C.2. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Debtor Reactions to Collection of Title II Overpayments by AWG
  • or
  • GN 02201.044C.2. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Request to Repay by Credit Card
  • GN 02210.152
  • Collection of Title II and Title XVI Overpayments by Credit Card
  • GN 02210.152
  • Collection of Title II and Title XVI Overpayments by Credit Card
  • Collection of Title II and
  • Title XVI Overpayments by Credit Card
  • GN 02201.041C.1.
  • Debtor Reactions to Collection of Title II Overpayments by AWG or
  • GN 02201.044C.1. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Request for Compromise
  • GN 02210.215
  • Debtor Offers to Compromise
  • GN 02201.030D.7.
  • Collection of Title II Overpayments by Tax Refund Offset (TRO)
  • GN 02201.041C.3.
  • Debtor Reactions to Collection of Title II Overpayments by AWG or GN 02201.044C.3. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Debtor Reactions to Collection of Title II Overpayments by AWG or
  • GN 02201.044C.3. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Request for Waiver
  • GN 02210.219
  • Request for Explanation of Overpayment, Reconsideration or Waiver - DCR/DS Actions
  • GN 02201.030D.2. Collection of Title II Overpayments by TRO
  • GN 02201.041B.2.
  • Debtor Reactions to Collection of Title II Overpayments by AWG or GN 02201.044B.2. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Debtor Reactions to Collection of Title II Overpayments by AWG or
  • GN 02201.044B.2. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Request for Explanation
  • GN 02210.219
  • Request for Explanation of Overpayment, Reconsideration or Waiver - DCR/DS Actions
  • GN 02201.030D.1.
  • Collection of Title II Overpayments by TRO
  • GN 02201.041B.1.
  • Debtor Reactions to Collection of Title II Overpayments by AWG or
  • GN 02201.044B.1. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Request for Reconsideration
  • GN 02210.219
  • Request for Explanation of Overpayment, Reconsideration or Waiver - DCR/DS Actions
  • GN 02201.030D.5.
  • Collection of Title II Overpayments by TRO
  • GN 02201.041B.7.
  • Debtor Reactions to Collection of Title II Overpayments by AWG or GN 02201.044B.8. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Debtor Reactions to Collection of Title II Overpayments by AWG or
  • GN 02201.044B.8. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Request for AWG/FSO Hardship
  • Not applicable
  • Not applicable
  • GN 02201.041B.5.
  • Debtor Reactions to Collection of Title II Overpayments by AWG or GN 02201.044B.5. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Debtor Reactions to Collection of Title II Overpayments by AWG or
  • GN 02201.044B.5. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Request for Review of the Debt
  • (not reconsideration)
  • Not applicable
  • GN 02201.030D.5.
  • Collection of Title II Overpayments by TRO
  • GN 02201.041B.4.
  • Debtor Reactions to Collection of Title II Overpayments by AWG or GN 02201.044B.4. Debtor Reactions to Collection of Title II Overpayments by FSO
  • Debtor Reactions to Collection of Title II Overpayments by AWG or
  • GN 02201.044B.4. Debtor Reactions to Collection of Title II Overpayments by FSO
  • F. Other situations - responsible party other than payee
  • In rare cases, the representative payee may not be responsible for repaying the benefits of a deceased beneficiary. For example, someone stole and cashed the checks sent to the representative payee after the death of the beneficiary.
  • NOTE: The Non-Entitled Debtor Status Change (NESC) screen is used to change the debtor NED STATUS and the NED STATUS REASON recorded on the NED database. If the representative payee is not responsible for the debt, use the NESC screen to change the NED status reason to Not Responsible, which will change the NED Status from active to inactive. For more information about the NESC screen, see MSOM DMS 012.006.
  • NOTE: We use the Non-Entitled Debtor Status Change (NESC) screen to change the debtor NED STATUS and the NED STATUS REASON recorded on the NED database. If the representative payee is not responsible for the debt, use the NESC screen to change the NED status reason to Not Responsible, which change the NED Status from active to inactive. For more information about the NESC screen, see MSOM DMS 012.006.
  • Until subsequent releases of NED are developed, SSA has very limited automated support to collect debts from these individuals or entities. In addition, the Social Security Act in some cases precludes the collection of debts from benefits payable to the responsible party.
  • NOTE: If there is an indication that fraud was involved please reference GN 02201.050.
  • NOTE: If there is an indication that fraud was involved, reference GN 02201.050.
  • 1. Responsible party other than payee not entitled to benefits
  • If the responsible party is not entitled to benefits, establish a ROAR record for that party using the Establish Debt (SMED) data screen per instructions in MSOM DMS 002.003. The PSC should be sure to establish the ROAR record on the claim account number of the deceased beneficiary using the “X” beneficiary identification code (BIC), as described in SM 00610.772 - Non-Entitled Overpaid Persons. Also, be sure to delete the overpayment from the deceased beneficiary’s ROAR record, per instructions in MSOM DMS 002.011 Transaction Correction, otherwise it will cause the same debt to be recorded twice. Take the following steps to collect the debt:
  • * Send an initial overpayment notice to the responsible party. If the debt is not a LDO, do not include waiver rights or reconsideration rights. For more information on what is and is not an LDO, see GN 02201.001.
  • * Send an initial overpayment notice to the responsible party. If the debt is not a LDO, do not include waiver rights or reconsideration rights. For more information on what is, and is not an LDO, see GN 02201.001.
  • * Ask for full repayment within 30 days.
  • * Follow-up in 60 days from the input to SMED for the presence of a repayment. To control the follow-up, the ROAR system will automatically generate diary code 5 (processing center (PC) alert-regular), as a result of the input to SMED.
  • * Follow-up in 60 days from the input to SMED for the presence of a repayment. To control the follow-up, the ROAR system automatically generates diary code 5 (processing center (PC) alert-regular), as a result of the input to SMED.
  • * If the responsible party does not repay, send a ROAR reminder notice.
  • * Check the status of repayment in about 60 days when ROAR automatically generates another diary code 5.
  • * If the debtor has not repaid, stop any further collection efforts to collect the debt.
  • * Input a termination of collection efforts by using the Terminate Collection (DFTE) screen described in MSOM DMS 007.003 Terminate Collection (DFTE).
  • * Input a termination of collection efforts by using the Terminate Collection (DFTE) screen described in MSOM DMS 007.003.
  • 2. Responsible party other than payee entitled to benefits
  • If someone other than the representative payee is responsible for accepting the payments, then the responsible party owes a debt for those payments. The specific circumstances of the indebtedness dictate whether or not benefit withholding is authorized. Each case must be examined on its own merits.
  • For example, individuals who negotiate stolen or forged checks generally cannot be subject to benefit withholding under section 204 of the Social Security Act. Section 207 of the Social Security Act prohibits collecting the debt by withholding benefits.
  • If you identify a case in which an individual other than the representative payee is responsible for the overpayment, contact your program analyst (in the PC) or other designated individual in the RO, as appropriate, for additional guidance. That designated individual will provide guidance or will contact Central Office for more information about the authority to withhold benefits. Do not take action to initiate benefit withholding.
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