SI 02101: Title XVI (SSI) Underpayments
TN 12 (04-08)
1. Past-due benefits paid to a dedicated account
Effective August 1996, after any Interim Assistance (IA) reimbursement payment and/or direct payment of representative fees, any payment that exceeds six times the Federal Benefit Rate (FBR) plus any Optional State Supplement (OSS) that is issued to the representative payee of an eligible individual under age 18, must be paid into a dedicated account at a financial institution. See GN 00603.025 for dedicated account requirements, and GN 00603.020 for information regarding collective savings and checking accounts.
NOTE: This account must be established by the representative payee prior to the release of the past-due benefits. SSA will directly deposit the past-due benefits into this account. Funds deposited into this account may be used only for certain limited expenditures as described in GN 00602.140.
EXCEPTION: If the Bureau of Indian Affairs has been appointed the representative payee by SSA and direct deposit is not possible, an A-OTP payment may be directly sent to the Bureau of Indian Affairs for deposit into the child’s account.
After reimbursement for IA and/or direct payment for representative fees, the past-due benefit is not equal to or greater than 3 X (FBR + OSS)
Normal underpayment rules apply and the past-due benefits are released by the system or offset for a collectible overpayment.
After reimbursement for IA and/or direct payment for representative fees, the past-due benefit equals or exceeds 3 X (FBR + OSS) but does not exceed 6 X (FBR + OSS)
Installment provisions (SI 02101.020) apply and the past-due benefits are released in installment payments by the system or offset for a collectible overpayment. A dedicated account is not required. This change is for past-due benefits payable on or after May 22, 2006.
After reimbursement for IA and/or direct payment of representative fees, the past-due benefits are greater than 6 X (FBR + OSS)
These payments must be made in installments at 6-month intervals, in addition to the requirement that they be deposited in a dedicated account. For installment requirements, see SI 02101.020.
In the previous scenario, a dedicated account is not opened by the representative payee
SSA cannot release the past-due benefits to the representative payee. Determine the need for new payee (GN 00504.100).
If the disabled/blind individual dies prior to the establishment of the dedicated account
Follow normal underpayment rules in SI 02101.001 to determine if and to whom the past-due benefits may be paid.
The disabled/blind individual dies after the establishment of a dedicated account
SSA has no authority over this account upon the death of the recipient. It is part of the deceased individual’s estate.
An SSI recipient attains age 18 prior to the issuance of the notice of determination of eligibility for the past-due benefits
Dedicated account provisions do not apply. Normal underpayment rules apply. Installments may apply.
An SSI recipient is under age 18 but does not have a representative payee
Dedicated account rules do not apply. Normal underpayment rules apply. Installments may apply.
2. Optional deposits to a dedicated account
After a dedicated account has been established, subsequent past-due benefits that are not more than 6 X (FBR + OSS) or equal to or greater than the maximum FBR may be, but are not required to be, deposited in the dedicated account. Once deposited, the funds may only be used for limited permissible expenditures.
NOTE: If the subsequent past-due benefit is equal to or greater than 3 X (FBR +OSS), but does not exceed 6 X (FBR +OSS), installments are required.
3. Definition - past-due benefits
Benefits due, but unpaid, that accrued prior to the month payment was effectuated;
Benefits due, but unpaid, that accrued during a period of suspension for which the recipient was subsequently determined to have been eligible; or
Any adjustment to benefits that results in an accrual of unpaid benefits.
4. Representative payee responsibilities
Any past-due benefits deposited into a dedicated account may only be used by the representative payee for specific and limited expenses for the disabled/blind individual. (For the representative payee requirements and responsibilities concerning these dedicated accounts before releasing any past-due benefits, see GN 00602.140.)
5. Resource and income exclusions
Past-due benefits deposited into a dedicated account are excluded from resources. Any accrued interest the account earns is excluded from income and resources. Additional smaller past-due benefits may be deposited into the “dedicated account” by the representative payee and are also excluded from resources (see SI 02101.010A.2.). (For additional information on this resource/income exclusion, see SI 01130.601.)
6. Installment dedicated accounts
Effective for past-due benefits paid on May 22, 2006 or later, Section 7502 of the Deficit Reduction Act of 2005 (P.L. 109-171), enacted February 8, 2006, changes the formula for determining when SSI past-due benefits are paid in installments.
If the past-due benefits equal or exceed 3 X (FBR+OSS) but do not exceed 6 X (FBR+OSS), after IA reimbursement and/or direct payment of representative fees, these payments must be paid in installments, but do not require a dedicated account.
If the past-due benefits are greater than 6 X (FBR+OSS), after IA reimbursement and/or direct payment of representative fees, these payments generally must be deposited into the dedicated account at 6-month intervals. The first and second installment payment cannot exceed 3 X (FBR + OSS).
The system determines (after any prepayment review, IA reimbursement and/or direct payment of representative fees) whether installments will be made. Diaries (EA and IN) are set and alerts (E1 and I6) are sent notifying the FO that the past-due benefit are scheduled for an Automated One-Time Payment (A-OTP) into the dedicated account. An automated notice is generated explaining the current installment payment and that the next payment will be made in 6 months.
However, even though the benefits must be deposited into a dedicated account, the installment procedures do not apply if the individual:
has a medical condition that is expected to result in death within 12 months, or
is ineligible at the time of payment and is likely to remain ineligible for the next 12 months.
If one of the above exceptions applies, the entire amount should be deposited into the dedicated account using the automated one-time payment (A-OTP) process.
7. Current calendar month benefits included in installment dedicated accounts
If benefits for the current calendar month (and/or a subsequent month) are included in the benefits subject to installments/dedicated accounts (see above) the FO may use the A-OTP process for the current month (and/or a subsequent month). In some instances, this action removes the case from the installment/dedicated account provisions.
NOTE: This action can be taken only after any prepayment review of large underpayments (SI 02101.025), adjustment for reimbursement for IA, or calculation or adjustment for direct payment of attorney/non-attorney fees.
EXAMPLE 1: If the SSI claim is effectuated on 08/15, the current computation month is September. The first monthly benefit would be issued September 1 and all benefits through August would be treated as an underpayment subject to the installment/dedicated account provisions. The FO may issue an A-OTP for August (the current calendar month).
EXAMPLE 2: If the claim was effectuated after the current computation month cutoff in August, the current computation month would be October. The first monthly benefit check would be issued October 1, and all benefits due through September would be treated as an underpayment and subject to installment/dedicated account provisions. In this situation, the FO may issue an A-OTP for the current calendar month’s benefits (August), and September benefits.
In both examples, the possibility exists that the A-OTP may reduce the underpayment so that the installment/dedicated account provisions do not apply.
8. Interim Assistance Reimbursement (IAR) cases
The SSA-L8125-F6 is generated to the State requesting the amount of IAR when a dedicated account may be involved. Upon receipt of the completed SSA-L8125, the FO pays the amount due to the State using the A-OTP process and, if the criteria are met, the FO issues any remaining past-due benefits to the dedicated account by A-OTP. (For the special instructions, see “IAR Payment Processing” SI 02003.025.)
If a dedicated account is not required after IAR or direct payment for representative fees, the underpayment is released.
For installment procedures, see “Installment Payments of Large Past-Due Benefits – Individual Alive” SI 02101.020.
9. Closed period of disability at time of past-due benefit determination and medical cessation cases
In closed period of disability cases placed in PSY N07 (i.e., not disabled), a dedicated account is not required for a child under 18 with a representative payee, even if an appeal is filed.
In medical cessation cases (CDRs), even when the cessation is appealed, the dedicated account rules stop at termination, unless benefit continuation is granted. If benefit continuation applies, then dedicated account rules continue.
If an existing dedicated account is involved in a medical cessation case, the rules for the account cease, unless benefit continuation applies.
10. Non-pay dedicated account cases with installments
If a case goes into non-pay or suspense status during the installment process, the FO is still responsible for issuing the scheduled installment to the representative payee by A-OTP. Manual notices are also required. For instructions on the prohibition against paying installments to persons residing in a correctional institution, see the No Social Security Benefits for Prisoners (NSSBP) Title XVI Provisions located in SI 00529.001.
1. IAR involvement – underpayment $5000 or more
If the past-due benefits are equal to or greater than $5,000, the FO must complete the underpayment prepayment review (see “Basic Requirements of SSI UP Review” SI 02101.025). Use the UOUP screen through Direct SSR Update (see MSOM BUSSR 004.018).
Once the prepayment review is complete, select the appropriate release option from the UOUP screen. If the prepayment review is not done through the UOUP screen, the case will not be automated. The system generates:
An underpayment verification code (UPV) of ‘V’;
The State is requested to submit a request for reimbursement for IA within 25 days through the eIAR website. Once the request has been submitted, the system will compute and issue the reimbursement amount, and process the remaining underpayment according to the priority of payment rules. If the system cannot issue the reimbursement automatically, an I9 diary will post to the record which requires an FO intervention;
NOTE: The E1 alert is not set and the EA diary is not set until the IAR is resolved.
An E1 alert that a dedicated account needs to be established; and
An EA diary indicating need for account establishment.
The system then determines whether the remaining underpayment requires a dedicated account and whether installments are required and changes the UPV field from a ‘V’ to ‘2’ or ‘B.’ When the representative payee has established the dedicated account, the past-due benefits should be direct deposited into the account by A-OTP. (See SM 01311.660 and MSOM BUSSR 004.018.)
NOTE: For past-due benefits less than $5,000 with IAR involvement, the system also determines whether a dedicated account is required after the State and/or direct payment of representative fees has been paid. If a dedicated account is still required, an alert and diary is generated for the establishment of the account and payment of benefits.
Once the account is established, follow the procedures in SI 02101.010B.3 in this section (See “Processing an Underpayment” SM 01311.660). The system releases the underpayment (in installments, if required) if a dedicated account is not required after IA reimbursement and/or direct payment for representative fees. See “Installment Payments of Large Past-Due Benefits – Individual Alive” SI 02101.020.
When there is a prior collectible overpayment on the record and there is direct payment of authorized representative fees, the priority of payment order is:
Direct Payment of Representative Fee
Recovery of Prior Overpayment
2. No IAR involvement and no direct payment of representative fee
If the past-due benefits require a prepayment review, the FO should follow instructions in “Basic Requirements of SSI UP Review” SI 02101.025. After the prepayment review, use the UOUP screen to release the underpayment using the appropriate option. (See MSOM BUSSR 004.018 and SM 01311.661)
The system determines if a dedicated account with installments applies. It sets the UPV to ‘B’. An automated notice is sent to the representative payee informing him or her to set up a dedicated account. An EA diary is also set with a 30-day maturity date. If the diary matures, an E1 alert is generated to notify the FO that a dedicated account needs to be established. Follow-up alerts are sent every 15 days thereafter until an A-OTP has been issued to the dedicated account, resolving the diary.
NOTE: If no prepayment review is necessary but the record requires a dedicated account, the system sets the UPV to ‘B’ and appropriate diaries and alerts are set, as explained. Appropriate notices are also generated by the system.
3. Dedicated account established by a representative payee
Once the representative payee has established the dedicated account for the disabled/blind individual and has provided the FO with the required information for the account (the name and address of the financial institution, the routing number, account number, account title, type of account, and the amount of money deposited to open the account), the FO should:
Input the financial institution information (routing number, account number, etc.) using the One-Time Payment Address (UPOA) screen. (For the A-OTP to pay the past-due benefits into the dedicated account, see SM 01901.160.) See MSOM BUSSR 003.023.
NOTE: This account cannot be the same financial account to which the regular, recurring SSI check is directed. If the bank account input on the A-OTP matches the bank account on the SSR in the DRDP segment of the SSR, a UP reject is given (For A-OTP rules for records with direct deposit, see SM 01901.160). Use the Special Payments Menu (UPSP) from the Direct SSR Update to establish an A-OTP from the One-time Payment (UPOT) screen (Option 2) to direct this payment to the new dedicated account. This does NOT affect the regular, recurring SSI check information on the SSR.
4. Dedicated account established - subsequent underpayments
After a dedicated account has been established, the amount of a subsequent underpayment determines whether it must be deposited, may be deposited, or may not be deposited in the dedicated account by the representative payee.
If the subsequent underpayment may be deposited, the system releases the underpayment and notice with language stating that it may be deposited into the dedicated account.
If the subsequent underpayment is equal to or greater than 3 X FBR+OSS, it is paid in installments.
If installments are being paid, any ‘new’ underpayment is added to the next installment. The system releases a notice that explains the new underpayment and instructs the payee to contact the field office if he or she wants the money paid directly to him or her.
5. Dedicated account not established
If, after 30 days from the original notice explaining the requirement for the account, the representative payee has not established the account, follow instructions in “Determining the Need for a Successor Payee” GN 00504.100. Once the EA diary matures, an E1 alert is generated to the FO to notify them that the record is still waiting for establishment of a dedicated account. Follow-up alerts are generated every 15 days until the EA diary is resolved.
1. Individual under age 18 with representative payee - past-due
benefits payable - dedicated account required
Mrs. Jane Hy is the payee for her son, Joe, a disabled 7-year old. The SSI claim was filed on 01/03/06. On 10/22/06, the FO receives a favorable disability determination from DDS that Joe is disabled as of 1/3/06.
The FO knows that Joe’s past-due benefit will exceed 6 times the adjusted FBR plus any federally administered optional State supplements ($603 +$75 State supplement). The FO conducts the prepayment review ($6,102 in past-due benefits for February – October), completes the UOUP screen through Direct SSR Update, and enters the appropriate selection.
The system holds the past-due benefits, sets the appropriate UPV code and diary, and issues an alert, if necessary. No IAR or representative fees are involved. The automated notice is released to the representative payee explaining the requirements of a dedicated account.
After receiving the dedicated account notice, Mrs. Hy visits the FO with the required financial institution information. The FO has Mrs. Hy sign and date the SSA-552, Dedicated Account Use of Funds Statement, explaining the limited expenditures authorized from this account.
The FO transmits the financial institution information on the UPOA screen and issues the first installment payment of $1809 by A-OTP into the account. This resolves the EA diary. An IN diary is established to indicate the next installment payment is due.
2. Disabled individual attains age 18 prior to the determination of eligibility for past-due benefits - dedicated account is not required
Mr. John Jay is payee for his daughter, Joan. The SSI claim was filed on 02/03/06. On 11/27/06, the FO receives a favorable DDS disability determination that Joan is disabled as of 02/03/06. Joan attained age 18 on September 2.
The FO determines that she is incapable of handling her own funds and must have a representative payee. Although the past-due benefits exceed 6 times the FBR + OSS, because Joan has attained age 18 prior to SSA issuing a determination that Joan is eligible for past-due benefits, these past-due benefits are not subject to the dedicated account requirements, but must be paid in installments.
Therefore, after prepayment review, if the underpayment is $5,000 or more, the FO adjudicates the case to pay and the system releases the past-due benefits in installment payments to the representative payee, along with the award notice.
3. IAR involved - dedicated account not required
The FO receives a favorable disability determination from the DDS on 11/25/06 that Sue Bowe, age 10, is disabled as of 02/11/06. Mrs. Bowe is payee for Sue.
Although there is an IAR, the FO believes the past-due benefits may still exceed 6 times the FBR + OSS, after the State has been paid. After the SSA-L8125-F6 is received from the State and the FO issues an A-OTP for the IAR, the past-due benefits no longer exceed 6 times the FBR + OSS. Therefore, a dedicated account is not required. If installments apply, the system releases the first installment to Mrs. Bowe and sets the UPV to ‘2’ to control for the next installment.
D. Procedure – manual DPS notices
Generally, the required dedicated account notices are automated. If a manual notice is required, the notices are available in the Document Processing System (DPS).
Dedicated Accounts for Past-Due Benefits Due to Individuals Under 18 Who Have a Representative Payee, SI 01130.601
A-OTPs, SM 01901.000
One-Time Payment (UPOT), MSOM BUSSR 003.022
Misapplication of Funds in a Dedicated Account, SI 02220.060
Dedicated Accounts for Disabled/Blind SSI Recipients Under Age 18, GN 00603.025
Notice Suppression, SM 01301.675
Payment Tape Considerations – Goldberg-Kelly, SM 01305.515C.