TN 7 (03-02)

CITATIONS: 404.2040, 416.64

A. INTRODUCTION

If the beneficiary's current needs and reasonably foreseeable needs are met, a payee may satisfy a beneficiary's past debt. The payee should consider the negative consequences of failure to pay past debts and attempt to settle the debts.

1. Past Debt

“Past Debt” is a debt the beneficiary incurred before the date the first benefit payment is made to the current payee. However, insurance policies and real estate in which the beneficiary has an interest are considered current needs and not “past debt”, regardless of when contracted.

2. Meeting Current Needs

As a flexible guideline, consider the beneficiary's current and reasonably foreseeable needs to be met if the beneficiary will have a reserve of two month's benefits after the past debt is paid and the entire ongoing monthly benefit is not needed to meet these needs.

B. POLICY

A payee is not required to repay the beneficiary's past debt unless it involves:

• Refund of a title II or title XVI overpayment (see GN 00602.030B., NOTE);

• An IRS levy for income tax purposes; or

• Garnishment authorized under section 459 of the Act.

A payee does not need SSA approval to pay a valid past debt if he/she determines it is in the beneficiary's best interest, unless the payee is also the creditor.

A creditor payee must obtain SSA approval prior to using benefits for self-reimbursement (see GN 00602.030C.).

EXCEPTION: If the creditor payee is a title XIX facility in which the title II or title XVI beneficiary resides, the payee must allocate two month's personal needs allowance ($60) to the beneficiary's resident account. The payee then may use remaining past-due benefits to pay for past care and maintenance without obtaining SSA approval.

NOTE: A payee may not use SSI “dedicated account” funds to pay past debt unless the debt is for medical treatment, education or job skills training, or for permitted items or services related to the child's impairment (e.g., attorney fees) as shown in GN 00602.140B.

C. PROCEDURE

Use the following instructions to approve or disapprove proposals to pay a beneficiary's past debt. These instructions apply both to creditor payees who are required to obtain advance approval and to non-creditor payees who ask for FO guidance.

1. Establish the Validity of the Debt

a. Institutions

“Institutions” include custodial agencies and organizations that provide direct care and maintenance to beneficiaries (e.g., foster care agencies).

If the creditor is requesting payment of past charges for care and maintenance, obtain a bill or statement of the amount owed. The bill or statement should designate the months for which care was provided, and the monthly customary care charges.

b. Other Creditors

If a non-institutional creditor is requesting payment for past beneficiary debt (e.g., payment for maintenance or funds advanced); obtain an affidavit or signed SSA-795 that includes:

• The nature, date and original amount of the debt;

• Amounts and dates of payments already made;

• The balance owed; and

• Whether the beneficiary understood that the advance was a loan and not a gift.

2. Determine Current and Reasonably Foreseeable Needs

Ask the payee the following questions to help you determine whether payment of past debt would affect the payee's ability to meet the beneficiary's current and reasonably foreseeable needs.

• What is the average monthly cost of current care and maintenance (e.g., mortgage, rent or institutional charges, food, clothing, medical, insurance, personal comfort items)?

• Does the beneficiary have reasonably foreseeable needs (e.g., funds for future education; release fund for future expenses upon release from a facility; rehabilitation fund to facilitate adjustment back into the community?)

• If the beneficiary is a child who will attain age 18 in the near future, consider the need to conserve funds for transition into an independent living arrangement, future education or occupational training.

3. Evaluate How Needs are Met

Ask the payee the following questions and consider any unusual circumstances that you become aware of as an aid to making your decision.

• Will the beneficiary have at least two month's remaining benefits after payment of the past debt?

• Does the beneficiary have reasonably foreseeable needs in excess of the amount of accrued benefits?

• Does the ongoing monthly benefit exceed average monthly costs?

4. Determine Whether Some or All of Past Debt May be Paid

Examine the information you obtained regarding the beneficiary's needs and available funds. You may approve payment of some or all of the debt, to the extent that the beneficiary has sufficient accrued benefits to meet his foreseeable needs and ongoing monthly payments will meet his current needs.

A. EXAMPLES

REMINDER: A payee is not required to repay past debt but should consider the consequences of nonpayment.

Example 1. Approve Full Repayment of Past Debt

You have established the validity of the debt and obtained information in accordance with GN 00602.030C. The amount still owed to the creditor is $1,400. The payee just received $6,400 in past-due benefits for the beneficiary, and the ongoing monthly benefit amount is $800.

The beneficiary is in a rehabilitation center where the monthly cost of care is $700. The payee has established a release fund of $2,000 from the past-due benefit, and is using $50 monthly to provide personal comfort items for the beneficiary.

Ongoing monthly benefits ($800) exceed monthly needs ($700 + $50), and accrued benefits ($6,400), less the amount of the release fund ($2,000), exceed the amount of the debt ($1,400). You may approve repayment of the entire $1,400 debt.

Example 2. Approve Partial Repayment of Past Debt

You have established the validity of the debt and obtained information in accordance with GN 00602.030C. The amount still owed to the creditor is $5,600. The payee just received $6,400 in past-due benefits for the beneficiary, and the ongoing monthly benefit amount is $800.

The beneficiary is in a rehabilitation center where the monthly cost of care is $700. The payee has established a release fund of $2,000 and is using $50 monthly to provide personal comfort items for the beneficiary.

Ongoing monthly benefits ($800) exceed needs ($700 + $50) but accrued benefits ($6,400) less the amount of the release fund ($2,000, are insufficient to repay the full amount of the debt. You may approve partial repayment, up to $4,400 ($6,400 accrued funds, less $2,000 release fund).

Example 3. Disapprove Repayment of Past Debt

You have established the validity of the debt and obtained information in accordance with GN 00602.030C. The amount still owed to the creditor is $5,600. The payee just received $6,400 in past-due benefits for the beneficiary, and the ongoing monthly benefit is $800.

The beneficiary is in a rehabilitation center where the monthly cost of care is $1,300. The payee has established a release fund of $2,000 and is using $50 monthly to provide personal comfort items for the beneficiary.

Ongoing monthly costs ($1,350) exceed monthly benefits ($800), so the payee will need to use past-due benefits to meet the beneficiary's current and reasonably foreseeable needs. Deny approval of request to repay past debt.