TN 35 (10-17)

Citations:

Social Security Act Section 204;

20 CFR 404.501

A. What is an overpayment

An overpayment is the amount we paid to an individual that was more than the amount we should have paid the individual. An overpayment may result from the failure to:

• Impose deductions;

• Suspend benefits;

• Reduce benefits; or

• Terminate benefits.

An overpayment may also result from technician error. For example, Jessica James primary insurance amount (PIA) is $525. When we adjudicated her award, we coded her monthly benefit amount (MBA) as $552. Therefore, we paid Ms. James more than the amount we should have paid her.

Once we determine that we overpaid an individual, the overpaid amount becomes a debt owed to the United States Government.

B. When payment is considered made or not made

We make a payment to the individual when we certify the payment to the Department of Treasury. Payment has not been made (and neither an overpayment nor an incorrect payment will exist) if the designated payee did not receive it or if the payment was returned. For this section, the term payee means the individual whom received the payment.

C. What is a legally defined overpayment

A legally defined overpayment (LDO) is a payment made to an individual that was more than the amount we should have paid the individual under Title II of the Act. An LDO also includes payments we made by direct deposit to a joint account which includes the deceased individual and another person who was entitled to a monthly benefit on the same earnings record as the deceased individual for the month before the month in which the deceased individual died. The amount of this payment is an LDO to the other person.

We are required to offer the individual due process rights for an LDO. For more information regarding the individual’s due process rights, see GN 02201.009. We must wait at least 30 days (plus 5 days for mailing) from the date we notify the individual to initiate collection activity for an LDO. In general, for individuals who live in the United States (U.S.) or a U.S. Territory, we wait 60 days from the date we notify the individual to initiate recovery, and for individuals who live in a foreign country, we wait 90 days before we initiate recovery. Foreign countries have a different postal system than in the U.S. Therefore, we must offer the individuals in those countries more time for their due process rights.

D. Examples of a legally defined overpayment

Below is a list of examples of legally defined overpayments:

• We paid a lump-sum death payment, even though there is a known outstanding overpayment to anyone on that record (see GN 02205.003D).

• Payment improperly certified to the address of an individual who has the same or similar name as the intended beneficiary (see GN 02406.232).

• Payment improperly certified to a bank account that belonged to an individual with the same or similar name as the beneficiary via direct deposit (see GN 02406.020).

• Payment directly deposited into a joint bank account after the beneficiary's death and the surviving joint account owner is entitled on the same record as the deceased for the month before the month of death. The joint owner is overpaid (see GN 02408.650).

• NOTE: If the joint owner is not entitled to benefits on the same record as the deceased, it is an incorrect payment to the joint owner and the usual overpayment recovery rules do not apply (see GN 02230.035).

• Payment issued after the beneficiary's death to a representative payee; the payee is overpaid (see GN 02408.007).

• An individual negotiates both the original and emergency or replacement check i.e. duplicate check negotiation (see GN 02230.010).

• We released the past due benefits to an individual without withholding the attorney’s fee and we paid the attorney per Section 206 of the Act (see GN 03940.020).

• We reduced the monthly benefit for medical insurance premiums, and we subsequently determine that no benefit was payable.

• Benefit continuation payments received while an individual is appealing a medical cessation and SSA affirms the cessation determination i.e. statutory benefit continuation (see DI 12027ff).

• Funds misused by a representative payee; the payee is overpaid (see GN 00604.065B).

E. What is an incorrect payment

An incorrect payment is not an LDO. An incorrect payment is a payment received by an individual who was not entitled to receive it under Title II of the Act. We do not offer the individual the same due process rights as we do for an LDO. In some instances, we will immediately begin benefit withholding or direct billing.

F. Examples of an incorrect payment

Below are some examples of incorrect payments:

• Non-disability benefits incorrectly paid for the current year based on current year work and estimated earnings (see RS 02501.095).

• NOTE: This is not to be confused with retroactively suspending disability benefits based upon extended period of eligibility/substantial gainful activity (EPE/SGA) which is an LDO.

• A penalty deduction (see GN 02604.150).

• Someone other than the beneficiary negotiates a benefit check via forgery; the forger is liable for the incorrect payment (see GN 02201.007).

• Benefits issued after the month of death or later that do not meet the criteria in GN 02201.001D in the above to qualify as an LDO.

• Payment directly deposited into a joint bank account after the beneficiary's death where the surviving joint account owner is not entitled on the same record as the deceased for the month before the month of death. Even if the joint owner is receiving benefits on another record, this is an incorrect payment to the joint owner and not an LDO.