TN 28 (01-17)

A. General information and background regarding limited payability (LP)

Prior to October 1, 1989, there was no time limit on the negotiability of government checks. The Department of the Treasury (Treasury) retained copies of negotiated checks for 6 years and 9 months after the issue date, accepted nonreceipt claims for 6 years after the issue date, and if the endorsement was forged, held the presenting bank liable for return of the funds for 6 years after the issue date.

As of October 1, 1989, Public Law (P.L.) 100-86 and the Competitive Equality Banking Act of 1987 (CEBA), made a Treasury check valid up to 12 months from its issue date. After 12 months, a check is void and non-negotiable. If Treasury records do not show the check as “cashed” within one year from the issue date, Treasury returns the funds to SSA in the form of a Limited Payability (LP) credit in the 15th month after the issue date. Non-receipt claims must be filed within 12 months from the issue date. Treasury has identified and cancelled all outstanding checks issued prior to October 1, 1989. Public Law (P.L.) 100-86 also limits the amount of time Treasury can reclaim funds paid on forged checks to 18 months.

NOTE: This law only applies to checks. It does not affect direct deposit payments.

If someone presents a check over 12 months old to a financial institution (FI) (which the FI may refer to as a stale dated check) and the FI honors it by mistake, the Federal Reserve Bank (FRB) will not reimburse the presenting FI. Following the holder in due course procedures, the FI must accept all checks less than 12 months. If someone cashes a check near the end of the month in which the check becomes 12 months old, and the banking system does not process it before the end of that month, the FRB will not honor reimbursement.

B. Limited Payability (LP) credit policy

Treasury identifies and records checks submitted to the government for payment. In the 14th month after issue, Treasury gathers information on checks not submitted for payment (determined to be “uncashed”). In the 15th month, Treasury furnishes SSA with LP credits. The credits contain identifying information and represent the funds for “uncashed” checks.

NOTE: Treasury sends SSA an LP credit when they have no record that the check was cashed. Treasury credits or reimburses the SSA Trust Fund or the General Fund with the amount of the “uncashed” check.

1. Title II process

Treasury sends SSA an LP credit file and the agency creates the PHUS EVENT 169 UNNEG CK on PHUS with a RCLRN of “B”, “C”, “N”, or “I”. The RCLRN codes indicate the type of action taken on the credit. For more information on the RCLRN codes, see SM 00545.300.

In addition to the LP file, the returned check program creates and sends an LP notice to the beneficiary or recipient. The LP notice can contain up to three check iterations that he or she may need to review.

2. Title XVI process

The Title XVI system receives the LP credit on a file sent from Treasury, posts it to the Unnegotiated Check Indicator (UCI) segment of the PMTH field on the SSR, and generates a K5 diary to the field office (FO). The UCI field in the PMTH segment on the SSR shows the status of the LP credit.

C. Title XVI Limited Payability (LP) alert process

1. Six-month alert

If a Title XVI check is uncashed 6 months after the issue date, the SSI system generates an L5 or L8 alert to the FO for investigation. For more information on the limited payability alert process, see GN 02401.904.

2. Twelve-month Treasury notification

If the Title XVI check is still uncashed 12 months after the issue date, the check is no longer valid. Treasury informs SSA that a credit is forthcoming and the SSI system updates the UCI field on the SSR to show the status.

3. Fifteen-month alert

In the 15th month after the issue date, Treasury will credit SSA with the funds. The Title XVI system generates a K5 alert to the FO for investigation, updates the UCI field on the SSR and sets a K5 diary.

D. Limited Payability (LP) exception policy

If an LP credit, correction, determination, or reversal does not process, the item rejects and generates an exception for investigation.

1. Title II LP exception process

When an initial LP action does not process, the item rejects to the processing center (PC) for investigation. The system generates two types of exceptions: RCCOLA RCLIMEX exceptions and LP REACT exceptions. The exception indicates only the first error condition. The PC technician must thoroughly review the exception and reenter the correct data, when possible, via the intranet SSA-4208 (Reclamation Data Input) form.

NOTE: Actions taken using the intranet SSA-4208 (Reclamation Data Input) form to correct the exception will not produce a notice. The PC technician must prepare a manual notice identifying the uncashed check(s), using the language shown in SM 00624.400E.

2. Title XVI LP exception process

The Title XVI system receives LP credits on daily files from Treasury. When an initial LP transaction does not process and post to the SSR, the item rejects for investigation. SSI systems processes the rejected transactions to exception files made available on a daily basis to the Division of Benefit Certification and Systems Analysis (DBCSA), Treasury Operations Branch (TOB). Treasury sends TOB a listing of all the excepted LP credits. TOB analyzes the SSR to determine why the transaction rejected and if the system posted the credit. If the credit is:

• on the record, the TOB technician purges the exception from the list; or

• not on the record, TOB updates the credit to the UCI field on the SSR. The update sends a K5 alert to the servicing FO and sets a K5 diary on the SSR. The FO will then process the credit using instructions in GN 02401.904B.

E. How to process returned benefit checks over one year old

If someone presents a check to SSA that is more than one year old and claims the check is uncashed, process the check in question per GN 02405.300. Additionally, review the available records of the individual named on the check to determine whether an LP credit exists on the record.

NOTE: For Title II, analyze the MBR and PHUS. For Title XVI, analyze the MSSICS Treasury Status Query and SSID.

1. An LP credit is present

   If an LP credit does exist on the record, the technician must verify and process the LP credit if we have not already reissued the check. Follow the instructions in GN 02401.903D for Title II cases. Follow the instructions in GN 02401.903E for Title XVI cases.

2. An LP credit is not present

   1. If 15 months have not passed from the issue date of the check, Treasury will not have sent an LP credit yet.

   2. If more than 15 months have passed from the issue date of the check and there is no LP credit on the record, follow the instructions in GN 02401.903F.

      NOTE: If, after reviewing all possible information, we lack documentation showing that we owe the beneficiary or recipient money based upon the presented check, send the notice found in NL 03001.025 (select choice 8).

F. References

• GN 02406.235 Holder in Due Course (Theft, Loss or Destruction of Check After Negotiation by the Original Payee)

• MSOM INTRANETMAMPSCDI 002.001 SSA-4208 Reclamation Data Input Forms – Overview (SSA4208)

• NL 00601.040 Postentitlement Notices

• NL 00603.001 General Notice Policy – Title II and Title XVI

• SM 00624.400 How the Returned Check Action (REACT) Program Processes Limited Payability Files

• SM 00624.405 How to Process PC Limited Payability Exceptions

• SM 01315.085 Stages of the Limited Payability Process

• SM 01315.100 How the System Issues Unnegotiated Check/Limited Payability Alerts

• SM 01315.101 The Limited Payability (K5) Diary

• SM 01601.835 Payment History - PMTH