TN 18 (11-08)

A. Introduction

Serious public relations problems are created when SSA employees incorrectly state that financial institutions (FI) should not have returned a Title II direct deposit payment received on the 3^rd of the month or a cycled payment date, when the beneficiary died before the payment date but after the close of the month for which the payment was due; i.e., the beneficiary was entitled to the payment. This advice is incorrect because it does not take into account the Department of the Treasury (DT) “Green Book ” instructions.

B. FI legally returns payment after death

Avoid making any statements that imply an FI has erred in returning a payment that arrived after the FI learned of the beneficiary’s death. This applies even when the beneficiary died after the end of the month for which the payment was made, but on or before the payment date. This includes payments from all four cycles.

For any post-death payments posted to the account before the FI learns of the death, the FI has the choice of either,

• returning any payments that have already been posted to the account after the date of death, but before the FI learned of the death, or

• waiting for a reclamation.

Payments deposited before the beneficiary’s death and then returned by the bank after the beneficiary’s death, are an asset to the estate and not underpayments. When this situation occurs, follow these instructions: Small Estates GN 02315.001, State Jurisdiction-Small Estates, GN 02315.005, and Foreign Jurisdiction-Small Estates GN 02315.005.

Examples of underpayments and assets to the estates are in GN 02408.650H.

The FI does not have the responsibility for making a decision as to whether the payment is due or not due.

In discussing any payment that arrived at an FI after the death of a beneficiary who met all requirements for the payment (and therefore was entitled to the payment), SSA will explain that the FI follows Treasury’s instructions. However, we do not send a reclamation request for any payments that were actually due the beneficiary.

If the FI asks whether a reclamation will be sent for an EFT payment that we determine was due the beneficiary, advise the FI that no reclamation request will be sent.

Take the following action:

• advise callers who inquire about payments returned after death that the FI has acted within the law;

• assist survivors to apply for any applicable underpayment; and

• decide who should receive an underpayment, based on the statutory order for paying underpayments, listed in GN 02301.030.

Examples of due or not due payments are in this section at GN 02408.650G.

C. Policy due to Treasury rule

DT’s “Green Book ,” a comprehensive guide for FIs processing Federal government electronic payments and collections, states that the FI must return all direct deposit payments that arrive after the FI learns of the death of a beneficiary. This is to make sure that the agency makes the decision as to whether the recipient was due the money.

1. FI learns of the death after posting the payment

The FI may choose to wait for a reclamation to arrive, if the payment was already posted before the FI learned of the death. When an FI contacts SSA to find out whether we will reclaim, determine whether the payment is due. If the beneficiary was entitled to the payment, advise the FI that no reclamation is necessary.

2. FI learns of the death before the payment arrives

The FI is instructed to return any payment that arrives after the FI learns of the death. Also, from the time the FI learns of the death, the FI may not allow any further withdrawals of post-death Federal benefit payments. When the FI asks whether the money should be returned, determine whether the payment is due. If the payment is due and therefore no reclamation request is issued, inform the FI that there will be no reclamation.

3. “Green Book” references

The “Green Book” may be found on the Internet at http://www.fiscal.treasury.gov/fsreports/ref/greenBook/greenbook_home.htm . “General Information on Returns” is in the Returns chapter, and “What to do upon Notification of Death with Payments Already Posted and Subsequent Payments” is in the Reclamations chapter. The applicable Treasury Regulation is 31 CFR 210.

D. Process if the payment was due

1. FI learns of the death

When the FI learns that a beneficiary has died after the end of the month for which a payment is due, but before the payment date, the FI generally follows the same rule as if the payment were not due: the payment is returned to the Government agency. There is a risk to the FI if it does not return the money and later finds that the payment was actually not due. The FI is then liable if the funds have been removed from the account.

2. FI asks SSA if a reclamation will be sent

When the FI asks us if a reclamation will be sent, determine whether the payment is due. When the payment is due, inform the FI that no reclamation request will be sent.

3. EFT intercept (internal intercept)

In certain situations, including death of the beneficiary, SSA intercepts the payment as it is on its way to Treasury. The payment never reaches the FI, even if it is due. It is shown on the Payment History Update System (PHUS) with EI as the reason for return.

SEE DETAILS:

• SM 00624.003 - Overview of the Electronic Funds Transfer (EFT) Intercept Hold Process

• GN 02407.010B.1.b. - Processing Post-Entitlement (PE) Events for Cycles 2, 3, and 4 During a “Window” Period

When the FI, the estate, or a survivor reports nonreceipt of a final payment that was due the beneficiary, check the PHUS to see if the payment has been returned. When the return reason is EI, explain that the payment was automatically intercepted at SSA and an underpayment is due. For how to handle an underpayment inquiry, see GN 02408.650E in this section.

4. Deciding who should receive the underpayment

When a payment is returned, decide who is the correct person(s) to receive any underpayment that a deceased beneficiary was due. The statutory priority of those eligible to receive the underpayment for Title II is listed in GN 02301.030.

E. Procedure when SSA receives an inquiry about the underpayment

If you receive an inquiry about a Title II underpayment due a deceased person, do the following:

1. FO/PSC

Explain how and on what basis the underpayment can be paid. If the inquirer wants to file to receive the underpayment, take the request and any necessary proofs. (Refer to Inquiries – Underpaid Person Deceased GN 02301.045 and Applications – Underpaid Person Deceased GN 02301.050.)

2. 800-Number agents

Follow Handling Title II Underpayment Inquiries TC 38001.010D.

If the MBR does not include enough information to show that the caller is eligible to receive the underpayment, send the inquirer an SSA-1724 with a courtesy envelope. Advise the caller to submit proof of death (if death information is not already on the record), proof of relationship to the deceased, and proof of appointment as the legal representative of the estate, if applicable.

3. FI questions

If you receive an inquiry from an FI that has received questions regarding a returned payment from a joint account holder, executor of the estate, or other survivor, explain the process and suggest the FI refer the inquirer to SSA.

Examples of due and not due payments are at GN 02408.650G.

F. Policy when the payment was not due

A payment after death is not due if:

• The beneficiary’s entitlement was terminated, for a reason other than death, before the month for which the payment was made; or

• The beneficiary was not entitled (for a reason other than death) for the month for which the payment was made; or

• The beneficiary died before the end of the month for which the payment was made.

EXCEPTION: If the beneficiary died on or after an early delivery payment date for the month of death and there was no termination for reasons other than death, and the beneficiary was otherwise entitled to the benefit for that month, the payment was due and is treated as in this section at GN 02408.650C. An early payment date for a Cycle 1 Title II payment occurs in the month for which the payment is made when the third, second, and first of the following month all fall on Saturday, Sunday, or a legal Federal holiday.

Examples of due and not due payments are at GN 02408.650G.

G. Examples

1. Example 1

Ms. Jessica Smith was receiving benefits in Cycle 2 as a wife. She died on July 4, 2008. When the FO developed for the underpayment for the month of June, they discovered she had received a final divorce from the wage earner on June 3, 2008, after only 5 years of marriage. Her benefits were terminated as of June. The payment for July 9, 2008, was not due.

2. Example 2

Lisa Beneficiary, a widow, received benefits in Cycle 1. She died February 29, 2008. The March 3, 2008, payment for February 2008 was not due.

3. Example 3

Sara Tee received retirement benefits in Cycle 1. He died on August 1, 2008, the payment date for July 2008 benefits. This meets the early delivery exception, so his August 1, 2008, payment was due.

4. Example 4

Morgan Payman received retirement benefits in Cycle 4. He died on June 1, 2008. His June 25, 2008 payment for May 2008 was due.

5. Example 5

Melvin Hearty was receiving Cycle 3 disability benefits before his death on February 29, 2008. His March 19, 2008 payment for February 2008 was not due.

H. Examples of underpayments and assets to estates

1. Example 1

Paula Mee was receiving benefits in Cycle 1. The bank deposited her benefits on June 2, 2006; however, she died on June 1, 2006. The bank returned the monies to SSA on June 6, 2006 after learning of her death. This is an underpayment since the deposit was a post-death payment and Paula was eligible for May’s benefits paid in June.

2. Example 2

Jack Mints was receiving his disability benefits in Cycle 2. The bank deposited his benefits on January 10, 2007. He died January 20, 2007. The bank returned the monies to SSA on January 23, 2007 after learning of his death. This is an asset to the estate since the deposit was a pre-death payment and Jack was eligible for December’s benefits paid in January.

3. Example 3

Meg Waters, a widow, received her retirement benefits in Cycle 3. The bank deposited her February benefits on March 19, 2008. She died on March 16, 2008. The bank returned the monies to SSA on March 27, 2008 after learning of her death. This is an underpayment since the deposit was a post-death payment and Meg was eligible for February benefits paid in March.

4. Example 4

Greg Lakes received his retirement benefits in Cycle 4. The bank deposited his December benefits on January 28, 2009. He died on January 29, 2009. The bank returned the monies to SSA on February 5, 2009 after learning of his death. This is an asset to the estate since the deposit was a pre-death payment and Greg was eligible for December’s benefits paid in January.