TN 14 (01-15)

A. Policy for releasing or withholding an underpayment

1. Paying an underpayment

If the recipient is alive, pay the underpayment to the recipient, or his or her representative payee, after considering:

a. Interim assistance reimbursement (IAR) agreement

When IAR is involved, issue the first retroactive payment to a state or political subdivision with a written authorization, rather than to the recipient. For more information on IAR, see SI 02003.001.

b. Direct fee payment to authorized representatives

When we authorize direct fee payment to an appointed representative, pay his or her fee before releasing any funds to the recipient. For instructions regarding direct fee payments, see GN 03920.017.

c. A collectible overpayment

We will impose netting to recover from an underpayment an overpayment or penalty for which we have not waived recovery, unless a dedicated account is involved. For instructions on overpayment recovery, see SI 02220.001. For instructions on accessing penalties, see SI 02301.100. For dedicated account instructions, see SI 02101.010.

NOTE: The established recovery rate is the maximum amount that we will withhold from the underpayment for the current calendar month. For adjustments to underpayments, see SM 01310.410.

2. Underpayments and the No Social Security Benefits for Prisoners Act (NSSBP) provision

Do not pay a current or former recipient an underpayment if he or she is subject to the NSSBP provision. A current or former recipient is subject to the NSSBP provision if we determine he or she is:

• A prisoner;

• Confined in a public institution based on a court order for a criminal act (CPICO);

• A fugitive felon (FF); or

• In violation of parole or probation.

For more information on the NSSBP provision, see SI 00529.001. If the NSSBP provisions do not apply to incarcerated recipients or former recipients due an underpayment, follow payment instructions in GN 02607.550.

NOTE: If a recipient’s current payment status code is N02, N22, or N25, or a former recipient’s last payment status code before termination was N02, N22, or N25, follow instructions in SI 02101.002A.2. in this section.

3. Releasing underpayments when the recipient is also overpaid

1. If the recipient receives an initial overpayment notice and does not appeal within 60 days or request a waiver, use any underpayment due a recipient to reduce (i.e., recover) any outstanding overpayment. For SSI overpayment recovery by adjustment, see SI 02220.015.

   EXAMPLE:

   In October 2013, we notified John that he was overpaid $2,400 between June and September 2013, due to his underreported wages. We continued to post John’s wages on his record since he did not inform us that he was no longer working. John did not request a reconsideration or request a waiver.

   During a February 2014 redetermination, John provided proof that he did not work in October, November, or December 2013. He was underpaid $450 between October and December 2013.

   Since John did not file an appeal or request a waiver on his overpayment, we applied the $450 underpayment to reduce his $2,400 overpayment.

2. If the recipient requests a timely reconsideration or waiver and we have not made a final overpayment determination, release any underpayment due by the close of the month following the month in which we discovered the underpayment.

   EXAMPLE:

   In December 2013, we notified Mary that we overpaid her $5,000 between March and October 2013, because she had more than $2,000 in countable resources. In January 2014, Mary requested a timely reconsideration of our overpayment determination. At the same time, she provided proof that her resources were below $2,000 starting in September. Mary was underpaid $1,000. We released the $1,000 to Mary because we did not issue a denial of Mary’s overpayment request until March 2014.

3. If the recipient requests a timely reconsideration of our overpayment determination, and we deny the reconsideration before the close of the month following the month in which we discovered the underpayment, apply the underpayment to recover or reduce the overpayment.

   EXAMPLE:

   In January, we notified Jim that we overpaid him $1,500 between August and December 2013, due to his underreported wages. Jim requested a timely reconsideration of our overpayment determination.

   During the March 2014 redetermination, Jim informs us that he did not work in October or November. We determine Jim has a $350 underpayment due for October through November 2013.

   In April 2014, we deny the reconsideration because Jim was at fault in causing the overpayment by not reporting his wages. Since we made a final overpayment determination before the close of the month following the month in which we discovered the underpayment, we apply the $350 underpayment to reduce the $1,500 overpayment.

4. Releasing underpayments in installments

When we determine that an SSI recipient or couple is eligible to receive past-due SSI payments in an amount that equals or exceeds three times the federal benefit rate (FBR), and no exception applies, release the payments to the recipient, couple, or his or her representative payee in no more than three installments, paid in six month intervals. For instructions on releasing installment payments, see SI 02101.020.

5. Releasing underpayments into a dedicated account

If an SSI recipient who has not yet attained age 18 and who has a representative payee is due an underpayment equal to or greater than six times the FBR, release the underpayment into a dedicated account at a financial institution. For dedicated account instructions, see SI 02101.010.

NOTE: Do not recover an overpayment from dedicated account funds.

B. Process for releasing or withholding an underpayment

1. Recipient is in current pay

The SSI System will compute and pay an underpayment based on data the recipient or his or her representative provides. For an explanation of SSI System capabilities, see SM 01311.660. The SSI System will automatically release an underpayment of less than $5,000 unless:

• The Supplemental Security Record (SSR) contains an overpayment collect decision;

• The recipient’s authorized representative has requested direct payment of his or her fees;

• We are required to deposit the payment into a dedicated account;

• We are withholding the underpayment (U TAC) on the Underpayment Processing screen in Direct SSR Update (UMEN); or

• The total underpayment amount is less than $1.

For underpayment withholding, see MSOM BUSSUR 004.018, SM 01311.355, and SI 02101.002B. For direct payment of appointed representative fee provisions, see GN 03920.017.

2. Recipient is ineligible for payment

If a recipient is currently ineligible for payment, we may release the underpayment via an automated one-time payment (A-OTP). However, in some non-pay situations, the SSI System will automatically release the underpayment. For SSI System underpayment processing for certain payment status codes, See SM 01311.660.

3. Withholding due underpayments (U TAC) to apply netting

If the record is excluded from automated netting and manual netting is applicable:

• Select the Underpayment Processing (UOUP) option from the Direct SSR Update (UMEN) screen;

• Enter option “1” Hold Underpayment, which will build a U TAC on the SSR;

• Follow the manual netting procedures in SM 01311.160, SM 01311.165, SM 01311.355, and MSOM BUSSR 004.018.

NOTE: If you use the “1” “Hold Underpayment” option, automated netting will not take place.

When you remove the U TAC, automated netting will take place as long as there are no exclusions.

If the record is excluded from automated netting, follow the manual netting procedure.

For examples of manual netting, see SM 01311.165, SM 01311.355, SM 01311.160, and MSOM BUSSR 004.018.

C. References

• SM 01311.160 Automated Netting

• SI 02101.020 Installment Payments of Large Past-Due Benefits-Individual Alive

• SI 02003.00 Interim Assistance Reimbursement (IAR)

• SM 01311.165 Manual Netting

• SI 00529.001 No Social Security Benefits for Prisoners (NSSBP) – Title XVI Provisions

• SI 00529.020 No Social Security Benefits for Prisoners (NSSBP)-Title XVI Field Office Processing Instructions

• SM 01311.66 Overview of Underpayment Processing

• SI 02101.010 Past-Due Benefits Payable – Individual Alive Under Age 18 With Representative Payee – Dedicated Account Required

• GN 03920.017 Payment of Representative’s Fees

• GN 02607.550 Payments to Prisoners and Correctional Institutions

• SM 01310.410 Underpayment Adjustment

• MSOM BUSSR 004.018 Underpayment Processing (UOUP)

• SM 01311.355 Withholding an Underpayment (U TAC)