E8-26224. Technical Revisions to Overpayment Rules

AGENCY:

Social Security Administration.

ACTION:

Final rules.

SUMMARY:

These rules amend our title II regulations to explicitly provide that we apply an underpayment due an individual to reduce an overpayment to that individual in certain cases. Our title XVI regulations already state this policy. Additionally, these rules reflect our procedures for collecting overpayments when a payment of more than the correct amount is made to a representative payee on behalf of a beneficiary after the beneficiary's death. These rules clarify that we collect overpayments in this situation from only the representative payee or his estate but not from the representative payee's spouse or from the spouse's estate.

DATES:

These rules are effective December 4, 2008.

FOR FURTHER INFORMATION CONTACT:

Joshua Silverman, Office of Regulations, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235-6401, [phone], for information about these rules. For information on eligibility or filing for benefits, call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our Internet site, Social Security Online, at http://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Electronic Version

The electronic file of this document is available on the date of publication in the Federal Register at http://www.gpoaccess.gov/​fr/​index.html.

Explanation of Changes

Reducing Overpayments

We can apply underpayments to reduce overpayments. 42 U.S.C. 404(a)(1)(A) and 1383(b)(1)(A). Our current title XVI regulations explicitly provide that we “apply any underpayment due an individual to reduce any overpayment to that individual that we determine to exist * * * for a different period, unless we have waived recovery of the overpayment * * *.” 20 CFR 416.543. However, there is no parallel section in our current title II regulations. We are modifying our regulations to reflect our current process of applying underpayments to reduce overpayments under title II.

We are amending 20 CFR 404.503 to state that we will apply any underpayment due an individual to reduce any overpayment owed by that individual that we determine to exist for a different period, unless we waive recovery. In cases when the underpaid individual has died, we will make the adjustment before distributing any underpayment according to the priority list in 20 CFR 404.503(b).

Overpayments Made to Representative Payees

Under title II, we currently collect overpayments from an overpaid beneficiary, from any other beneficiary entitled to benefits based an overpaid beneficiary's earnings, or from the estate of a deceased overpaid individual. 20 CFR 404.502. Under title XVI, we may collect overpayments from the overpaid recipient, his eligible spouse, or the recipient's or eligible spouse's estate if one of them dies before we finish collecting the overpayment. 20 CFR 416.570.

When a representative payee receives benefits on behalf of a beneficiary, we generally collect any overpayment using these same procedures. However, when a representative payee receives benefits intended for a beneficiary after the beneficiary has died, the representative payee is liable for repaying the overpayment. 42 U.S.C. 404(a)(2) and 1383(b)(2). We are updating our regulations to reflect these statutory changes that became effective on December 14, 2000.

These rules clarify that we collect these overpayments solely from the representative payee and his estate. We do not collect from the benefits of the representative payee's spouse, the estate of the spouse, the auxiliaries of the overpaid representative payee, or the deceased beneficiary's estate. We will continue to use all means for collecting such overpayments allowed by federal law, including adjustment of benefits or lump sums, cross-program recovery, administrative offset, tax refund offset, administrative wage garnishment, and federal salary offset. See 20 CFR 404.520, 404.527, 404.530, 416.572, 416.580, 416.590, 422.310, and 422.403.

For title II, we are adding a new paragraph, 20 CFR 404.502(a)(3), which states that we apply the procedures found in paragraph 20 CFR 404.502(a)(1) to recover an overpayment made to a representative payee after the death of a beneficiary. In this situation, we will not recover these overpayments from any other individual entitled to benefits based on the beneficiary's earnings because only the representative payee or his estate is liable for repayment. We also are adding paragraph 20 CFR 404.502(b)(5) to state that, if an overpaid representative payee dies before we recover the full amount of the overpayment, we will collect the overpayment from the representative payee's estate, but we will not adjust the benefits based on the representative payee's record owed to the representative payee's spouse or children.

For title XVI, we are redesignating the existing language in 20 CFR 416.570 as paragraph (a) and are adding a new paragraph (b). This new paragraph provides that some of the procedures in paragraph (a) will apply to recover overpayments from a representative payee or his estate. We are clarifying that we will not adjust benefits owed to the representative payee's eligible spouse or the eligible spouse's estate because only the representative payee is liable.

Public Comments

In the notice of proposed rulemaking we published at 73 FR 40997 (July 17, 2008), we provided the public with a 60-day period in which to comment on the proposed changes. That comment period ended on September 15, 2008. We did not receive any comments.

Corrections

We are making three minor corrections. First, we have corrected the last sentence in 20 CFR 404.502(b)(5) because words were unintentionally omitted from the proposed rules. The revised sentence clarifies that we do not collect the overpayments at issue under 20 CFR 404.502(b)(3) from anyone other than the representative payee, but we may use any underpayment due to the representative payee to reduce an outstanding overpayment. We also corrected the title of 20 CFR 416.570(b) to use the term “recipient” instead of “beneficiary” for consistency with our rules. Finally, we have amended the language in 20 CFR 416.570(b)(2) to make clear that we will not collect these overpayments from the eligible spouse or the eligible spouse's estate.

Regulatory Procedures

Executive Order 12866, as Amended

We have consulted with the Office of Management and Budget (OMB) and determined that these final rules do not meet the criteria for a significant regulatory action under Executive Order 12866, as amended. Thus, they were not subject to OMB review.

Regulatory Flexibility Act

We certify that these final rules will not have a significant economic impact on a substantial number of small entities as they affect individuals only. Therefore, a regulatory flexibility analysis as provided in the Regulatory Flexibility Act, as amended, is not required.

Paperwork Reduction Act

This rule will impose no additional reporting or recordkeeping requirements requiring OMB clearance.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social Security—Disability Insurance; 96.002, Social Security—Retirement Insurance; 96.004, Social Security—Survivors Insurance; 96.006, Supplemental Security Income)

List of Subjects

20 CFR Part 404

• Administrative practice and procedure
• Blind
• Disability benefits
• Old-age
• Survivors and Disability Insurance
• Reporting and recordkeeping requirements
• Social Security

20 CFR Part 416

• Administrative practice and procedure
• Reporting and recordkeeping requirements
• Supplemental Security Income (SSI)

Dated: October 23, 2008.

Michael J. Astrue,

Commissioner of Social Security.

For the reasons set forth in the preamble, we are amending subpart F of part 404 and subpart E of Part 416 of chapter III of title 20 of the Code of Federal Regulations as set forth below:

PART 404—FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE (1950- )

Subpart F—[Amended]

1. The authority citation for subpart F of part 404 continues to read as follows:

Authority: Secs. 204, 205(a), 702(a)(5), and 1147 of the Social Security Act (42 U.S.C. 404, 405(a), 902(a)(5), and 1320b-17); 31 U.S.C. 3720A.

2. Amend § 404.502 by adding paragraphs (a)(3) and (b)(5) to read as follows:

§ 404.502

Overpayments.

* * * * *

(a) * * *

(3) If a representative payee receives a payment on behalf of a beneficiary after that beneficiary dies, the representative payee or his estate is solely liable for repaying the overpayment. If the representative payee is entitled to a monthly benefit or a lump sum under title II of the Act at the time we determine that an overpayment exists or at any time thereafter, except as provided in paragraphs (c) and (d) of this section, we will not pay the monthly benefits or the lump sum to the representative payee until the amount of the overpayment has been repaid. We will make such adjustments against any monthly benefit or lump sum under title II of the Act to which the representative payee is entitled whether payable on the basis of such representative payee's earnings or the earnings of another individual.

(b) * * *

(5) The methods in paragraphs (b)(1) and (b)(2) of this section for overpayments owed by a representative payee for payments made after the beneficiary's death. We will not recover such overpayments from any person other than the individual who was representative payee or his estate, but we may recover these overpayments from such other person under § 404.503(b).

* * * * *

3. Amend § 404.503 by adding a second sentence to paragraph (a) and revising paragraph (b) introductory text to read as follows:

§ 404.503

Underpayments.

* * * * *

(a) Individual underpaid is living. * * * However, if we determine that the individual to whom an underpayment is due also received an overpayment as defined in § 404.501(a) for a different period, we will apply any underpayment due the individual to reduce that overpayment, unless we have waived recovery of the overpayment under the provisions of §§ 404.506 through 404.512.

(b) Individual dies before adjustment of underpayment. If an individual who has been underpaid dies before receiving payment or negotiating a check or checks representing such payment, we first apply any amounts due the deceased individual against any overpayments as defined in § 404.501(a) owed by the deceased individual, unless we have waived recovery of such overpayment under the provisions of §§ 404.506 through 404.512. We then will distribute any remaining underpayment to the living person (or persons) in the highest order of priority as follows:

* * * * *

PART 416—SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND DISABLED

Subpart E—[Amended]

4. The authority citation for subpart E of part 416 continues to read as follows:

Authority: Secs. 702(a)(5), 1147, 1601, 1602, 1611(c) and (e), and 1631(a)-(d) and (g) of the Social Security Act (42 U.S.C. 902(a)(5), 1320b-17, 1381, 1381a, 1382(c) and (e), and 1383(a)-(d) and (g)); 31 U.S.C. 3720A.

5. Amend § 416.570 by revising the section heading, redesignating the existing text as paragraph (a), adding a heading to redesignated paragraph (a), and adding new paragraph (b) to read as follows:

§ 416.570

Adjustment.

(a) General. * * *

(b) Overpayment made to representative payee after the recipient's death. A representative payee or his estate is solely liable for repaying an overpayment made to the representative payee on behalf of a recipient after the recipient's death. In such case, we will recover the overpayment according to paragraph (a) of this section, except that:

(1) We will not adjust any other payment due to the eligible spouse of the overpaid representative payee to recover the overpayment, and

(2) If the overpaid representative payee dies before we complete adjustment, we will not seek to recover the overpayment from the eligible spouse or the estate of the eligible spouse.