A ‘defeat the purpose’ determination is based on a person’s current circumstances. The financial information must be no more than 1 year old when the waiver determination is made.

During recovery, if a person goes into debt to meet his/her ordinary and necessary living expenses, recovery will defeat the purpose of title VIII at that time.

Anticipated financial changes may also influence a person’s ability to repay the overpayment, but they should be expected to occur within a few months of the date of the waiver determination, and should be verified. Examples of such changes include increases in expenses because a child enters college, increases in income because of a return to seasonal work or expected inheritance or a decrease in expenses because of debt liquidation.

Follow procedures explained in SI 02260.040 when a change in the debtor’s financial circumstances follows waiver denial for failure to meet defeat the purpose provisions. Such a change could support a finding of defeat the purpose, and waiver of recovery of the outstanding overpayment amount.

Every household has some unbudgeted or unaccountable expenses. In comparing income and expenses, each household is allowed a margin of $10. This $10 margin is used to establish household expenses (Question 16B on the SSA-2032-BK) which are compared to household income when deciding defeat the purpose.

Recovery will not defeat the purpose of title VIII of the Social Security Act if at the time the request for waiver is filed the liable person has in his/her possession any of the incorrectly paid check(s) or proceeds identifiable as title VIII payments in liquid resources which accumulated during the overpayment period.

Find that recovery would defeat the purpose of title VIII of the Social Security Act when:

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  The person receives cash public assistance; or

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  The person needs substantially all current income (including Social Security benefits) to meet current ordinary and necessary living expenses; and

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  Recovery would reduce the debtor’s total assets below $800 for a person without dependents, or $1200 for a person with one dependent (allow an additional $400 for each additional dependent).

Assets are available to repay an overpayment to the extent that their total value exceeds the above amounts. If income does not exceed expenses, recovery will defeat the purpose if it would cause assets to be reduced below these amounts.