Misapplication refers to the use of dedicated account funds for non-permitted expenditures
for the beneficiary. Misapplication of benefits occurs when a payee or an individual
who is in direct-payment knowingly uses dedicated account funds for non-permitted expenditures, or basic maintenance
costs (unless the emergency exception in GN 00602.140B.1 in this section applies).
Misapplication differs from misuse in that misuse occurs when a payee uses funds for
a purpose other than for the use and benefit of the beneficiary while the misapplication
of dedicated account funds, though not permitted, can benefit the beneficiary. For
information on the misuse of benefits, see GN 00604.001.
If SSA determines that a payee knowingly misapplied funds, we will seek repayment from the payee for the misapplied amount
on a dollar-for-dollar basis. For more information on repayment of misapplied funds,
see SI 02220.060. For guidance on misapplication procedures see GN 00602.140C.3. in this section.
If SSA determines that an individual recipient, who is in direct-payment misapplied
funds from their dedicated account, we will reduce future SSI benefits payable to
the individual (or spouse) in an amount equal to the misapplied amount.
Misapplication of dedicated account funds is not an overpayment because we correctly
paid the funds into the dedicated account. Waiver rules do not apply to the requirement
to return misapplied funds because misapplication is not an overpayment.
Returned misapplied funds go back into the general revenues of the Treasury Department.