TN 11 (12-12)
GN 02205.003 Primary Liability for Title II Overpayment Recovery
A. What is primary liability?
The person who receives the overpayment is primarily (directly) responsible for the overpayment. Other persons may be primarily liable for the overpayment. If the person who receives the overpayment is the only person with primary liability, that person is solely liable for the overpayment.
B. Who has primary liability for repayment of an overpayment?
Generally, the overpaid person (including a representative payee) is responsible for repayment of an overpayment. If the overpaid person dies, his or her estate, or the beneficiaries of the estate, is responsible for repayment of the overpayment. The estates, or the beneficiaries of the estates, responsibility is limited to the extent of the proceeds of the estate. For further instructions regarding estate development, see GN 02215.050 through GN 02215.070.
Effective December 4, 2008, a representative payee (or his or her estate) who receives payments on the beneficiary’s behalf after the death of the beneficiary is solely liable for repayment of this type of overpayment. For representative payee liability, see GN 02205.003C.4. in this section.
C. Recovery policy when an overpaid person is alive or deceased
1. Overpaid person is alive
When we make direct payment (check or direct deposit) and the person who received the overpayment is alive, that person is primarily liable for repayment.
2. Joint and sole owned bank accounts of a deceased beneficiary
If we make a payment to the bank account of a deceased beneficiary, we must determine if the payment was an overpayment or an incorrect payment per the following:
The payment is an overpayment if the payment was to a jointly owned bank account and the joint (living) account holder was entitled to benefits on the same earnings record as the deceased for the month before the month of death. The joint beneficiary is primarily liable for the overpayment.
The payment is an incorrect payment if the payment was to a jointly owned bank account and the joint (living) account holder was not entitled to benefits on the same earnings record as the deceased.
The payment is an incorrect payment if the payment was to a bank account in which the deceased beneficiary was the sole owner of the account.
3. Incorrect payments
An incorrect payment is not an overpayment and is not subject to overpayment procedures or protections. Incorrect payments are subject to reclamation action by the Department of Treasury. For more information on what is not an overpayment, see GN 02201.001F. Notice and waiver do not apply to incorrect payments. For specific instructions to recover an incorrect payment, see GN 02401.917.
4. Representative payee
When a representative payee receives payments after the beneficiary’s death, the representative payee or the representative payee’s estate is solely liable for repayment of the overpayment. In these cases, we will not collect payments from:
the representative payee’s spouse;
the estate of the representative payee’s spouse;
the auxiliaries of the overpaid representative payee;
the lump-sum death payment (LSDP) resulting from the representative payee’s death;
the deceased beneficiary’s estate; or
the auxiliaries on the deceased beneficiary’s record.
Exception: If the executor closes the representative payee’s estate, the beneficiaries of the estate are liable to the extent of the proceeds of the estate (or property attributable to such proceeds) that are in his or her possession when notified of the overpayment.
If the overpaid representative payee is not receiving payments, we will use other collection methods to recover the overpayment such as:
For more information on the automated identification and selection of Non-Entitled Debtors (NED) for these collection tools, see GN 02230.040B.
D. Recovery policy for the beneficiary’s lump-sum death payment
When there is a recoverable overpayment to any person on a record (i.e., we have not waived recovery from the person(s) primarily liable for the overpayment), we must withhold the LSDP. We do not pay an LSDP in overpayment cases unless we waive recovery of the overpayment to the deceased overpaid person (or contingently liable person) or the overpayment amount is less than the LSDP amount. For more information on the rules for paying the LSDP, see SM 00805.035B.1. and RS 00210.020.
If we erroneously paid the LSDP when we should have used all or part of that payment to recover an overpayment, the LSDP, up to the outstanding overpaid amount, is now a separate overpayment. The erroneous LSDP is subject to normal recovery and waiver rules.
Example: There is an overpayment balance due on the deceased’s record for $75. We paid the $255 LSDP to the surviving child. The surviving child who we erroneously paid the LSDP is now overpaid $75. If we waive recovery of the LSDP overpayment, the total outstanding overpayment (the original $75) remains collectable from the estate.
NOTE: If the person(s) who received the LSDP is receiving survivor benefits on the same earnings record as the overpaid person, do not make a separate determination of an LSDP overpayment. In these cases, the original overpayment is subject to recovery from other person(s) entitled on the same earnings record. The receipt of the LSDP in this case is a non-issue and not subject to the overpayment recovery process.
E. Recovery policy for an overpayment caused by a garnishment
The garnished beneficiary has primary liability for the entire overpayment even though the garnisher may have received a portion of the overpaid amount. For more information on other garnishment situations, see #4 in GN 02410.225.
EXAMPLE: John Brown is overpaid $300 for October 2010. Of that $300, we paid $150 to the court for garnishment. John Brown is liable for the entire $300 overpayment.
If the garnished beneficiary is deceased, and we issue a garnishment payment for the month of death or later, the payment is an incorrect payment (or unjust enrichment), not an overpayment. We will request a refund from the garnisher. If the deceased garnished beneficiary had a representative payee or surviving joint owner of a direct deposit account, that person is not liable for repaying the portion of the overpayment that we paid to the garnisher. For more information about garnishment payments paid after the beneficiary dies, see #3a in GN 02410.225.
Supplemental Security Income (SSI) (title XVI) payments are not subject to garnishment.
GN 02201.001 Overpayments – General
GN 02205.005 Contingent Liability for Title II Overpayment Recovery
GN 02230.040 Non-Entitled Debtors (NED) – Collection of Overpayments from Representative Payees of Deceased Title II Beneficiaries
SM 00610.720 Recover of an Overpayment (O/Pmt) When the Overpaid Person is in LAF T1 – Death Case, Title II Only