When our efforts to recover an overpayment from a primarily liable individual (i.e. original overpaid individual) are unsuccessful, propose adjustment of benefits payable to any other individual currently receiving benefits on the same earnings record as the primarily liable individual. We call this contingent liability (see GN 02205.005). For more information regarding a waiver and a reconsideration (appeal) request, see GN 02250.001 and GN 02201.025.

We will not propose adjustment until we notify the contingently liable individual about the overpayment. We will not propose adjustment when we waived recovery of the overpayment from the primarily liable individual. In addition, we will stop collection activity when the contingently liable individual is no longer entitled to benefits or when the originally overpaid individual re-establishes eligibility to benefits.

EXAMPLE 1: We determined that Shawn Smith (C1) and their representative payee (parent), Susan Smith, are jointly liable for a $1,000 overpayment due to the number holder’s receipt of workers’ compensation payments. We approved their waiver request based on not at fault and recovery would defeat the purpose due to their inability to repay the overpayment. Because we approved the waiver request, we will not transfer the overpayment to any other individual currently receiving benefits on the same earnings record for collection based on contingent liability.

Based on the Privacy Act, when we send the notice about the overpayment to the contingently liable individual, we may only disclose:

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  The name of the primarily liable individual,

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  The amount of the overpayment, and

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  The month(s) of the overpayment.

We must not disclose the full explanation of reasons behind overpayment, the monthly amounts paid, the monthly amounts that we should have paid, and the reason that a different amount was actually due. Instead, provide a simple explanation that we cannot collect the overpayment from the primarily liable individual along with the waiver and appeal rights.

If the contingently liable individual requests an explanation of the overpayment, reconsideration (appeal), or waiver of recovery, stop collection activity. We may have to repay any monies withheld after we received the request. For an explanation request, we may only disclose the name of the primarily liable individual, the amount of the overpayment, and the month(s) of the overpayment as stated in GN 02210.007C above.

For more information regarding a reconsideration or waiver request, see GN 02201.025, and GN 02250.001.

NOTE: When an individual requests waiver and we receive the request within 30 days of the date of the overpayment notice, we consider the individual to have made the request in the same month we issued the notice.

If the 90-day due process recovery period expires without a due process request from the individual, the automated system will reduce or withhold 10% of the monthly benefit payment until we have fully recovered the overpayment.

EXAMPLE 1: Mary Green was overpaid spouse's benefits after their divorce. Mary's child, Theresa, is their own payee receiving student benefits on their other parent’s record (Mary Green’s ex-spouse) and lives with Mary. We notified Mary of the overpayment in 01/2015. Mary did not request a reconsideration or a waiver; nor did they submit a full refund within 30 days. Mary did not repay the overpayment or make installment payments. In 08/2015, we notified Theresa of Mary Green’s overpayment and proposed adjustment of their benefits to recover Mary's overpayment. Since Theresa did not protest the proposed recovery, we started withholding from Theresa’s benefits to recover the overpayment beginning in 11/2015.

EXAMPLE 2: In 08/2015, we notified Theresa of Mary Green’s overpayment and proposed adjustment of their benefits to recover their parent's overpayment. Theresa requested waiver in 08/2015 when we notified them of Mary Green’s overpayment and proposed adjustment. Because of Theresa’s waiver request, we would stop recovery actions until we make a determination on their request.

EXAMPLE 3: In 08/2015, we notified Theresa of Mary Green’s overpayment and proposed adjustment of their benefits to recover Mary's overpayment. Theresa requested waiver in 12/2015 but we did not stop collection activity until 01/2016. The amount we withheld from their 11/2015 benefits was proper. However, we would refund the amount we withheld from their 12/2015 benefits.

After notifying the contingently liable individual about the overpayment, withhold any underpayment that becomes due as long as he or she does not protest the overpayment.

Example 1: In 10/2015, when we were taking action to notify Lane Davis of a proposed adjustment of their retirement benefits to recover his spouse's overpayment, we discovered they were due an AERO increase of their monthly benefit effective 01/2014 and 01/2015. Since we had not notified Lane Davis of their spouse's overpayment when we determined they were underpaid, we will not withhold any part of the additional benefits due them for 1/2014 through 09/2015 in order to recover the overpayment.