TN 14 (02-98)
GN 02250.115 Application of Defeat the Purpose Provisions
1. Current Financial Information Needed
A defeat the purpose decision is based on a person's current circumstances. The financial information must be no more than 1 year old when the waiver decision is made.
2. Changes in Financial Circumstances
During recovery, if a person goes into debt to meet his/her ordinary and necessary living expenses, recovery will defeat the purpose of title II 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 decision 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.
3. Adjusted Household Expenses
Every household has some unbudgeted or unaccountable expenses. In comparing income and expenses, each household is allowed a margin of $25. This $25 margin is used to establish “adjusted household expenses”, which is compared to household income when deciding defeat the purpose.
A person's entire financial situation must be evaluated when making a defeat the purpose finding. Defeat the purpose may be found if recovery reduces assets to below:
$3000 for a person without dependents, or
$5000 for a person with one dependent, plus $600 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 adjusted expenses, recovery will defeat the purpose if recovery would cause assets to be reduced below these amounts.
5. Estate Is Seeking Waiver
Although waiver of recovery of an overpayment is possible, recovery from an estate can never defeat the purpose. An estate does not have ordinary and necessary living expenses.
If the estate has been closed and the distributee is seeking waiver, defeat the purpose is possible for the distributee.
If a person's financial circumstances change before a waiver decision is final, reevaluate the defeat the purpose finding as of the date of the change. If the change in situation occurs after a final waiver denial, the person can again request waiver.
EXAMPLE 1: When Tom and Alice Miles requested waiver in November, they indicated that they rely entirely on their Social Security benefits of $600 a month to meet expenses averaging $600 a month. In December, when the waiver request is being considered in the FO, the cost of living increase has already been announced effective December, payable January 3. Since it is known that the combined benefits will exceed $626 after the cost of living increase (allowing for the increased SMI premium), it is decided (in December after a personal conference) that recovery will not defeat the purpose effective January 3.
EXAMPLE 2: Mr. Jerry Pitt was overpaid $1,250. In addition to his automobile, he owns outright a camper which has a current fair market value of $11,000. Mr. Pitt alleges a monthly income of $940 and adjusted expenses of $940 which includes $275 for upkeep and insurance on the camper. The camper is not a necessity of life and represents a disproportionate share of Mr. Pitt's expenses. In view of this asset (and the resulting expenditures which are not necessary), a finding of defeat the purpose of title II is not justified.
EXAMPLE 3: Rachel Robbins is overpaid $2,000. Her income is $642 a month and her adjusted expenses are $642 a month. She has assets valued at $3,500. Recovery would not defeat the purpose for $500 of the overpayment ($3,500 - $3,000).