The Debt Collection Improvement Act of 1996 (section 31001 of Pub. L. 104-134) (DCIA) authorized Benefit Payment Offset (BPO). The DCIA requires Federal-disbursing agencies to offset Federal payments to collect delinquent non-tax debts owed to the Federal Government.

BPO is the reduction, or offset of Social Security's Title II benefit payments to recover delinquent non-tax debts owed to other Federal agencies. It is an automated process administered by the Department of the Treasury's Bureau of the Fiscal Service (Fiscal Service). Fiscal Service matches SSA payment records against a large debtor database called the National Interactive Delinquent Debtors Database (NID3). When a match occurs, and if all the criteria for BPO are met, the Title II benefit is reduced. When an offset occurs, Fiscal Service notifies the beneficiary and sends the offset funds to the agency where the debt is owed, which is also known as the creditor agency. Fiscal Service also notifies SSA of a reduced benefit payment due to BPO.

Over 30 Federal agencies participate in BPO as creditor agencies. Examples of debts owed to other agencies are student loans owed to the Department of Education, home loans owed to the Department of Veterans Affairs, and food stamp overpayments owed to the Food and Nutrition Service.

NOTE: Internal Revenue Service (IRS) collects delinquent tax debts using the paper levy program described in GN 02410.100 and the automated Federal Payment Levy Program (FPLP) described in GN 02410.305.

This chapter will explain BPO policy, SSA and Fiscal Service processes, and the procedures for handling inquiries from the public.

When one person owes more than one debt to a Federal agency or agencies, Fiscal Service’s policy is to collect the oldest debt first from the Social Security Title II benefit. After the oldest debt is collected, Fiscal Service will continue offsetting the Social Security Title II benefit to collect the next debt. See GN 02410.300F.1. in this section for more information about how Fiscal Service processes multiple debts.

By law, BPO will not reduce benefit payments below $750 per month. Therefore, SSA beneficiaries identified by the BPO process as delinquent debtors will still receive at a minimum $750 per month.

The reduction of an SSA benefit under BPO is not appealable to SSA. The offset occurred due to a debt that is owed to another Federal agency (the creditor agency). The beneficiary should discuss any appeal rights with the creditor agency.

Additionally, since SSA is not the creditor agency, we can only redirect a beneficiary who wants to appeal to the creditor agency. See GN 02410.300H.3. in this section for more information about handling beneficiaries who want to protest the offset of an SSA benefit due to BPO.

If a Title II beneficiary has a reduced payment due to BPO, and we later determine that the payment was not due the beneficiary, he or she is liable for the entire payment amount.

Redirect any request for relief from BPO due to hardship to the creditor agency. SSA is not authorized to stop or delay the collection of another agency's debt via BPO.

IMPORTANT: Do not issue any special payments such as critical payments or immediate payments to pay back benefits previously offset. See GN 02410.300H.6. in this section for more information about how to handle requests for relief from BPO due to hardship.

In some cases, BPO will result in an excess collection. For example, this may occur when a beneficiary fully repays another agency's debt and due to BPO systems timing, Fiscal Service cannot stop the next scheduled offset. It is not SSA's responsibility to refund the excess collection. It is the responsibility of the creditor agency to refund the person any excess collections.

IMPORTANT: Do not issue any special payments such as critical payments or immediate payments to pay back benefits previously offset. See GN 02410.300H.4. and GN 02410.300H.5. in this section for more information about how to handle allegations of excess collections.

Some payments under the Social Security Act are exempt from the BPO process. The following payments are exempt:

1. a. 

   Title XVI payments. The law allows the head of an agency to request an exemption for means tested payments. SSA has requested and been granted an exemption for Title XVI payments.

2. b. 

   Title II payments undergoing partial withholding to recover a debt owed to SSA. (See GN 02410.300F.2. in this section for more information.)

3. c. 

   Title II underpayments being made in installments.

4. d. 

   Current Monthly Accrual payments that include retroactive amounts due (e.g., AERO increases).

NOTE: Due to processing limitations, prior monthly accrual payments are not subject to BPO.

Some debts are not subject to collection via BPO.

1. a. 

   Debts owed to or enforced by states, the District of Columbia and territories, including child support, will not be collected from Social Security benefits via BPO.

2. b. 

   Social Security debts will not be collected from Social Security benefits via BPO. For example, Fiscal Service will not collect a delinquent Title XVI debt from a Title II benefit paid to that person. This is because Social Security will conduct its own benefit withholding to collect its debts.

NOTE: Fiscal Service is responsible for identifying the debts that should not be offset from SSA's payments. SSA's systems automatically identify the payments that should not be offset and are exempt. SSA does not need a manual action to make a payment exempt from BPO.

SSA computes and certifies its Title II payments to the Department of the Treasury. We do not check for delinquent debts owed to other Federal agencies, and we do not calculate the amount of the offset. After SSA computes and certifies its Title II payments, Fiscal Service identifies the existence of any Federal debt owed by any beneficiary, determines whether BPO applies and calculates the amount of the offset for each payment that is subject to BPO.

SSA sends payment files to Fiscal Service each month. These files contain data about the beneficiary and the payment that includes, but it is not limited to, monthly benefit payments, the beneficiary's own account number (BOAN), the claim account number (CAN) and the BPO bypass code, if applicable. Fiscal Service uses this file in its automated processes to conduct BPO.

SSA's systems automatically identify payments that qualify for any of the BPO exemptions listed in GN 02410.300C.1 of this section. The system places a BPO bypass code on the person's payment record. (The person's payment record is an SSA systems-generated record sent automatically to Fiscal Service; it is not the Master Beneficiary Record (MBR).) The BPO bypass code tells Fiscal Service not to offset a Social Security payment.

NOTE: If you identify a Title II case that involves one of the BPO exemptions, no manual action is required to input a BPO bypass code on the person's record. SSA's systems recognize the exemption situations and add the code to the person's record.

Fiscal Service uses the Treasury Offset Program (TOP) to conduct the offset of SSA's Title II benefits via the BPO program. (See GN 02201.029 for information on TOP.) TOP is based on computer matching and uses the taxpayer identification number (TIN) and a name control (generally the first four characters of the debtor's last name), to match the payee and debtor records. For SSA, the TIN is the same as the BOAN.

When TOP matches a Title II beneficiary's identifying information (BOAN and name control) with the same information from the debtor database, it checks for all of the criteria that allow an offset to be taken from the Social Security benefit, e.g., no BPO bypass code, Title II benefit larger than $750, etc. If Fiscal Service determines that an offset is appropriate, they send a 60-day warning letter and a 30-day warning letter to the Social Security beneficiary. After 60 days, Fiscal Service reduces the payment, notifies the debtor of the offset and sends the funds to the agency that is owed the debt (the creditor agency).

Fiscal Service sends a series of letters to the debtors telling them about the planned offset of their Social Security benefits. As explained above, Fiscal Service sends a 60-day warning letter, a 30-day warning letter, and an offset notice.

The purpose of the warning letters is to give the debtor adequate advance warning about the possible offset, and provide them with the opportunity to settle the debt with the creditor agency. The offset letter tells the debtor that the Social Security benefit was reduced as payment toward a debt they owe to another agency.

In addition, the Fiscal Service warning letters and notices of offset tell beneficiaries not to contact SSA with questions about BPO. In some cases, however, beneficiaries will still contact SSA. See GN 02410.300H in this section for more information about how to handle situations involving beneficiary contact with SSA.

IMPORTANT: Due process notices (i.e., notices to the debtor describing appeal rights) regarding the delinquent debt are the responsibility of the creditor agency. The creditor agency sends due process notices to the debtor before sending information on the delinquent debt to Fiscal Service for collection via BPO.

When Fiscal Service performs its initial match and determines that a Social Security benefit qualifies for BPO, it sends a 60-day warning letter to the beneficiary. The warning letter tells the beneficiary:

1. a. 

   they owe a delinquent debt that has been referred to Fiscal Service; and

2. b. 

   the debt can be collected from payments made by Fiscal Service unless the person contacts the agency to which the person owes the debt and meets that agency's requirements to stop the offset; and

3. c. 

   the debt will be collected from each Social Security payment made on or after a date cited in the warning letter; and

4. d. 

   the name of the agency to which they owe the debt;

5. e. 

   contact information such as telephone number, address, and account number for the agency to which they owe the debt; and

6. f. 

   the rules for how Fiscal Service calculates the offset amount; and

7. g. 

   information about the Social Security payment, such as payee name, SSN, estimated payment amount, and payment date.

If the debt continues to meet the criteria for BPO, Fiscal Service sends a 30-day warning letter telling the beneficiary the same basic information as the 60-day warning letter. The 30-day warning letter tells the beneficiary that an offset will occur about 30 days from the date of the letter unless the beneficiary settles the debt with the creditor agency.

If the debt still qualifies for BPO after the warning letters have been sent, Fiscal Service reduces the Social Security benefit. Fiscal Service sends an offset notice to the beneficiary in time for the beneficiary to receive the notice by payment day. The notice is sent each time a benefit payment is offset. The Fiscal Service offset notice includes the following information:

1. a. 

   the name, address and telephone number of the creditor agency; and

2. b. 

   the name, address, SSN, and creditor agency account number of the person whose benefit was offset; and

3. c. 

   the amount of the Social Security payment before the reduction and the amount of the reduction; and

4. d. 

   the payment date; and

5. e. 

   the toll-free telephone number of Fiscal Service in case the person wants to contact Fiscal Service about the offset. See GN 02410.300H.1. in this section for the toll-free number.

Fiscal Service automatically determines the offset amount. It is the least of:

1. a. 

   the amount of the debt; or

2. b. 

   an amount equal to 15% of the monthly benefit payment (MBP); or

3. c. 

   the amount, if any, by which the MBP exceeds $750.

NOTE: When the MBP changes, Fiscal Service automatically recalculates the offset amount according to the rules above.

Below are examples on how Fiscal Service calculates offset amount.

1. a. 

   Example 1: A disabled wage earner who receives an MBP of $1,000 also owes a delinquent $100 debt to the Army and Air Force Exchange Service. Fiscal Service calculates the offset amount to be $100 because it is the least of the following three amounts: the amount of the debt ($100); the amount equal to 15% of the MBP (15% of $1,000, or $150); and the amount by which the MBP exceeds $750 ($1,000 minus $750, or $250).

2. b. 

   Example 2: A retired worker receives an MBP of $1,000. He also owes Housing and Urban Development a delinquent debt in the amount of $10,000 for a defaulted loan. Fiscal Service calculates the offset amount to be $150 because it is the least of the following three amounts: the amount of the debt ($10,000); the amount equal to 15% of the MBP (15% of $1,000, or $150); and the amount by which the MBP exceeds $750 ($1,000 minus $750, or $250).

3. c. 

   Example 3: A young mother receives an MBP of $800, and she owes a delinquent debt of $100 to the U.S. Postal Service. Fiscal Service calculates the offset amount to be $50 because it is the least of the following three amounts: the amount of the debt ($100); the amount equal to 15% of the MBP (15% of $800, or $120); and the amount by which the MBP exceeds $750 ($800 minus $750, or $50).

Fiscal Service sends the offset amount (i.e., the debt collection) to the creditor agency.

Post-offset claims (e.g., non-receipt, non-entitlement) involving Title II payments that were offset are handled the same as non-offset payments. No special handling or inputs are necessary.

A reversal is the act of taking back offset amounts from the creditor agency. Fiscal Service performs reversals automatically. Reversals are done when, for example, SSA determines that a Title II benefit that was offset under BPO should not have been paid at all. SSA's systems automatically tell Fiscal Service about the need for reversals. No manual action is required by SSA to process reversals.

To control cases with multiple debts, Fiscal Service established debt priorities based on the age of the debt, with the oldest debt having the highest priority for collection via BPO. Therefore, when a person has multiple debts, Fiscal Service’s policy is to collect the oldest debt first. After recovering the oldest debt, Fiscal Service collects the next oldest debt, and so on, until all debts are collected.

When a beneficiary who is already subject to BPO incurs an SSA debt, BPO ceases until the debt owed to SSA is collected. This is because Social Security payments that are reduced to collect an SSA debt are exempt from BPO. See GN 02410.300C.1., above, for more information about this exemption.

Since Title II benefits that are being reduced to collect SSA debts are exempt from BPO, any BPO-related activity that is in progress will automatically stop. For example, Fiscal Service will not send warning letters and offsets will not occur due to BPO. SSA's systems will automatically include the BPO bypass code on the payment record of any Title II beneficiary who is undergoing benefit withholding by SSA. See GN 02410.300D.3. in this section for more detailed information about the BPO bypass code.

Once the Title II debt is recovered, SSA removes the BPO bypass code, and Fiscal Service resumes its BPO actions if all conditions for the program continue to be met. Fiscal Service takes the following actions:

• •

  Completes the 60-day and 30-day warning letter process if it was interrupted by the BPO bypass code;

• •

  Resumes offsets without further warning if the warning letter cycle was completed by Fiscal Service before BPO was stopped by SSA; and

• •

  Sends offset notices each month that the benefit is reduced due to BPO.

If you receive an inquiry from a person who is confused about this situation, refer to GN 02410.300H.11. in this section for guidance.

You will find specific information about a Social Security beneficiary's BPO in ORS. ORS contains electronic images of the Fiscal Service warning letters and offset notices. The Fiscal Service letters and notices show the information listed in GN 02410.300E.3. and GN 02410.300E.4 in this section. This information includes the name of the agency to which the Social Security beneficiary owes the debt, the creditor agency's contact information, the amount of the Social Security payment before the BPO, the amount of the offset, and the payment date.

The MBR and PHUS show limited information about the BPO. The MBR shows two codes in the Transaction Data Line indicating BPO involvement on a claim. The PHUS shows two new BPO-related event codes and legends (see SM 00630.100C).

You should retrieve copies of the Fiscal Service BPO warning letters and offset notices only when you need specific information about BPO as it affects a Social Security beneficiary. Since the Fiscal Service letters and notices are stored on ORS to identify the creditor agency and agency contact information, you should retrieve copies of the documents in ORS only for that information.

IMPORTANT: Do not print and give the beneficiary a copy of the warning letter or offset notice. If you have printed a copy of the Fiscal Service BPO warning letter or offset notice, you must destroy the printed copy.

In most cases, the Social Security beneficiary asks questions about BPO that should be answered by the creditor agency. If the person's question should be answered by the creditor agency, redirect him or her to that agency. For more information about handling inquiries, see GN 02410.300H in this section.

You can get access by clicking the following link Online Retrieval System (ORS).

Some people who receive the Fiscal Service warning letters and offset notices will contact SSA with questions about the BPO program. If the question is general, provide a description of the program. Include the following items in your description:

1. a. 

   BPO is a debt collection program run by Fiscal Service; and

2. b. 

   It is authorized by law (the Debt Collection Improvement Act of 1996); and

3. c. 

   It is the reduction of a Title II benefit payment to collect a delinquent non-tax debt owed by the beneficiary to another Federal agency; and

4. d. 

   SSA has no control over whether Fiscal Service performs the offset.

If the person wants more information about the BPO program, he or she should contact the TOP Call Center at 1-800-304-3107. The TOP Call Center is trained in the BPO program and can answer questions.

The Fiscal Service warning letters and offset notices refer to the debt owed by the Social Security beneficiary to another Federal agency. When a person asks SSA for information about the debt owed to another agency, tell the person:

1. a. 

   SSA does not have any specific information about the debt, such as the amount of or reason for the debt; and

2. b. 

   SSA knows only the information shown on the warning letter or offset notice (name, address and telephone number of the agency); and

3. c. 

   SSA can provide that information to the person if they want it; and

4. d. 

   He or she should contact the agency shown on the Fiscal Service letter for additional information about the debt.

Fiscal Service’s offset of a benefit payment due to BPO is not an initial determination. Therefore, it is not subject to appeal rights with SSA. If a person wants to protest Fiscal Service’soffset of a Social Security benefit, tell him or her:

1. a. 

   The offset is not an SSA initial determination subject to appeal rights with SSA; and

2. b. 

   We cannot accept a formal request for an appeal of Fiscal Service’s offset; and

3. c. 

   To contact the agency which is owed the debt to discuss any further appeal rights; and

4. d. 

   The name, address and telephone number of the creditor agency if the person asks for that information.

IMPORTANT: Do not accept any formal appeal, such as a Form SSA-561 regarding the person's protest of the BPO action. If a person sends a formal request to SSA or otherwise insists on making a formal appeal, handle it in accordance with existing instructions in GN 03102.100.

When a person alleges that he or she already paid the debt or is not the individual who owes the debt, tell him or her:

1. a. 

   The creditor agency determines who owes delinquent non-tax debts and who is liable for the repayment; and

2. b. 

   SSA is not authorized to decide on behalf of the creditor agency that a person does or does not owe a debt subject to BPO; and

3. c. 

   To contact the agency that is owed the debt to discuss the liability for the debt; and

4. d. 

   The name, address and telephone number of the creditor agency if the person asks for that information.

IMPORTANT: Do not make any special payments such as critical payments to pay back benefits that were offset due to BPO. The creditor agency is responsible for paying back money.

If a beneficiary believes the amount withheld from his payment by Fiscal Service is calculated incorrectly, tell him or her:

1. a. 

   Fiscal Service is responsible for calculating the amount withheld from the Social Security payment; and

2. b. 

   SSA only knows the general rules of the calculation of the offset amount (see GN 02410.300E.5. and GN 02410.300E.6. in this section); and

3. c. 

   To contact the TOP Call Center at 1-800-304-3107 to discuss the calculation in more detail.

IMPORTANT: Do not make any special payments such as critical payments to pay back benefits that were reduced or offset due to BPO. The creditor agency is responsible for paying back money.

Due to alleged hardship, people sometimes request SSA to prevent BPO from occurring, or to refund the money that has already been withheld from their Social Security benefit. When a person requests relief from BPO due to hardship, tell him or her:

1. a. 

   BPO is done at the request of the agency that is owed the money; and

2. b. 

   SSA cannot take any action to stop the offset or to refund any money that has already been withheld; and

3. c. 

   Any money that has been withheld is in the possession of the creditor agency; and

4. d. 

   To contact the creditor agency regarding the request for relief from BPO due to hardship.

If the person requests contact information for the creditor agency (name, address, or telephone number), provide the information from the Fiscal Service warning letters and/or offset notice found in ORS, but do not make copies for the debtor.

IMPORTANT: Do not make any special payments such as critical payments to pay back benefits that were offset due to BPO. The creditor agency is responsible for paying back money.

If the person alleges not receiving the Fiscal Service warning letters and/or offset notice, tell him or her:

1. a. 

   Fiscal Service is responsible for mailing the letters and notices to the person subject to BPO; and

2. b. 

   To contact the TOP Call Center at 1-800-304-3107 to discuss the issue.

When a beneficiary approaches SSA in the mistaken belief that he or she can repay another agency by paying SSA, tell him or her that:

1. a. 

   The debt is owed to another agency and payment is a matter between the person and the agency that is owed the debt; and

2. b. 

   SSA cannot accept payment on behalf of that agency; and

3. c. 

   SSA can provide the name, address, and telephone number of that agency if the person needs that information.

IMPORTANT: Under no circumstances should you accept a payment for a debt owed to another Federal agency.

If a beneficiary alleges non-receipt of a payment that coincidentally was reduced because of BPO, take the same action you would normally take in the event of an allegation of non-receipt of payment.

NOTE: For information on processing non-receipt claims, see GN 02406.000.

The unusual BPO cases described in GN 02410.300F.1. and GN 02410.300F.2. in this section, may prove to be difficult for beneficiaries to understand. Since Fiscal Service carries out the rules for conducting offsets for multiple debts with different priorities, they are in the best position to handle these inquiries. When a person asks SSA for information about multiple debts and debt priorities, tell the person:

1. a. 

   BPO is a debt collection program run by Fiscal Service; and

2. b. 

   SSA has no control over how Fiscal Service performs the offsets or how it determines debt priorities.

If the person wants more information about how offsets are computed for multiple debts or how debt priorities are determined, the person should contact the TOP Call Center at 1-800-304-3107. The TOP Call Center employs people who are trained in the BPO program and can answer questions.

A beneficiary who was undergoing BPO may become confused if the BPO process is stopped while an SSA debt is being recovered. When the beneficiary asks what happened to the BPO process, tell the person:

1. a. 

   The BPO process is suspended while SSA recovers its own debt;

2. b. 

   This happens because Title II benefits being reduced to collect SSA debts are exempt from BPO; and

3. c. 

   Once SSA completely recovers the SSA debt, Fiscal Service will resume collection of the non-SSA debt if all BPO criteria are met.

If a beneficiary asks about requesting waiver of the debt owed to another agency, tell the person:

1. a. 

   The debt is not owed to the Social Security Administration;

2. b. 

   SSA cannot accept a waiver request regarding the debt owed to another agency; and

3. c. 

   To contact the creditor agency to request a waiver or other relief.

IMPORTANT: Do not accept a waiver request (SSA-632-BK or equivalent form) on a debt owed to another agency. If a person sends a waiver request to SSA or otherwise insists on making a waiver request, do not process the waiver request (see GN 02250.001 for instructions).

If the person alleges bankruptcy, tell the person:

1. a. 

   BPO is done at the request of the agency that is owed the money;

2. b. 

   SSA cannot take any action to stop the offset or to refund any money that has already been withheld;

3. c. 

   Any money that has been withheld is in the possession of the creditor agency; and

4. d. 

   To contact the creditor agency to discuss further options.

On behalf of the Center for Medicare and Medicaid Services (CMS), SSA issues CMS's Supplementary Medical Insurance (SMI) premium refund payments and return payments to our beneficiaries. Medicare SMI premiums, commonly known as Medicare Part B premiums, are payments for medical insurance that covers services not covered by Medicare Part A. By contrast, Medicare Part A, or hospital insurance, does not require most individuals to pay a premium.

With CMS' agreement, beginning April 12, 2016, Fiscal Service will also offset SMI premium refund payments via BPO.

When offsets occur, individuals will receive a notice from Fiscal Service that informs them of the Federal agency to which they owe a debt. This offset will mirror the same guidelines as the Title II procedures. Direct individuals with questions concerning the offset of their SMI premium refunds to contact the TOP Call Center at 1-800-304-3107, or the Federal creditor agency identified on the letter Fiscal Service sends informing them of the offset.