TN 47 (09-23)

GN 02250.100 Defeats the Purpose of Title II - Waiver Determination

CITATIONS:

Social Security Act §204(b)

20 C.F.R. §§ 404.506, 404.507, 404.508, 404.512

A. Introduction

We will waive an overpayment when an individual requests a waiver, we find that the overpaid individual is without fault, and recovery would defeat the purpose of Title II of the Social Security Act. Before you determine if a waiver request meets the defeats the purpose provision, consider whether you can approve the waiver under one of the following provisions:

 

  • Against equity and good conscience, see GN 02250.150; or

B. Requirements for a defeats the purpose waiver determination

To make a defeats the purpose determination, we must first determine that the overpaid individual is without fault in causing the overpayment, see GN 02250.005. Recovery of an overpayment defeats the purpose of Title II if recovery would deprive the overpaid individual of the income and resources required for ordinary and necessary living expenses. To find that recovery defeats the purpose, we must find that:

 

  • the overpaid individual needs substantially all of their current income to meet their current ordinary and necessary living expenses, see GN 02250.100C.and

  • the overpaid individual has no more than $3,000 in resources or $5,000 if the individual has one household family member. If the individual has more than one household family member, add $600 for each additional household family member to their resource limit, see GN 02250.100E.

To make the defeats the purpose waiver determination, we will review the monthly income, monthly expenses, and resources of the overpaid individual, the individual’s spouse, and all other household family members.

1. Definition of household family members

For purposes of determining whether recovery defeats the purpose, “household family members” is defined as the overpaid individual’s spouse and any dependents. A dependent is an individual who depends on the overpaid individual for financial support and whom the overpaid individual can claim on their income tax returns. Even if a dependent family member resides outside the household (e.g., child away at school), still consider the individual as a dependent. For purposes of determining whether recovery defeats the purpose, we consider that all household family members and the overpaid individual are a single financial unit, with all income and resources available to each individual.

Where a child is overpaid, a “household family member” is defined as the child’s parents and their dependent family members. A dependent is an individual (e.g., the child’s sibling) who depends on the overpaid child’s parents for financial support and for whom the parents can claim on their income tax returns.

2. Applying defeats the purpose for a child's overpayment

We consider income and resources as belonging to the child if the income and resources are:

 

  1. a. 

    in the child’s name or in an instrument (e.g., a trust) in which the child is a named beneficiary; and

  2. b. 

    available for the child’s use. For information about how to determine whether resources are available to the child, refer to GN 02250.100E.

If any of the child’s income or resources help with household expenses, count the income, resources, and household expenses of the parent(s) and any other household family members as belonging to the child in the defeat the purpose determination. If someone other than a household family member lives in the household, include any contributions that the individual makes to the household or any room and board payments that the individual provides as income to the child.

If any of the child’s income or resources do not help with monthly household expenses, make the defeat the purpose determination using only the child’s monthly income, share of monthly household expenses, and resources. To determine the share of monthly household expenses, apply a pro-rata share of the ordinary and necessary living expenses to the overpaid individual and each household family member. Take the total monthly household expenses and divide the expenses by the number of household family members plus the overpaid individual.

For examples on how to apply the defeats the purpose provision for a child’s overpayment, see section G, examples 1 and 2.

C. Monthly household income

To determine whether the overpaid individual needs substantially all their current income to meet ordinary and necessary living expenses, we compare the overpaid individual’s and household family member’s monthly household income to monthly household expenses. We subtract the monthly household expenses from the monthly household income, see GN 02250.100D4.

We include any income that a household family member receives as income available to the overpaid individual. If someone other than a household family member lives in the household, include any contributions that the individual makes to the household or any room and board payments that the individual provides as income to the overpaid individual.

Only include the overpaid individual’s and any household family members’ income and resources in the defeat the purpose determination. If a representative payee (payee) resides in the same household as the overpaid individual, determine if the payee is a household family member and treat as appropriate. For the definition of family household members, refer to GN 02250.100B1.

Income includes, but is not limited to:

 

  • Government benefits, such as Social Security, railroad, workers' compensation, unemployment compensation;

  • Net wages;

  • Net income from self-employment;

  • Child support;

  • Alimony;

  • Regular monthly payments, such as room and board;

  • Pensions;

  • Investment income, such as interest, royalties, dividends, and rent;

  • Regular contributions from family and friends; or

  • Income from an Individual Retirement Account (IRA), Keogh plan, or any other type of retirement plans.

NOTE: The overpaid individual or payee is responsible for providing the documents that support the income for the household. The supporting documents must be no older than 3 months from the date we receive the waiver request. If the overpaid individual does not provide the supporting documents with the waiver request, give them 30 days to provide the information. For more information refer to GN 02250.230B3.

If the overpaid individual has more than $55 in income after paying the monthly household expenses, the overpaid individual does not meet the defeats the purpose provision, see GN 02250.100D4.

D. Monthly household expenses

An individual's particular circumstances and lifestyle determines whether expenses are ordinary and necessary. Round the total amount to the nearest dollar when you calculate the household expenses. Do not include expenses of any individual who lives in the household and is not the overpaid individual or a household family member.

1. Types of monthly expenses

Ordinary and necessary expenses include, but are not limited to:

 

  • Fixed living expenses such as rent or mortgage payments;

  • Utilities, taxes, food, household and personal care items, transportation, insurance (life, homeowners, car, medical, etc.);

  • Medical payments paid by the family;

  • Court ordered payments paid directly to the court;

  • Tuition and school expenses;

  • Expenses for the support of others for whom the individual is legally responsible; and

  • Miscellaneous expenses which may be reasonably considered as part of the individual's standard of living , such as newspaper, hairdresser, pet maintenance, entertainment, charitable donations, and etc.

2. Determining acceptable monthly household expenses

Expenses that are reasonably consistent with the overpaid individual's standard of living are acceptable household expenses as long as they are ordinary and necessary. When determining acceptable household expenses, do not allow extraordinary and unnecessary amounts for expenses such as:

 

  • Entertainment; or

  • Travel and vacationing.

    NOTE: You must fully document and explain any unusual expenses on the Remarks (RMRK) screen in the Debt Management System (DMS).

3. Large expenses

If the overpaid individual has a large one-time expense, prorate the expense and divide the total amount of the expense over a 12-month time period to determine the monthly amount (e.g., large medical expense).

4. Adjusted household expenses

Every household has some unbudgeted or unaccountable expenses. In comparing monthly household income and monthly household expenses, we allow each household a margin of $55. We use this $55 margin to establish the “adjusted household expenses,” which we compare to household income. When we subtract the monthly household expenses from the monthly household income, if the balance is $55 or less and if the resources are below the amounts in GN 02250.100A, recovery will defeat the purpose. If the overpaid individual has more than $55 left over after paying the monthly household expenses, the overpaid individual does not meet the defeats the purpose provision.

For examples on how to evaluate and apply the adjusted household expenses, see section H, examples 2, 3, and 4.

NOTE: If the monthly household expenses are more than the monthly household income, the overpaid individual must explain how they are paying their bills or explain which bills they are not paying.

E. Resources

For the purpose of a waiver determination, financial resources are cash or other liquid assets or any real or personal property that could be converted to cash to repay an overpayment. If the resources are not available to the overpaid individual, we will not consider those resources when we make a defeats the purpose determination. We review the overpaid individual’s resources to determine if their resources are below $3,000 for an individual without any household family members, or $5,000 for an individual with one household family member.

If the individual has more than one household family member, we allow an additional $600 for each additional household family member. We must review and evaluate an overpaid individual's and any household family member's entire financial situation.

For examples on how to evaluate and apply resources in a defeats the purpose determination, see section H, examples 2, 3, and 4. For examples of resources for the purpose of a defeats the purpose determination, see GN 02250.255.

1. Items that we exclude as resources for the purpose of a defeats the purpose determination

  • Household furnishings;

  • Clothes;

  • One home (the overpaid individual's principal place of residence);

  • One automobile;

  • Any additional automobile(s) used for the support of the overpaid individual or a household family member who uses a wheelchair or mobility device;

  • Burial plot or prepaid burial contract;

  • Any resource or fund that generates income that the overpaid individual needs to meet ordinary and necessary living expenses; and

  • Individual Retirement Account (IRA), Keogh plan, or other type of retirement plan, if the overpaid individual or household family member receives income from the retirement plan. If the retirement plan does not produce income, then include it as a resource.

 

2. Resources that may not be available to the overpaid individual

a. Trust fund

If an overpaid individual is the beneficiary of a trust fund, determine if they have access to the funds. The trust fund is a resource unless the funds are not available to the individual (e.g., if the overpaid individual cannot use the principal until they attain age 25 or the trust fund is comprised solely of the proceeds of Veterans Affairs (VA) funds). Request guidance from the Office of General Counsel (OGC) on whether the trust fund is a liquid resource. Provide OGC with a full explanation of the facts.

b. Joint ownership in property

Do not include the value of the individual’s share of the property if the other parties will not agree to liquidate the resource.

3. Authorization to obtain financial account information

An overpaid individual must provide their authorization for us to obtain financial account information whenever we need the information to make a defeats the purpose determination. The authorization is located at the bottom of the SSA-632-BK "Request for Waiver of Overpayment Recovery" form. If an overpaid individual is legally competent, the overpaid individual must sign the authorization, even if they have a payee. If the overpaid individual is a legally incompetent adult or a minor child, the legal guardian or parent must sign the authorization.

If you need financial information from a spouse, parent, or other household family member, the overpaid individual or payee must provide the financial information. If you need additional financial information for the overpaid individual that you cannot receive through the Access for Financial Institutions (AFI) process, the overpaid individual or payee must provide the information. For a list of acceptable proofs, refer to GN 02250.255B3.

NOTE: The documents to support the financial information should be no older than 3 months from the date we receive the waiver request. If you already have financial records that you received for an SSI recipient, you may use those financial records, if the records are no older than 3 months from the date that we receive the waiver request. If the information is more than 3 months from the date we receive the waiver request, contact the individual or payee to request updated information, refer to GN 02250.230B3.

4. Sending requests to financial institutions using the e4641 system

Technicians must use the e4641 system to request financial account information if it is needed for a defeats the purpose determination. The e4641 system gives us the ability to access financial account balances and allows the generation of up to twelve GeoRequest searches to financial institutions located in the geographic area where the overpaid individual resides. To process an electronic request, refer to field office management staff.

If a financial institution does not participate in the electronic AFI process and you need the financial account information for a defeats the purpose determination, you must send the completed and signed SSA-4641 "Authorization for the Social Security Administration to Obtain Account Records from a Financial Institution and Request for Records" form to the nonparticipating financial institution.

Foreign financial institutions do not participate in the electronic AFI process. If you need financial account information from a foreign financial institution to make a defeats the purpose determination, you must send the completed and signed SSA-4641 directly to the financial institution.

NOTE: Do not request the overpaid individual's financial account information if you can approve the waiver under another waiver provision.

5. No financial information received from the financial institution

If the financial institution does not respond to the AFI request within 15 days, review the SSA-632 to determine if the overpaid individual's resources were completed and use the information from the form. If the financial information was not completed on the SSA-632, contact the overpaid individual or payee to ask them to provide the information. Document their response on an SSA-795 "Statement of Claimant or Other Person" form. If the overpaid individual or payee does not provide the financial account information, you cannot approve the waiver under the defeats the purpose provision. Refer the waiver to an independent decision-maker to schedule a folder review and personal conference.

6. No financial authorization provided

If the overpaid individual, parent, or legal guardian failed to complete and sign the financial authorization, contact the overpaid individual, parent, or legal guardian to ask if they will provide authorization for us to obtain the overpaid individual's financial records. To determine the appropriate individual to sign the financial authorization, see GN 02250.100E4. Document their response on an SSA-795 form. If they indicate that they want to provide their authorization, send an SSA-4641 to the overpaid individual, parent, or legal guardian and give them 15 days to return the signed form. If they do not provide their authorization, you cannot approve the waiver under the defeats the purpose provision. Refer the waiver request to an independent decision-maker to schedule a folder review and personal conference.

7. Refuses to authorize SSA to obtain financial account information

If the overpaid individual, parent, or legal guardian refuses to provide, or revokes the authorization to obtain financial information, you cannot approve the waiver under the defeats the purpose provision. Refer the waiver to an independent decision-maker to schedule a folder review and personal conference. To determine the appropriate individual to sign the financial authorization, see GN 02250.100E4. For an example on when an individual refuses to provide authorization to access financial account information, see section H, example 5.

F. Estate requests a waiver

Although waiver of recovery of an overpayment from an estate is possible, recovery from an estate can never defeat the purpose because an estate does not have ordinary and necessary living expenses. If the estate has been closed and the distributee(s) request a waiver, the waiver may be approved under the defeats the purpose provision. For more information on closed estates, see GN 02215.070.

G. Processing a defeats the purpose determination

Before completing the following steps, you must first determine that the overpaid individual is without fault in causing the overpayment.

 

  1. 1. 

    Ensure the appropriate individual provided the AFI authorization, see GN 02250.100E4.

  2. 2. 

    Request the overpaid individual’s financial account information according to the requirements outlined in, GN 02250.100E.

  3. 3. 

    Review the SSA-632 to make sure the information is no more than 3 months old from the date that we receive the waiver request. If the information is more than 3 months old from the date we receive the waiver request, contact the individual to request updated information, refer to GN 02250.230B3.

  4. 4. 

    After reviewing the monthly household expenses, monthly household income, and resource information, determine if the overpaid individual meets the defeats the purpose requirements outlined in, GN 02250.100A.

    NOTE: Make sure you calculate the overpaid individual’s resources correctly. The overpaid individual may include their resources on SSA-632. Compare the information on the SSA-632 and the financial account information that you receive via an AFI request to ensure you are not counting the overpaid individual's resources more than one time.

    If you can approve the waiver under the defeats the purpose provision, follow the instructions in GN 02250.301 and GN 02250.370.

    If you cannot approve the waiver under the defeats the purpose provision, document why you cannot approve the waiver on the Remarks (RMK) screen in the Debt Management System (DMS) and input the denial using the DRWD screen in DMS, see MS DMS 006.004. Refer the waiver to an independent decision-maker to schedule a folder review and personal conference.

H. Examples

Example 1: Recovery defeats the purpose

Jacob, age 10, is overpaid $1,400. Jacob's parent and payee, Sarah, received an overpayment notice on behalf of Jacob. Sarah completed the SSA-632, signed the financial authorization and sent the form to the local field office.

We determined that Jacob is not at fault in causing the overpayment and does not meet any of the other waiver provisions. Jacob lives with Sarah and two siblings. Sarah does not use any of Jacob's income or resources to help with the food or household expenses. Therefore, we will consider only Jacob’s monthly income, share of household expenses, and resources.

Jacob receives $450 in Title II benefits.

We received Jacob's financial account information through an AFI request. Jacob has $1,000 in a savings account. Jacob is under the resource limit of $3,000.

The family's monthly household expenses total $2,000. Jacob's pro-rata share of expenses is $500 ($2,000 divided by 4 individuals, including Jacob and 3 household family members).

Jacob's pro-rata share of expenses ($500) exceeds Jacob's income ($450). Jacob is under the resource limit and Jacob’s expenses exceed Jacob’s income, recovery from Jacob defeats the purpose.

 

Example 2: Exceeds adjusted household expense amount

Kayla, age 12, is overpaid $1,600. Kayla's parent and payee, Karen, received an overpayment notice on behalf of Kayla. Karen completed the SSA-632, signed the financial authorization, and sent the form to the local field office.

We determined that Kayla is not at fault in causing the overpayment and does not meet any of the other waiver provisions. Karen told us that Kayla's income helps with food and household expenses. Kayla lives with Karen, and three siblings. We need the monthly income, monthly household expenses, and resources for all household family members since Kayla's income helps with the household expenses.

Kayla receives Title II benefits in the amount of $500. Karen's net monthly income from her employer is $3,000. Karen also receives $1,500 in child support every month for Kayla's three siblings. The family's total monthly household income is $5,000 ($500 for Kayla, $3,000 for Karen, $500 each for Kayla’s three siblings = $1,500).

The total monthly household expenses are $3,000. When you subtract the monthly household expenses ($3,000) from the monthly household income ($5,000), the balance is $2,000, which is more than the $55 adjusted household expense amount.

We received Kayla's financial account information via an AFI request. Kayla has $2,000 in a savings account. Karen has $2,600 in a checking account. Karen owns a 2020 Ford Edge, which is the only automobile in the household; therefore, we are excluding the automobile as a resource. Each sibling has $200 in a savings account. The family does not have any more resources.

After adding Kayla’s savings account ($2,000), Karen’s checking account ($2,600), and the three siblings savings account (3 times $200 = $600), the total resources are $5,200. The family meets the resource limit, which is $6,800 (5,000 for Kayla and Kayla’s parent plus $600 each for the three other household family members).

After evaluating Kayla’s and the household family members’ resources, we determined that the resources are under the resource limit. However, the total monthly household income exceeds the allowable adjusted household expense amount. We are unable to approve Kayla's waiver because Kayla does not meet the defeats the purpose waiver provision. An independent decision-maker will schedule a folder review and personal conference.

 

Example 3: Exceeds the resource limit

Tom received an overpayment notice. Tom was overpaid $3,500. Tom completed the SSA-632, signed the financial authorization, and sent the form to the local field office.

Tom lives with Tom's spouse, Alice. We determined that Tom is not at fault in causing the overpayment and does not meet any of the other waiver provisions.

Tom provided the couple’s monthly income, monthly household expenses, and Alice’s resource information. Tom receives $2,500 in Title II benefits and a monthly pension of $1,000. Alice receives $1,000 in net income. Together they receive $4,500 per month in income.

Tom and Alice's monthly household expenses are $4,450. When you subtract the monthly household expenses ($4,450) from the monthly household income ($4,500), the balance is $50, which is less than the $55 adjusted household expense amount.

We received Tom's financial account information via an AFI request. Tom has $15,000 in a savings account and $1,000 in a checking account. Tom owns a 2018 Chevy Equinox, which is the only automobile in the household; therefore, we are excluding the automobile as a resource. Alice has a $10,000 Certificate of Deposit. They do not have any more resources. After adding Tom’s savings account ($15,000), checking account ($1,000), and Alice’s CD ($10,000), the total resources are $26,000. Tom exceeds the resource limit ($5,000 for Tom and Alice).

After evaluating Alice’s and Tom’s resources, we determined that their resources exceed the resource limit. We are unable to approve Tom's waiver because Tom does not meet the defeats the purpose waiver provision. An independent decision-maker will schedule a folder review and personal conference.

 

Example 4: Exceeds the resource limit

Jerry received an overpayment notice. Jerry was overpaid $5,250. Jerry completed the SSA-632, signed the financial authorization, and sent the form to the local field office. Jerry lives alone in a home that Jerry owns. We determined that Jerry is not at fault in causing the overpayment and does not meet any of the other waiver provisions.

Jerry receives $2,000 in Title II benefits and $1,500 in a pension. Jerry’s total monthly income is $3,500. Jerry’s monthly household expenses are $3,450. When you subtract the household expenses ($3,450) from the household income ($3,500), the balance is $50, which is less than the $55 adjusted household expense amount.

We received Jerry's financial account information via an AFI request. Jerry has $5,000 in a savings account. Jerry owns a home, which is Jerry’s principal place of residence, an automobile, and a camper. We excluded Jerry's home and automobile as resources. The current fair market value of the camper is $11,000. We must include the camper as a resource because the camper is not Jerry’s principal place of residence or equipped for an individual who needs a mobility device. After adding Jerry’s savings ($5,000) and camper ($11,000), which can be converted to cash, Jerry's resources total $16,000. Jerry exceeds the resource limit ($3,000 for Jerry).

Although Jerry meets the adjusted household expense amount, Jerry exceeds the resource limit. We are unable to approve Jerry's waiver because Jerry does not meet the defeats the purpose waiver provision. An independent decision-maker will schedule a folder review and personal conference.

 

Example 5: Refused to provide authorization to access financial account information

Rachel received an overpayment notice. Rachel was overpaid $2,500. Rachel completed the SSA-632 and sent the form to the local field office. Rachel refused to provide authorization for us to obtain financial account information.

We determined that Rachel is not at fault in causing the overpayment and does not meet any of the other waiver provisions.

We cannot approve Rachel's waiver under the defeats the purpose waiver provision because Rachel refused to give us permission to access financial account information. An independent decision-maker will schedule a folder review and personal conference.

 


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0202250100
GN 02250.100 - Defeats the Purpose of Title II - Waiver Determination<EndLine/> - 09/15/2023
Batch run: 09/15/2023
Rev:09/15/2023