If the overpaid individual has not requested a waiver or a reconsideration and we have determined that an underpayment is also due on the record, withhold the underpayment to reduce or recover the outstanding overpayment. If we denied the waiver, or the reconsideration decision does not completely reverse the overpayment determination, withhold any underpayment to reduce or recover the outstanding overpayment.

In addition, withhold any underpayment to reduce or recover an overpayment if the overpaid individual has a partial withholding or installment agreement.

EXAMPLE 1:In 01/2016, we determined that Brenda Smith was overpaid $2,500 because of work and earnings in 2015. Due to their 2016 work estimate, Brenda was not receiving payments in 2016. In 04/2016, we denied their request for waiver. In 07/2016, Brenda began to refund the overpayment via $20 monthly installment payments.

In 08/2016, Brenda revised their 2016 earnings estimate and was due benefit payments beginning 06 /2016. Due to the 04/2016 waiver denial, we will withhold Brenda's underpayment of $980 for 06/2016 through 08/2016 to reduce their overpayment. In addition, since Brenda is again receiving benefits, we will continue to use their installment agreement amount to recover the balance of the overpayment beginning 09/2016 via partial withholding. The underpayment is used to reduce the overpayment even if partial withholding or installment payments is ongoing.

EXAMPLE 2:In 10/2012, we notified Jordan Lee that they were overpaid $2,300. Jordan began to repay the overpayment via monthly installment payments. We discontinued collection efforts in 01/2015 because Jordan stopped making installment payments.

In 02/2016, we established a new period of disability and processed Jordan's re-entitlement to benefits in 05/2016. We withheld an underpayment of $900 (benefits due 03/2016 and 04/2016) to reduce the overpayment since Jordan did not request a waiver or appeal when we informed them of their overpayment in 10/2012. When we processed Jordan’s re-entitlement to disability benefits, we informed them that we were withholding their underpayment to reduce the overpayment and withholding their benefits until we fully recover the overpayment.

If we have not made a final determination on the individual’s waiver or reconsideration request, pay any underpayment due for the months beginning with the month the individual submitted the request.

A waiver or a reconsideration determination is pending if:

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  The 30-day closeout notice (Request for Waiver Cover Letter) for an implied waiver request has not expired; or

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  The individual requested a reconsideration or a waiver (or both) but we have not made a final determination.

If the overpaid individual requests a hearing after they have exhausted other administrative appeal rights, re-initiate collection activity (see GN 02201.027). Withhold any underpayment due for the month the individual requests a hearing and thereafter until a final decision is made.

EXAMPLE 1:In 12/2016, we notified Shawn Roberts that they were overpaid $5,800 because we did not terminate their disability benefits timely. In 02/2017, Shawn requested reconsideration of the overpayment determination and waiver of recovery. In 04/2017, the reconsideration determination affirmed the overpayment. In 06/2017, Shawn filed for a new period of disability. We also proposed to deny the waiver request and scheduled a personal conference.

In 08/2017, prior to the scheduled personal conference date in 09/2017, we determined that Shawn was entitled to a new period of disability effective 06/2017 and was underpaid $2,310. We would pay the entire underpayment to them since we did not make a final determination on their 02/2017 waiver request (i.e., the personal conference decision was pending) and none of the additional benefits represented monies due for the months before the month Shawn requested waiver (i.e. months prior to 02/2017).

EXAMPLE 2:In 12/2016, we notified Shawn Roberts that they were overpaid $5,800 because we did not terminate their disability benefits timely. In 02/2017, Shawn requested reconsideration of the overpayment determination and waiver of recovery. In 04/2017, the reconsideration determination affirmed the overpayment. In 06/2017, Shawn filed for a new period of disability. We also proposed to deny the waiver request and scheduled a personal conference.

In 08/2017, prior to the scheduled personal conference date in 09/2017, we determined that Shawn was entitled to a new period of disability effective 01/2017 and was underpaid $3,310. We would withhold the part of the underpayment representing benefits due for 01/2017 to reduce the overpayment. Because the personal conference decision on the 02/2017 waiver request was still pending, we would pay the part of the underpayment representing additional benefits for 02/2017 and subsequent months.

If we waive recovery of the overpayment and subsequently determine an underpayment is due:

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  Use any additional benefits due for months before we issued the overpayment notice to recalculate the overpayment amount (see GN 02201.005); and

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  Withhold any part of the underpayment representing additional benefits due for months before the month the individual requested waiver.

EXAMPLE 1:On 4/12/2015, we notified Pete Reed of a $1,680 overpayment because of an incorrect computation. We withheld their $400 monthly benefit payment for 07/2015 and 08/2015, and reduced the outstanding overpayment to $880 ($1,680 minus $800). Pete requested waiver in 09/2015. We approved their waiver request; therefore, Pete was no longer overpaid. In 10/2016, an Automatic Earnings Reappraisal Operation (AERO) resulted in a $2 monthly benefit increase effective 01/2015. We used the $6 due for 01/2015 through 03/2015 to recalculate Pete's overpayment amount to $1,674 (see GN 02201.005).

We withheld the additional benefits for 07/2015 through 08/2015 totaling $6, due for months before the month Pete requested waiver in 09/2015, to adjust the overpayment amount we waived to $868 (i.e., $1,674 minus $800 and minus $6). We paid the additional benefits due beginning 09/2015, the month of the waiver request.

EXAMPLE 2:On 4/12/2015, we notified Pete Reed of a $1,680 overpayment because of an incorrect computation. Pete requested waiver in 05/09/2015 (i.e., within 30 days of the overpayment notice). We approved Pete's waiver request; therefore, they were no longer overpaid. In 10/2016, an Automatic Earnings Reappraisal Operation (AERO) resulted in a $2 monthly benefit increase effective 01/2015. We used the $6 due for 01/2015 through 03/2015 to recalculate Pete's overpayment amount to $1,674 (see GN 02201.005).

In this case, the overpayment for which we waived recovery is $1,674 (i.e., $1,680 minus $6). We pay the entire underpayment (i.e., additional benefits due from 04/2015, the month of overpayment determination and notice).