The Foster Care Independence Act (FCIA) of 1999 (Public Law 106-169), section 201, requires SSA to establish an overpayment control record under the Social Security Number of payees who received payments after the death of the individual. That section of the law amended Section 204(a)(2) of the Social Security Act (42 USC 404(a)(2)) by adding the following sentence: “If any payment of more than the correct amount is made to a representative payee on behalf of an individual after the individual’s death, the representative payee shall be liable for the repayment of the overpayment, and the Commissioner of Social Security shall establish an overpayment control record under the social security account number of the representative payee.” To meet the requirement of FCIA section 201, SSA created the NED database, which establishes the overpayment control record.

The Social Security Act, section 204(a)(1)(A) states that whenever the Commissioner of Social Security finds that more or less than the correct amount of payment has been made to any person under this title, proper adjustment or recovery shall be made, under regulations prescribed by the Commissioner of Social Security, as follows “With respect to payment to a person of more than the correct amount, the Commissioner of Social Security shall decrease any payment under this title to which such overpaid person is entitled, or shall require such overpaid person or his estate to refund the amount in excess of the correct amount.”

The Social Security Protection Act of 2004 (Public Law 108-203), section 105, states if, “a representative payee that is not a Federal, State, or local government agency has misused all or part of an individual’s benefit that was paid to such representative payee under this subsection, the representative payee shall be liable for the amount misused, and such amount (to the extent not repaid by the representative payee) shall be treated as an overpayment of benefits under this title to the representative payee for all purposes of this Act and related laws pertaining to the recovery of such overpayments.”

Amendments enacted in section 5 of Public Law 103-387 (1994) and the Debt Collection Improvement Act (DCIA) of 1996 (Public Law 104-134), section 31001(z)(2)(A), authorized SSA to use administrative offset, credit bureau reporting, interest and penalty charging, private collection agencies and Federal Salary Offset (FSO) to collect delinquent debts. (Those provisions amended Section 204(f) of the Social Security Act (42 USC 404)).

See Details

GN 02201.031 Collection of Title II Overpayments by Administrative Offset

GN 02201.032 Reporting Title II Overpayment Debts to Credit Bureaus

GN 02201.043 Collection of Title II/Title XVI Overpayments by Federal Salary Offset (FSO)

The Unemployment Compensation Act of 1992 made tax refund offset (TRO) a permanent authority for SSA. The authority to use TRO to collect delinquent debts from payees and other debtors comes from 31 USC 3720A. SSA’s regulations in 20 CFR 404.520–404.526 contain the Agency’s rules for using TRO to collect delinquent debts. For detailed information about TRO, see GN 02201.030.

NED identifies and selects both existing and prospective title II LDOs incurred by representative payees of a deceased title II beneficiary. These are debts that have been or will be established on the Recovery of Overpayments, Accounting and Reporting (ROAR) system. For information on the ROAR system, see SM 00610.001.

SSA’s systems conduct the automated identification and selection of NEDs. The system automatically selects the debts and then carries them through the debt collection program. The result is the inclusion of eligible NED debts in the TOP/ECO program, where authorized collection techniques such as TRO, administrative offset, credit bureau reporting, and AWG are used to recover the overpayments.

Payments made to payees after the death of a beneficiary, and overpayments to payees prior to the death of the beneficiary are LDOs for which the payee is responsible. There are some overpayments excluded from NED processing (see exceptions in GN 02230.040D.2). For information on what is and is not an overpayment see GN 02201.001.

SSA uses all authorized debt collection tools to collect the overpayments from NED payees. We use billing and follow-up (via the RECOOP system), TOP/ECO tools and benefit withholding, including cross-program recovery, when available.

To determine if the NED should serve as a representative payee for other beneficiaries, refer to GN 00502.132.

In some cases, the NED is in current pay (see GN 02230.040D.5.) and an auxiliary beneficiary is entitled on the NED’s earnings record. Do not collect any NED related overpayment from any auxiliary on the NED’s own record. Do not move the overpayment to any auxiliary’s ROAR record on the NED claim account number. The auxiliaries are not held responsible for repaying this debt.

The NED database currently controls and records overpayments made to representative payees of deceased title II beneficiaries, as well as on the ROAR system. As a result, TOP/ECO selects these NED cases and uses the appropriate debt collection tools to recover the debt from the overpaid representative payee.

NED debts are automatically established on the NED database. Based on the post entitlement (PE) actions that terminate benefits to the beneficiary because of death, the beneficiary must have had a representative payee who is an individual with an SSN, and not an organizational representative payee.

In future releases, NED will expand the type of debts targeted to include all LDOs in MSOM DMS 001.001C, except Medicare (TOE 29), title XVI Cross Program Recovery (TOE 31), Civil Monetary Penalty (TOE 61), and title VIII Cross Program Recovery (TOE 64).

The NED database records debts as active or inactive:

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  An active status in NED means that there is an overpayment balance that can be pursued from the non-entitled debtor. An active status could result from events such as the posting of an additional overpayment to the deceased beneficiary’s record, repayment, or other resolution.

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  An inactive status in NED means that the overpayment has been reduced to zero or that the overpayment can no longer be pursued. For more information about NED processing, see SM 00610.090.

The NED database interfaces with the RECOOP billing system. This interface allows RECOOP to extract data from the NED database for billing purposes. RECOOP reads the NED database, and when necessary updates address information on the records, and sends bills to the most recent address for the payee. For more information about the data interface between RECOOP and the NED database, see SM 00610.095.

A systems interface has been established between the NED database and the ECO system. NED does not pass any data to ECO. However, ECO does extract data from the NED database. See SM 00610.097 for more information about the data interface between TOP/ECO and the NED database.

NED inactivates the ECO record of the deceased beneficiary, which allows for creation of a new ECO record for the liable party (e.g. representative payee) under the same SSN/BIC. Therefore, all updates to ECO will be against the current ECO record for the liable party.

In some cases, after selection, the NED payee is found to be in current pay or becomes entitled to Social Security benefits on an account (either his or her own account or someone else’s). This can occur in two circumstances:

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  Systems limitations in the NED selection process, and

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  Entitlement begins after NED selection

ECO looks for entitlement beginning 90 days after NED establishment. If the NED payee is in current pay on another account, the system generates a one-time alert via the Processing Center Action Control System (PCACS). The NED Alert A - Debtor in Current Pay on Another Account is generated in the Debt Management Section of the Processing Center of jurisdiction. For more information about the NED Alert, see SM 00610.070. There will be no alert if the NED payee s in current pay on a title XVI record. Recovery of title II overpayment from monthly title XVI benefits is a manual process; for the recovery procedures, see SM 00610.820 and SM 01311.320.

If the responsible party is not the payee and is not entitled to benefits, establish a ROAR record for that party using the Establish Debt (SMED) data screen per instructions in MSOM DMS 002.003. The PC should be sure to establish the ROAR record on the claim account number of the deceased beneficiary using the “X” beneficiary identification code (BIC), as described in SM 00610.772 - Non-Entitled Overpaid Persons. Also, be sure to delete the overpayment from the deceased beneficiary’s ROAR record, per instructions in MSOM DMS 002.011 Transaction Correction, otherwise it will cause the same debt to be recorded twice. Take the following steps to collect the debt:

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  If fraud was involved but OIG declined to pursue the case, send an initial overpayment notice to the responsible party. Since the debt is not a LDO, do not include waiver rights or reconsideration rights. For more information on what is, and is not an LDO, see GN 02201.001

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  Ask for full repayment within 30 days.

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  Follow-up in 60 days from the input to SMED for the presence of a repayment. To control the follow-up, the ROAR system automatically generates diary code 5 (processing center (PC) alert-regular), as a result of the input to SMED.

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  If the responsible party does not repay, send a ROAR reminder notice.

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  Check the status of repayment in about 60 days when ROAR automatically generates another diary code 5.

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  If the debtor has not repaid, stop any further collection efforts to collect the debt.

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  Input a termination of collection efforts by using the Terminate Collection (DFTE) screen described in MSOM DMS 007.003.

If someone other than the representative payee is responsible for accepting the payments, then the responsible party owes a debt for those payments. The specific circumstances of the indebtedness dictate whether or not benefit withholding is authorized. Each case must be examined on its own merits.

For example, individuals who negotiate stolen or forged checks generally cannot be subject to benefit withholding under section 204 of the Social Security Act. Section 207 of the Social Security Act prohibits collecting the debt by withholding benefits.

If you identify a case in which an individual other than the representative payee is responsible for the overpayment, contact your program analyst (in the PC) or other designated individual in the RO, as appropriate, for additional guidance. That designated individual will provide guidance or will contact Central Office for more information about the authority to withhold benefits. Do not take action to initiate benefit withholding.