Recovery of an overpayment will defeat the purpose of title II of the Social Security Act if recovery would deprive the person of income required for ordinary and necessary living expenses.

Recovery will defeat the purpose of title II to the extent that the person does not have any of the overpaid funds in his possession when notified of the overpayment (GN 02250.105) and the person:

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  Receives cash public assistance (GN 02250.110); or

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  Needs substantially all current income to meet ordinary and necessary living expenses (GN 02250.120) and recovery would reduce assets below the levels specified in GN 02250.115A.4.

Consider a person's financial situation, comparing the person's income and resources to ordinary and necessary expenses when deciding defeat the purpose. Take into account such factors as the existence of overpaid funds in the person's possession, living arrangements, the presence of a boarder or dependent in the household, and the person's usual and customary fixed expenses (i.e., standard of living). If the person is receiving cash public assistance, recovery is deemed to defeat the purpose and no financial development is needed.