TN 9 (12-04)
SI 02101.001 SSI Underpayment Definitions and General Rules
Social Security Act — Section 1631(b) Regulations No. 16, Section 416.535 and 416.536 and 416.538; 416.542 through 416.546
A. Definitions -11/10/04
1. What Is an Underpayment
An underpayment, including any amounts of State supplementary payments SSA administers, is
Nonpayment, when payment for a month (or quarter, for the period before April 1982) was due;
Payment of less than the amount due for a month (or quarter for the period before April 1982); and
A check representing correct payment to an individual who died before the check was negotiated.
2. What Is Not an Underpayment
The following do not meet the definition of an SSI underpayment:
Payment where the total amount was correct but there was an error in the composition of the payment (i.e., Federal/State). Because the total payment was correct, there is no underpayment.
NOTE: However, it is necessary to transmit (MOTP's only) correct data for accounting adjustments. (See SM 01901.500 - SM 01901.810.)
Amounts recovered from a former representative payee and paid to the recipient or a new representative payee as restitution of misused funds. See GN 00604.060.
NOTE: Any misused funds to be reissued to an overpaid individual will be used to reduce/recover a collectible overpayment.
Conserved funds returned to SSA after a change of representative payee or after the death of a representative payee or the individual. If the individual has died, the funds belong to the estate, to the extent that there is no outstanding overpayment and/or penalty on the record. (See GN 00603.110 for handling conserved funds upon death of a representative payee.)
Amounts refunded (cash, check, money order or by title II adjustment) by the individual in excess of the overpaid amount. If the individual dies before the excess collected funds can be returned, the refund should be reimbursed to the estate.
NOTE: When an individual is repaying an SSI overpayment by adjustment of his/her SSI check, and too much is withheld, an SSI underpayment does exist. (See SI 02101.001A.)
A refund made by a third party in excess of a deceased individual's overpayment. (See SM 01315.142 and SM 01315.143 for processing reimbursement to the third party).
An amount returned to SSA by a financial institution representing an erroneous direct deposit when the Treasury Department also reclaims from the institution a not due amount based on a Form SF-1184 stop payment for the same deposit. (See SM 01315.142 and SM 01315.143 for processing reimbursement.)
Remaining presumptive disability or presumptive blindness (PD/PB) payments not yet paid when the field office (FO) is notified of the Disability Determination Section (DDS) decision of denial. No underpayment exists for the remaining PD/PB payments which would have been paid if a final DDS decision had been made. PD/PB payments issued before the DDS decision is received may not be an overpayment; see SI 02201.005 - SI 02201.010.
There is a single Federal Benefit Rate (FBR) for an SSI eligible couple. Generally each member of the couple is paid one-half what the couple is due. Each member of the couple may get different amounts for the same month. If these amounts add up to the total amount the couple should receive, there is no underpayment. (See SI 02005.030 through SI 02005.050.)
1. Existence of an Underpayment
An underpayment can occur only for a period for which an individual applied for benefits and met all conditions of eligibility.
2. Amount of an Underpayment
The underpayment amount is the difference between the amount due and the amount paid an individual for the period under review.
3. Underpayment Period
The underpayment period is a period under review which begins with the month for which there is a difference between the amount paid and the amount due (either an additional amount due or excess payment or a change in the previously computed amount of either of these). The period ends with the month in which the determination for the period is made.
4. Disposition of Underpayments
a. An underpayment may become payable to the:
State/political subdivision with an interim assistance reimbursement (IAR) authorization with the eligible individual (see SI 02101.004);
Authorized direct payment of representative fee by SSA
Surviving spouse who was the member of an eligible couple (see SI 02101.005);
Surviving spouse who was not the member of an eligible couple (see SI 02101.006); or
Surviving parent or parents (see SI 02101.007).
b. An underpayment is not payable to:
A claimant, recipient, or terminated recipient while he or she is subject to the No Social Security Benefits for Prisoners (NSSBP) provisions.
NOTE: For instructions on processing underpayments to claimants and recipients subject to the NSSBP provisions, see SI 00529.001 and SI 00529.020. If the NSSBP provisions do not apply to a Title XVI underpayment due an incarcerated claimant, recipient, or terminated recipient, see GN 02607.550.
5. Calculation of Additional Amount Due or Excess Payment
An additional amount due for a month, or an excess payment, is the difference between the amount paid for the month (minus any recovery) and the amount due for the month. Netting is the process whereby all excess payments made for a period are applied against all additional amounts due for the period and before an initial notice is sent.
Calculation of an additional amount due or excess payment for a month is not affected by a prior waiver of an overpayment recovery for that month. Disregard the waiver in computing the amount due/excess payment, but do not disregard it when considering collection.
NOTE: The amount of the overpayment for which recovery is waived is the net excess payment as determined after recalculation. (See Example - SI 02101.001E.1.)
6. Collectible Overpayment for Different Period
An underpayment for months prior to the current calendar month can be used to recover an overpayment for a different period that is determined to be collectible (see SM 01311.120). (For current calendar month, see SI 02101.002A.)
NOTE: Exception - when direct payment of representative fee is involved, the priority of payment order is:
7. Recovery of Prior Overpayment Waived
An underpayment for one period cannot be used to recover an overpayment for a different period if overpayment recovery was waived. The underpayment should be paid.
8. Effect of Underpayment on Income
An SSI underpayment (received by the underpaid individual or a survivor) is not income for determining SSI eligibility or payment amount.
9. Effect of Underpayment on Resources
See SI 01130.600 regarding excluding SSI underpayments. This rule applies to an SSI underpayment received by the individual or a survivor.
C. Procedure -- Review of Payments
1. Review of Payments for a Period - Netting
Automated netting is part of the computational process (effective September 2002). Thus, unless the case meets one of the netting exclusions (see SM 01311.160B.1.), automated netting will take place whenever additional amounts due and excess payments exist that can be netted against each other to determine an end result of either an underpayment or overpayment in a period under review. Automated notices are released. (See SM 01311.160 for automated netting instructions.)
Manual nettings should only be performed if the case has an exclusion to automated netting. Determine for each of the months within the period under review whether there is an additional amount due or an excess payment. (The determination of underpayment or overpayment is the result of netting the month-by-month results for the entire period). See SI 02101.001E.2. - Example for an illustration of month-by-month netting. (See SI 02101.002B.3., SM 01311.165, SM 01311.160 and MSOM BUSSR 004.018 for netting procedures.) Manual notices will be required if the result of netting is an underpayment that is paid by A-OTP or if the FO has suppressed the automated notice. Manual notices can be found on the Distributed Online Correspondence System (DOCS).
2. Underpayment Less than $1
If the underpayment is less than $1, take no action. The system will not release an underpayment less than $1.
D. Procedure – Netting Notices
Use the netting paragraph found in DOCS when preparing a manual netting notice if the underpayment is being paid by A-OTP or if the automated notice has been suppressed. Use the appropriate notice--an SSA-L8025, SSA-L8151, SSA-L8100 or SSA-8166.
1. Additional Amount Due or Excess Payment Made
An individual received $150 for February 2004 and was actually due $100. The FO waives recovery of the $50 overpayment. If the FO later finds that the amount due was really $130, the excess payment is $20 ($150 paid - $130 due). The FO does not attempt to collect the $20 excess payment since it has already waived recovery. The waiver of recovery of $50 is now shown as waiver of recovery of $20, and no additional amount is due. (If the $50 had been recovered, there would be a $30 additional amount due.)
However, if the FO determines that the amount due was $195, a $45 underpayment would be issued.
2. Manual Netting -- Month-by-Month Results
Period: January - June
+ Additional Amount due
- Excess Payment
Retroactive SSI and RSDI Payments, SI 01130.600
Basic Requirements for SSI Underpayment Review, SI 02101.025
Benefits Subject to Offset, GN 02610.014, SM 01310.010
Determining the Overpayment Amount, GN 02201.003
Automated Netting, SM 01311.160
Manual Netting, SM 01311.165 and MSOM BUSSR 004.018
Netting/Offsetting Overpayments Against Underpayments, SI 02201.015
SSI Overpayment – Recovery by Adjustment, SI 02220.015