§ 404.508: How Defeating the Purpose of Title II Affects Your Social Security Benefits

Social Security benefits are designed to provide individuals with income to cover ordinary and necessary living expenses.

However, there are certain situations where the adjustment or recovery of these benefits can defeat the purpose of Title II, as outlined in § 404.508. In this blog post, we’ll delve into the definition of “defeating the purpose” and discuss the criteria used to determine whether an individual’s benefits are subject to adjustment or recovery.

1. What Does “Defeat the Purpose” Mean?: Defeating the purpose of Title II refers to depriving a person of income required for ordinary and necessary living expenses. This depends on whether the individual has enough income or financial resources to meet more than their basic needs or is entirely dependent on their current benefits.
2. Ordinary and Necessary Expenses: According to § 404.508, an individual’s ordinary and necessary expenses include:

a) Fixed living expenses, such as food, clothing, rent, mortgage payments, utilities, maintenance, insurance (including life, accident, health, and supplementary medical insurance premiums), taxes, and installment payments. b) Medical, hospitalization, and other similar expenses. c) Expenses for the support of others for whom the individual is legally responsible. d) Other miscellaneous expenses considered part of the individual’s standard of living.

3. When Adjustment or Recovery Defeats the Purpose of Title II: Adjustment or recovery will defeat the purpose of Title II in situations where the person from whom recovery is sought needs substantially all of their current income, including social security monthly benefits, to meet current ordinary and necessary living expenses. This is not an exhaustive list, and other circumstances may also apply.

Example: Jane’s Social Security Benefits and the Impact of a Lump Sum Payment

Jane, a 65-year-old retiree, relies on her Social Security benefits to cover her basic living expenses. Her monthly income consists of $1,500 in Social Security benefits, and she has no other financial resources or savings. Jane’s ordinary and necessary living expenses include:

• Rent: $800
• Utilities: $150
• Groceries: $300
• Health insurance premiums: $100
• Medications and medical expenses: $100
• Clothing and other miscellaneous expenses: $50

Jane’s total monthly expenses amount to $1,500, which equals her monthly Social Security benefits.

One day, Jane receives a notice from the Social Security Administration (SSA) stating that she was overpaid by $3,000 due to an administrative error. The SSA is now seeking to recover this overpayment by adjusting or reducing her future benefits.

However, under § 404.508, recovering the overpayment from Jane would defeat the purpose of Title II because she relies on her entire Social Security benefits to meet her ordinary and necessary living expenses. If the SSA were to adjust or recover the overpayment, Jane would not have enough income to cover her basic needs.

In this case, the SSA may decide not to recover the overpayment or might negotiate a repayment plan that does not jeopardize Jane’s ability to meet her essential living expenses. This example demonstrates how the “defeat the purpose” provision in § 404.508 can protect individuals who depend on their Social Security benefits to cover their day-to-day needs.

Conclusion: Understanding the concept of defeating the purpose of Title II is crucial for individuals receiving Social Security benefits. This knowledge can help you determine whether your benefits may be subject to adjustment or recovery, allowing you to better plan for your financial future. Keep in mind that the criteria outlined in § 404.508 are guidelines and that individual circumstances may vary. If you have any questions or concerns, it’s always a good idea to consult with a financial or legal professional for personalized advice.

https://www.ssa.gov/OP_Home/cfr20/404/404-0508.htm