In this blog post, we will discuss the rules and regulations related to the collection and compromise of claims for overpayment as stated under § 404.515.
These rules are applicable to overpayments under title II or title XVIII of the Act, and are subject to specific conditions and exceptions.
- General Effect of the Debt Collection Improvement Act of 1996:
According to the Debt Collection Improvement Act of 1996, claims for overpayment recovery by the Administration not exceeding $100,000 (or any higher amount authorized by the Attorney General) can be compromised, or collection suspended or terminated under certain circumstances. These include the inability of the individual or their estate to pay the full claim amount within a reasonable time or if the cost of collection is likely to exceed the recovery amount.
- Exceptions to Compromise, Suspension, or Termination of Collection:
Overpayment claims will not be compromised, suspended, or terminated in cases where there is an indication of fraud, filing of a false claim, or misrepresentation by the overpaid individual or any other party having an interest in the claim. This rule applies whether the overpaid individual is alive or deceased.
- Determining Inability to Pay Overpayment Claim:
When assessing an individual’s ability to pay an overpayment claim, the Administration will consider factors such as age, health, present and potential income, assets, possible concealment or improper transfer of assets, and income or assets available in enforced collection proceedings. The Administration will also take into account exemptions under State or Federal law.
- Cost of Collection and Litigative Probabilities:
A compromise or settlement for less than the full claim amount may be considered if the probable costs of recovering the overpayment would not justify enforced collection proceedings or if there is doubt concerning the Administration’s ability to establish its claim.
- Amount of Compromise:
The compromise amount for an overpayment claim must bear a reasonable relationship to the amount that can be recovered through enforced collection proceedings. This determination should consider exemptions available to the overpaid individual under State or Federal law and the time it will take to collect the debt.
- Payment Terms and Conditions:
Payment of the compromised amount must be made within the time and manner set by the Administration. The claim will not be considered settled until the full payment of the compromised amount is made as per the agreed terms. Failure to make the payment as required may result in the reinstatement of the full overpayment amount, less any amounts paid prior to the default.
Example: Overpayment Collection and Compromise Scenario
John, a 68-year-old retired individual, receives Social Security benefits under Title II of the Act. Due to an administrative error, John was overpaid by $15,000 over the course of two years. The Administration discovers the overpayment and initiates the process of recovering the funds from John.
After reviewing John’s financial situation, the Administration finds that he has limited assets, a modest fixed income from his retirement savings, and no prospects of receiving a significant inheritance. Additionally, John has ongoing medical expenses due to a chronic health condition.
Taking these factors into account, the Administration determines that John does not have the present or prospective ability to pay the full amount of the overpayment within a reasonable time. They also estimate that the cost of enforced collection proceedings is likely to exceed the amount they would recover.
As there is no indication of fraud, false claim, or misrepresentation on John’s part or any other party with an interest in the claim, the Administration decides to consider a compromise. They calculate a compromised amount that bears a reasonable relationship to the amount that could be recovered through enforced collection proceedings, considering the exemptions available to John under State or Federal law.
The Administration agrees to accept $7,000 as a compromise, which is to be paid within 12 months. John agrees to the terms and makes payments as per the agreed schedule. Once the full compromised amount is paid, the overpayment claim is considered settled, and John is no longer responsible for the remaining overpayment balance.
Conclusion: Understanding the rules and regulations surrounding the collection and compromise of overpayment claims is essential for individuals dealing with such situations. By being aware of the conditions under which a claim may be compromised, suspended, or terminated, individuals can better navigate the process and work towards a resolution that is in line with the guidelines set forth under § 404.515.
https://www.ssa.gov/OP_Home/cfr20/404/404-0515.htm
At Hugo Fierro & Michael Perez, we are a cohesive group of diligent experts with a comprehensive comprehension of the intricacies associated with Social Security disability claims. We take great pride in utilizing our extensive knowledge to provide tailored counsel and assistance to our clients. Our skilled team excels in maneuvering through the nuanced particulars of each case, ensuring that you receive invaluable insights and personalized aid that specifically cater to your distinct needs.