[Title 20 CFR E] [Code of Federal Regulations (annual edition) - April 1, 1996 Edition] [Title 20 - EMPLOYEES' BENEFITS] [Chapter III - SOCIAL SECURITY ADMINISTRATION] [Part 416 - SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND DISABLED] [Subpart E - Payment of Benefits, Overpayments, and Underpayments] [From the U.S. Government Publishing Office]20 EMPLOYEES' BENEFITS 2 1996-04-01 1996-04-01 false Payment of Benefits, Overpayments, and Underpayments E Subpart E EMPLOYEES' BENEFITS SOCIAL SECURITY ADMINISTRATION SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND DISABLED Subpart E--Payment of Benefits, Overpayments, and Underpayments Sec. 416.501 Payment of benefits: General. Payment of SSI benefits will be made for the month of initial eligibility and each subsequent month provided all requirements for eligibility (see Sec. 416.202) and payment (see Sec. 416.420) are met. In the month the individual first meets all eligibility requirements and the month in which an individual re-establishes eligibility after at least a month of ineligibility, benefits are paid for such a month beginning with the date in the month on which the individual meets all eligibility requirements. In some months, while the factors of eligibility based on the current month may be established, it is possible to receive no payment for that month if the factors of eligibility for payment are not met. Payment of benefits may not be made for any period that precedes the date on which an application is filed or, if later, the date all conditions for eligibility and payment are met. It is possible for a couple to become eligible in the same month but as of different dates and receive different payment amounts for that month if they file their applications on different dates or if they meet the necessary requirements (for example, age) on different dates. [50 FR 48572, Nov. 26, 1985] Sec. 416.502 Manner of payment. For the month an individual first meets all eligibility requirements or reestablishes eligibility after a month of ineligibility, an SSI payment will be made on or after the day of the month on which the individual becomes eligible or reeligible to receive benefits. In all other months, a payment will be made on the first day of each month and represents payment for that month. If the first day of the month falls on a Saturday, Sunday, or legal holiday, payments will be made on the first day preceding such day which is not a Saturday, Sunday, or legal holiday. Unless otherwise indicated, the monthly amount for an eligible couple will be divided equally and paid separately to each individual. Section 416.520 explains emergency advance payments. [55 FR 4422, Feb. 8, 1990] Sec. 416.503 Minimum monthly benefit amount. If you receive an SSI benefit that does not include a State supplement the minimum monthly SSI benefit amount payable is $1. When an SSI benefit amount of less than $1 is payable, the benefit amount will be increased to $1. If you receive an SSI benefit that does include a State supplement and the SSI benefit amount is less than $1 but when added to the State supplement exceeds $1, the SSI benefit amount will not be increased to $1. Rather, we pay the actual amount of the SSI benefit plus the State supplement. [50 FR 48572, Nov. 26, 1985] Sec. 416.520 Emergency advance payments. (a) General. Before we make a determination on an application, we may pay a one-time emergency advance payment to an individual who is presumptively eligible for SSI benefits and who has a financial emergency. The amount of this payment cannot exceed the Federal benefit rate (see Secs. 416.410 through 416.414) plus the State supplementary payment, if any (see Sec. 416.2020), which apply for the month in which payment is made. Emergency advance payment is defined in paragraph [[Page 644]] (b)(1) of this section. The actual payment amount is computed as explained in paragraph (c) of this section. An emergency advance payment is an advance of benefits expected to be due that is recoverable as explained in paragraphs (d) and (e) of this section. (b) Definition of terms. For purposes of this subpart-- (1) Emergency advance payment means a direct, expedited payment by a Social Security Administration district or branch office to an individual or spouse who is initially applying (see paragraph (b)(3) of this section) and has not been determined eligible, who is presumptively eligible (see paragraph (b)(4) of this section), and who has a financial emergency (see paragraph (b)(2) of this section). (2) Financial emergency is the financial status of an individual who has insufficient income or resources to meet an immediate threat to health or safety, such as the lack of food, clothing, shelter, or medical care. (3) Initially applying means the filing of an application (see Sec. 416.310) which requires an initial determination of eligibility, such as the first application for SSI benefits or an application filed subsequent to a prior denial or termination of a prior period of eligibility for payment. An individual or spouse who previously received an emergency advance payment in a prior period of eligibility which terminated may again receive such a payment if he or she reapplies for SSI and meets the other conditions for an emergency advance payment under this section. (4) Presumptively eligible is the status of an individual or spouse who presents strong evidence of the likelihood of meeting the income and resources tests of eligibility (see subparts K and L of this part), categorical eligibility (age, disability, or blindness), and technical eligibility (United States residency and citizenship or alien status-- see subpart P). (c) Computation of payment amount. To compute the emergency advance payment amount, the maximum amount described in paragraph (a) of this section is compared to both the expected benefit payable for the month the payment is made (see paragraph (c)(1) of this section) and the amount the applicant requested to meet the emergency. The actual payment amount is no more than the least of these three amounts. (1) In computing the emergency advance payment amount, we apply the monthly income counting and proration rules apppropriate for the month in which the advance is paid, as explained in Secs. 416.420 and 416.421. (2) For a couple, we separately compute each member's emergency advance payment amount. (d) Recovery of emergency advance payment where eligibility is established. The amount of an emergency advance payment is deducted from payment(s) certified to the United States Treasury when the individual or spouse is determined to be eligible. (See paragraph (e) of this section if the individual or spouse is determined to be ineligible.) (e) Disposition of emergency advance payments where eligibility is not established. If a presumptively eligible individual (or spouse) or couple is determined to be ineligible, the emergency advance payment constitutes a recoverable overpayment. (See the exception in Sec. 416.537(b)(1) when payment is made on the basis of presumptive disability or presumptive blindness.) [55 FR 4422, Feb. 8, 1990; 55 FR 7411, Mar. 1, 1990] Sec. 416.525 Reimbursement to States for interim assistance payments. Notwithstanding Sec. 416.542, the Social Security Administration may, in accordance with the provisions of subpart S of this part, withhold supplemental security income benefits due with respect to an individual and may pay to a State (or political subdivision thereof, if agreed to by the Social Security Administration and the State) from the benefits withheld, an amount sufficient to reimburse the State (or political subdivision) for interim assistance furnished on behalf of the individual. [41 FR 20872, May 21, 1976] Sec. 416.532 Method of payment when the essential person resides with more than one eligible person. (a) When an essential person lives with an eligible individual and an eligible spouse, the State may report that the person is essential to one or both [[Page 645]] members of the couple. In either event, the income and resources of the essential person will be considered to be available to the family unit. The payment increment attributable to the essential person will be added to the rate of payment for the couple, the countable income subtracted, and the resulting total benefit divided equally between the eligible individual and the eligible spouse. (b) Where the essential person lives with two eligible individuals (as opposed to an eligible individual and eligible spouse), one of whom has been designated the qualified individual, the income and resources of the essential person will be considered to be available only to the qualified individual (as defined in Sec. 416.221) and any increase in payment will be made to such qualified individual. (c) In those instances where the State has designated the essential person as essential to two or more eligible individuals so that both are qualified individuals, the payment increment attributable to the essential person must be shared equally, and the income and resources of the essential person divided and counted equally against each qualified individual. (d) When an essential person lives with an eligible individual and an eligible spouse (or two or more eligible individuals) only one of whom is the qualified individual, essential person status is not automatically retained upon the death of the qualified individual or upon the separation from the qualified individual. A review of the State records established on or before December 31, 1973, will provide the basis for a determination as to whether the remaining eligible individual or eligible spouse meets the definition of qualified individual. Payment in consideration of the essential person will be dependent on whether the essential person continues to live with a qualified individual. If the essential person does reside with a qualified individual, status as an essential person is retained. [39 FR 33796, Sept. 20, 1974, as amended at 50 FR 48572, Nov. 26, 1985; 51 FR 10616, Mar. 28, 1986; 60 FR 16375, Mar. 30, 1995] Sec. 416.533 Transfer or assignment of benefits. Except as provided in Sec. 416.525 and subpart S of this part, the Social Security Administration will not certify payment of supplemental security income benefits to a transferee or assignee of a person eligible for such benefits under the Act or of a person qualified for payment under Sec. 416.542. The Social Security Administration shall not certify payment of supplemental security income benefits to any person claiming such payment by virtue of an execution, levy, attachment, garnishment, or other legal process or by virtue of any bankruptcy or insolvency proceeding against or affecting the person eligible for benefits under the Act. [41 FR 20873, May 21, 1976, as amended at 58 FR 52912, Oct. 13, 1993] Sec. 416.535 Underpayments and overpayments. (a) General. When an individual receives SSI benefits of less than the correct amount, adjustment is effected as described in Secs. 416.542 and 416.543. When an individual receives more than the correct amount of SSI benefits, adjustment is effected as described in Sec. 416.570. Refund of overpayments is discussed in Sec. 416.560 and waiver of recovery of overpayments is discussed in Secs. 416.550 through 416.555. (b) Additional rules for individuals whose drug addiction or alcoholism is a contributing factor material to the determination of disability. When an individual whose drug addiction or alcoholism is a contributing factor material to the determination of disability, as described in Sec. 416.935, receives less than the correct amount of SSI benefits, adjustment is effected as described in Secs. 416.542 and 416.543 and the additional rule described in Sec. 416.544 applies. (c) [Reserved] (d) Additional rules for eligible aliens and for their sponsors. When an individual who is an alien is overpaid SSI benefits during the 3-year period in which deeming from a sponsor applies (see Sec. 416.1160(a)(3)), the sponsor and the alien may be jointly and individually liable for repayment of the overpayment. The sponsor is liable for the overpayment if he or she failed to report correct information that affected [[Page 646]] the alien's eligibility or payment amount. This means information about the income and resources of the sponsor and, if they live together, of the sponsor's spouse. However, the sponsor is not liable for repayment if the sponsor was without fault or had good cause for failing to report correctly. A special rule that applies to adjustment of other benefits due the alien and the sponsor to recover an overpayment is described in Sec. 416.570(b). (e) Sponsor without fault or good cause exists for failure to report. Without fault or good cause will be found to exist if the failure to report was not willful. To establish willful failure, the evidence must show that the sponsor knowingly failed to supply pertinent information regarding his or her income and resources. [52 FR 8881, Mar. 20, 1987, as amended at 60 FR 8149, Feb. 10, 1995] Sec. 416.536 Underpayments--defined. An underpayment can occur only with respect to a period for which a recipient filed an application, if required, for benefits and met all conditions of eligibility for benefits. An underpayment, including any amounts of State supplementary payments which are due and administered by the Social Security Administration, is: (a) Nonpayment, where payment was due but was not made; or (b) Payment of less than the amount due. For purposes of this section, payment has been made when certified by the Social Security Administration to the Department of the Treasury, except that payment has not been made where payment has not been received by the designated payee, or where payment was returned. [58 FR 52912, Oct. 13, 1993] Sec. 416.537 Overpayments--defined. (a) Overpayments. As used in this subpart, the term overpayment means payment of more than the amount due for any period, including any amounts of State supplementary payments which are due and administered by the Social Security Administration. For purposes of this section, payment has been made when certified by the Social Security Administration to the Department of the Treasury, except that payment has not been made where payment has not been received by the designated payee, or where payment was returned. When a payment of more than the amount due is made by direct deposit to a financial institution to or on behalf of an individual who has died, and the financial institution credits the payment to a joint account of the deceased individual and another person who is the surviving spouse of the deceased individual and was eligible for a payment under title XVI of the Act (including any State supplementation payment paid by the Secretary) as an eligible spouse (or as either member of an eligible couple) for the month in which the deceased individual died, the amount of the payment in excess of the correct amount will be an overpayment to the surviving spouse. (b) Actions which are not overpayments--(1) Presumptive disability and presumptive blindness. Any payment made for any month, including an advance payment of benefits under Sec. 416.520, is not an overpayment to the extent it meets the criteria for payment under Sec. 416.931. Payments made on the basis of presumptive disability or presumptive blindness will not be considered overpayments where ineligibility is determined because the individual or eligible spouse is not disabled or blind. However, where it is determined that all or a portion of the presumptive payments made are incorrect for reasons other than disability or blindness, these incorrect payments are considered overpayments (as defined in paragraph (a) of this section). Overpayments may occur, for example, when the person who received payments on the basis of presumptive disability or presumptive blindness is determined to be ineligible for all or any part of the payments because of excess resources or is determined to have received excess payment for those months based on an incorrect estimate of income. (2) Penalty. The imposition of a penalty pursuant to Sec. 416.724 is not an adjustment of an overpayment and is imposed only against any amount due the penalized recipient, or, after death, any amount due the deceased which [[Page 647]] otherwise would be paid to a survivor as defined in Sec. 416.542. [40 FR 47763, Oct. 10, 1975, as amended at 43 FR 17354, Apr. 24, 1978; 50 FR 48572, Nov. 26, 1985; 55 FR 7313, Mar. 1, 1990; 58 FR 52912, Oct. 13, 1993] Sec. 416.538 Amount of underpayment or overpayment. (a) General. The amount of an underpayment or overpayment is the difference between the amount paid to a recipient and the amount of payment actually due such recipient for a given period. An underpayment or overpayment period begins with the first month for which there is a difference between the amount paid and the amount actually due for that month. The period ends with the month the initial determination of overpayment or underpayment is made. With respect to the period established, there can be no underpayment to a recipient or his or her eligible spouse if more than the correct amount payable under title XVI of the Act has been paid, whether or not adjustment or recovery of any overpayment for that period to the recipient or his or her eligible spouse has been waived under the provisions of Secs. 416.550 through 416.556. A subsequent initial determination of overpayment will require no change with respect to a prior determination of overpayment or to the period relating to such determination to the extent that the basis of the prior overpayment remains the same. (b) Limited delay in payment of underpaid amount to recipient or eligible surviving spouse. Where an apparent overpayment has been detected but determination of the overpayment has not been made (see Sec. 416.558(a)), a determination of an underpayment and payment of an underpaid amount which is otherwise due cannot be delayed to a recipient or eligible surviving spouse unless a determination with respect to the apparent overpayment can be made before the close of the month following the month in which the underpaid amount was discovered. (c) Delay in payment of underpaid amount to ineligible individual or survivor. A determination of an underpayment and payment of an underpaid amount which is otherwise due an individual who is no longer eligible for SSI or is payable to a survivor pursuant to Sec. 416.542(b) will be delayed for the resolution of all overpayments, incorrect payments, adjustments, and penalties. (d) Reduction of underpaid amount. Any underpayment amount otherwise payable to a survivor on account of a deceased recipient is reduced by the amount of any outstanding penalty imposed against the benefits payable to such deceased recipient or survivor under section 1631(e) of the Act (see Sec. 416.537(b)(2)). [58 FR 52912, Oct. 13, 1993] Sec. 416.542 Underpayments--to whom underpaid amount is payable. (a) Underpaid recipient alive--underpayment payable. (1) If an underpaid recipient is alive, the amount of any underpayment due him or her will be paid to him or her in a separate payment or by increasing the amount of his or her monthly payment. (2) If an underpaid recipient whose drug addiction or alcoholism is a contributing factor material to the determination of disability (as described in Sec. 416.935) is alive, the amount of any underpayment due the recipient will be paid through his or her representative payee in installment payments. No underpayment may be paid directly to the recipient. If the recipient dies before we have paid all benefits due through his or her representative payee, we will follow the rules which apply to underpayments for the payment of any remaining amounts due to any eligible survivor of a deceased recipient as described in paragraph (b) of this section. (b) Underpaid recipient deceased--underpaid amount payable to survivor. (1) If a recipient dies before we have paid all benefits due or before the recipient endorses the check for the correct payment, we may pay the amount due to the deceased recipient's surviving eligible spouse or to his or her surviving spouse who was living with the underpaid recipient within the meaning of section 202(i) of the Act (see Sec. 404.347) in the month he or she died or within 6 months immediately preceding the month of death. (2) If the deceased underpaid recipient was a disabled or blind child when the [[Page 648]] underpayment occurred, the underpaid amount may be paid to the natural or adoptive parent(s) of the underpaid recipient who lived with the underpaid recipient in the month he or she died or within the 6 months preceding death. We consider the underpaid recipient to have been living with the natural or adoptive parent(s) in the period if the underpaid recipient satisfies the ``living with'' criteria we use when applying Sec. 416.1165 or would have satisfied the criteria had his or her death not precluded the application of such criteria throughout a month. (3) If the deceased individual was living with his or her spouse within the meaning of section 202(i) of the Act in the month of death or within 6 months immediately preceding the month of death, and was also living with his or her natural or adoptive parent(s) in the month of death or within 6 months preceding the month of death, we will pay the parent(s) any SSI underpayment due the deceased individual for months he or she was a blind or disabled child and we will pay the spouse any SSI underpayment due the deceased individual for months he or she no longer met the definition of ``child'' as set forth at Sec. 416.1856. If no parent(s) can be paid in such cases due to death or other reason, then we will pay the SSI underpayment due the deceased individual for months he or she was a blind or disabled child to the spouse. (4) No benefits may be paid to the estate of any underpaid recipient, the estate of the surviving spouse, the estate of a parent, or to any survivor other than those listed in paragraph (b)(1) through (3) of this section. Payment of an underpaid amount to an ineligible spouse or surviving parent(s) may only be made for benefits payable for months after May 1986. Payment to surviving parent(s) may be made only for months of eligibility during which the deceased underpaid recipient was a child. We will not pay benefits to a survivor other than the eligible spouse who requests payment of an underpaid amount more than 24 months after the month of the individual's death. (c) Underpaid recipient's death caused by an intentional act. No benefits due the deceased individual may be paid to a survivor found guilty by a court of competent jurisdiction of intentionally causing the underpaid recipient's death. [40 FR 47763, Oct. 10, 1975, as amended at 58 FR 52913, Oct. 13, 1993; 60 FR 8149, Feb. 10, 1995] Sec. 416.543 Underpayments--applied to reduce overpayments. We apply any underpayment due an individual to reduce any overpayment to that individual that we determine to exist (see Sec. 416.558) for a different period, unless we have waived recovery of the overpayment under the provisions of Secs. 416.550 through 416.556. Similarly, when an underpaid recipient dies, we first apply any amounts due the deceased recipient that would be payable to a survivor under Sec. 416.542(b) against any overpayment to the survivor unless we have waived recovery of such overpayment under the provisions of Secs. 416.550 through 416.556. Example: A disabled child, eligible for payments under title XVI, and his parent, also an eligible individual receiving payments under title XVI, were living together. The disabled child dies at a time when he was underpaid $100. The deceased child's underpaid benefit is payable to the surviving parent. However, since the parent must repay an SSI overpayment of $225 on his own record, the $100 underpayment will be applied to reduce the parent's own overpayment to $125. [58 FR 52913, Oct. 13, 1993] Sec. 416.544 Paying benefits in installments: Drug addiction or alcoholism. (a) General. For disabled recipients who receive benefit payments through a representative payee because drug addiction or alcoholism is a contributing factor material to the determination of disability, certain amounts due the recipient for a past period will be paid in installments. The amounts subject to payment in installments include: (1) Benefits due but unpaid which accrued prior to the month payment was effectuated; (2) Benefits due but unpaid which accrued during a period of suspension for which the recipient was subsequently determined to have been eligible; and (3) Any adjustment to benefits which results in an accrual of unpaid benefits. [[Page 649]] (b) Installment formula. Except as provided in paragraph (c) of this section, the amount of the installment payment in any month is limited so that the sum of (1) the amount due for a past period (and payable under paragraph (a) of this section) paid in such month and (2) the amount of any current benefit due cannot exceed twice the Federal Benefit Rate plus any federally-administered State supplementation payable to an eligible individual for the preceding month. (c) Exception to installment limitation. An exception to the installment payment limitation in paragraph (b) of this section can be granted for the first month in which a recipient accrues benefit amounts subject to payment in installments if the recipient has unpaid housing expenses which result in a high risk of homelessness for the recipient. In that case, the benefit payment may be increased by the amount of the unpaid housing expenses so long as that increase does not exceed the amount of benefits which accrued during the most recent period of nonpayment. We consider a person to be at risk of homelessness if continued nonpayment of the outstanding housing expenses is likely to result in the person losing his or her place to live or if past nonpayment of housing expenses has resulted in the person having no appropriate personal place to live. In determining whether this exception applies, we will ask for evidence of outstanding housing expenses that shows that the person is likely to lose or has already lost his or her place to live. For purposes of this section, homelessness is the state of not being under the control of any public institution and having no appropriate personal place to live. Housing expenses include charges for all items required to maintain shelter (for example, mortgage payments, rent, heating fuel, and electricity). (d) Payment through a representative payee. If the recipient does not have a representative payee, payment of amounts subject to installments cannot be made until a representative payee is selected. (e) Underpaid recipient no longer eligible. In the case of a recipient who is no longer currently eligible for monthly payments, but to whom amounts defined in paragraph (a) of this section are still owing, we will continue to make installment payments of such benefits through a representative payee. (f) Recipient currently not receiving SSI benefits because of suspension for noncompliance with treatment. If a recipient is currently not receiving SSI benefits because his or her benefits have been suspended for noncompliance with treatment (as defined in Sec. 416.936), the payment of amounts under paragraph (a) of this section will stop until the recipient has demonstrated compliance with treatment as described in Sec. 416.1326 and will again commence with the first month the recipient begins to receive benefits. (g) Underpaid recipient deceased. Upon the death of a recipient, any remaining unpaid amounts as defined in paragraph (a) of this section will be treated as underpayments in accordance with Sec. 416.542(b). [60 FR 8150, Feb. 10, 1995] Sec. 416.550 Waiver of adjustment or recovery--when applicable. Waiver of adjustment or recovery of an overpayment of SSI benefits may be granted when (EXCEPTION: This section does not apply to a sponsor of an alien): (a) The overpaid individual was without fault in connection with an overpayment, and (b) Adjustment or recovery of such overpayment would either: (1) Defeat the purpose of title XVI, or (2) Be against equity and good conscience, or (3) Impede efficient or effective administration of title XVI due to the small amount involved. [52 FR 8882, Mar. 20, 1987, as amended at 53 FR 16543, May 10, 1988] Sec. 416.551 Waiver of adjustment or recovery--effect of. Waiver of adjustment or recovery of an overpayment from the overpaid person himself (or, after his death, from his estate) frees him and his eligible spouse from the obligation to repay the amount of the overpayment covered by the waiver. Waiver of adjustment or recovery of an overpayment from anyone [[Page 650]] other than the overpaid person himself or his estate (e.g., a surviving eligible spouse) does not preclude adjustment or recovery against the overpaid person or his estate. Example: The recipient was overpaid $390. It was found that the overpaid recipient was eligible for waiver of adjustment or recovery of $260 of that amount, and such action was taken. Only $130 of the overpayment remained to be recovered by adjustment, refund, or the like. [40 FR 47763, Oct. 10, 1975] Sec. 416.552 Waiver of adjustment or recovery--without fault. Without fault relates only to the situation of the individual seeking relief from adjustment or recovery of an overpayment. The overpaid individual (and any other individual from whom the Social Security Administration seeks to recover the overpayment) is not relieved of liability and is not without fault solely because the Social Security Administration may have been at fault in making the overpayment. In determining whether an individual is without fault, the fault of the overpaid person and the fault of the individual seeking relief under the waiver provision are considered. Whether an individual is without fault depends on all the pertinent circumstances surrounding the overpayment in the particular case. The Social Security Administration considers the individual's understanding of the reporting requirements, the agreement to report events affecting payments, knowledge of the occurrence of events that should have been reported, efforts to comply with the reporting requirements, opportunities to comply with the reporting requirements, understanding of the obligation to return checks which were not due, and ability to comply with the reporting requirements (e.g., age, comprehension, memory, physical and mental condition). In determining whether an individual is without fault based on a consideration of these factors, the Social Security Administration will take into account any physical, mental, educational, or linguistic limitations (including any lack of facility with the English language) the individual may have. Although the finding depends on all of the circumstances in the particular case, an individual will be found to have been at fault in connection with an overpayment when an incorrect payment resulted from one of the following: (a) Failure to furnish information which the individual knew or should have known was material; (b) An incorrect statement made by the individual which he knew or should have known was incorrect (this includes the individual's furnishing his opinion or conclusion when he was asked for facts), or (c) The individual did not return a payment which he knew or could have been expected to know was incorrect. [40 FR 47763, Oct. 10, 1975, as amended at 59 FR 1636, Jan. 12, 1994] Sec. 416.553 Waiver of adjustment or recovery--defeat the purpose of the supplemental security income program. We will waive adjustment or recovery of an overpayment when an individual on whose behalf waiver is being considered is without fault (as defined in Sec. 416.552) and adjustment or recovery of the overpayment would defeat the purpose of the supplemental security income program. (a) General rule. We consider adjustment or recovery of an overpayment to defeat the purpose of the supplemental security income (SSI) program if the individual's income and resources are needed for ordinary and necessary living expenses under the criteria set out in Sec. 404.508(a) of this chapter (b) Alternative criteria for individuals currently eligible for SSI benefits. We consider an individual or couple currently eligible for SSI benefits to have met the test in paragraph (a) of this section if the individual's or couple's current monthly income (that is, the income upon which the individual's or couple's eligibility for the current month is determined) does not exceed-- (1) The applicable Federal monthly benefit rate for the month in which the determination of waiver is made (see subpart D of this part); plus (2) The $20 monthly general income exclusion described in Secs. 416.1112(c)(3) and 416.1124(c)(10); plus (3) The monthly earned income exclusion described in Sec. 416.1112(c)(4); plus [[Page 651]] (4) The applicable State supplementary payment, if any (see subpart T of this part) for the month in which determination of waiver is made. For those SSI recipients whose income exceeds these criteria, we follow the general rule in paragraph (a) of this section. [45 FR 72649, Nov. 3, 1980, as amended at 50 FR 48573, Nov. 26, 1985] Sec. 416.554 Waiver of adjustment or recovery--against equity and good conscience. We will waive adjustment or recovery of an overpayment when an individual on whose behalf waiver is being considered is without fault (as defined in Sec. 416.552) and adjustment or recovery would be against equity and good conscience. Adjustment or recovery is considered to be against equity and good conscience if an individual changed his or her position for the worse or relinquished a valuable right because of reliance upon a notice that payment would be made or because of the incorrect payment itself. In addition, adjustment or recovery is considered to be against equity and good conscience for an individual who is a member of an eligible couple that is legally separated and/or living apart for that part of an overpayment not received, but subject to recovery under Sec. 416.570. Example 1: Upon being notified that he was eligible for supplemental security income payments, an individual signed a lease on an apartment renting for $15 a month more than the room he had previously occupied. It was subsequently found that eligibility for the payment should not have been established. In such a case, recovery would be considered ``against equity and good conscience.'' Example 2: An individual fails to take advantage of a private or organization charity, relying instead on the award of supplemental security income payments to support himself. It was subsequently found that the money was improperly paid. Recovery would be considered ``against equity and good conscience.'' Example 3: Mr. and Mrs. Smith--members of an eligible couple-- separate in July. Later in July, Mr. Smith receives earned income resulting in an overpayment to both. Mrs. Smith is found to be without fault in causing the overpayment. Recovery from Mrs. Smith of Mr. Smith's part of the couple's overpayment is waived as being against equity and good conscience. Whether recovery of Mr. Smith's portion of the couple's overpayment can be waived will be evaluated separately. [60 FR 16375, Mar. 30, 1995] Sec. 416.555 Waiver of adjustment or recovery--impede administration. Waiver of adjustment or recovery is proper when the overpaid person on whose behalf waiver is being considered is without fault, as defined in Sec. 416.552, and adjustment or recovery would impede efficient or effective administration of title XVI due to the small amount involved. The amount of overpayment determined to meet such criteria is measured by the current average administrative cost of handling such overpayment case through such adjustment or recovery processes. In determining whether the criterion is met, the overpaid person's financial circumstances are not considered. [40 FR 47764, Oct. 10, 1975] Sec. 416.556 Waiver of adjustment or recovery--countable resources in excess of the limits prescribed in Sec. 416.1205 by $50 or less. (a) If any overpayment with respect to an individual (or an individual and his or her spouse if any) is attributable solely to the ownership or possession by the individual (and spouse if any) of countable resources having a value which exceeds the applicable dollar figure specified in Sec. 416.1205 by an amount of $50.00 or less, including those resources deemed to an individual in accordance with Sec. 416.1202, such individual (and spouse if any) shall be deemed to have been without fault in connection with the overpayment, and waiver of adjustment or recovery will be made, unless the failure to report the value of the excess resources correctly and in a timely manner was willful and knowing. (b) Failure to report the excess resources correctly and in a timely manner will be considered to be willful and knowing and the individual will be found to be at fault when the evidence clearly shows the individual (and spouse if any) was fully aware of the requirements of the law and of the excess resources and chose to conceal these resources. When an individual incurred a similar overpayment in the past and received an explanation and [[Page 652]] instructions at the time of the previous overpayment, we will generally find the individual to be at fault. However, in determining whether the individual is at fault, we will consider all aspects of the current and prior overpayment situations, and where we determine the individual is not at fault, we will waive adjustment or recovery of the subsequent overpayment. In making any determination or decision under this section concerning whether an individual is at fault, including a determination or decision of whether the failure to report the excess resources correctly and in a timely manner was willful and knowing, we will take into account any physical, mental, educational, or linguistic limitations (including any lack of facility with the English language) of the individual (and spouse if any). [53 FR 16544, May 10, 1988, as amended at 59 FR 1636, Jan. 12, 1994] Sec. 416.558 Notice relating to overpayments and underpayments. (a) Notice of overpayment and underpayment determination. Whenever a determination concerning the amount paid and payable for any period is made and it is found that, with respect to any month in the period, more or less than the correct amount was paid, written notice of the correct and incorrect amounts for each such month in the period will be sent to the individual against whom adjustment or recovery of the overpayment as defined in Sec. 416.537(a) may be effected or to whom the underpayment as defined in Secs. 416.536 and any amounts subject to installment payments as defined in Sec. 416.544 would be payable, notwithstanding the fact that part or all of the underpayment must be withheld in accordance with Sec. 416.543. When notifying an individual of a determination of overpayment, the Social Security Administration will, in the notice, also advise the individual that adjustment or recovery is required, as set forth in Sec. 416.571, except under certain specified conditions, and of his or her right to request waiver of adjustment or recovery of the overpayment under the provisions of Sec. 416.550. (b) Notice of waiver determination. Written notice of an initial determination of waiver shall be given the individual in accordance with Sec. 416.1404 unless the individual was not given notice of the overpayment in accordance with paragraph (a) of this section. (c) Notice relating to installment payments to individuals whose drug addiction or alcoholism is a contributing factor material to the determination of disability. Whenever a determination is made concerning the amount of any benefits due for a period that must be paid in installments, the written notice will also explain the amount of the installment payment and when an increased initial installment payment may be made (as described in Sec. 416.544). This written notice will be sent to the individual and his or her representative payee. [40 FR 47764, Oct. 10, 1975, as amended at 55 FR 33668, Aug. 17, 1990; 60 FR 8150, Feb. 10, 1995] Sec. 416.560 Recovery--refund. An overpayment may be refunded by the overpaid recipient or by anyone on his or her behalf. Refund should be made in every case where the overpaid individual is not currently eligible for SSI benefits. If the individual is currently eligible for SSI benefits and has not refunded the overpayment, adjustment as set forth in Sec. 416.570 will be proposed. [55 FR 33669, Aug. 17, 1990] Sec. 416.570 Adjustment--general rule. Where a recipient has been overpaid, the overpayment has not been refunded, and waiver of adjustment or recovery is not applicable, any payment due the overpaid recipient or his or her eligible spouse (or recovery from the estate of either or both when either or both die before adjustment is completed) is adjusted for recovery of the overpayment. Adjustment will generally be accomplished by withholding each month the amount set forth in Sec. 416.571 from the benefit payable to the individual except that, when the overpayment results from the disposition of resources as provided by Secs. 416.1240(b) and 416.1244, the overpayment will be recovered by withholding any payments due the overpaid recipient or his or her eligible spouse before any further payment is made. Absent a specific request from the person from [[Page 653]] whom recovery is sought, no overpayment made under title II or XVIII of the Act shall be recovered by adjusting SSI benefits, and absent a specific request, no overpayment of SSI benefits shall be adjusted against benefits payable under title II of the Act. In no case shall an overpayment of SSI benefits be adjusted against title XVIII benefits. [55 FR 33669, Aug. 17, 1990; 55 FR 42148, Oct. 17, 1990] Sec. 416.571 10-percent limitation of recoupment rate--overpayment. Any adjustment or recovery of an overpayment for an individual in current payment status is limited in amount in any month to the lesser of (1) the amount of the individual's benefit payment for that month or (2) an amount equal to 10 percent of the individual's total income (countable income plus SSI and State supplementary payments) for that month. The countable income used is the countable income used in determining the SSI and State supplementary payments for that month under Sec. 416.420. When the overpaid individual is notified of the proposed SSI and/or federally administered State supplementary overpayment adjustment or recovery, the individual will be given the opportunity to request that such adjustment or recovery be made at a higher or lower rate than that proposed. If a lower rate is requested, a rate of withholding that is appropriate to the financial condition of the overpaid individual will be set after an evaluation of all the pertinent facts. An appropriate rate is one that will not deprive the individual of income required for ordinary and necessary living expenses. This will include an evaluation of the individual's income, resources, and other financial obligations. The 10-percent limitation does not apply where it is determined that the overpayment occurred because of fraud, willful misrepresentation, or concealment of material information committed by the individual or his or her spouse. Concealment of material information means an intentional, knowing, and purposeful delay in making or failure to make a report that will affect payment amount and/or eligibility. It does not include a mere omission on the part of the recipient; it is an affirmative act to conceal. The 10-percent limitation does not apply to the recovery of overpayments incurred under agreements to dispose of resources pursuant to Sec. 416.1240. In addition, the 10-percent limitation does not apply to the reduction of any future SSI benefits as a consequence of the misuse of funds set aside in accordance with Sec. 416.1231(b) to meet burial expenses. Adjustment or recovery will be suspended if the recipient is subject to a reduced benefit rate under Sec. 416.414 because of residing in a medical facility in which Medicaid is paying a substantial portion of the recipient's cost of care. [55 FR 33669, Aug. 17, 1990]