Introduction to SSA Overpayment Issues

1. Introduction to SSA Overpayment Issues Kirkland & Ellis September 2009 Presentation by: Thomas Yates, Health & Disability Advocates

2. Some Background Terminology Programs offered by Social Security Administration (SSA): • Social Security Old Age, Retirement, and Disability Programs (OASDI); and • Supplemental Security Income (SSI).

3. Old Age, Retirement, and Disability Insurance • Social Security taxes pay for three kinds of benefits: retirement, disability and survivors. Payment amounts vary. • If you are eligible for retirement or disability benefits, other family members might receive benefits. These include: your spouse if s/he is at least 62 years old or under 62 but caring for a child under age 16 or 16 and older but disabled and entitled to benefits on your record; and your children if they are unmarried and are under age 18, age 18–19 and attending high school full-time or 18 or older but disabled. If you are divorced, your ex-spouse could be eligible for benefits on your record. • Social Security disability is also called SSDI.

4. Supplemental Security Income • SSI provides monthly support to persons who are either age 65 or older, disabled, or blind. • Maximum SSI monthly payment for individual in Illinois in 2009 is $674; couples are paid $1,011. For comparison, FPL for one person is $903, couple is $1,214. • Must be U.S. Citizen or immigrant eligible for SSI • Income limits: based on amounts of earned and unearned income, size of household, and number of persons who are SSI-eligible in household • Resources limits: no more than $2,000 in countable resources (home, personal belongings, and one motor vehicle exempt); $3,000 for couple.

5. SSI Rules and Regulations Because SSI is need-based welfare program, it has extensive rules about eligibility. The rules address the following requirements: • Family status • Living Arrangements • Gifts, inheritances, tax refunds, and other unearned income • Salaries and wages • Real and personal property • Savings

6. Disability Standard • Social Security pays SSDI and SSI benefits to people who cannot work because they have a medical condition that is expected to last at least one year or result in death. • People who have worked 5 out of the last 10 years prior to disability onset are SSDI-eligible. Others must look to SSI. • Social Security defines work to exclude jobs in which a person’s gross monthly wages or salary are less than $980. Thus, many Social Security and SSI recipients who are disabled work part-time jobs. • The Social Security Administration encourages disability claimants to return to work in hopes that they will leave the disability rolls. • Work earnings may impact amount of benefits to be paid in SSDI and SSI programs.

7. Overpayments • For both programs, OASDI and SSI, federal law requires that SSA collect all overpayments made, regardless of cause. Overpayments are collected by recouping overpaid amounts from future checks, seizing federal income tax returns and other federal funds owed, and in some cases by collection lawsuits or wage garnishment. • SSA will waive collection of overpayments when claimants show that they were without fault in causing overpayment. The fault standard is strict. • Even when claimants cannot show they were without fault, SSA will agree to repayment plans that recoup less or require smaller monthly payments in many cases.

8. How SSA Recoups Overpayments • For persons currently receiving benefits, SSA will recoup from monthly benefits checks. For OASDI checks, SSA takes 100% of each check until recovery is completed. For SSI, assuming no fraud, only 10% of SSI amount ($67.40 in 2009) can be recouped monthly. • SSA also can seize other government payments such as income tax refunds or, in limited circumstances, garnish wages if the person who was overpaid is working.

9. SSA Processes are Confusing • Sometimes overpayment notices come out of SSA headquarters in Baltimore and the local Social Security office (District Office) is unaware. • Sometimes overpayments notices are issued by Social Security local offices or Regional Offices. • SSA notices are often poorly drafted and confusing. • Notices can be different---”overpayment is coming” notice vs. “overpayment is here!” notice.

10. Overpayments Happen • Situations change and the SSA rules about how those changes impact eligibility are complex and confusing. • SSA beneficiaries often don’t know what needs to be reported, assume SSA knows what is happening, or otherwise don’t report the changes. For example, many recipients also receive benefits through the Illinois Department of Human Services and they do not understand that SSA and the Illinois Department of Human Services do not communicate with each other regarding information regarding eligibility. • SSA has never come up with an adequate system for tracking changes and implementing its rules despite repeated complaints by Congress and the public.

11. The Problem of Overpayments • General Accounting Office Report Released in 2004 demonstrates the widespread and enormous problem with overpayments. • Dollar amount of overpayments has increased from $772 Million in 1999 to $990 Million in 2003. • The more complex eligibility rules become, the often overpayments occur. • Employment by recipients and recipients’ family members is most common cause of overpayments: 31% of SSDI overpayments attributable to employment.

12. Most Overpaid Claimants Aren’t Cheats! • Most overpaid claimants are not trying to get away with something. People who are cheating the system are referred to local U.S. Attorney for criminal prosecutions or face administrative fines. This Project will not refer such clients for pro bono help. • Most SSA beneficiaries assume that SSA knows what it is doing even though many overpayments are the fault of SSA. • The rules are confusing enough that people often do not actually know if they are/were entitled to a check. • Others have cognitive difficulties or low reading levels and do not understand the eligibility rules.

13. Common Causes of Overpayments • Employment Income and Failure to Report Wages or Failure of SSA to Act on Claimant’s Report of Income; • SSA fails to determine whether claimants are entitled to possible deductions from earned income. • Resource Changes affect SSI eligibility. • Life Status Changes affect SSI eligibility (marriage, new living arrangement, child in household turns 18, etc.)

14. Incomplete Information Abounds • SSA often makes overpayment determinations based upon inaccurate or incomplete information. • SSA may not have properly determined countable income because they have no information on possible work deductions. • SSA obtains information from IRS and IRS information does not break down income by month, so income averaging or when earned income was received may be an issue. • IRS information obtained by SSA makes no distinction between earned and unearned income.

15. Working Up an Overpayment Case • Legal Services agency will provide initial summary of facts with relevant documents and recommended course of action • Interview client to fill in all the gaps in information. • Accurately characterize the income/resources/other eligibility factor that are seen as causing the overpayment or obtain information for waiver and/or negotiation. • Follow up with Social Security to pursue chosen remedy. • Referring Legal Services agency contact is available for questions/assistance.

16. Legal Options in Dealing with an Overpayment • Challenge Overpayment by Filing an Appeal (Request for Reconsideration) or Seek Re-Opening of Issue in which Appeal was not filed Timely • File a Request for Waiver • Negotiate a Lower Payment Amount or More Favorable Payment Plan • Assist client whose benefits have been cut off in qualifying for Expedited Reinstatement of Benefits in appropriate cases.

17. Dealing with SSA • Most cases will involve working with staff at Social Security District Offices (DOs). Metro Chicago area has 25 DOs. • Each DO has an attorney liaison who is first contact point. Case handlers will be provided with direct dial numbers for liaisons. • Regional SSA staff, based in Chicago, can be consulted in problematic cases.

18. Appealing Overpayment: Request for Reconsideration • SSA-561-U2 Form: “Request for Reconsideration” or Letter requesting Reconsideration of Decision. • Reason for appeal: “The overpayment amount is incorrect and/or I was not overpaid.” If the claimant was overpaid, but the overpayment was not his/her fault, then waiver is appropriate remedy. • Must be filed within 60 days unless good cause (within 65 day of date on notice) applies. • If appeal period has run, request late filing of appeal based on good cause or reopening based on new and material evidence. • Appeal should set forth legal and factual basis for challenging overpayment.

19. Request for Reconsideration, Cont. • All correspondence with District Office needs to be mailed by certified mail, or faxed to prove that it was received at DO. • Once Request for Reconsideration has been filed, or Request for Late Filing or Reopening has been requested, Advocate must be proactive in following up with District Office to ensure that request is being considered. • If Request for Reconsideration is denied, Request for Hearing may be requested within 60 days of decision (within 65 days of date on notice). Non-adversarial de novo hearing will be heard by Social Security Administrative Law Judge.

20. Request for Waiver • Form SSA-632-BK: “Request for Waiver of Overpayment Recovery or Change in Repayment Rate”. • May be filed at ANY TIME. No time limit. • Reason for waiver: “I owe the overpayment but it was not may fault and I cannot afford to repay it and/or it is unfair and/or not worth it to make me repay it.” • Must show 1) that claimant was not at fault in causing the overpayment; and 2) recovery would a) defeat the purpose of the SSA, b) be against equity and good conscience, or (for SSI only) impede the effective and efficient administration of the SSI program. • If waiver is denied, appeal can be filed.

21. Negotiation • Always an option at any stage in the process. • No specified SSA form for requests for negotiation. • Requests for Negotiation are handled at the SSA District Office level. • The claimant needs to provide a reasonable monthly repayment plan and provide documentation to support the plan (e.g., based on my current benefits and my current monthly expenses for essential items (rent, food, utilities, etc.) I can only pay proposed amount and still meet my essential needs.

22. Expedited Reinstatement (EXR) • Must apply within 5 years of termination of benefits. • Stopped receiving benefits because of work. • Must continue to meet the medical definition of disability and not be earning over SGA. • Use medical improvement standard. • Decision is made quickly. • Eligible for 6 months provisional benefits while a decision is pending.

23. How Attorneys and ParalegalsCan Help • Clients do not understand legal standards for overpayment appeals, waiver requests, and negotiations. • Clients are not able to succinctly state their cases to SSA or let their emotions color their communications with SSA. • Legal Service agencies lack resources to address need. • SSA is part of the problem: increased legal representation on overpayment issues may provide impetus to change complicated and unworkable eligibility standards.

24. Case Example-Kathy Peoples • Ms. Peoples has received SSDI disability benefits for 15 years. She was found disabled and eligible for SSDI starting in January 1994. She received LTD benefits from Cigna from August 1993 through August 1995 when those benefits ended. • In 1999, Ms. Peoples worked as a classroom aide for an elementary school near where she lived. • In 2004-2005, Ms. Peoples worked a part-time work as a secretary for her church. That job ended when she had back surgery.

25. Kathy Peoples continued Case raised three related issues: • Trial work period—LTD benefits were improperly considered to be work income. • Information relied upon by SSA about wages relied in 1999 was incorrect. • Wages received in 2005-2006 were not above the substantial gainful activity level due to Ms. Peoples’s Impairment-Related Work Expenses. • Sample letter attached addressing these issues in support of Request for Reconsideration.

26. Case Example: Carrie Askins • Notice of Overpayment Reason: YOU SHOULD HAVE REPORTED YOUR MARRIAGE. • Notice does not indicate what proof they have that Carrie Askins was married or living with a husband. • SSI regulations provide that spousal income be considered in determining SSI eligibility when SSI applicant/recipient is married and living with spouse. • Next step would be to file Request for Reconsideration and provide evidence. A request for waiver may be filed at the same time as well.

27. Carrie Askins continued • Sample Referral form is attached that sets forth the facts in Ms. Askins’s case. The form sets forth next steps and proposes that a Request for Reconsideration and a Request for Waiver be filed simultaneously.

28. Sources of Law • OASDI and SSI overpayments, waivers, and negotiations are governed by 3 sets of rules: • Federal Regulations: 20 CFR Parts 404 and 416 • Program Operations Manual System (POMS) • Social Security Rulings (SSRs) All are found at the SSA website: www.socialsecurity.gov.