SSR 81-19a: SECTIONS 204(a) and (b) (42 U.S.C. 404(a) and (b)) DETERMINING OVERPAYMENT AMOUNT -- WAIVER OF ADJUSTMENT OR RECOVERY

20 CFR 404.504 and 404.506

SSR 81-19a

In October 1978, the Social Security Administration (SSA) determined that the claimant received $1299 more in Old-Age Insurance Benefits than he ,was entitled to from September through December 1977. At the same time the claimant was due additional benefits totaling $392.40 for January through September 1978. Reducing the $1299 by $392.40, SSA determined that the claimant had been overpaid $906.60 from overpayment was waived, the claimant filed an appeal. He contended that the $1299 excess payment for 1977, rather than $906.60, should be the amount subject to waiver, and that he should be paid the additional $391.40 due for 1978. In determining the amount a person was overpaid (or underpaid) during a given retroactive period, SSA must consider the benefits paid and due the person during that period. In this case, the claimant's retroactive period extends from September 1977 (the first month that there is a difference between the amount payable and the amount paid) through September, 1978 (the month before the month of the initial overpayment determination.) Held: (1) an overpayment is the difference between payments made and payments due from the first month of incorrect payment through the month before the month of determination; therefore the net amount of the claimant's overpayment from September 1977 through September 1978, is $906.60; and (2) because the claimant was without fault in causing the overpayment and recovery of the overpayment would defeat the purpose of title II of the Social Security Act (the Act); recovery of the $906.60 overpayment is waived.

The issues before the Appeals Council are whether the claimant was underpaid for 1978 and whether any underpayment due for 1978 should be paid or may be withheld to reduce an overpayment, recovery of which is subject to waiver.

The claimant, born on October 19, 1909, became entitled to Old-Age Insurance Benefits effective October 1974 and was paid benefits effective September 1977, based on his retirement effective with that month. By notice dated October 10, 1978, the claimant was advised that the sick-pay he had received from his employer through the December 1977 constituted wages for deduction purposes and that he had been incorrectly paid $1299 for 1977 due to excess earnings. The notice also advised him that this amount had been reduced to $906.60 by withholding an increase of $392.40 due for January through September 1978. Although recovery of the $906.60 overpayment was waived, the claimant requested reconsideration. He contended that recovery of the full unreduced 1977 "overpayment" of $1299 should be waived, and that he should be paid the $392.40 "underpayment" for 1978. When it was determined, upon reconsideration, that the reduction of 1977 excess payment by the amount of the additional benefits due for 1978 was correct, the claimant requested a hearing.

N his decision, the administrative law judge found that the claimant was overpaid $1299 in 1977, that he was underpaid $392.40 in 1978, that adjustment or recovery of the $1299 overpayment is waived, and that the $392.40 underpayment must be paid to the claimant.

Section 204(b) of the Act and ยง 404.506 of Regulations No. 4 provide that in any case in which more than the correct amount of payment has been made, there shall be no adjustment of payments to, or recovery from, any person who is without fault if such adjustment or recovery would defeat the purpose of title II of the Act or would be against equity and good conscience.

Section 404.504 of Regulations No. 4 provides, in pertinent part, that the amount of an overpayment or underpayment is the difference between the amount paid and the amount actually due. Thus, the Appeals Council noted, an overpayment or underpayment is the net result of payments made and due and is not limited to a single month or a single year. All excess payments made for months in a given period of time and all additional amounts due for other months in that same period of time must be taken into account in determining whether there is an overpayment or an underpayment and, if so, the amount of the overpayment of the underpayment.

The Appeals Council is the opinion, and so finds, that the period of time to be used to determine whether an overpayment or an underpayment has occurred and the amount of either extends in this case from September 1977, the first month the beneficiary received an incorrect payment, through September 1978, the month before the month SSA made its initial determination and notified him of the overpayment. During this period, benefits were paid (less premiums for Supplementary Medical Insurance (SM) as follows:

RATE MONTHS TOTAL
$368.30 09/77 $ 368.30
419.30 10/77 419.30
386.10 11/77-05/78 2,702.70
411.30 06/78-09/78 1,645.20
TOTAL PAID $5,135.50

The claimant's benefits were subject to work deductions in 1977 and a recomputation effective January 1978. Based on these changes, benefits should have been paid for the period September 1977 through September 1978 as follows:

RATE MONTHS TOTAL
$ 0.00 09/77-11/77 0.00
276.20 12/77 276.20
436.20 01/78-05/78 2,181.00
464.60 06/78-09/78 1,858.40
TOTAL PAYABLE $4,315.60

Reducing the payments of $5,135.50 which the claimant received by the $4,315.609 which is payable, resulted in an excess payment of $819.90 for the period September 1977 through September 1978. In addition, SMI premiums of $86.70 are due for the months of December 1977 through September 1978. Therefore, the total amount of the claimant's overpayment for September 1977 through September 1978 was $906.60.

The evidence of record indicates that the claimant was "without fault" in causing the overpayment and that recovery of the overpayment would defeat the purpose of title II of the Act. Accordingly, the Appeals Council finds that recovering of the $906.60 overpayment is waived.


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