PURPOSE: To explain the policy governing refunds of overpayments made in foreign currencies by persons residing outside the U.S.
CITATIONS (AUTHORITY): Section 204 of the Social Security Act; Regulations No. 4, section 404.502.
PERTINENT HISTORY: Section 204 of the Social Security Act provides that whenever the Secretary finds that more than the correct amount of payment has been made to any person, refund (or adjustment of benefits payable) shall be made under regulations prescribed by the Secretary. However, neither the Social Security Act nor the regulations prescribed by the Secretary (20 CFR section 404.502) address the matter of whether an overpayment may be refunded in foreign currency by an overpaid person residing outside the U.S.
Currently, an overpaid person residing outside the U.S. is notified of the amount of the overpayment in U.S. dollars and asked to make refund in U.S. currency. However, the person may submit a check or money order in the applicable foreign currency or submit a given amount of local currency in cash to a Social Security Administration (SSA) agent for the purpose of receiving refunds of overpayments; e.g., a U.S. Foreign Service post or the Veterans Administration Regional Office in the Philippines. In these cases, SSA credits the debt account using the currency exchange rate in effect at the time the check or money order is negotiated by SSA and/or the conversion made.
On occasion, due to a change in the official exchange rate between receipt of the remittance and its conversion into U.S. dollars, the actual amount refunded in U.S. dollars may be less than what was intended by the foreign currency remittance. In these cases, the debt account would be credited only with the amount actually received in U.S. dollar value. This would be a disadvantage to the person refunding the overpayment, since an additional amount could be due SSA if the foreign currency had been devalued from time of receipt to conversion.
POLICY STATEMENT: An overpaid beneficiary residing outside the U.S. including a person determined to be contingently liable for repayment of the overpayment debt, may refund an overpayment either in U.S. dollars or in a foreign currency. Although payment in U.S. dollars is preferred, whether the refund is made in dollars or the applicable foreign currency may depend on national currency restrictions, either foreign or U.S. For example, certain foreign countries preclude the mailing of dollar instruments outside those countries, while certain foreign currencies issued by foreign banks are not acceptable in the U.S. Where no currency restrictions apply, a debtor may make a refund in a foreign currency as a matter of convenience. A refund made in foreign currency will be credited to the debt account at the exchange rate for U.S. dollars in effect at the time SSA or its agent receives the refund in foreign currency, check or money order. The exchange rate in effect at the time of actual conversion to U.S. dollars will not be used. The overpaid person will be informed of these policies in the overpayment/refund due notice from SSA.
EFFECTIVE DATE: Upon Publication.
FURTHER INFORMATION: The claim file will be documented by either SSA or its agent to show the applicable exchange rate effective at the time of receipt of the refund.
CROSS REFERENCES: Program Operations Manual System, Sections GN 02215.005 and GN 02220.110.
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