2.3 Creating Overpayment Situations 



TROBLEM: SSA may not know of death of beneficiaries. A check, drawn to 

 the order of a beneficiary and mailed to him at his home address is an 

 excellent communication. The endorsement of that check by the beneficiary 

 is proof of his continued existence and, should he die, the check itself 

 is usually returned bv the Postal Service or, if delivery has been made, 

 by a member of the deceased beneficiary's family. Since these safeguards 

 are lost when a beneficiary receives his payments under the direct-deposit 

 procedure, overpayments would, presumably, increase. Further, when a 

 direct -deposit beneficiary dies, his benefits may continue to be credited 

 to a joint account and nay be withdrawn from that account by the other 

 account holder. In these cases, recovery of overpayments may be difficult. 

 On a long-range basis, concern has been expressed that an TFT system 

 might impair the ability to accomplish "hold" actions, as is now done 

 in Treasury disbursing centers after the checks have been printed and 

 while they are being held for release in the mails, And thus create addi- 

 tional overpayment situations. 



FINDINGS: Based on the examination of suspended and terminated cases, most 

 suspension and termination notifications (of death and other occurrences) 

 are timely. Most such notifications are received from the beneficiary 

 himself or a member of his family. In cases where overpayments did occur 

 due to untimely notification, refunds were obtained from the overpaid bene- 

 ficiary or withheld from other benefits due or. the account; and no change 

 in this procedure is anticipated under a direct-deposit system. 



CONCLUSION: The concern that a direct-deposit svstem might result in 

 special overpayment situations is unfounded. Although overpayments are 

 made to pover-of-attomey beneficiaries, there is no distinction between 

 them and overpayments made to the general population of social security 

 beneficiaries. In fact, the burden of recoverv of overpayments in some 

 events appears eased. The absence of the returned check as notification 

 of the death of the beneficiary does not result in overpayments. The 

 absence of the beneficiary's endorsement on checks as proof of his con- 

 tinued existence is not a loss of a safeguard under the direct-deposit 

 system since Treasury regulations in Department Circular 1076 state that 

 a financial organization's endorsement of a check shall constitute a 

 guarantee of the existence of the beneficiary for whom it receives pay- 

 ment. Considering the extent to which suspension and termination noti- 

 fications are received, the overpayment recovery procedures in existence, 

 and the legal obligations of financial organizations, the potential for 

 Government losses due to overpayments is minimal. With respect to the 

 long-range concern about 'holds" under an EFT system, the transactions 

 can be handled automatically under the computerized system. 



Figure 2.3 shows various methods of recovering overpayments. 



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