11126 Collecting Claims

11126 Collecting Claims - The following special procedures apply when initiating collection action on claims.

Cash Overpayments - Cash overpayments cannot be recovered through medical eligibility or vice versa. Furthermore, when recovery is made through cash grant reduction or special spenddown procedures in medical, only FFP (Federal Financial Participation) benefits can be reduced or withheld to recover FFP overpayments and only non-FFP benefits can be reduced or withheld to recover non-FFP overpayments. GA overpayments may be recovered from TANF benefits because in TANF funding the state has flexibility to designate non-FFP funded amounts.

In TANF the amount of retained current child support received in the month at issue which is in excess of the correct benefit amount, must also be applied to reduce the overpayment. If the support is not retained by the agency or is less than the correct benefit amount, the overpayment collection is not affected by the support amount.

For cash and medical purposes, all overpayments are subject to recovery including special needs payments.
Food Assistance - For client or agency claims, collection action shall be initiated against any or all of the adult members of the household which received an overissuance. If a change in household membership occurs, collection action may be pursued against any household which has a member who was an adult member of the household that received an overissuance. Food assistance benefits can only be withheld (benefit reduction) to pay on a food assistance claim.

For fraud claims, collection action shall first be initiated against the household which contained the household member found to have committed fraud and which received the overissuance for which the claim was established. If a change in household membership occurs, collection action shall be initiated against any or all households which has a member who was an adult member of the household that received the fraud overissuance.

For all types of claims, the amount of the claim may be offset with lost benefits owed to any household which contains a member who was an adult member of the original household that received an overissuance.

Child Care - When an overpayment is identified, the agency shall determine the cause and set up a plan for repayment, including the use of benefit reduction.

11126.1 Methods of Collecting Payments - Claims shall be collected in one of the following ways:

Lump Sum
1. Payments shall be collected from households in one lump sum cash payment if the household is financially able. However, the household shall not be required to liquidate all of its resources to make this one lump sum payment.
2. If the household is financially unable to pay the entire amount of the claim at one time and prefers to make a lump sum cash payment as partial payment of the claim, it shall be accepted.
Installments - If the household is not currently participating in the program with the overpayment and has insufficient liquid resources or is otherwise financially unable to pay the claim in one lump sum, a payment schedule shall be negotiated by the Central Collections Unit (CCU). Once negotiated, the amount to be repaid each month through installment payments shall remain unchanged. Both the household and the agency shall have the option to initiate renegotiation of the payment schedule if they believe that the household's economic circumstances have changed enough to warrant such an action.

If the household requests renegotiation, but the CCU feels that the household's economic circumstances have not changed enough to warrant the requested settlement (such as the fact that the household's source of income has not changed) then the CCU may continue renegotiation until a settlement can be reached.
Offsetting - For collection to be made by offsetting the amount of the claim against restored benefits, the amount of benefits due the household shall be determined and deducted from any outstanding claim balances. Refer to 11115.

A notice of action shall be sent to inform the household of the restored benefit amount and the amount still due on the claim or the amount of restored benefits due after applying them to any outstanding claim.

NOTE: See KEES User Manual to determine how overpayment can be offset from lost benefits.
Benefit Reduction - If a household is currently participating in the program with the overpayment, collection action for ALL types of claims shall be accomplished by benefit reduction. See the KEES User Manual for instructions.

When benefit reduction is being utilized the regular benefit shall be reduced as follows; or the client may agree to a larger benefit reduction amount:
1. Fraud Claims
  
  Food Assistance - The benefit shall be reduced by the greater of 20% of the household's monthly entitlement or $20 per month.
  
  Cash and Child Care - The benefit shall be reduced by the greater of 20% of the household’s monthly benefit or $10 per month.
  
  NOTE: If the individual is receiving child care for work programs, before recoupment is initiated, a supervisor must indicate in writing on the case log that recoupment is appropriate.
2. Client and Agency Claims
  
  Food Assistance - The benefit shall be reduced by the greater of 10% of the household's monthly benefit or $10 per month. See NOTE in (a) above.
  
  Cash and Child Care - The benefit shall be reduced by the greater of 10% of the household’s monthly benefit or $10 per month.
  
  NOTE: If benefit reduction is occurring for an agency or client error claim, and the household subsequently has a fraud claim established, the agency should cease benefit collection on the agency/client error claim and initiate benefit reduction on the fraud claim.
EBT Repayments - For cash, child care and food assistance, clients can make payments on a claim using their EBT account. Refer to item (21) of the EBT System Guide (#V-1) in the Appendix.
Provisions Specific to Medical - For medical cases not subject to the fraud provisions of 11200 (2) or to other legal recovery efforts, an overpayment may be recovered only if there are nonexempt resources that are currently available. This includes any resources counted toward the allowable resource level of 5130.

If the overpayment is a result of an understated spenddown, the total amount of the overpayment cannot exceed the understated amount. If the overpayment is a result of excess resources, the total amount of the overpayment shall be the amount of claims paid (or subject to be paid) for the ineligible period not to exceed the amount by which the total nonexempt resources exceed the allowable resource level. (See 5130.) If the value of the total nonexempt resources vary during the ineligible period, the highest value obtained for that period shall be used. If ineligibility exists for a reason other than excess resources, the total amount of the overpayment shall be equal to the amount of claims paid (or subject to be paid) for the ineligible period.

When the amount of the overpayment has been determined and there are resources to recover from, the client may voluntarily choose to make a repayment to the agency. If the client does not choose to make a lump sum repayment, a special spenddown shall be created in an amount equal to the amount to be recovered and shall be considered in the current eligibility base period.

Medical expenses may be counted against the special spenddown requirements if the expense is:
1. verified,
2. for a medically necessary service (see Appendix Item P-1 Medical Necessity), and
3. reported to the agency on at least a 6 month basis.
Medical expenses shall first be counted against regular spenddown requirements and then the special spenddown requirements.

The special spenddown mechanism may be used to recover medical program overpayments for both automatic and determined eligibles. There is no necessity that a client have a regular spenddown. However, special spenddown shall not be used in the Medicaid poverty level or Title 21 programs. If a special spenddown mechanism is used on regular spenddown cases, it is necessary for the client to report all medical expenses incurred until both spenddowns have been met. They may extend over more than one base period. If the client fails to provide the agency with this information and he reapplies at a later date, the special spenddown shall be considered to be unmet.
Treasury Offset Program (Food Assistance Only) - The Treasury Offset Program (TOP) (formerly FTROP) was established to collect recipient claims from Federal income tax refunds, Federal salaries and other federal payments. Any type of claim can be collected through TOP. TOP is housed in the Central Collection Unit in Topeka.
The following describes generally what must be met before a claim will be considered for collection through TOP:
1. The claim must be established and at least one demand letter has to have been sent. The initial demand letter must also be dated within 10 years prior to the offset. The minimum claim balance referred to TOP is $25. The 10 year rule does not apply to claims with a court judgment. Therefore, if a claim has a court judgment for collection, the Status Reason Code of "JD" must be entered on OVCA. This code will tell the TOP system that collection past the 10 year rule is allowed for that claim.
  
  Advance TOP notices for new debts are sent monthly. The debt has to be delinquent for at least 120 days when the client is notified of the TOP collection. The client has 60 days to respond to the TOP advance notice before offsetting will occur. These notices, in addition to all other TOP activities, are handled centrally by the TOP Unit. Client and staff calls regarding TOP should be referred to the TOP number, 1-866-977-6689.
2. The individual for which the claim is established is not currently participating in the program.
3. The claim is delinquent as described above, and the client has not paid the claim or contacted the agency within 60 days of the advance TOP notice.

11126.2 Special Criteria for Initiating Collection Action on Fraud Claims - If a household member is found to have committed fraud (by any of the means described in 11200), collection action shall be initiated against the individual's household. In addition, a personal contact shall be made with the household, if possible. Such collection action shall be initiated unless the household has already repaid the overissuance. See 11280.

11126.3 Claims Discharged through Bankruptcy - If local agency staff have knowledge of bankruptcy proceedings against any household owing a food assistance, cash or child care claim, Central Office Legal Department shall be notified immediately and the local agency shall cease collection activity pending the outcome of the court proceedings. Collection action should be resumed (or initiated) after and in conformance with the final court action.

NOTE: To cease collection activity pending the outcome of bankruptcy proceedings, food assistance, cash and child care claims should be terminated (TE). A claim status reason code of BK (bankruptcy) is to be entered in the Status Reason field on OVCA when the claim is terminated. If the household has declared bankruptcy and the claim(s) are included in a civil or criminal judgment, the code of JB (judgment-bankruptcy) shall be entered in the Status Reason field. Claims must not be deleted. Because bankruptcy activities are rare, claims involved in bankruptcy shall be referred to the Central Office Legal Department for all necessary actions. Also see 11129.

11126.4 Interstate Food Assistance Claims Collection - In certain situations, the local agency becomes aware of the fact that a household which has moved into this state from another state has a claim against it in the previous state. If the former state does not take action against the household to collect the claim, this state may initiate action to collect the claim (and vice-versa). When a local office becomes aware of such a situation, the former state should be contacted to verify that collection action is currently not being taken against the household and to verify the type and amount of claim on which a balance is still due. Once documentation of the claim and the current balance is received, a claim must be established on KAECSES for the current claim balance. Send a demand letter and initiate collection action per 11125 and 11126.1.

11126.5 Refund of Over Collected Food Assistance Benefits - If the agency should collect more benefits than are due on a claim, the amount over collected must promptly be refunded to the household. Under the EBT system, the only means to refund over collected benefits is to issue restored benefits. The local agency shall be responsible for notifying the household that a refund has been processed, and for notifying the EBT Unit (e-mail to EBTMAIL) of the case name, case number, and amount of the refund.

11126.6 Expunged Benefits - Expunged food assistance, cash and child care benefits for a client are to be used to reduce the amount of any active claims that the client has. Expunged benefits are benefits that have been aged off and not returned to the KAECSES and/or KsCares system and EBT account within 12 months for food assistance, and 90 days for cash and child care, from the date they were initially made available. These benefits can not be used as payment on a claim. See Appendix Item V-1, EBT System Guide, Item (25) and KEESM 11130.

11127 Terminating Claims -

Cash, Food Assistance, Child Care and Medical - Staff shall terminate claims for the following reasons:
1. The only remaining household member responsible for the claim is now deceased. Enter a claim Status Reason code of DE (Death) on the OVCA screen; or
2. The household has filed for bankruptcy. Claims pending bankruptcy are terminated until final action on the bankruptcy is known. See 11126.3. Enter a claim Status Reason code of BK (Bankruptcy) on OVCA.
  - If the household has declared bankruptcy and the claim(s) are included in a civil or criminal judgment, use the claim Status Reason code of JB (Judgment - Bankruptcy).
The above terminations may be done by field staff or TOP Administration staff if so requested.
Food Assistance Only - No payments have been made in three years, the whereabouts of the household are unknown, and the claim is not successfully collected through TOP. At least one unsuccessful submission to TOP is required before the claim can be terminated.

These terminations are completed by the TOP Administration Unit as needed.
KAECSES and KsCares System Terminations - All Programs - KAECSES and KsCares will automatically terminate claims in the following situations:
1. On a monthly basis, all active claims (fraud, client and agency) with a remaining balance of less than $1.00 will be terminated. This allows collection to begin on another claim for that program. A system generated claim Status Reason code of SM (system maintenance) will be entered automatically on OVCA when the claim is terminated.
2. On an annual basis, all client and agency error claims that were established more than 10 years prior to the date of the run, that have had no collection activity within 36 months of the run date, and for food assistance, are not known to the TOP system will be terminated. These are claims with a balance of $1.00 or greater. A SAR report listing these terminated claims will be produced. A claim Status Reason code of SM as described above will be entered automatically on OVCA.
  
  No fraud claims will be automatically terminated by this process.

A payment, such as from debt set-off, may be applied to a terminated claim if received.