Administrative Wage Garnishment Joanne R Gasparini Director Payment

Administrative Wage Garnishment Joanne R. Gasparini Director, Payment and Recovery Policy Staff Office of Financial Policy and Operations June 2, 2005

SSA Program Outlays 39. 5 million OASI beneficiaries $ 412 billion (79%) 6. 9 million SSI recipients $38 billion (7%) 7. 7 million DI beneficiaries $76 billion (14%)

SSA Benefit Overpayments – Fiscal Year 2004 ($’s in millions) Total OASI DI SSI Beginning Balance, 10/1/03 8, 145. 1 1, 108. 8 2, 960. 9 4, 075. 4 New Overpayments Detected 3, 593. 7 687. 8 927. 3 1, 978. 6 186. 4 10. 3 46. 8 129. 3 11, 925. 2 1, 806. 9 3, 935 6, 183. 3 1, 854. 1 621. 2 629. 9 1, 016 413 62. 2 198. 7 152. 1 477. 2 54. 2 160. 7 262. 3 Total Reductions 2, 744. 3 675. 4 790. 6 1, 278. 3 Ending Balance, 9/30/04* 8, 707. 4 1, 140. 7 3, 161. 3 4, 405. 4 Reestablished Debt Total Available Debt Collections (Remittances and Offsets) Waivers Terminated/Uncollectable *Reflects adjusted balance

Debt Collection Tools § Treasury Offset Program = Tax Refund Offset and Administrative Offset § Credit Bureau Reporting § Benefit Payment Offset § Federal Payment Levy Program § Mandatory Cross Program Recovery § Administrative Wage Garnishment (AWG)

Debt Collection Tools, cont’d § Future § Federal Salary Offset § Non-Entitled Debtors § Private Collection Agencies/Fed. Debt § Interest Charging

Legal Authorities for AWG § Debt Collection Improvement Act of 1996 § Title 31, United States Code, section 3720 D § Department of the Treasury’s regulations, 31 Code of Federal Regulations (CFR) 285. 11 § SSA’s regulations, 20 CFR, parts 422. 401 -422. 445 effective January 2004

What is AWG? § Federal agency orders an employer to withhold amount each pay day and remits those collections to the agency § Federal agency’s pursuit of the delinquent non-tax debt can occur without a court order § Withholding is 15% of a debtor’s disposal wages (net amount after taxes and other deductions) § SSA’s AWG process is fully automated to select, control and monitor Title II and XVI cases

AWG Selection Criteria To be selected: § Debtor is alive; and § SSN is available; and § Not entitled to Social Security or SSI benefits; and § Debt is delinquent and $200 or more; and § Debt established after age 18; and § No installment payment arrangement exists; and § No waiver or appeal is pending

AWG Selection Criteria, cont’d Reasons for Non-Selection: § Debt delinquent > 10 years; or § Debtor participating in work incentive program; or § Debtor making regular installment payments; or § SSI debtor is undergoing mandatory cross program recovery

AWG – The Debtor § Delinquent debtors notified 60 days before using AWG; i. e. , preoffset notice § First wave of 60 -day notices sent on 2/8/05. Each month thereafter, newly delinquent debtors notified § 60 -day preoffset notice informs debtors about: § SSA’s plans to use AWG (as well as the Treasury Offset Program and credit bureau reporting) § Due process rights § Opportunity to repay in full before AWG

AWG – The Employer If a debtor does not respond to 60 -day notice, SSA systems automatically check the Master Earnings File for employment and earnings information § Debtor has regular wages from a domestic employer of $25, 000 or more and at least one employer with $15, 000 or more § Debtor was not involuntarily separated or, if so, has been re-employed continuously for 12 months § Wage earners excluded: self-employed, agricultural wages, military and Federal employees

AWG – The Employer, cont’d Employer Compliance: § Employer required to comply with AWG order § Failure to do so could result in a lawsuit by government and employer is held accountable for amounts they refused to withhold § Employer can be held liable for attorney fees, cost of the lawsuit and punitive damages § Employer cannot retaliate against employee; e. g. , terminate or take disciplinary action, due to wages subject to garnishment § Employer can be held liable for employee’s attorney fees, reinstatement, back pay and punitive damages

AWG – The Employer, cont’d When all conditions for AWG are met, SSA sends employer an AWG Package: ü Letter to Employer – Announces intent to garnish, explanation of law and consequences of failing to comply ü Wage Garnishment Order – Orders employer to begin deductions immediately and continue until notified by SSA ü Wage Garnishment Worksheet – Assists employer calculating appropriate garnishment amount ü Employer Certification – Employer’s response to SSA’s garnishment order; due in 20 days ü Scannable coupons and return envelopes

AWG Implementation § January 2005 – First debtors selected to receive 60 -day notice § Consisted of newly delinquent debtors (prospective approach) § Monthly notices released to newly-identified debtors § February 2005 – Preoffset notices mailed § April 2005 – Initial Employer Packages released § May 2005 – Systems planning begins on “AWG Conversion” – identification, notification and inclusion of remaining delinquent debtors into AWG § AWG expected to yield $105 million in collections over 5 years from Title II and XVI overpayments.

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