Overpayments - Rules

[EAS 44-350, 44-350.16]

An overpayment is any amount of any aid payment an AU received to which it was not eligible. An overpayment may be all or a portion of an aid payment. This includes, but is not limited to, an immediate need payment, regular grant computation, a special need payment or aid paid pending a state hearing.

For a SAR AU, an overpayment may not be assessed based on any differences between the projected reasonably anticipated income received during the SAR payment period and the income actually received during that period, provided that the recipient’s reports were complete and accurate.

For a Annual Reporting/Child Only (AR/CO) AU, an overpayment may not be assessed based on any differences between the amount of projected reasonably anticipated income received during the AR/CO payment period and the income actually received during that period. If the recipients reports were incomplete or inaccurate, an overpayment must be assessed based on what should have been reasonably anticipated at the time of the report, had the recipient reported completely and accurately.

Required Action

The EW must take all reasonable steps necessary to promptly correct and collect any overpayments that are known on active cases. This includes recovering overpayments due to either client error or administrative error (AE), regardless of the dollar amount.

Investigation of Overpayments

When information indicates that an overpayment may have occurred, the following actions shall be taken:

Review the eligibility and grant factors to find what the correct grant amount should have been;
Calculate the overpayment;
Determine from whom the overpayment may be recovered and,
Determine the appropriate recovery method and amount to be recovered.

If appropriate, initiate any referrals to the SIU for an investigation.

Apparent Eligibility

An immediate need payment is only an overpayment if the applicant was not apparently eligible for CalWORKs when the immediate need was issued. After a full evaluation of the application, a determination that the AU is not eligible for CalWORKs does not, by itself, mean that the immediate need payment is an overpayment.

Additionally, a change in circumstances between the issuance of an immediate need and the full application determination does not make the immediate need payment an overpayment unless the applicant was not apparently eligible for CalWORKs when the payment was issued based on the applicant’s circumstances at the time.

The following are examples of when an overpayment cannot be assessed for an immediate need payment:

Example 1

A Pregnant Person Only (PPO) applied for CalWORKs and was issued an immediate need. When the applicant applied, she was the only adult in the household and was determined eligible for CalWORKs and issued the immediate need payment.

After issuing the immediate need payment, the EW determines that the individual is not eligible for CalWORKs because of income attributed to an adult, who was not a member of the assistance unit when the immediate need payment was issued, who returned to the home before the final determination of eligibility.

In this example, the individual is not liable for an overpayment as the EW correctly determined eligibility for the immediate need when the payment was issued.

Example 2

An individual applied for CalWORKs and was issued an immediate need payment as it was determined that the individual was apparently eligible. The apparent eligibility determination was based on the individual’s statement that a pending claim for Worker’s Compensation benefits would not be received for two to three months for an undetermined amount.

Two weeks after the immediate need payment was issued and before the regular application was processed, the individual received a $2,000 Workers’ Compensation payment and a letter stating that $1,500 in Workers’ Compensation benefits would be issued monthly.

In this scenario, the individual is not liable for an overpayment because the AU was apparently eligible when the immediate need was issued because the Workers’ Compensation benefit was not reasonably anticipated income.

The following are examples of when an overpayment can be assessed for an immediate need payment:

Example 3

An individual applied for CalWORKs and was issued an immediate need payment as it was determined that the individual was apparently eligible.

After issuing the payment the EW determines that the individual is not eligible for CalWORKs because of income attributed to an adult, who was a member of the household when the immediate need was issued, whom the client failed to report during the intake process.

In this scenario, the individual would not have been eligible for the immediate need payment and an overpayment is assessed.

Example 4

An individual applied for CalWORKs and was determined to be apparently eligible and issued an immediate need payment. The immediate need eligibility was based on the client’s statement that a pending claim for Workers’ Compensation benefits would not received for two to three months and the claim amount was not yet determined.

However, the individual had already received the first $2,000 Workers’ Compensation payment when the immediate need payment was issued which would have made the AU ineligible for CalWORKs. In this situation, the individual is liable for an overpayment because eligibility for the immediate need payment would not have been determined if the Worker’s Compensation payment was known.

Failure to Comply with Conditions of Eligibility

An overpayment shall not include aid paid where all four of the following prerequisites are met:

An applicant or recipient fails to perform an act constituting a condition of eligibility for aid.
The applicant's or recipient's failure to perform an act constituting a condition of eligibility of eligibility is caused by a state agency error or by AE, and not by an applicant or recipient error.
- "State agency error," for purposes of this section is the state agency's failure to promptly notify the county that the applicant/recipient does not or no longer meets a specific condition of eligibility.
- "AE," for purposes of this section, is the county's failure to inform an applicant/recipient that an act must be performed which constitutes a condition of eligibility.
- "Applicant or recipient error," for this section, shall occur only when the applicant/recipient was notified, either verbally or in writing, of the need to perform the act which constitutes a condition of eligibility and did not perform the act in question after notification, within a reasonable period of time under the circumstances.
The amount of aid paid would have been the same had the act constituting the condition of eligibility been performed.
The state agency or AE is discovered or an overpayment is being calculated or an overpayment is being recouped on or after January 1, 1985.

Deceased Child

An overpayment must not be established for aid paid to an aided CalWORKs recipient on behalf of a deceased child in the AU in the month of and the month following the death of a child. However, recovery of an overpayment for an already established claim may continue.

Timeframe

Effective July 1, 2022, a Administrative Error (AE) and Client Error (CE) OP claim may only be established for a CalWORKs non-fraudulent O/P if all or portion of the O/P occurred within a 24-month period immediately prior to the date of discovery. Any O/P that was issued more than 24-months prior to the date of discovery must not be included when calculating the O/P claim. The date of discovery must be entered into case narration so that it can easily be determined that the established O/P is within the timeframe period of 24-months.

Important: This 24-month timeframe policy is applied prospectively. Claims established prior to this 24-month timeframe policy must not be recalculated. Except for O/P claims that have been later determined to be fraudulent.

Example Example In July 2022 it is discovered that the household was overpaid benefits starting in June 2019 through May 2022. The county established the O/P claim in the same month. The county would only calculate an O/P for August 2020 through July 2022, which is when the county discovered the O/P. The overpaid benefits from June 2019 through July 2020 fall beyond the 24-month timeframe and will not be included in calculating the O/P.

Promptness Requirement

Once the amount of the overpayment is calculated, the EW must ensure that the following actions are taken:

Send the client an adequate and timely Notice of Action, which shows the overpayment computation and explains the reason the overpayment occurred, which establishes the claim.
Identify all liable individuals in CalSAWS.
Begin monthly recoupment to recover the overpayment from a current recipient.
Refer case to Collections when aid is discontinued (this action occurs automatically in CalSAWS).

Supplemental Payments

A supplemental payment which was correctly computed, based on the reasonably anticipated income, must not be considered as an overpayment provided that the recipient’s report was complete and accurate. If there is a computational error, the supplemental payment must be corrected.

Supplemental payments are not issued retroactively, based on actual income, when a client fails to make a voluntary report of a decrease in income. Although supplements can not be issued retroactively, the benefit to the client is that an OP will not be assessed for that month in which a decrease to the income occurred.

Action When CalWORKs Program is Discontinued

The following chart shows what action is taken by CalSAWS when CalWORKs program is discontinued with an outstanding overpayment balance:

IF the Overpayment Balance is...	THEN CalSAWS Sends...
From an IPV or a fraudulent overpayment,	A referral to Collections by CalSAWS on any remaining balance regardless of the amount.
$1.00 or more,	The claim to VACS. Collections will send a demand notice for repayment. No further collection efforts will be made if the overpayment is $250 or less.

The CalWORKs overpayment threshold increased from $35 to $250 effective 7/1/2019 and is applicable only to closed cases.

Non-System Determined Claim (NSDC)

Claims can be manually recorded in the Benefit Recovery subsystem for the following circumstances: (The liable individual and the CalWORKs program must be known in CalSAWS).

An overpayment determined for months preceding conversion to CalSAWS a non-converted claim.
A claim on an Inter-County Transfer.
When there are multiple claims with different error types within the same month.

Note: When claims are established via NSDC, client correspondence must be manually generated by selecting the overpayment reason in CalSAWS.

Case Record Information

The information about the overpayment and the balance owing are to be retained in the Benefit Recovery subsystem to allow recoupment to begin should any individuals from the overpaid AU reapply and be determined eligible for CalWORKs. This will be displayed on the Display Claim Summary by Case window.

Prior to initiating aid for a client with a closed case, the EW must review the Benefit Recovery subsystem to determine if there are overpayment balances which must be recouped and that a NOA was previously sent regarding the overpayment.

IF...	THEN THE EW MUST...
A referral to Collections has previously been made,	Check if the notice of the overpayment was sent to the client. Note: Funds that have been received through tax intercept or another method of recovery which reduces the amount of the overpayment balance are sent over to CalSAWS via VACS. The system updates the balance owing.
The client has previously been notified of the overpayment and the balance is cor- rect,	Ensure that CalSAWS resumes the grant adjustment of the overpayment, pro-rating the amount for the initial month of aid and establishing an on-going recoupment amount.
The client has not been notified of the overpayment,	Send the client an appropriate NOA based upon the record in the Benefit Recovery subsystem of CalSAWS. Begin recoupment of the overpayment balance after sending a timely and accurate 10-day NOA.