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

2. SSA Program Outlays 39.5 million OASI beneficiaries $ 412 billion (79%) 7.7 million DI beneficiaries $76 billion (14%) 6.9 million SSI recipients $38 billion (7%)

3. TotalOASIDISSI Beginning Balance, 10/1/038,145.11,108.82,960.94,075.4 New Overpayments Detected3,593.7687.8927.31,978.6 Reestablished Debt186.410.346.8129.3 Total Available Debt11,925.21,806.93,9356,183.3 Collections (Remittances and Offsets) 1,854.1621.2629.91,016 Waivers41362.2198.7152.1 Terminated/Uncollectable477.254.2160.7262.3 Total Reductions2,744.3675.4790.61,278.3 Ending Balance, 9/30/04*8,707.41,140.73,161.34,405.4 SSA Benefit Overpayments – Fiscal Year 2004 ($’s in millions) * Reflects adjusted balance

4. 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)

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

6. Legal Authorities for AWG  Debt Collection Improvement Act of 1996  Title 31, United States Code, section 3720D  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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

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

14. 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.

15. Questions