TANF-ACF-PI-1999-02 (Collecting and Reporting of Overpayments Made to Families Under the Former Aid to Families with Dependent Children (AFDC) Program)
State Agencies Administering a Temporary Assistance for Needy Families (TANF) Program Under Title IV-A of the Social Security Act and Other Interested Organizations, Agencies and Individuals.
Collecting and Reporting of Overpayments Made to Families Under the Former Aid to Families with Dependent Children (AFDC) Program
Under the former AFDC Program, an individual recipient might, on occasion, receive a monthly Maintenance Assistance payment that was greater than the amount to which they were entitled. The State IV-A agency was then obligated to recover the overpayment either by recouping it from the recipient as a reduction in the recipient’s payment in one or more future months or by collecting a cash repayment from the recipient. Federal regulations required States to continue these efforts until the full amount of the overpayment was recovered.
Although the AFDC Program was repealed and replaced with the TANF Program, a number of AFDC overpayments remain outstanding, and the requirement to pursue and recover the remaining uncollected AFDC overpayments remains in place.
For overpayments made on or before September 30, 1996:
This is a situation where a State is able to recover all or a portion of an outstanding AFDC overpayment that was made to the AFDC recipient on or before September 30, 1996. The recovery will be either by recoupment from the recipient's current TANF grant or by a cash repayment from the recipient. The Federal share of these recovered overpayments must be calculated by multiplying the amount recovered by the Federal Medical Assistance Percentage (FMAP) rate in effect for that State during fiscal year 1996.
In any quarter in which one or more of these overpayments are recovered, the Federal share must be returned to this agency with a check made payable to the U.S. Department of Health and Human Services, and sent to:
Administration for Children and Families
Office of Financial Services
c/o Director, Division of Formula,
Entitlement and Block Grants
370 L’Enfant Promenade, SW
Washington, DC 20447
For overpayments made on or after October 1, 1996:
This is a situation where a State is able to recover all or a portion of an outstanding AFDC or TANF overpayment made to the AFDC or TANF recipient on or after October 1, 1996. The recovery will be either by recoupment from the recipient's current TANF grant or by a cash repayment from the recipient. The full amount of these recovered overpayments is to be retained by the State and used for TANF Program costs.
In this circumstance, the following procedure is required:
- The amounts recovered must be credited against the grant applicable to the fiscal year of the overpayment, not the fiscal year in which the overpayment was recovered.
- The amounts recovered cannot be used to meet the State’s Maintenance of Effort (MOE) goal in the year of recovery, but must be allocated towards the State’s TANF and MOE expenditures in the year of the overpayment expenditures in the same proportion as the State’s other expenditures for that year.
- The State is not required to include the amount recovered and expended on its quarterly expenditure report (Form ACF-196) either for the year of the initial overpayment or the year of the recovery.
- The State must maintain records of all recovered overpayments, including the amounts recovered, the fiscal year and quarter of the recovery and the fiscal year of the original overpayment to which the recovered amount has been applied.
A $200 overpayment made in fiscal year 1997 was recovered in fiscal year 1999. The entire $200 is credited against the State’s fiscal year 1997 grant and is available to the State for expenditures for fiscal year 1997 and subsequent years. Assuming that in fiscal year 1997 70% of the expenditures were under TANF and 30% were for the State’s MOE, $140 of this recovery is allocated to the State’s 1997 TANF costs and $60 is allocated to the State’s 1997 MOE.
Inquiries should be directed to the appropriate ACF Regional Administrator.