deceased accountholders and federal government payments
TRANSCRIPT
Deceased Accountholders and Federal Government Payments
Presented by Laura Nelson, AAP NCP Auditor/Trainer
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Deceased Accountholders and Federal Government Payments
Presented by: PAR/WACHA-The Premier Payments Resource
Laura Nelson, AAP, NCP Education Specialist / Auditor
262-345-1245 www.wacha.org
[email protected] 2017
• WACHA, through its Direct Membership in NACHA, is a specially recognized and licensed provider of ACH education, publications and support. • Regional Payments Associations are directly engaged in the NACHA rulemaking process and Accredited ACH Professional (AAP) program. • NACHA owns the copyright for the NACHA Operating Rules & Guidelines. • The Accredited ACH Professional (AAP) is a service mark of NACHA. • This material is derived from collaborative work product developed by NACHA ─ The Electronic Payments Association and its member Regional Payments Associations, and is not intended to provide any warranties or legal advice, and is intended for educational purposes only. • This material is not intended to provide any warranties or legal advice, and is intended for educational purposes only. • This document could include technical inaccuracies or typographical errors and individual users are responsible for verifying any information contained herein. • No part of this material may be used without the prior written permission of WACHA/PAR © 2017 PAR/WACHA All rights reserved
Disclaimer
� Who is Bureau of the Fiscal Service? � Green Book Background � Government Returns � DNEs � Corporate Reclamations � Government Reclamations
Today’s Agenda
� The Bureau of the Fiscal Service was formed from the consolidation of the Financial Management Service (FMS) and the Bureau of the Public Debt (BPD)
Who is the Bureau of the Fiscal Service?
� What do they do? � US Government's Money Manager � Provides centralized payment, collection and
reporting services for the government � Provides cash management guidance to Federal program
agencies � Serves as governments central debt collection agency, managing
the governments delinquent debt portfolio � Collects more than $3.7 billion per year in delinquent debts
Bureau of the Fiscal Service
Comprehensive Guide for Financial Institutions processing Federal Government ACH payments and collections
� 31 CFR (Code of Federal Regulations) Part 210 provides the
basis for most information in the Green Book � Provides regulatory foundation for use of the ACH system
by agencies � Defines the rights and liabilities of agencies, federal reserve
banks, financial institutions, and the public, in connection with ACH credit and debit entries and entry data originated or received by an agency through the ACH system
What is the Green Book?
The Green Book is located at: https://www.fiscal.treasury.gov/fsreports/ref/greenBook/greenbook_home.htm You can subscribe to updates at: https://www.fms.treas.gov/fmsweb/EmailSubscribeAction.do
The entire Green Book
has been updated January
2016
• Applicable Rules – 2016 NACHA Operating Rules – 31 CFR Part 210 (updated June 2014)
http://www.ecfr.gov/cgi-bin/ECFR?page=browse&mc=true&SID=74eac127a745e81dc853ce6a8e8c1cc1
A total of 8 exceptions … some examples
– Reclamation process within the Rules – Timing of Origination – No Audit requirement – Not subject to Rule violation and penalties
Exceptions to NACHA Rules
� An enrollment has been terminated and new enrollment has not been completed
� The FI as actual or constructive knowledge of death or legal incapacity of recipient or rep payee
� The FI is honoring a DNE � The account has been closed by the recipient or the
FI has closed account after 30 day notice � There is no current account for the recipient � Any other reason the FI is unable to credit the
payment to the account
ACH Payments Must be Returned if:
� These are the most common return reason codes received by the government agencies: � RO2 Account Closed � RO3 No Account/Unable to locate account � R04 Invalid Account Number � R06 Per ODFI’s request � R14 Representative Payee Deceased or Unable to Continue in that Capacity
� R15 Beneficiary or Account Holder (other than Rep Payee) Deceased
� R16 Account Frozen � R17 File Record Edit Criteria (Specify)
Returns
� Automatically revokes the Direct Deposit authorization and may stop further payments
� Return should be by ACH � Return partial payments by check
If You Return a Payment…..
� "Constructive knowledge" of the death means that the RDFI would have learned of the death if it had followed commercially reasonable business practices.
� A RDFI has “actual knowledge” of the death or legal incapacity of a recipient or the death of a beneficiary when it receives information, through whatever means, that the recipient has died and has had a reasonable opportunity to act on such information.
Knowledge of Death
� DNE (Death Notification Entry) � Notice of Reclamation � Contact from or Reference to an Estate… � Reference from Probate Court, Funeral
Director or Letters of Testamentary � Oral or Written report of death � Personal awareness by staff � Obtained by inquiry by RDFI
Actual/Constructive Knowledge of Death
� Death Notification Entry � allows Federal agencies to notify financial
institutions of a benefit recipient’s death � It is a zero dollar entry with an addenda record � The addenda record contains the date of death,
the deceased individual’s SS#, amount of next payment
� Constitutes official notice of death
What is a DNE?
DATE OF DEATH*012813*CUSTOMER SSN*012345678*750.50
� Should be included in your exception reports � Looks like a prenote with an addenda
Where do I find DNEs?
� Flag that Account!!! � Check all accounts to see if any benefit
payments from any Government Agency have been received after the date of death
� Return any Subsequent Payments Immediately � Limit FI’s liability
� Response to DNEs have eliminated most reclamations
You Received a DNE or Knowledge of Death…Now What?
• When an RDFI receives knowledge of death, it does not have to await a Notice of Reclamation, it should immediately return any already posted benefit payments.
• RDFI must immediately return all subsequent (i.e., subsequent to receiving notice of death) post-death benefit payments to the Government Disbursing Office
• The RDFI also must notify the sending agency of the recipient's death, which it may do by using "death" as the return reason code on the returned payment
What’s Next?
R15 Beneficiary Deceased � The beneficiary is the person entitled to the benefits.
In this case, there is no representative payee or guardian involved, or they are still alive
R14 Representative Payee (or Guardian) Deceased or Incapacitated
� The representative payee (or guardian) is the person who receives benefit payments on behalf of the (under aged or incapacitated) beneficiary. E.g., payment is payable to "John Doe, for [another person]". In any event, the beneficiary is not deceased
Return Codes
� 20% of payments returned after receipt of a DNE are INCORRECT! � Mostly joint account problems – � flag is at the account level, not individual
� 3-6 months to get these corrected � Doing these wrong INCREASES your liability (you
made the error)
DNE Problems
� An RDFI is not liable for any benefit payment dated (whose effective date is) the same as the date of death
� Beneficiary (recipient) MUST be alive on payment date to keep the funds
� FI is not to determine “entitlement”
Date of Death
Let’s test your knowledge – Date of Death is May 1
To Return or Not to Return? 1. SSA Payment posted May 1 2. SSA Payment posted April
30 3. SSI Payment posted May 2
� If a survivor request the FI not to return the payment, because of “entitlement”, the RDFI should still return the payment and advise the survivor to contact the appropriate agency
Survivor Request not to Return
� DO NOT hold payments in suspense accounts if conditions apply on when to return a payment
Holding Payments
• Reclamation � Request by company or government for return of credit entry upon the death of recipient
What is a Reclamation?
� Collect for Pension, Annuity or Benefit Payments after death
� RDFI Liability � Amount of payments reclaimed OR amount in the account when a written demand for payment is received
Corporate Reclamations
� Corporate Reclamations � Prenotification is not required � Originator must submit within 5 days of notice of
death � The word “RECLAIM” is in Company Entry
Description field
Corporate Reclamations
� If there is $800 in the account and you receive a $600 reclamation, what is FI liability?
� What will you do?
� If there is $0 in the account and the reclamation is for $800, what is FI liability?
� What will you do?
Corporate Reclamations
� If there is $800 in the account and the reclamation is for $1000, what is FI liability?
� What will you do? � How will the corporation get their money?
Corporate Reclamations
� A procedure used by the Federal government to recover benefit payments
� Specific payments subject to Reclamation (page 5-4)
� Must be sent within 120 days after the agency learns of death
� An RDFI is not liable for any post-death payments made more than six years prior to the date of the notice of reclamation
Government Reclamation
� Social Security benefit or disability (SSA)
� Supplemental Security Income (SSI)
� Black Lung disability (Dept. of Labor)
� Military and Coast Guard retirement, including allotments from military retired pay (DFAS)
� Civil Service annuity (OPM)
� Veterans benefits (VA)
Payments Subject to Reclamation • Railroad retirement annuity (RRB)
• Central Intelligence Agency annuity (CIA) • Workers' compensation (FECA) Longshore and Harbor Workers' • Compensation Act (Dept. of Labor) • Any other Federal retirement or annuity
§ Federal salary, allotments, and travel
payments
§ U.S. savings bond payments
§ Vendor/miscellaneous
payments
§ IRS tax refunds
Payments Not Subject to Reclamation § Discretionary allotments § Public Debt payments (TreasuryDirect) § Other types of federal ACH payments § Stimulus Payments
� Full Liability � A RDFI is liable for ALL benefit payments received after
the death or legal incapacity of a recipient or death of a beneficiary
� A RDFI has no right to limit its liability with respect to post-death benefit payments received after it knows of the death and has had a reasonable opportunity (one business day) to act on that knowledge � (More on Limiting Liability later in presentation)
� The RDFI must immediately notify the paying agency if the RDFI learns of the death from a source other than notice from that agency
� RDFI must immediately return any post death benefit received after learning of the death, regardless of how the death was discovered
Reclamations: Liability of RDFI
Fiscal Service 133 Form (Front)
Fiscal Service 133 Form (Back)
� Notify the account owner(s) of any action you have taken, or plan to take, against the account
� If the outstanding total was previously repaid to the Government then: • RDFI should return Notice of Reclamation • Attach proof of the repayment • Respond within 60 days of the date on the Notice
Response to Notice of Reclamation
� If the account balance is equal to or greater than the outstanding total then: � RDFI must return full amount listed on the Notice of
Reclamation � If return is done within 45 days of notice date, no response is needed.
� If return is done after 45 days of notice date then: � Complete and sign Certificate #1 � If the RDFI had no knowledge of death, sign Certificate #2
on the back of the Disbursing Office Copy � Return within 60 days, original signatures required
Response to Reclamation
Fiscal Service 133 Form (Back)
ü Certification #1 – Certifies that Notice to Account Owners was sent ü Include date sent
ü Certification #2 – Certifies the dates that the FI received the Notice of Reclamation and when FI learned of the date of death
� If the account balance is less than the outstanding total then: � Return an amount equal to the account balance
(by check) � If you had prior knowledge of death, Complete
and sign Certificate #1 � If you had no knowledge of death, sign Certificate
#2 � Provide a statement to the Government with the
name(s), current address, dates and amounts of who withdrew funds after death
Response to Reclamation
You receive a Notice of Reclamation on Mar 31 containing the following information: Customer name: Mary Smith SSN: 123345690A Date of Death: 12-31 Account number: C65738495 Payment information: Jan 2 ($795.00), Feb 3 ($795.00), Mar 3 (795.00) Total Amount of Reclamation: $2,385.00 Reclamation Ticket Number: 123456789 You have not received a DNE from SSA, but the family did make you aware of Ms. Smith’s passing on Feb 1 at which time you put a hold on the account to protect the account balance. As of Mar 31 the account balance is $2,038.76 How much should you return to Fiscal Service?
Test Your Knowledge
� No response to reclamation is received within 30 days,
� Or if your response � was incomplete � was rejected
Follow-Up Notice TFS 2942 Will be Sent If:
� RDFIs failure to respond by due date � Government Disbursing Office will debit the RDFI’s Federal Reserve or correspondent account for the full amount of its outstanding liability via the Fiscal Service-135 Form
� THE DEBIT ACTION IS FINAL
Failure to Respond – RESULTS in…
� The RDFI is authorized by the government to terminate the reclamation if it obtains satisfactory proof that the recipient or beneficiary is alive � Acceptable types of proof for verifying that the person
did not die: � Driver's license or other evidence similar to that required for
cashing a check � A signed, dated, and notarized statement attesting to the
fact that the recipient or beneficiary is alive if, he/she is unable to appear at the RDFI
� A written statement from the authorizing Federal agency verifying that the recipient or beneficiary is alive
� The RDFI must still return the Notice of Reclamation on time
Errors in Death - If the Person did not Die
� If day of month is wrong � FI provide copy of death certificate � Respond to reclamation timely
� If month or year is wrong � Enter correct date on the back of the Disbursing
Office copy � Sign Certificate 1 and/or 2 according to charts on
page 5-24 and 5-25 of Green Book � Return appropriate amount timely
Errors in Death – The Date of Death is Wrong
� Contact the Federal Gov’t Agency � Notify the recipient � Watch for incorrect DNEs due to the error � Initiate a new enrollment to reactivate the ACH
payments
Payments Returned in Error
� A RDFI may qualify to limit its liability if it: � Had no actual or constructive knowledge at
the time of the deposit of any post-death benefit payments
� Returns all post-death benefit payments (Federal Govt. payments subject to reclamation) it receives after it learns of the death
� Responds to the Notice of Reclamation so that it is received by the Government Disbursing Office within 60 days of the date on the reclamation
Limiting Liability
� If RDFI qualifies: � the amount for which a RDFI can be debited is the
amount of the account balance at the time the RDFI first receives notice of death (which could be the Notice of Reclamation) plus the 45 day amount � 45-day amount is the dollar amount of the post-
death benefit payments received within 45 calendar days following the death
Calculating the Limited Liability Amount
� 4 payments of $200 were received after the date of death
� The first payment was received within 45 days after the date of death � (i.e 45 days amount= $200)
� FI had no constructive knowledge of death when the payments were received or withdrawn
� No additional payments were received after the FI had knowledge of the death
Example of 45 Day Amount
� 3 payments of $800 were received after the date of death
� 2 payments were made within 45 days � 45 day amount is $1600
� Account balance is $350 � Total amount of the reclamation is $2400 � FI’s liability is $1950
� $350 sent back in response to reclamation � $1600 debit to FI’s Fed account
Limited Liability Example 1
� 2 payments of $750 received after the date of death
� 1 payment was made within 45 days � 45 day amount is $750
� Account balance is $200 � Total amount of the reclamation is $1500 � FI’s liability is $950
� $200 sent back in response to reclamation � $750 debit to FI’s Fed account
Limited Liability Example 2
Ex. 1 Ex. 2 Ex. 3 Ex. 4 Ex. 5 Total Amount of post-death payments on the Notice of Reclamation $ 800 $ 800 $ 800 $ 800 $
800 Amount of the Account Balance paid by RDFI in response to the Notice of Reclamation $ 300 $ 300 $ 750 $ 0 $
800 Amount due from withdrawers $ 500 $ 500 $ 50 $ 800 $ 0 Amount collected by government from withdrawers $ 250 $ 500 $ 0 $ 0 $ 0 Outstanding total $ 250 $ 0 $ 50 $ 800 $ 0 Amount to be debited from the RDFI’s Federal Reserve account = (lesser of Outstanding Total or 45-day amount) $ 200 $ 0 $ 50 $ 200 $ 0
Green Book Examples
Questions?
PAR/WACHA The Premier Payments Resource
Phone: 262-345-1245
Deceased Account Holders & Federal Government Payments This session is worth 1.8 credits
AAP - Continuing Education Credits
Laura Nelson, AAP, NCP
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