FSTL 232 (Food Stamp Program: Recipient Claim Establishment and Collection Standards)
Food Stamp Transmittal Letter No. 232
May 29, 2001
TO: Food Stamp Certification Handbook Holders
FROM: Jo Ann Davidson, Interim Director
SUBJECT: Food Stamp Program: Recipient Claim Establishment and Collection Standards
  • Claims Against Assistance Groups
  • Claims Threshold
  • Claim Referral Management
  • Initiating Collection Action
  • Claims Accounting Procedures

These rules were proposed to be effective August 1, 2001. If no revisions are made to the proposed rules prior to the finalization by JCARR, they will become effective on a permanent basis on August 1, 2001. If changes are necessary, a copy of the revised rules will be forwarded to you at that time.

This transmittal letter is dedicated to incorporating changes mandated by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The Recipient Claim Establishment and Collection Standards Regulation 7 CFR 273.18 was published on July 6, 2000 with an effective date of August 1, 2001. This rule creates new standards for establishing and collecting food stamp overpayments and reflects a major reorganization of the current claims rules. This rule conforms to President Clinton's memorandum of June 1, 1998 requiring states to write new regulations in plain and understandable language. Due to the reorganization of Chapter 8000, references to the former Food Stamp Certification Handbook (FSCH) sections (prior to the conversion to Ohio Administrative Code format) are no longer beneficial and will gradually be removed beginning with this FSTL.

Due to extensive changes to previous rules 5101:4-8-15, 5101:4-8-17, 5101:4-8-19, 5101:4-8-23, and 5101:4-8-25, all of these rules have been replaced or replaced in part. These rules were reviewed in accordance with the Ohio Revised Code Section 119.032. Each state agency is required to review its rules a minimum of once every five years. The intent of the law is to ensure that rules are clearly written and that program requirements are accurate, up-to-date, and clearly expressed. To the extent possible, unnecessary paperwork will be eliminated and local agencies will be given increased flexibility. The purpose of a rule review is to determine whether a rule should be continued without amendment, be amended, or be rescinded, taking into consideration each rule's scope and purpose. Rules reviewed include the following:

5101:4-8-15; 5101:4-8-17; 5101-4-8-19; 5101:4-8-23; and 5101:4-8-25.

Recipient Claims

Rule 5101-4-8-15 (A) defines a recipient claim as an amount owed because of benefits that are overpaid or benefits that are trafficked. Trafficking is defined in Rule 5101:4-8-17 (J) as fraudulently using, transferring, altering, acquiring or possessing food stamp benefits or presenting food stamp benefits for payment or redemption knowing the same to have been fraudulently obtained or transferred for cash or consideration other than eligible food. Paragraph (E) of Rule 5101:4-8-17 defines the amount of trafficked benefits as the value as determined by the individual's admission, adjudication, or the documentation that forms the basis for the trafficking determination.

Rule 5101:4-8-17 provides the specific steps in calculating the claim amount and the method of calculating claims related to trafficking. The Food and Nutrition Service (FNS) has clarified that when calculating a claim, county agencies are expected to only use new data that it becomes aware of due to circumstances regarding the claim. County agencies are not required to re-verify all factors pertaining to the assistance group (AG).

Language has been added to Rule 5101:4-8-15 that food stamp benefits are Federally funded and claims established from overpayments are Federal debts. The purpose of this provision is to make clear that food stamp recipient claims are included in many of the collection authorities and methods available for other Federal claims. The term "overissuance" is being replaced by the word "overpayment" to coincide with the language used in the Federal Register to maintain consistency.

Rule 5101:4-8-17(A) repeats the Federal language that counties may establish claims that exceed 12 months up to 6 years. For an agency error or inadvertent household error, if the overpayment has existed 12 months or longer, the county must go back at least 12 months. Obviously, if the overpayment is less than 12 months, the claim would be calculated for the number of months it existed.

The language in 5101:4-8-19 (I) that personal contact be made with an AG when an IPV is established has been removed. An AG affected by an IPV claim has ample opportunity during the hearing and demand letter process to discuss the overpayment as well as future collection action.

Individuals who are responsible for paying a claim now include an adult person connected to the AG, such as an authorized representative, who actually trafficks or otherwise causes an overpayment or trafficking.

Claim Referral Management

FNS is requiring time frames for the establishment of claims. State agencies could either use the standards established by FNS or develop their own standards and procedures subject to approval by FNS. Ohio submitted a claim referral management plan which was approved.

Rule 5101:4-8-15 (M) provides the time frames for establishing claims. The county agency must establish a claim within one month of the date the overpayment or trafficking incident was discovered. A claim referral is the identification of a potential overpayment that needs to be investigated and established as a claim. The date of discovery is defined as the date in which all needed verification related to the claim is received. The claim is considered established as of the date of the initial demand letter or written notification of the overpayment. County agencies must ensure that no less than ninety percent of all claim referrals are either established or disposed of according to this time frame.

Cost-Effectiveness Determination Policy: Claims Threshold:

A claims threshold is the overpayment dollar amount under which county agencies do not need to establish and pursue an overpayment for those AGs that are NOT participating in the Food Stamp Program. The claims threshold is being increased from $35.00 to $125.00. This policy does not apply to overpayments that are already established or overpayments discovered in a quality control review. Pursuit of claims discovered in a quality control review ensures the chance that any overpayment, regardless of size, may be subject to establishment and collection.

Acceptable methods of payment on claims

Rule 5101:4-8-19 (K) requires that allotment reduction be invoked on AGs participating in the program unless the claim is being collected at regular intervals at a higher amount than can be achieved by allotment reduction. County agencies must not use additional involuntary collection methods against individuals in AGs that are already having their benefits reduced.

Allotment reduction for IPV claims shall be the greater of $20.00 per month or 20 percent of the AG's monthly entitlement rather than the AG's actual allotment. Entitlement is what the AG would have received if the individual who received the IPV was still participating. It should be noted that the $20.00 per month allotment reduction was increased from $10.00 with the publication of this final rule of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

Rule 5101:4-8-19 (K)(3) requires county agencies to allow AGs to pay its claim using benefits from its electronic benefit transfer (EBT) account. Repayments made by EBT benefits are to be entered on CRIS-E as a coupon payment. Payment on a claim using EBT benefits is strictly voluntary for the AG as the AG is already subject to allotment reduction. County agencies must obtain a written statement from the AG authorizing the collection from its EBT account. This section also address the disposition of coupons used in the EBT conversion process. Coupons used in the conversion process must go back into inventory. Coupons used in the conversion process remain "intact" because they have never been in public circulation. Coupons issued and then submitted by the recipient for repayment of a claim will continue to be destroyed.

Rule 5101:4-8-19 (J)(5) allows AGs to repay a claim by performing public service. This form of payment must be ordered by a court and specifically be in lieu of paying any claim. If the court does not order a rate of pay, the federal minimum wage shall be used. This regulation obsoletes Policy Question/Answer (PQ/A) titled "Claims" dated 8/12/86 which addresses AGs performing public service to repay their claims. Clarification has been received from FNS that the retention rates do not apply to this form of payment.

Compromising claims

Language in Rule 5101:4-8-19(G) allows a claim or any portion of a claim to be compromised if the county agency determines that the claim will not be paid in three years due to the AG's economic circumstances. With compromising authority, county agencies can manage their outstanding receivables better by pursuing amounts that they can expect to collect.

Terminating and writing-off claims

Rule 5101:4-8-19(H) describes the criteria for terminating and writing-off claims. A terminated claim is a claim in which all collection action has stopped. A written-off claim is no longer considered a receivable subject to continued Federal, State and county agency collection and reporting requirements. Federal regulations mandate the termination of claims that are delinquent for three years or more unless the claim is being pursued through the Treasury Offset Program (TOP). The purpose of the three year time frame is to dispose of receivables that are laying idle and the likelihood of further collection action is relatively low.

An invalid claim is one of the criteria for terminating and writing off claims. An invalid claim is one in which the county agency becomes aware of factual information that negates an already established claim.

Claims that have been terminated and written-off may be reactivated if the AG provides a voluntary payment. County agencies should only reactivate an amount which is equal to the offset or voluntary payment amount rather than reactivating the full value of the outstanding claim. More information regarding reinstating a terminated and written-off claim is found in paragraph (I) of Rule 5101:4-8-19.

Claims accounting procedures

Rule 5101:4-8-23 paragraph (C) provides the required accounting procedures for claims, some of which will be manual and others will be automated. The purpose of this section is to incorporate the updated language from the Code of Federal Regulations on the information needed for Federal reporting. There is no change to the current accounting procedures.

Paragraph (D) addresses the procedures to be followed for correlating claim repayments with food stamp billings and the food stamp coupon destruction process until the food stamp coupons are totally replaced by the electronic benefit transfer process.

Collecting claims against aliens and sponsors of aliens

Paragraph (I) of Rule 5101:4-8-17 has been deleted. Claims against alien sponsors will be addressed in a future FSTL clearance.

Miscellaneous

Rule 5101:4-8-19(D) defines when a claim becomes delinquent.

Procedure 11, "Determination of an AG's Eligibility during an IPV Disqualification Period", Procedure 13, "Calculation of Claims: Month of Overpayment Involves Work Program Activity", and Example 3, "Incentives Due County/Monies Due State" have been revised to reflect the updated claims language.

Appendix 21, "Report of Claim Determination/Lost Benefits", ODJFS 7424; Appendix 21-A, "Instructions for Completing ODJFS 7424 Report of Claim Determination/Lost Benefits"; Appendix 21-B, "Summary Sheet Claim Determination/Lost Benefits" Model; Appendix 42, "Food Stamp Overpayment Report" Model; and Appendix 61, "Compromise Agreement" Model have all been revised to reflect the updated claims language and to add references to claims related to trafficking.

Appendix 80, "Treasury Offset Program Referral Cancellation Form" has been obsoleted and replaced by a revised ODJFS 7430 developed by the Fraud Control Section.

Since the majority of client notices have been transferred to the State Hearings Manual (ODHS 7240), Appendix 23 "Food Stamp Repayment Agreements" ODHS 7442 and Appendix 87 "Important Notice About Your Food Stamp Benefits Notice of Mass Change" model are being removed from the Food Stamp Certification Handbook and the revisions will be added to the State Hearings Manual.

The Policy Question/Answer (PQ/A) titled "Claims" dated 8/12/86 which addresses AGs performing public service to repay their claims is obsolete with the implementation of this policy.

Implementation

These provisions are effective August 1, 2001 and must be implemented effective August 1, 2001.

Instructions

Remove and file as obsolete the Table of Contents page headed Chapter 6000 (continued) dated November 30, 1999, and replace with the attached corresponding page dated August 1, 2001.

Remove and file as obsolete the Outline of Contents to Chapter 8000 dated November 30, 1999, and replace with the attached page dated August 1, 2001.

Remove and file as obsolete all pages headed 5101:4-8-15 dated May 1, 1999, and replace with the attached corresponding pages headed 5101:4-8-15 dated August 1, 2001.

Remove and file as obsolete all pages headed 5101:4-8-17 dated May 1, 1999, and replace with the attached corresponding pages headed 5101:4-8-17 dated August 1, 2001.

Remove and file as obsolete all pages headed 5101:4-8-19 dated May 1, 1999, and replace with the attached corresponding pages headed 5101:4-8-19 dated August 1, 2001.

Remove and file as obsolete all pages headed 5101:4-8-23 dated May 1, 1999, and replace with the attached corresponding pages headed 5101:4-8-23 dated August 1, 2001.

Remove and file as obsolete all pages headed 5101:4-8-25 dated July 15, 1999.

Remove and file as obsolete pages 2, 3, 6, and 11 of the Index and replace with the attached corresponding pages.

Remove and file as obsolete Procedure 11, "Determination of an AG's Eligibility During an IPV Disqualification Period" dated November 30, 1999, and replace with the attached corresponding pages.

Remove and file as obsolete Procedure 13, "Calculation of Claims: Month of Overissuance Involves Work Program Activity" dated July 15, 1999, and replace with the attached corresponding pages.

Remove and file as obsolete Example 3, "Incentives Due County/Monies Due State" dated July 15, 1999, and replace with the attached corresponding pages.

Remove and file as obsolete the Appendix Index page headed Appendix 23, "Food Stamp Repayment Agreements" dated July 15, 1999, and replace with the attached corresponding page dated August 1, 2001.

Remove and file as obsolete the Appendix Index page headed Appendix 84. "Reserved" dated July 15, 1999, and replace with the attached corresponding page dated August 1, 2001.

Remove and file as obsolete Appendix 21, "Report of Claim Determination/Lost Benefits", ODHS 7424 (Revised 10/96), and replace with the attached Appendix 21 (Revised 08/01).

Remove and file as obsolete Appendix 21-A, "Instructions for Completing ODHS 7424 Report of Claim Determination/Lost Benefits" and replace with the attached Appendix 21-A.

Remove and file as obsolete Appendix 21-B, "Summary Sheet Claim Determination/Lost Benefits" (Model 10/96) and replace with the attached Appendix 21-B (Model 8/01).

Remove and file as obsolete Appendix 23, "Food Stamp Repayment Agreements" ODHS 7442 (Revised 12/90).

Remove and file as obsolete Appendix 42, "Model Food Stamp Overissuance Report" and replace with the attached Appendix 42 "Model Food Stamp Overpayment Report (County Reproduces).

Remove and file as obsolete Appendix 61, "Model Compromise Agreement (County Reproduces) and replace with the attached Appendix 61.

Remove and file as obsolete Appendix 80, "Treasury Offset Program Referral Cancellation Form", ODHS 7430 (Revised 9/98) and replace with the attached Appendix 80, (Revised 10/00).

Remove and file as obsolete Appendix 87, "Important Notice About Your Food Stamps Notice of Mass Change (Model 3/91) and file as obsolete.

Update Appendix 35, Record of Changes to Handbook, with the number and date of this transrmital.