[Code of Federal Regulations]
[Title 20, Volume 1]
[Revised as of April 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 20CFR255.12]

[Page 506-507]
 
                      TITLE 20--EMPLOYEES' BENEFITS
 
                  CHAPTER II--RAILROAD RETIREMENT BOARD
 
PART 255_RECOVERY OF OVERPAYMENTS--Table of Contents
 
Sec.  255.12  When recovery is contrary to the purpose of the Railroad 

Retirement Act.

    (a) The purpose of the Railroad Retirement Act is to pay retirement 
and survivor annuities and other benefits to eligible beneficiaries. It 
is contrary to the purpose of the Act for an overpayment to be recovered 
from income and resources which the individual requires to meet ordinary 
and necessary living expenses. If either income or resources, or a 
combination thereof, are sufficient to meet such expenses, recovery of 
an overpayment is not contrary to the purpose of the Act.
    (b) For purposes of this section, income includes any funds which 
may reasonably be considered available for the individual's use, 
regardless of source, including inheritance prospects. Income to the 
individual's spouse or dependents is available to the individual if the 
spouse or dependent lived with the individual at the time waiver is 
considered. Types of income include but are not limited to:
    (1) Government benefits, such as Black Lung, Social Security, 
Workers' Compensation, and Unemployment Compensation benefits;
    (2) Wages and self-employment income;
    (3) Regular incoming payments, such as rent or pensions; and
    (4) Investment income.
    (c) For purposes of this section, resources may include:
    (1) Liquid assets, such as cash on hand, the value of stocks, bonds, 
savings accounts, mutual funds and the like;
    (2) Non-liquid assets (except an individual's primary residence) at 
their fair market value; and
    (3) Accumulated, unpaid Federal benefits.
    (4) For purposes of paragraphs (c)(1) and (2) of this section, 
assets concealed or improperly transferred on and after the date of 
notification of the overpayment, other than cash expended to meet 
ordinary and necessary living expenses, shall be included.
    (d) Whether an individual has sufficient income and resources to 
meet ordinary and necessary living expenses depends not only on the 
amount of his or her income and resources, but also on whether the 
expenses are ordinary and necessary. While the level of expenses which 
is ordinary and necessary may vary among individuals, it must be held at 
a level reasonable for an individual who is living on a fixed income. 
The Board will consider the discretionary nature of an expense in 
determining whether it is reasonable. Ordinary and necessary living 
expenses include:
    (1) Fixed living expenses such as food and clothing, rent, mortgage 
payments, utilities, maintenance, insurance (e.g., life, accident, and 
health insurance), taxes, installment payments, etc.;
    (2) Medical, hospital, and other similar expenses;
    (3) Expenses for the support of others for whom the individual is 
legally responsible; and
    (4) Miscellaneous expenses (e.g., newspapers, haircuts).

[[Page 507]]

    (e) Where recovery of the full amount of an overpayment would be 
made from income and resources required to meet ordinary and necessary 
living expenses, but recovery of a lesser amount would leave income or 
resources sufficient to meet such expenses, recovery of the lesser 
amount is not contrary to the purpose of the Act.
    (f) This section may be illustrated by the following examples:

    Example (1). A remarried widow, W, is overpaid $6000 due to receipt 
of benefits on the wage records of both her late husbands. It has been 
determined that she is without fault. Her financial disclosure statement 
reveals monthly income greater than monthly expenses, and assets of 
$12,000, $10,000 of which is in cash. She claims to be saving these 
funds for future medical expenses, because she has a progressive 
disease. While it is not necessarily contrary to the purposes of the Act 
to recover the overpayment in these circumstances, the legitimate 
medical expenses associated with the disease must be considered.
    Example (2). A disability annuitant, D, is overpaid $33,000 because 
of simultaneous entitlement to workers' compensation payments. He is 
determined to be without fault. He claims he has assumed financial 
responsibility for his adult child and her children. A claimed expense 
for which the annuitant has no legal obligation to pay does not make 
recovery contrary to the purposes of the Act.