CABINET FOR HEALTH AND FAMILY SERVICES

Department for Community Based Services

Division of Family Support

(Amendment)

 

      921 KAR 3:050. Claims and additional administrative provisions.

 

      RELATES TO: 7 C.F.R. 272.1, 272.5, 272.6, 273.16, 273.17, 273.18, 26 C.F.R. 301.6402-6

      STATUTORY AUTHORITY: KRS 194A.010(2), 194A.050(1), 7 C.F.R. 271.4, 273.18

      NECESSITY, FUNCTION, AND CONFORMITY: KRS 194A.010(2) requires the Cabinet for Health and Family Services to administer income-supplement programs that protect, develop, preserve, and maintain families and children in the Commonwealth. KRS 194A.050(1) requires the secretary to promulgate administrative regulations necessary to implement programs mandated by federal law or to qualify for the receipt of federal funds and necessary to cooperate with other state and federal agencies for the proper administration of the cabinet and its programs. 7 C.F.R. 271.4 requires each state to administer a Supplemental Nutrition Assistance Program (SNAP). 7 C.F.R. 273.18 requires the agency administering SNAP to develop a process to establish and collect claims. This administrative regulation establishes the criteria for recipient claims, collections provisions, and additional provisions used by the cabinet in the administration of SNAP.

 

      Section 1. Responsibility for a Claim. The following individuals shall be responsible for paying a recipient claim as defined in 921 KAR 3:010:

      (1) An individual who was an adult member of the household during the time period when the overissuance or trafficking occurred;

      (2) A sponsor of an alien household member if the sponsor is at fault; or

      (3) A person connected to the household, such as an authorized representative, who actually traffics or otherwise causes an overissuance or trafficking.

 

      Section 2. Claim Category. (1) As specified in 921 KAR 3:010, a recipient claim shall be classified as an:

      (a) Inadvertent household error (IHE);

      (b) Agency error (AE); or

      (c) Intentional program violation (IPV).

      (2) Until fraud is substantiated, an IPV claim shall be established as an IHE with a Suspected Intentional Program Violation (SIPV), indicator.

 

      Section 3. Acting on a Change. (1) A claim shall be established if a household:

      (a) Fails to report a change in circumstance in accordance with the timeframes specified in 921 KAR 3:035; or

      (b) Reports a change within the required timeframe, but the cabinet fails to act on the change within ten (10) days of the date the change is reported.

      (2) The first month of overissuance, as defined in 921 KAR 3:010, shall:

      (a) Be the first month that the change would have been effective had it been timely:

      1. Reported by the household; or

      2. Acted upon by the cabinet; and

      (b) Not exceed two (2) months from the month the change in circumstance occurred.

 

      Section 4. Calculating the Amount of a Recipient Claim. (1) In accordance with 7 C.F.R. 273.18(c), unless a claim is related to trafficking, the cabinet shall:

      (a) Calculate:

      1. An IHE or AE claim back to twelve (12) months prior to when the cabinet became aware of the overissuance, unless an IHE has an SIPV indicator; and

      2. An IPV claim or an IHE claim with a SIPV indicator back to the month the fraudulent act first occurred, but not more than six (6) years prior to when the cabinet became aware of the overissuance;

      (b) Determine the correct amount of SNAP benefits for each month that a household received an overissuance;

      (c) Not apply the earned income deduction to the portion of earned income that a household failed to report in a timely manner, as specified in Section 3 of this administrative regulation, if:

      1. The claim is classified as an IPV or IHE; and

      2. The IHE or IPV is the basis for the recipient claim;

      (d) Subtract the correct amount of SNAP benefits from the benefits actually received and the difference shall be the amount of the overissuance; and

      (e) Deduct any SNAP benefits that are designated to be expunged from a household’s EBT account from the amount of overissuance:

      1. When the recipient claim is initially calculated; and

      2. At each subsequent expungement until the balance of the claim is paid in full.

      (2) If a claim is related to trafficking, the cabinet shall calculate the value of the trafficked SNAP benefits as determined by:

      (a) An individual’s admission;

      (b) Adjudication; or

      (c) The documentation that forms the basis for the trafficking determination.

      (3) The amount of a claim may differ from a calculation obtained through the methods outlined in subsections (1) and (2) of this section if a different amount is ordered by:

      (a) An administrative hearing officer or agency head in accordance with: 921 KAR 3:060 or 921 KAR 3:070; or

      (b) A court.

      (4) In accordance with 7 C.F.R. 273.18(e)(2), the cabinet shall not establish a recipient claim if the claim referral is $125 or less, unless the:

      (a) Household is currently participating in SNAP; or

      (b) Recipient claim was established or discovered through a quality control review.

 

      Section 5. KCD-1. (1) A KCD-1, General Claims Notice shall serve many purposes in the administration of claims collections, including the use as:

      (a) An appointment notice;

      (b) A demand letter;

      (c) Notification of benefit reduction;

      (d) A past due notice;

      (e) A repayment agreement;

      (f) A claim adjustment notice;

      (g) A claim termination notice;

      (h) A payment receipt;

      (i) Notice of a suspended claim;

      (j) Notice of a claim being paid in full; or

      (k) Notification that a delinquent claim shall be sent to the U.S. Department of Treasury for collection.

      (2) The language on the KCD-1 shall differ according to the purpose of the notice as described in subsection (1) of this section.

 

      Section 6. Notification of a Claim. (1) A household with a suspected claim shall be mailed a KCD-1 notifying the household of an appointment to:

      (a) Discuss the potential claim;

      (b) Determine the classification of the claim, as specified in Section 2 of this administrative regulation; and

      (c) Offer the recipient an opportunity to waive the administrative disqualification hearing if the claim is suspected to be an IPV.

      (2) If a household requests to reschedule the appointment within ten (10) days of the date of the notice, the appointment shall be rescheduled.

      (3) The cabinet shall determine the classification and the amount of the recipient claim based on the information that is available to the cabinet if the household:

      (a) Fails to attend the appointment to discuss the potential claim; and

      (b) Does not contact the cabinet to reschedule the appointment.

      (4) When the cabinet determines the amount of a recipient claim, in accordance with Section 4 of this administrative regulation, collection shall be initiated and a KCD-1 shall be mailed to notify the household of the claim:

      (a) Amount;

      (b) Time period;

      (c) Reason; and

      (d) Category, as specified in Section 2 of this administrative regulation.

      (5) The household shall return the KCD-1 within ten (10) days of receipt if the household chooses to:

      (a) Initiate a repayment agreement; or

      (b) Request a hearing on the claim.

 

      Section 7. Collection Methods. (1) Benefit reduction.

      (a) A household that is participating in SNAP shall have payments on the claim made by reducing its monthly SNAP benefits through benefit reduction by the following amount:

      1. For an IPV claim, the amount reduced shall be the greater of twenty (20) dollars per month or twenty (20) percent of the household’s monthly benefits or entitlement, unless the household agrees to a higher amount; or

      2. For an IHE or AE claim, the amount reduced shall be the greater of ten (10) dollars per month or ten (10) percent of the household’s monthly benefits, unless the household agrees to a higher amount.

      (b) The cabinet shall not use additional collection methods against individuals in a household that is already having its benefits reduced unless the:

      1. Additional payment is voluntary; or

      2. Source of the payment is irregular and unexpected such as a federal or state tax refund or lottery winnings offset.

      (2) A household may pay its claim using SNAP benefits from its EBT account if the household gives the cabinet permission:

      (a) By completing and returning a KCD-1 or other written statement requesting this option; or

      (b) Through an oral request for a one (1) time reduction and the cabinet provides the household with a receipt for the transaction within ten (10) days.

      (3) If the cabinet becomes aware of expunged SNAP EBT benefits, the claim balance shall be reduced by an amount equal to the expunged benefits.

      (4) During the claim establishment and collection process, the cabinet shall:

      (a) Deduct the amount of an outstanding recipient claim from SNAP benefits that may be owed to a household; and

      (b) Send the household a KCD-1 as notification of the adjustment.

      (5) A lump sum payment on a recipient claim:

      (a) Shall be accepted by the cabinet; and

      (b) May be a full or partial payment.

      (6) If a household is not participating in SNAP, the cabinet shall:

      (a) Negotiate a repayment agreement, either orally or in writing, which includes a repayment schedule; and

      (b) Employ additional collection methods if the claim becomes delinquent through the household’s failure to submit a payment in accordance with the negotiated repayment agreement.

      (7) In accordance with 7 C.F.R. 273.18(g), the cabinet may employ other collection methods to collect a recipient claim, such as:

      (a) Referral to a public or private sector collection agency;

      (b) Lottery offsets;

      (c) Wage garnishment;

      (d) The intercept of unemployment compensation benefits;

      (e) State income tax refund intercept; or

      (f) The intercept of any eligible federal payment owed the debtor through the Treasury Offset Program (TOP).

      (8) The cabinet shall:

      (a) Refer a recipient claim that is delinquent for 180 or more days to TOP, unless the debtor is a member of a participating household that is undergoing benefit reduction to collect a recipient claim; and

      (b) Remove a recipient claim from TOP if the:

      1. FNS or U.S. Department of the Treasury instructs the cabinet to withdraw a recipient claim;

      2. Cabinet discovers that the debtor:

      a. Is a member of a SNAP household undergoing benefit reduction; or

      b. Has made an arrangement to resume payments; or

      3. Claim:

      a. Has been paid off;

      b. Was disposed of through a hearing, termination, or compromise; or

      c. Was referred to TOP in error.

 

      Section 8. Delinquent Recipient Claims. (1) In accordance with 7 C.F.R. 273.18(e)(5), a recipient claim shall be considered delinquent if:

      (a) The claim has not been paid by the due date and a satisfactory payment arrangement has not been made; or

      (b) A payment arrangement has been established and a scheduled payment has not been made by the due date.

      (2) The date of delinquency for a claim shall be the due date on the:

      (a) Initial written notification if the claim meets the criteria of subsection (1)(a) of this section; or

      (b) Missed installment payment if the claim meets the criteria of subsection (1)(b) of this section.

      (3) Pursuant to 7 C.F.R. 273.18(e)(5)(ii), the claim shall remain delinquent until:

      (a) Payment is received in full;

      (b) Benefit reduction, as described in Section 7 of this administrative regulation, is implemented; or

      (c) A satisfactory payment agreement is negotiated for a claim meeting the criteria of subsection (1)(a) of this section.

      (4) A claim shall not be considered delinquent if:

      (a) Another claim for the same household is currently being paid either through an installment agreement or benefit reduction; and

      (b) The cabinet expects to begin collection on the claim once the prior claim is settled.

      (5) If the cabinet is unable to determine delinquency status because claim collection is coordinated through the court system, a claim shall not be subject to the requirements for delinquent debts.

      (6) A claim awaiting a fair hearing decision shall not be considered delinquent.

      (7) If a hearing official determines that a claim does, in fact, exist against the household, the cabinet shall:

      (a) Renotify the household of the claim; and

      (b) Base delinquency on the due date of the subsequent notice.

      (8) If a hearing official determines that a claim does not exist, the cabinet shall:

      (a) Dispose of the recipient claim in accordance with Section 9(2) of this administrative regulation; and

      (b) Send a KCD-1 to notify the household of the terminated claim.

 

      Section 9. Compromising, Terminating, and Writing-off Claims.      (1) Except for a recipient claim that is established by a court of the appropriate jurisdiction, the cabinet may compromise a claim or a portion of a claim if:

      (a) A request for compromise is received from the household; and

      (b) In accordance with 7 C.F.R. 273.18(e)(7), the cabinet can make a reasonable determination that the household will be unable to pay off the claim within three (3) years.

      (2) In accordance with 7 C.F.R. 273.18(e)(8), a claim shall be terminated and written off if:

      (a) The claim:

      1. Is invalid, unless it is appropriate to pursue the overissuance as a different type of claim;

      2. Balance is twenty-five (25) dollars or less and the claim has been delinquent for ninety (90) days or more, unless other claims exist against the household resulting in an aggregate claim total of greater than twenty-five (25) dollars; or

      3. Has been delinquent for at least three (3) years and, in accordance with 7 C.F.R. 273.18(n), cannot be pursued through TOP;

      (b) All adult household members, as specified in Section 1(1) of this administrative regulation, die; or

      (c) The cabinet is unable to locate the household.

 

      Section 10. Restoration of Benefits. (1) Benefits shall be restored to a household if the household has lost benefits:

      (a) Due to an administrative error; or

      (b) By an administrative disqualification for an IPV that is subsequently reversed.

      (2) Benefits shall be restored for a period of not more than twelve (12) months from the date:

      (a) The agency receives a request for restoration; or

      (b) A final order is implemented, if no request for restoration is received.

      (3) Benefits to be restored shall be calculated by determining the difference between what the household was entitled to receive and what the household actually received.

      (4) Benefits to be restored shall be used to offset any unpaid or suspended claim that the household has.

 

      Section 11. Disclosure of Information. The disclosure or use of information regarding SNAP participants shall be restricted to an individual who meets the criteria specified in 7 C.F.R. 272.1(c).

 

      Section 12. Retention of Records. (1) In accordance with 7 C.F.R. 272.1(f), the cabinet shall retain program records:

      (a) In an orderly fashion, for audit and review purposes; and

      (b) Except for records specified in subsection (2) of this section, for a period of three (3) years from the:

      1. Month of origin of each record; or

      2. Date of fiscal or administrative closure for fiscal records and accountable documents, such as claims.

      (2) The cabinet shall retain records on IPV disqualifications and work violations indefinitely.

 

      Section 13.Civil Rights Compliance. In accordance with 7 C.F.R. 272.6, the cabinet shall not discriminate in any aspect of program administration on the basis of age, race, color, sex, disability, religion, political beliefs, or national origin.

 

      Section 14.Incorporation by Reference. (1) "KCD-1, General Claims Notice", 9/14[edition 3/13], is incorporated by reference.

      (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department for Community-Based Services, 275 East Main Street, Frankfort, Kentucky 40621, Monday through Friday, 8 a.m. to 4:30 p.m.

 

 

TERESA C. JAMES, LCSW, Commissioner

AUDREY TAYSE HAYNES, Secretary

      APPROVED BY AGENCY: May 7, 2014

      FILED WITH LRC: May 8, 2014 at 2 p.m.

      PUBLIC HEARING AND PUBLIC COMMENT PERIOD: A public hearing on this administrative regulation shall, if requested, be held on June 23, 2014, at 9:00 a.m. in the Health Services Auditorium, Health Services Building, First Floor, 275 East Main Street, Frankfort, Kentucky. Individuals interested in attending this hearing shall notify this agency in writing by June 14, 2014, five (5) workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be canceled. The hearing is open to the public. Any person who attends will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to attend the public hearing, you may submit written comments on the proposed administrative regulation. You may submit written comments regarding this proposed administrative regulation until June 30, 2014. Send written notification of intent to attend the public hearing or written comments on the proposed administrative regulation to:

      CONTACT PERSON: Tricia Orme, Office of Legal Services, 275 East Main Street 5 W-B, Frankfort, Kentucky 40601, phone 502-564-7905, fax 502-564-7573, tricia.orme@ky.gov.

 

REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT

 

Contact Person: Elizabeth Caywood

      (1) Provide a brief summary of:

      (a) What this administrative regulation does: This administrative regulation establishes the criteria for recipient claims, collections, and additional administrative provisions used by the cabinet in the administration of the Supplemental Nutrition Assistance Program (SNAP).

      (b) The necessity of this administrative regulation: This administrative regulation is necessary to establish uniform standards for establishing and collecting SNAP claims.

      (c) How this administrative regulation conforms to the content of the authorizing statutes: This administrative regulation conforms to the authorizing statutes by establishing claims criteria for SNAP.

      (d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: This administrative regulation assists in the effective administration of the statutes by establishing the criteria for recipient claims, collections, and additional administrative provisions used by the cabinet in the administration of SNAP.

      (2) If this is an amendment to an existing administrative regulation, provide a brief summary of:

      (a) How the amendment will change this existing administrative regulation: The amendment to the administrative regulation will revise material incorporated by reference, form KCD-1, General Claims Notice, to comply with federal regulations by updating the nondiscrimination statement as required by the U.S. Department of Agriculture, Food and Nutrition Service (FNS), Office of Civil Rights. Other technical corrections were made in accordance with KRS Chapter 13A.

      (b) The necessity of the amendment to this administrative regulation: The amendment to this administrative regulation is necessary to ensure the nondiscrimination statement included on incorporated material conforms to federal requirements. FNS revised the nondiscrimination statement in 2013. If the incorporated material does not conform, the state risks corrective action up to and including federal penalties and sanctions.

      (c) How the amendment conforms to the content of the authorizing statutes: The amendment conforms to the authorizing statutes through its congruency with federal requirements.

      (d) How the amendment will assist in the effective administration of the statutes: The amendment to this administrative regulation will assist in the effective administration of the statutes by assuring compliance with federal requirements and affording public assistance recipients with adequate notice of their rights regarding nondiscrimination.

      (3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: All SNAP recipients and potential applicants are affected by this administrative regulation. Approximately 825,684 individuals in 398,545 households participated in SNAP in Kentucky during February 2014. In March 2014, there were over 47,000 SNAP applicants. In December 2013, there were 19,479 active SNAP claims comprised of 3,208 Intentional Program Violations, 11,248 Inadvertent Household Errors, and 5,023 Agency Error claims.

      (4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:

      (a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: This amendment will not require any additional actions on the part of SNAP applicants or recipients.

      (b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): The amendment to this administrative regulation will not impose a new cost or burden to the regulated entities.

      (c) As a result of compliance, what benefits will accrue to the entities identified in question (3): As a result of this amendment, regulated entities will have their rights to nondiscrimination and methods to report suspected discrimination clearly outlined, in accordance with federal requirements, within this administrative regulation’s incorporated material.

      (5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:

      (a) Initially: The amendment to this administrative regulation is technical and conforming in nature and has no initial cost to implement.

      (b) On a continuing basis: The amendment to this administrative regulation is technical and conforming in nature and has no continuing cost to implement.

      (6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: SNAP benefits are 100 percent federally funded. Administrative functions are funded at a fifty (50) percent state and fifty (50) percent federal match rate. The funding has been appropriated in the enacted budget.

      (7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment: There is no increase in fees or funding required to implement this administrative regulation amendment.

      (8) State whether or not this administrative regulation established any fees or directly or indirectly increased any fees: This administrative regulation does not establish any fees or directly or indirectly increase any fees.

      (9) TIERING: Is tiering applied? Tiering is not applied, because this administrative regulation will be applied in a like manner statewide.

 

FEDERAL MANDATE ANALYSIS COMPARISON

 

      1. Federal statute or regulation constituting the federal mandate. 7 C.F.R. 272.1, 271.4, 272.5, 272.6, 273.16, 273.17, 273.18, 26 C.F.R. 301.6402-6

      2. State compliance standards. KRS 194A.010, KRS 194A.050

      3. Minimum or uniform standards contained in the federal mandate. The provisions of the administrative regulation comply with the federal mandate.

      4. Will this administrative regulation impose stricter requirements, or additional or different responsibilities or requirements, than those required by the federal mandate? This administrative regulation does not impose stricter, additional, or different responsibilities or requirements than those required by the federal mandate.

      5. Justification for the imposition of the stricter standard, or additional or different responsibilities or requirements. Justification for the imposition of a stricter standard, or additional or different responsibilities or requirements, is not applicable.

 

FISCAL NOTE ON STATE OR LOCAL GOVERNMENT

 

      1. What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation? The Department for Community Based Services will be impacted by this administrative regulation.

      2. Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation. KRS 194A.010, KRS 194A.050, 7 C.F.R. 272.1, 271.4, 272.5, 272.6, 273.16, 273.17, 273.18, 26 C.F.R. 301.6402-6

      3. Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.

      (a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year? This administrative regulation will not generate any additional revenue in the first year.

      (b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? This administrative regulation will not generate any additional revenue in subsequent years.

      (c) How much will it cost to administer this program for the first year? The administrative regulation will not require any additional cost in the first year.

      (d) How much will it cost to administer this program for subsequent years? The administrative regulation will not require any additional costs in subsequent years.

      Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.

      Revenues (+/-):

      Expenditures (+/-):

      Other Explanation: