11.1 — Recovery of overpayments
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Summary of policy
- A payment under the Ontario Disability Support Program (ODSP) or Ontario Works provided to an ODSP recipient in excess of entitlement is an overpayment and may be recovered by deductions to ODSP income support
- If a recipient had a dependent spouse when an overpayment was incurred, an overpayment may become enforceable against the spouse
- The Director must give written notice of an overpayment decision to the recipient and, if applicable, to the dependent spouse, setting out the amount of the overpayment, the reasons for the decision and their right to appeal
- An overpayment recovery deduction must not exceed up to 10% of monthly budgetary requirements and 100% of any arrears payable to the recipient, unless the recipient agrees to a greater amount
- Failing to honour an assignment or agreement to reimburse will result in an overpayment
Sections 14, 15, 16, 17 and 18 of the ODSP Act.
Section 51(1) of the ODSP Regulation.
Application of policy
ODSP staff must ensure that a recipient receives only the amount of income support for which the recipient is eligible to receive, based on all available information.
ODSP staff must ensure that a recipient is aware of their reporting requirements. A signed Rights and Responsibilities form must be on file. If notification regarding a new or changed circumstance is provided by a recipient or identified through a file review, this information must be actioned in a timely manner to prevent the creation of, or reduce the amount of, a new overpayment.
If an amount has been provided to the recipient that exceeds the amount the recipient was eligible to receive, the excess is an overpayment. In addition, if a recipient, spouse or dependent fails to honour an Assignment or Agreement to Reimburse, the amount is an overpayment.
All overpayments are subject to recovery. Only under exceptional circumstances is an overpayment considered uncollectible.
The overpayment must be calculated accurately, and the reason(s) for the overpayment and the period of time to which it applies must be fully documented.
Overpayment collection should only take place if there is documentation to substantiate the overpayment.
For active cases, notice should be given to the recipient and spouse in the benefit unit of the amount of the overpayment, the period for which it applies, the reason for which it was incurred and their rights to appeal (see Directive 11.3 - Spouse’s Overpayment for more information).
Overpayments on active cases should be recovered by reducing monthly income support. Where arrears of income support are owed to the recipient, the Director may apply up to 100% of the arrears toward an existing overpayment.
Establishing an Overpayment
An overpayment should be established where a recipient received an amount more than the amount to which the recipient was eligible to receive. Causes of overpayments include, but are not limited to, delays in reporting changes in circumstances, non-disclosure of information, misrepresentation of facts, administrative error, and excess assets (see Directive 11.2: Overpayments due to Excess Assets for more information).
An overpayment should only be established if there is documentation to substantiate it. If upon review of an existing overpayment, ODSP staff cannot find sufficient documentation to validate the overpayment, it should be recommended for write off (for more information, please see the Write Off Process section).
Where a recipient does not use his/her income support payment for the intended purpose (e.g., shelter) an overpayment should not be established. Rather, pay direct or trusteeship may be options to investigate to ensure the recipient retains their lodgings (see Directive 10.1 - Pay Direct and Directive 10.2 - Trustees for more information). Â Overpayments can only be established where a recipient received an amount in excess of the amount the recipient was eligible to receive.
Overpayment on Benefits
A payment for a benefit provided to a recipient, spouse or dependent in a month where he/she was deemed ineligible should be established as an overpayment and may be recovered, with the following exceptions:
- where the amount of the benefit cannot be quantified; or
- where a recipient was found to be ineligible for social assistance for a month due to high earnings but was eligible the following month
Recovery of Overpayments
It is expected that Ministry staff will attempt to collect 100% of the overpayment. However, there may be circumstances that may warrant suspending recovery (please see the Temporarily Uncollectible Overpayments section) or deeming part or all of an overpayment as permanently uncollectible (e.g., the balance of an overpayment remaining after a bankruptcy settlement).
Overpayment recovery should be activated when the overpayment balance is over $2.50. Where the balance is $2.50 or less, the overpayment should be deemed temporarily uncollectible, and may be recommended for write off during the annual write off process (for more information, please see the Temporarily Uncollectible Overpayments section and the Write Off Process section).
Where ongoing recovery has reduced the overpayment to $2.50 or less, recovery should continue until the overpayment is reduced to zero.
Overpayments on Active Cases
Overpayments on active cases, including cases previously terminated and re-granted, are recovered by reducing monthly financial assistance. The system recovery rate is set at 5% of budgetary requirements. However, the prescribed rate of recovery is 10% of budgetary requirements.
Recovery of overpayments may be increased up to the prescribed rate of 10% where there is evidence of the recipient's capacity to pay. Additionally, ODSP staff should increase recovery to the prescribed rate of 10% when a new overpayment is created in the following circumstances:
- Eligibility Verification Process (EVP) review
- Complaint Assessment (preliminary or secondary review)
- The new overpayment covers three or more benefits months
- New overpayment created is $1000 or more; or
- The recipient has multiple overpayments on file that were a result of separate changes and were collectively not a result of an administrative error or have valid exceptional circumstances for late reporting
ODSP staff may use their discretion to not recover an overpayment at the prescribed rate of 10% as described above and may set a lower recovery rate when the following circumstances are present:
- Client was not informed of their reporting requirements
- The reason for the overpayment was an Administrative Error; or
- Factors beyond an individual’s control prevented reporting in a timely and/or accurate manner
In situations where the recipient provides evidence that demonstrates, to the satisfaction of the ODSP local office, that the application of the prescribed rate of overpayment recovery will result in undue hardship, ODSP staff may use their discretion to set a lower recovery rate.
Where income support arrears are owing to the recipient, the Director may apply 100% of such arrears to cover off the existing overpayment. The ODSP local office must advise the recipient that arrears owed were applied to an existing overpayment.
ODSP staff should review the amount of the arrears that will be applied to the existing overpayment with the recipient. Discretion is to be used in the application of this policy so that it does not create undue hardship. In situations where arrears are incurred as a result of circumstances outside the control of the recipient, full arrears will be paid. For example, arrears should be paid if a recipient’s rent is increased retroactively following a Landlord and Tenant Board hearing.
If the recipient receives a personal needs allowance, and this amount is the recipient's only income, then the Director may consider the amount as temporarily uncollectable (for more information, please see the Temporarily Uncollectible Overpayments section).
If the recipient receives a personal needs allowance and the recipient has chargeable income against their income support, overpayment recovery may take place as long as the recipient's monthly income from all sources does not fall below the amount of the personal needs allowance. Where recovery would result in the recipient’s monthly income falling below the amount of the personal needs allowance, then the Administrator may consider the amount as temporarily uncollectable (for more information, please see th. Temporarily Uncollectible Overpayments section).
In cases where the Special Boarder Allowance (SBA) is a component of the income support and an overpayment exists, overpayment recovery may continue as long as the recipient's monthly income from all sources does not fall below the SBA amount.
If a Support Deduction Notice (SDN) issued by the Family Responsibility Office (FRO) is received for a recipient and an overpayment is being recovered, the SDN has priority over the overpayment recovery. The combined total amount that may be deducted to recover an overpayment and to honour a SDN cannot exceed 10% of budgetary requirements unless the recipient agrees in writing to the remittance of a greater amount (see Directive 5.16 - Income Support Protected from Seizure or Garnishment for more information). This means that the rate of recovery may need to be reduced or overpayment recovery may need to be suspended while the SDN is in effect (for more information, please see the Temporarily Uncollectible Overpayments section).
Overpayments Incurred under Ontario Works
An overpayment incurred under the Ontario Works Act, 1997, is recoverable under ODSP. It is important that overpayments are properly validated when a recipient moves from Ontario Works to ODSP. If the information that is necessary to validate an overpayment is not on the ODSP file, an effort should be made by ODSP staff to locate that information from the recipient’s Ontario Works local office. If the information necessary to validate all or part of an overpayment is not available, the portion of the overpayment that cannot be validated is uncollectible and should be recommended for write-off.
If there is an ongoing Ontario Works appeal respecting an overpayment when a recipient moves to ODSP, the Ontario Works overpayment should not be transferred to (ODSP for recovery until the appeal is resolved. Ontario Works staff are responsible for this appeal. If the Social Benefits Tribunal (SBT) affirms the overpayment decision, the overpayment should be transferred to ODSP for recovery.
If an Ontario Works overpayment decision is appealed after the ODSP grant date,ODSP staff are responsible for this appeal. It may be necessary to work with their counterparts at the Ontario Works office where the overpayment was originally created. An appeal on an overpayment or portion of an overpayment that cannot be validated should not be defended.
Overpayments on Inactive Cases
All overpayments for persons no longer receiving assistance are subject to recovery.
When a case is terminated with an outstanding overpayment, ODSP staff should review the file to ensure that the amount of the overpayment is correct and make a recommendation regarding the status and collection of the overpayment. The overpayment will either be transferred to the Social Assistance Central Services Branch - Financial Services Unit (FSU) for recovery or recommended for write-off.
The FSU provides debt collection services for social assistance. The FSU may collect debt through negotiated voluntary repayment plans or by utilizing the to collect outstanding overpayments on inactive cases.
The Canada Revenue Agency (CRA) Refund Set Off (RSO) Program
The CRA RSO Program intercepts personal income tax refunds on behalf of the province and applies them against outstanding debts that the province has been unable to collect.
Note: The following overpayments are ineligible for referral to the CRA RSO Program and may be recommended for write off where the case is inactive (for more information, please see the Write Off Process section):
- Overpayments incurred under the General Welfare Assistance (GWA) Act:
- as these overpayments are not debt due to the Crown, they should not be referred to the CRA RSO Program under any circumstances (including overpayments incurred under the GWA Act by persons who were subsequently granted Ontario Works or ODSP, and may be recommended for write off; or
- Any overpayment under the Family Benefits Act (FBA) where the person has never been in receipt of Ontario Works or ODSP and did not have the right to appeal the overpayment decision:
- these overpayment are only collectible if the person returns to social assistance and receives notice of the right to appeal
- The former recipient is undergoing bankruptcy
- The former recipient has a net income below the low income threshold established by the CRA
- Collecting the overpayment would cause undue hardship
- The former recipient has returned to social assistance
- the overpayment balance on an active case is $2.50 or less and the overpayment has not yet been recommended for write off (for more information, please see the Recovery of Overpayments section)
- recovery of the overpayment would result in undue hardship (for more information, please see the Overpayments on Active Cases section)
- the recipient’s only income is the personal needs allowance, or where recovery would result in the recipient’s monthly income from all sources to fall below the amount of the personal needs allowance (for more information, please see the Overpayments on Active Cases section)
- income support is being deducted and applied to a SDN and the amount deducted for the SDN exceeds 10% of the recipient’s budgetary requirements (for more information, please see the Overpayments on Active Cases section)
- the overpayment is pending the outcome of bankruptcy proceedings, unless the court has granted permission for recovery to continue (for more information, please see the Bankruptcy section)
- the case is under criminal investigation/court proceedings for fraud and protocol with local authority requires that overpayment recovery be suspended until the outcome of the investigation/court proceedings is known (for more information, please see the Cases of Alleged Fraud section)
- the overpayment is pending the outcome of a Consumer Proposal (for more information, please see the Negotiated Settlements to Defer Collection Activity on Inactive Cases section)
- the overpayment is under internal review; or
- the overpayment is under appeal and the SBT has ordered Interim Assistance to be paid to the recipient
Ontario Works overpayments that are not considered Crown debt are not eligible for the RSO program. As these overpayments are not Crown debt, they should not be recommended for write-off.
Overpayment accounts will be recalled from the RSO program if:
If an overpayment account is recalled and appears to be uncollectible based on the information on file, ministry staff will determine whether the overpayment should be considered temporarily uncollectible or recommended for write-off.
When a former social assistance recipient returns to ODSP, the local office should review the file to determine whether there are any outstanding overpayments that are subject to recovery, including past SBT decisions and previously written off overpayments (for more information, please see the Write Off Process section).
The local office must advise the recipient that the outstanding overpayment is being recovered.
If a case with an outstanding overpayment is being granted income support retroactively, recovery of the overpayment must be applied to the retroactive payment.
Temporarily Uncollectible Overpayments
Under certain circumstances, overpayment recovery may be suspended and the overpayment deemed temporarily uncollectible for a period of time. Examples of valid reasons for suspending overpayment recovery include situations where:
Caseworkers should set a reasonable review date (e.g., one month, three months, etc.) for these overpayments on a case by case basis according to the circumstances. At the review, a decision should be made on the appropriate status for the overpayment (e.g., begin collection, maintain as temporarily uncollectible, recommend for write off per the write off criteria in this directive, etc.).
Bankruptcy / Consumer Proposal
Current and former recipients who have outstanding overpayments may file for bankruptcy or a consumer proposal and staff should ask for the documents verifying the filing.
On receipt of a notice of bankruptcy or a consumer proposal, overpayment recovery should be stopped.
Both a bankruptcy and a consumer proposal may require ODSP staff to complete a “Proof of Claim” form and provide information about the overpayment debt.
Forms, cover letter template as well as instructions and guidance on completing the documentation can be obtained from the Social Assistance Extranet.
The Proof of Claim should include the overpayment amount as of the end of the month in which the bankruptcy/consumer proposal is filed.
Overpayments incurred for months after the date of bankruptcy/consumer proposal are not part of the bankruptcy/consumer proposal process.
Staff will receive a notice of discharge at the end of the bankruptcy process and any dividend is accepted as full settlement of the overpayment incurred by the bankrupt person up to the date that the person filed for bankruptcy. The balance of the overpayment is permanently uncollectible and recommended for write-off.
A consumer proposal is legally binding on creditors and may result in a reduction of the overpayment and may result in a repayment schedule over a longer period of time. Once any revised overpayment amount is paid in full, the balance of the overpayment is to be made permanently uncollectible and recommended for write-off.
Both the bankruptcy process and a consumer proposal may be unsuccessful or annulled and in these cases the overpayment is not discharged and remains.
An overpayment debt will survive a bankruptcy/consumer proposal and remain recoverable in cases where there is a criminal or civil court decision that the overpayment was incurred by fraud. For example, where there is a fraud conviction.
Cases of Alleged Fraud
Eligibility investigations on active or inactive cases, which result in an overpayment, may or may not be pursued for fraud.
Where an overpayment has been established and the case will not be referred to police for fraud investigation, the recipient/former recipient should be advised of the reason for the overpayment amount, and appropriate collection efforts should begin.
Where a case has been referred for police investigation/court proceedings for fraud, the collection of the overpayment can proceed in accordance with regular recovery procedures. However, if there is an agreement with local authorities for overpayment collection to be suspended until the outcome of the investigation/court proceedings is known, overpayment recovery should be suspended (for more information, please see the Temporarily Uncollectible Overpayments section
For cases that proceed, it is important that a request for restitution be made to the court and the Crown Attorney, at the appropriate time.
If a recipient/former recipient is acquitted without a finding by the court on the merits of the case, the overpayment should be considered collectible and recovered in accordance with regular recovery procedures.
In cases where the recipient/former recipient is acquitted and the finding of the court is that fraud has not been proven, there must be a careful review of the circumstances. An overpayment may still be recovered notwithstanding the acquittal on a fraud charge if the recipient/former recipient received assistance in excess of which he/she was eligible to receive.
In cases where a recipient/former recipient is convicted of fraud, if the overpayment amount originally calculated is more than the amount confirmed by the findings of fact by the court, the difference should be recommended for write off.
If negotiations have occurred between the accused (either personally or through his/her defence counsel) and the Crown Attorney, they must be taken into account to determine whether or not, and how much overpayment should be recovered. If the Crown Attorney agreed not to pursue recovery in exchange for a guilty plea, or at the time of sentencing indicated no recovery would be pursued, it would not be appropriate to proceed with an overpayment recovery. In this case, the balance of the overpayment should be recommended for write off (for more information, please see the Write Off Process section).
In cases where there has been a fraud conviction, the Court may order restitution for all or part of the overpayment in question. However, in cases where no restitution is ordered, there can still be a collectible overpayment.
The Social Assistance Program Manager or designate should take appropriate steps to ensure that restitution orders are collected in accordance with the instructions referred to in the restitution order.
Under current policy, interest is not charged on a court-ordered restitution order related to a social assistance case.
Where restitution is ordered and is part of a Probation Order, it is the responsibility of ODSP staff to monitor the payments against these orders and to contact the probation officer in cases of default.
Restitution Orders may be forwarded to the Ministry of Children Community and Social Services (MCCSS) Legal Services for further enforcement, primarily filing a writ of seizure and sale with the Sheriff's office in the district where the debtor resides. These Orders will continue to be filed and maintained by the Ministry’s Legal Services Branch.
An overpayment that is subject to a restitution order can be referred to the FSU for submission to the CRA RSO if it specifies that it is payable to a particular Ministry (as it is considered a Crown debt) and payments are not being made on the order.
An overpayment that is subject to a restitution order should be tracked separately from other overpayments that may be on file for the recipient. This is to ensure that there is accurate tracking of what has been paid on the restitution order through the CRA RSO. Any recovery will be first applied to reduce the amount owing under the restitution order.
There may be situations where a non-recipient is charged and convicted of fraudulently receiving social assistance (e.g., cashing cheques of a recipient who is deceased) and has been ordered by the court to repay this amount through a restitution order. Given that the convicted person has never been a recipient of social assistance an overpayment cannot be established. However, it is important that monies owing are recovered and ODSP staff should establish an internal procedure for tracking payments and monitoring files of this nature. A ledger recording receipt of payments should also be kept.
With regard to the processing of the payments received under the restitution order, the same procedure that is followed for restitution payments from recipients should be applied in these circumstances.
Overpayments may, at times, result from administrative errors such as miscalculations, a delay or failure to act on information.
When a recipient provides information that would reduce the amount of income support, every effort must be made to promptly act to reduce the amount of income support in order to prevent an overpayment. If the information is not processed and the recipient receives an amount he/she knows to be incorrect, the onus is on the recipient to notify ODSP staff of this error. These overpayments are recoverable. The overpayment should be properly documented on the file and action taken to avoid recurrence of the problem.
In extenuating circumstances, an overpayment resulting from an administrative error may be recommended for write off (see below for more information on the write off process). For example, if change(s) to a recipient's income support are not made even after notification of an error in distribution of income support and the recipient has done everything possible to notify ODSP staff (i.e., there is documented evidence that the recipient had advised staff of the error), an overpayment may not be recovered.
Negotiated Settlements to Defer Collection Activity on Inactive Cases
If all reasonable efforts have been made to collect an overpayment in full, and the former recipient indicates a willingness to enter into a repayment plan for the total or partial repayment of the outstanding overpayment, the Financial Services Unit (FSU) may negotiate a reasonable settlement, subject to approval by the Senior Manager, FSU.
As part of any repayment plan, the FSU should include a specific term whereby the individual consents to the plan being reviewed in the future and consents to the overpayment being collectible should, in the opinion of the FSU, the individual’s financial circumstances improve. Letters outlining the proposed settlement, and details and acceptance of the terms are to be kept on file.
The Write Off Process
Uncollectible overpayment debts that are owed to the Crown are to be recommended for write-off on an annual basis each fiscal year for accounting purposes. The write-off process does not mean that an overpayment is forgiven, and there are situations where an overpayment may be reactivated after write-off.
If the collection of an account receivable (including a social assistance overpayment) is no longer cost effective in relation to the amount expected to be recovered, the account is deemed to be uncollectible. Pursuant to section 5 of the Financial Administration Act, the Lieutenant Governor in Council may remove uncollectible debts from its accounts. Such losses are reported in the Public Accounts for that year. However, each ministry maintains records of all debts written off as the write-off process does not extinguish the person's continuing legal obligation to repay his/her debt to the Crown.
The Ministry must obtain Order-in-Council approval in order to write-off an overpayment. This process is coordinated by the Social Assistance and Municipal Operations Branch and covers all the overpayments recommended for write-off within the designated period
ODSP staff must ensure that appropriate action has been taken prior to recommending a debt for write-off, including that voluntary recovery efforts have been made.
There are two categories of overpayments that may be recommended for write off:
- Uncollectible Overpayments
- Overpayments Where Collection Efforts Have Not Resulted in Recovery (Inactive Cases Only)
1. Uncollectible Overpayments
Overpayments that are uncollectible may be recommended for write off annually where:
- the former recipient has been deported
- there is insufficient documentation to substantiate the overpayment (for more information, please see the Establishing an Overpayment section)
- the overpayment balance is $2.50 or less (for more information, please see the Recovery of Overpayments section)
- the former recipient is deceased and there is no estate, and where applicable, the overpayment debt has been with the Canada Revenue Agency Refund Set Off (CRA RSO) Program for two full taxation years (for more information, please see The Canada Revenue Agency Refund Set Off Program section)
- the overpayment on an inactive case is not eligible for the CRA RSO Program, and local collection efforts have not produced results (i.e., overpayments incurred under the General Welfare Act, and overpayments incurred under the Family Benefits Act where the person has never been in receipt of Ontario Works or ODSP and has not received notice of the right to appeal; for more information, please see The Canada Revenue Agency Refund Set Off Program section)
- the recipient/former recipient has had his/her overpayment debt discharged in a bankruptcy proceeding -
- the dividend paid, if any, after the notice of discharge is received should be accepted as full settlement of the overpayment and the balance of the overpayment should be recommended for write off (except where there is a criminal or court decision that the overpayment was a result of fraud or misrepresentation; for more information, please see the Bankruptcy section)
- there has been a court decision of fraud or misrepresentation -
- if the overpayment amount originally calculated is greater than the amount confirmed by the findings of the court, the difference, or the amount the Crown Attorney agreed not to pursue, should be recommended for write off (for more information, please see the Criminal Convictions section)
- the overpayment was established due to an administrative error, and there is an extenuating circumstance (i.e., there is evidence that the recipient had advised staff of the error, for more information, please see the Administrative Errors section)
- the Financial Services Unit has negotiated a reasonable settlement -
- the balance of the overpayment should be recommended for write off (for more information, please see the Negotiated Settlements to Defer Collection Activity on Inactive Cases section)
- the SBT made a decision, ordering that an overpayment not be recovered (for more information, please see the Jurisdiction of the Social Benefits Tribunal section).
2. Overpayments Where Collection Efforts Have Not Resulted in Recovery (Inactive Cases Only)
Overpayments in inactive cases, for which the CRA RSO has not produced results, should be recommended for write-off based on age (date of termination of the case or last voluntary payment), the amount outstanding and collection efforts as outlined in the table below:
Age of Overpayment
|Amount||< 120 days||120 days to|
< 3 years
|3 years to|
< 5 years
Note: Debts greater than $25,000 must be resubmitted to the CRA RSO after 5 years before being recommended for write off.
Reactivation of Recovery of Previously Written Off Overpayments
In cases where an overpayment was previously written off and ODSP staff determine that opportunities to recover amounts owed have improved, then ODSP staff should initiate efforts to collect the written off overpayment except in the following cases:
- there is insufficient documentation to substantiate the overpayment (for more information, please see the Establishing an Overpayment section)
- the overpayment was written off because the balance was $2.50 or less (for more information, please see the Recovery of Overpayments section)
- the former recipient is deceased and there is no estate
- the overpayment was discharged in a bankruptcy proceeding (for more information, please see the Bankruptcy section)
- the overpayment amount was written off as a result of court proceedings (i.e., based on findings of fact by the court or negotiations by the Crown Attorney; for more information, please see the Criminal Convictions section)
- the overpayment was incurred due to an administrative error and was written off due to an extenuating circumstance (for more information, please see the Administrative Errors section)
- the SBT orders that the overpayment not be collected and the decision is final
Rights of Appeal
Decisions regarding the correctness of an overpayment assessment can be appealed to the SBT. Appropriate information on the right to request an internal review and the right to appeal must be given.
Jurisdiction of the SBT
The SBT has jurisdiction with respect to a decision of the Director affecting eligibility for, or the amount of, income support. The SBT has the same discretion as the Director with respect to the recovery of overpayments, and as such may order that a recipient’s income support should not be reduced to recover an overpayment.
A decision by the SBT that an overpayment should be permanently uncollectible means that overpayment recovery should cease if the individual is currently receiving social assistance, and that their overpayment remains uncollectible if the individual leaves social assistance. Overpayments that are ordered permanently uncollectible by the SBT should be recommended for write-off.
Interim Assistance Overpayments - Person Not Disabled after Medical Review
Where there is a final SBT decision affirming the Director’s decision that a recipient is no longer a person with a disability, the recovery of the interim assistance is limited to the difference between the interim assistance paid and the amount that the recipient would have been eligible to receive under Ontario Works for the same period. The balance is permanently uncollectible and recommended for write-off.