New Interest Rates for Over/Under Payment Recoupments Announced

The Department of the Treasury announced updated interest rates for overpayments and underpayments this week. Essentially, on overpayment payment plans, the rate that is in effect for the quarter in which the determination was made is the effective rate for the duration of the plan. All rates are listed for your records below. From the announcement:

The interest rates on overpayments and underpayments is determined in accordance with regulations promulgated by the Secretary of the Treasury and is the higher of the private consumer rate or the current value of funds rate prevailing on the date of final determination. Interest accrues from the date of the initial request for refund and is assessed for each 30-day period, or portion thereof, that payment is delayed after the initial refund request.

Interest assessed for both late payments and installment payments is computed as simple interest using a 360-day year. Simple interest is interest that is paid on the original principle balance and after each payment interest accrues on the remaining unpaid principal balance. Interest charges will not be prorated on a daily basis for overdue payments received during the month (e.g., 10, 15, or 20 days late). Interest is assessed for the full 30-day period. The interest rate on each of the final determinations will be the rate in effect on the date the determination is made.

Period                                    Rate Interest
July 21, 2010 – October 21, 2010 11.00%
October 22, 2010 – January 23, 2011 10.75%
January 24, 2011 – April 18, 2011 11.25%
April 19, 2011 – July 17, 2011 11.00%
July 18, 2011 – October 18, 2011 11.50%
October 19, 2011 – October 19, 2011 10.78%
October 20, 2011 – January 18, 2012 10.875%
January 19, 2012 – April 17, 2012 10.50%
April 18, 2012 – July 10, 2012 10.875%
July 11, 2012 – October 17, 2012 11.00%
October 18, 2012 – January 16, 2013 10.375%
January 17, 2013 10.625%

If periodic but unscheduled payments or credits are made in different calendar quarters, the quarterly rate prevailing at the time of the final determination is charged and remains the same until the debt is liquidated. Interest must be recalculated based on the outstanding balance at 30-day intervals from the date of final determination.

The interest rate charged on overpayments repaid through an approved extended repayment schedule is the rate that is in effect for the quarter in which the determination was made. The rate remains constant unless the provider defaults (i.e., misses two consecutive installment payments) on an extended repayment agreement. When the provider defaults on such an agreement, interest on the balance of the debt may be changed to the prevailing rate in effect on the date of the default if that rate is higher than the rate specified in the agreement.

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