Overpayments occur when Social Security pays an individual more disability, retirement, or dependents benefits than he or she was due, often because a one's income, resources, marital status, or living situation has changed. When Social Security discovers that it has made an overpayment, it sends the beneficiary a Notice of Overpayment stating the amount of improperly paid benefits and instructing the individual to return the excess benefits within 30 days.
If you've received a Notice of Overpayment from Social Security, you do have options. You can file an appeal if you disagree with the existence of the overpayment or the amount of the overpayment. If the overpayment was not your fault and repaying it would cause you financial hardship, the Social Security Administration (SSA) may agree to reduce the amount of the overpayment or even waive it entirely. If it's determined that the overpayment is justified but you don't have the funds to repay it immediately, Social Security will usually agree to set up a reasonable payment plan.
How to Appeal an Alleged Overpayment
Just as Social Security sometimes mistakenly pays more benefits than were due, the agency also sometimes issues overpayment notices erroneously. If you don't believe that you were actually overpaid, or if you think that the SSA has calculated the amount of your overpayment incorrectly, you should file SSA Form 561, Request for Reconsideration. The deadline for filing the reconsideration request is 60 days after receiving the Notice of Overpayment, but if you file within 10 days of receiving the notice, the SSA will not attempt to recover your overpayment until after your reconsideration has been decided.
It often happens that an individual really has no idea whether the alleged overpayment is justified or not. In this case, a reconsideration request forces the SSA to look at your case again and explain to you why it believes you were overpaid.
At the reconsideration stage of your appeal, you're entitled to present evidence to support your case at an informal hearing with a Social Security employee. If the reconsideration is denied, you have 60 days to request a hearing in front of an Administrative Law Judge. If you receive an unfavorable decision from the ALJ, you have another 60 days to pursue your final administrative appeal in front of the SSA's Appeals Council. If Social Security says you owe a significant amount of money, it's a good idea to contact an experienced disability attorney as soon as you receive your overpayment notice to handle your appeal.
What If I Can't Repay the Overpayment?
Requesting a Waiver
If you can't afford to repay the amount you owe to Social Security, you should file form SSA-632, Request for Waiver of Overpayment Recovery or Change in Repayment. A waiver will usually be granted if:
- the overpayment was not your fault, and
- you can't afford to repay the overpayment because the money is needed for ordinary and necessary living expenses.
The lack of fault, not the inability to repay benefits, is usually the major stumbling block in obtaining a waiver. The SSA may determine that an overpayment was not your fault in situations such as the following:
- You reasonably believed that you had reported all required changes in your living situation.
- You were not informed of the requirement to report changes.
- You are illiterate or did not understand the reporting requirement.
If your waiver request is denied initially, the SSA will arrange a personal conference at your local Social Security field office where you can argue your case to an SSA employee. Social Security should allow you to review your claim file at least five days before the conference is held. If the waiver request is still not granted after the personal conference, you may request reconsideration and even an administrative hearing. For more information, see our article on appealing a denied overpayment waiver request.
Social Security routinely grants waivers requested in cases where an SSI overpayment is $1,000 or less, as long as the overpayment was not caused by the beneficiary's fraudulent activity.
Negotiating a Compromise
Although Social Security doesn't like to publicize this fact, the agency will sometimes agree to compromise on the amount of the overpayment if you can pay the amount agreed upon in full. In general, amounts under $5,000 may be reduced by as much as 20%, while more substantial overpayments may be knocked down even further. It never hurts to call Social Security and make a reasonable offer for less than you owe.
Setting Up a Payment Schedule
On request, the SSA will usually arrange a payment plan for you if you can't afford to repay the overpayment all at once. If you're still receiving disability benefits, Social Security may agree to reduce your monthly check by as little as 10%, or even less, until your debt is satisfied. Contact your local SSA field office to discuss this option.
Finally, note that Social Security overpayments are dischargeable in bankruptcy, although this option should be considered only as a last resort.
How to Prevent Overpayments From Happening
Recipients of SSDI and SSI are required to inform Social Security of any changes in income, employment, living situation, or marital status. A great number of overpayments are caused by beneficiaries who fail to do so. Be sure to keep the SSA up-to-date on these changes to avoid incurring inconvenient and potentially costly overpayments.
How to Find an Attorney Who Will Take an Overpayment Case
Many disability attorneys do not take overpayment cases because they have to petition Social Security to be able to charge you a fee. You can try to find an attorney by calling disability lawyers in your community and asking if they take overpayment cases, or you may be able to find a legal aid lawyer to help you with your overpayment case. For more information, see this article on finding a lawyer for help with a Social Security overpayment.