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Understanding Social Security Overpayments

An overpayment is the total amount an individual received for any period that exceeds the total amount that should have been paid for that period. Once a determination of overpayment is made, the overpaid amount is a debt owed to the United States government. There are various reasons in which an individual receives more benefits than he or she was due for disability benefits, his or her dependents’ benefits or retirement benefits. These reasons include a change in the individual’s marital status, work, income, resources or living arrangements.

Overpayments under Title II are either “entitlement overpayments” or “deduction overpayments.” An entitlement overpayment occurs when an individual fails to meet one or more requirements to receive benefits or receives a benefit payment in excess of the proper amount. A deduction overpayment results from factors that may cause deductions from benefits concerning circumstances that should have been brought to the attention of the Social Security Administration (SSA) by immediate report or required return of a benefit. Overpayments under Supplemental Security Income (SSI) have no distinction and are generally due to excess income and resources, changes in living arrangements or changes in marital status.

Further, if any benefits are terminated at a later date, it can lead to an overpayment for retroactive receipt of benefits, and Social Security has no statute of limitations, so the overpayment can go back several years. Overpayments under Title II can also include dependent benefits for the period at issue. Where Social Security concludes that an overpayment has been made, the beneficiary or others should receive a Notice of Overpayment. This notice will identify the amount of overpaid benefits and set a 30-day deadline for returning the benefits. Under Title II Overpayments, the eligible person, eligible spouse, others receiving benefits on the wage-earner’s SSN, the estate and/or the representative payee can be charged with the full overpayment. Under Title XVI (SSI), generally, only the eligible person and/or representative payee can be charged.

There are many options to resolve this problem if you have received this notice. You may:

  1. File an appeal to contest the overpayment amount or the overpayment notice.
  2. File a Request for Waiver Of Overpayment Recovery if repaying the amount would lead to financial hardship or if you were not at fault for receiving excess benefits.
  3. Negotiate a payment plan or agreement to compromise the debt for less than face value.

Both of these procedures are set by SSA regulations. Until the overpayment is satisfied or payments are arranged, the SSA may collect the amount from benefits being received, tax refunds or any other federal benefits or payments. Further, the amount will be listed under an individual’s credit record as a debt to the United States government.

Appealing An Overpayment

If the individual believes the overpayment is incorrect due to some fact or the amount of the overpayment is incorrect, the proper appeal is to submit a Request for Reconsideration. You will need to use Form 561, which can be found on ssa.gov. If you receive the Notice of Overpayment, you will have 60 calendar days to file for reconsideration.

If individuals respond to this notice within 10 days of receiving correspondence from the SSA, the SSA will not try to recover the overpayment until the reconsideration process has concluded. However, you should clearly indicate that you wish the SSA to withhold any recovery procedures until the matter is concluded in your request.

If, after reviewing all circumstances, you conclude that you were actually overpaid, you can request a waiver for overpayment. Form SSA-632 allows individuals to request a change in repayment or request that the SSA abandon its attempt to recover benefits if individuals meet these requirements:

  1. The applicant is “without fault” in causing the overpayment, and
  2. The costs of living expenses are preventing the applicant from repaying the SSA

A Request for Waiver Of Overpayment Recovery can be filed at any time. Both elements above are required to grant a waiver of overpayment. Even if the SSA is clearly responsible for the payment of incorrect benefits, if the individual has the financial ability to repay the funds, the SSA will state that the overpayment would be akin to a loan and should be repaid. The regulations pertaining to “without fault” do, however, contain other situations that would allow for waiver of overpayment even if the individual has the financial ability to repay the benefits.

Social Security is likely to grant waiver requests to individuals who have been overpaid $1,000 or less and the individuals did not use fraudulent means to secure an overpayment.

Under the regulations, the SSA may also make a compromise agreement for at least 80% of the total amount or periodic payments on a monthly basis. If you’re receiving benefits, you may make arrangements with Social Security to pay off your debt by reducing your monthly benefits until you have met your financial obligations. Contact your local SSA field office to discuss this option.

Finally, overpayments from the SSA can be discharged in bankruptcy.

Preventing Overpayments

Individuals who receive SSI and Social Security Disability Insurance (SSDI) must provide updates to the SSA on changes to their incomes, living situations, marital statuses or employment. Any information given to the SSA must be documented, if possible. Keep all notices from the SSA and copies of any statements or documents sent to the SSA. Note the date of phone calls and to whom you spoke as well as a brief note about the conversation.

Representation In Overpayment Cases

Most attorneys who represent individuals in disability cases will not accept cases tied to overpayment matters because these types of cases are lengthy and complex and the attorney cannot be paid from retroactive benefits and must file a fee petition with the SSA for attorney fees.

Overpayments are extremely serious and should be dealt with as such. Maintain detailed records of all dealings with the SSA and, when necessary, consult with a skilled, experienced legal practitioner within the 60-day appeal period or as soon as possible.

Chris A. Cornaghie

Attorney at Law