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An Overview

An overpayment occurs when the Social Security Administration makes a payment that the recipient was not supposed to receive.

Whether you or Social Security discover the overpayment, it is important to treat overpayments from Social Security seriously and as if you will have to repay the extra money.

If you discover the overpayment, expect to have to return the money. It is preferable to let Social Security know about the overpayment.

You can always request a waiver, which means you don't have to repay the money at all. If the overpayment relates to a Supplemental Security Income (SSI) benefit, the local office has the authority to waive repayment.

If a waiver isn't granted, you can request a period of time over which to repay the funds. The time period is usually limited to 36 months unless there is a good cause to extend the period of time.

Social Security's position with respect to the overpayment usually depends on the cause. For example, whether it is due to the fault of Social Security, or whether you misstated facts which led to the overpayment.

For more information, see:

Social Security Rules And Policy About Repayment

There are some basic rules and policies to be aware of in the event of an overpayment:

Social Security's goal is to obtain full repayment within 36 months.

  • Within the target period, Social Security will work with you on determining any repayment amount, and can adjust monthly amounts periodically if needed.
  • Social Security will not agree to stretch-out repayment over a longer period of time unless you can demonstrate you will otherwise suffer substantial hardship.

A lump sum repayment of the overpayments is Social Security's preferred method of repayment.

  • For larger amounts, the Notice of Overpayment will automatically suggest a repayment plan.
  • If you can show that immediate repayment in full or the proposed repayment plan will create a financial hardship on you, Social Security will usually work out a more reasonable time payment which will reduce your monthly benefit by an agreed amount until the money is repaid.

When the overpayment is due to a failure on your part to report earnings when you should have, Social Security has been known to be very demanding about quick repayment.

You have the right to appeal and show Social Security that you were not overpaid.

You are permitted to apply for a "Waiver of Recovery" to ask Social Security to write off the overpayment without repayment. See Forms To Use If You Receive An Overpayment.

What Happens If You Ignore Notices Of Overpayment Or Refuse To Make Repayment

It is very important that you not ignore the Notice of Overpayment letter or any subsequent correspondence from Social Security. Social Security is an arm of the federal government and has several means of getting your attention if ignored.

If you don't respond to a Notice of Overpayment:

If you are still collecting benefits

If you do not reply to the Notice of Overpayment letter within the designated time (usually 30 days), Social Security will start collecting the overpayment under the payment schedule described in the letter. This means you will start receiving less than your full benefit until the debt is repaid. You will have no say in how much is taken out each pay period.

If you are no longer collecting benefits

If you do not reply to the Notice of Overpayment or if you refuse to make any repayments to Social Security:

  • Social Security can recover the overpayment from any federal tax refund which you may be due.
  • Social Security can go after you the same as any other creditor, including the right to inform the credit bureaus. Of course, informing the credit bureaus will affect your credit rating. Your credit rating is even more important since your diagnosis. (To learn more, see: Credit Score.) You should receive prior notice of Social Security's intent to report the bad debt to credit reporting agencies prior to an actual reporting.

If The Overpayment Is From SSI

Social Security is more flexible in its repayment procedures with overpayments under SSI than it is with Social Security Disability Insurance (SSDI) since the beneficiary has already proven a need for the income.

Overpayments of less than $500 from SSI can actually be waived or erased at your local Social Security field office. You will need to show the hardship repayment would cause.

If this describes your situation:

  • Call your local office and make an appointment to apply for a waiver.
  • Take any documentation to show the hardship repayment will cause -- such as a budget showing monthly expenses compared to your income and liquid assets. Bank statements are good documentation about liquid assets.
  • Ask whether you will be required to complete the Request for Waiver form (see Request for a Waiver of Overpayment Recovery). Some offices handle small waivers more informally.

You may file both a reconsideration appealing the overpayment as being incorrect at the same time you file a Request for Waiver of Overpayment Recovery form. By filing both, you're saying, "I don't really owe an overpayment but if you don't agree, you should not make me repay it anyway." See Forms To Use If You Receive An Overpayment.

What To Do If You Discover The Overpayment

If you discover an overpayment from Social Security, do not just ignore the situation.

  • Double check to make sure that it really is an overpayment.
  • Set the overpayment aside and don't think of it as yours to spend. It is not your money -- Social Security has not yet embraced the Finders-Keepers doctrine.
  • You don't need to put the money in a separate bank account unless it is substantial and you are concerned you might accidentally spend it.
  • Assemble what documentation you have to show that it is an overpayment. This would include a copy of the check itself, and any letters or other paperwork you have that shows it to be an overpayment.

For example: If you become eligible for Medicare, but Social Security neglects to withhold the Part B monthly premium.

  • Write a letter that:
    • Summarizes your position
    • Explains the overpayment and
    • Offer to return the money
    • Include:
      • A copy of your Medicare card showing the effective date of your coverage.
      • Copies of the first check after Medicare is effective
      • The check just before Medicare started to show that there was no withholding taken
  • Make a copy of the letter and the proof for yourself.
  • Personally go to your local Social Security office. Explain the situation, deliver the original of your letter and a copy of your proof.
  • Assuming Social Security agrees it is an overpayment, return the overpayment AND get a receipt.
  • Get a receipt for any documents you leave including the letter.

If Social Security Discovers The Overpayment

If Social Security believes you received more money than you were supposed to, the usual first step is to send you a "Notice of Overpayment."

Social Security is required by law to send you this notice. The notice must include:

  • The amount of the overpayment.
  • When and how the overpayment occurred.
  • A request for an immediate refund of the full amount, unless it is small enough to be withheld from the payment due you for the next month.
  • How Social Security proposes to adjust your future benefits if a full refund is not received within 30 days.
  • An explanation that you should notify Social Security if you wish to request a reconsideration, a waiver, a lesser rate of withholding, installment payments or any other adjustment from the original demand.
  • If the overpayment is due to your earning wages through work, Social Security will also provide you with a month-by-month breakdown of what your earnings are believed to be and when they occurred.

If you disagree with the claim of an overpayment, for the form to use see Forms To Use.

How To Request A Waiver So You Don't Have To Pay Back An Overpayment

You always have the right to ask that Social Security waive an overpayment and let you keep it. Social Security calls this a "Waiver of Recovery."

Your chances of succeeding depend on the amount of the overpayment and the reason for it.

The regulations state that Social Security may grant a Waiver of Recovery if:

  • The person who is liable for repayment is without fault, and
  • Recovery or adjustment would defeat the purpose of the program involved or would be against equity and good conscience

If you receive money from the Supplemental Security Income program, Social Security may grant waiver of repayment if repayment would work against the efficient or effective administration of the program because of the small amount involved.

NOTE: Request a waiver of recovery only if you agree that there was an overpayment. If you believe the money you received was not an overpayment, then you would first use the form that indicates you disagree that there was an overpayment. (See Overpayment Forms To Use.) If you lose, consider Social Security: Appeals.

The form to use to apply for a waiver is SSA-632-BK (4-91) "Request for Waiver of Overpayment Recovery or Change in Repayment Rate."

  • The purpose of the form is to attempt to discover just why the overpayment was made in the first place and how much of a hardship repayment of the overpayment will cause you.
  • The form is available at offsite link.
  • We explain questions from the form at SSA-632-BK.

How To Appeal A Claim Of Overpayment

If you believe that Social Security's claim that you were overpaid is incorrect, but Social Security doesn't agree, consider filing for an appeal.

The process is the same as that in appealing denials of Social Security benefits. The first level of appeal is a Reconsideration.

Accumulate all documentation that supports your position, then follow the instructions for appeals. Watch deadlines to make sure you take action on a timely basis. If you don't, you can lose your right to appeal.

Overpayment Form To Use

If Social Security claims you received an overpayment, you can repay it. If you disagree, you can request a Reconsideration. If you prefer not to repay the overpayment, you can request a waiver.

To request a waiver of an overpayment

Use Request for Waiver of Overpayment Recovery or Change in Repayment Rate, form (SSA-632-BK (4-91e.) For a copy of the form together with instructions and advice for completing it see offsite link.

If you disagree with Social Security's claim for an Overpayment

If Social Security claims that you have been overpaid, and you do not agree with the fact or the amount of the overpayment, you should complete form SSA-561-U2, Request for Reconsideration. You can find the form at offsite link.

If you disagree with either the fact or amount of an overpayment, and want a waiver if there was an Overpayment

File both requests by filing form SSA-561-U2 and SSA-632-BK offsite link.