Millions of Americans rely on Social Security for either disability or retirement benefits.  Overall, the government does a good job of calculating and distributing benefits, but sometimes mistakes are made.  Overpayments occur when you receive more money in your checks than you are entitled to receive.

Changes in your marital status, incorrect estimates of your income, or recovery from a disabling injury must be promptly reported to Social Security. You can consult the Social Security website to find out all the changes you are required to report.  www.ssa.gov.  A delay in reporting these “life changes” can result in overpayments in your Social Security checks.  Mistakes in calculating benefits can also occur if the agency has incomplete or erroneous information relating to your income or status.

The first question people ask when overpayments are discovered is “Do I have to pay the money back?”  Generally, the answer is yes.  When Social Security discovers an overpayment, the agency will send you a written notice requesting that you repay the full amount of the overpayment within 30 days. That can be a big problem for some people, especially if they have been receiving overpayments for months or even years.  Receiving overpayments for an extended period of time can leave you with a crippling debt to the Federal Government.

The Notice of Overpayment Social Security sends will also inform you of the following:

a.  If you do not repay the overpayment in full, the agency proposes to withhold the overpayment from your monthly benefits;
b. It will specify the month the proposed withholding will begin;
c. It will explain your right to appeal the decision and how to file an appeal;
d.  It will explain the procedure to request that the overpayment be waived.

Steps to Take to Contest a Notice of Overpayment

Make sure you read the notice carefully to understand the amount of the noticed overpayment and the reason the Social Security Administration (SSA) believes you have been overpaid.  Go through all the documents you have received from SSA in the past several years.  You want to be sure of your facts and know exactly what income and status you have reported to the agency.  If you have questions, talk to a representative at the local SSA office or on the telephone.  Always write down the name of anyone you talk to at SSA.

If the overpayment is small, you are entitled to an automatic waiver of the overpayment if these conditions apply: (1) you were overpaid $1000 or less; (2) you did not cause the overpayment by making false statements to the SSA; and (3) you request a waiver on the appropriate form.  To request a waiver, you must first get a form called Overpayment Recovery Request Form SSA-632.  Complete the form and submit it to the SSA for consideration.  You can download the form from the SSA website. www.ssa.gov.

Even if the overpayment is more than $1000, you can request a waiver.  If the agency does not grant your waiver, file a request for reconsideration in writing at your local Social Security office.  Use Form SSA-561 to file your request.  If you file your request for reconsideration within 30 days of the waiver being denied. SSA will delay any collection actions until after your case is reviewed.  Your time for filing a request for reconsideration is limited.  You must file your request for reconsideration within 60 days of the waiver being denied.

If your reconsideration is denied, there are additional steps you can take to contest the overpayment.  You have the right to an administrative hearing where you can present your case to an administrative law judge.  You will need to fill out the Request for Hearing By Administrative Law Judge form.  If you lose the administrative hearing, your next option is to file an appeal with the appeals council.   If you lose after going through all these administrative steps, your only remaining option is to hire a lawyer and take your case to court.

Negotiating Your Repayment Options

SSA normally tries to recover the full amount of overpayments within three years.  However, if that is more than you can afford to pay, SSA will usually negotiate a reasonable payment plan.  Sit down and figure out a budget that allows for monthly payments to SSA.  Then, call your local SSA office at the number listed on your overpayment notice.  Talk to a SSA representative about negotiating repayment options.  The representative will discuss your proposal and tell you what documents you will need to provide to support your position.  This usually includes, bank statements, bills, receipts and income statements.  You will then submit your request along with the required documentation to your local SSA office.  The SSA will process your request and get back to you with an answer within 30 days.  Unless the agency finds a discrepancy in your income or expenses, the SSA will normally agree to your proposed repayment plan.  Repayment amounts will be deducted from your monthly Social Security check unless you make arrangements to pay by credit card or debit.

Preventing Overpayment Problems

Prevention is always better than fixing a problem after the fact.  The very worst thing you can do if you suspect an overpayment, is to shrug it off, accept the money as part of your income, and do nothing to investigate.  To avoid the hardship of repaying a Social Security overpayment, take the following steps:
    1.  If your income, marital status or disability status changes, be sure to report it promptly to the SSA.
    2.  Review all documentation you receive from SSA with care.  Know exactly what benefits you are receiving and the basis for those benefits. 
    3.  If you receive a greater payment than expected and you do not know why, contact your local Social Security office and find out.  Make certain to write down the name of the person you consult. 
    4.  If you believe you have received an overpayment, do not spend the money.  Put that money aside in a separate account from your other income and assets while you make inquiries.  If it turns out that the extra money is an overpayment, you will have the money available to repay within the 30 day time limit and suffer no negative consequences.  If the SSA determines you are entitled to the extra money, so much the better.  You will have a little extra money to spend.

“Code of Federal Regulations.” Social Security Administration, www.ssa.gov/OP_Home/cfr20/416/416-0537.htm. Accessed 10 Jan. 2017.

“How to Cope with Social Security Overpayments,” Pine Tree Legal Assistance, www.ptla.org/how-cope-social-security-overpayments. Accessed 10 Jan. 2017.

“Overpyaments,” Social Security Administration, www.ssa.gov/pubs/EN-05-10098.pdf. Accessed 10 Jan. 2017.

“Social Security Benefits Calculator: When Should You Claim Yours?” AARP, www.aarp.org/work/social-security/info-2015/social-security-benefits-wrong.html. Accessed 10 Jan. 2017.