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The Overpayment Process: Why They Occur and How to Handle Them

An overpayment of benefits can occur for a number of reasons. Knowing how they can occur can help you avoid such a circumstance. However, in some circumstances, overpayments can occur through no fault of your own. When this occurs, it’s important to know how you might avoid the need to repay all or part of such an overpayment should you remain incapable of paying all or some of it back.

In some circumstances, an individual’s medical condition and ability to work can improve to the point where the are no longer disabled from working and they are no longer in need of Social Security disability benefits. Assuming the Social Security Administration (SSA) makes a determination that you are no longer disabled and that your benefits should have ceased, you may see that SSA seeks recovery of some portion of the past benefits paid as part of what is called an overpayment process. In such a circumstance, one would have a right to appeal the decision that their disability has ceased and that an overpayment process should even proceed: in such a circumstance, one would be provided with a 60 day period (plus 5 days to account for receipt of notice by mail issues) within which to request reconsideration. Overpayments likewise can occur when a claimant returns to work and fails to report their earnings to Social Security, or, in circumstances where one is receiving SSI benefits, should one fail to report a change in household income or asset circumstances (such as should one marry and their spouse has brought an income into the household, or should one receive a large sum of money in a case such as an inheritance or recovery in a personal injury case).

It is important to understand that one has the right to appeal (or request reconsideration) in the event one disagrees with an overpayment notice: that is to say, they disagree with either the fact that an overpayment has occurred at all (for example, one believes that payment should have continued) or an overpayment amount is correct.

Likewise, one has the right to request, separate and apart from an appeal, what is called a “waiver” process in the event one believes that the overpayment was not caused through their “fault” and they remain unable to pay part or all of the overpayment amount within what is deemed to be a reasonable period of time (ordinarily, within a 36 to 60 month period of time) It is important to understand that one remains liable for any overpayment amount even if it is determined not to be their fault, but that all or part of the overpayment amount may be waived if one were to show that 1) they were not at fault for the overpayment and 2) they remain financially incapable of paying it back. A request for a full or partial waiver of the overpayment is, in essence, saying that even if an overpayment amount is appropriate 1) I did not cause the overpayment (it is not my fault that SSA overpaid me) and 2) I remain incapable of paying it back given my financial circumstances.

A determination as to your ability repay the funds will take place through SSA’s review of your request for waiver form, https://www.socialsecurity.gov/forms/ssa-632.pdf Through use of this form, SSA undertakes a detailed analysis of your sources of income and your monthly household expenses. After deducting your necessary expenses from monthly income, SSA determine what is your “disposable income,” which amount they will deem available for repayment of the overpayment. SSA will ordinarily look to see that you make payment of this disposable income amount over a 3 to 5 year period of time, and would then waive only the remaining balance (again, only in circumstances where they determine the overpayment was through no fault of the claimant).

It is important to note that in order to avoid action being taken by SSA on an overpayment (by way of either an adjustment to one’s ongoing checks or by way of action to recover the amount of the overpayment process) one needs to request reconsideration or a waiver of the overpayment within 30 days of their receipt of the overpayment notice. However, even if one does not request a waiver within 30 days, one may still request a waiver at any point in time if one feels it appropriate and may still request reconsideration within the 60 day period provided for (as mentioned above).

Given SSA will seek recovery of any overpayment, and will only grant an overpayment in the above exceptional circumstances, it’s important to keep in mind when one’s SSI or SSDI benefits may be subject to reduction or discontinuance. If your condition improves to the point that you’re capable of returning to work (for instance, if your doctor informs you that you can return to work), you need to understand (should you decide to continue receiving a benefit check at that point) that SSA may find later on that an improvement of your condition has occurred and that you were not entitled to benefits for the period of time you continued to receive benefits. Thus, being proactive about discontinuing or putting aside your benefit checks for potential return to SSA should be considered. Likewise, you need to understand that returning to work and reporting your earnings religiously does not mean that the SSA will stop sending you a check at the appropriate point in time: that is to say, once your trial work period comes to an end. Thus, keeping track of the extent to which you’ve used up your trial work period months and as to when your checks should be coming to an end is important: in this way you can put the money aside for when SSA requests that this money be returned in the event you’re then faced with an overpayment request. Ultimately, any amounts overpaid will remain your responsibility and will only be forgiven through a process whereby you succeed in showing 1) the overpayment is not your fault and 2) you can’t afford to repay it out of your disposable income over a 3 to 5 year period.

At the Law Offices of Russell J. Goldsmith, we’re here to guide you through your Social Security disability concerns. Please feel free to give us a call at (800) 773-8622 for your free consultation regarding your claim for disability benefits.