Understanding Social Security Disability Overpayments and How They May Affect You

Submitted by Chris on

When you begin receiving Social Security Disability benefits it is very important to understand what overpayments are and how they may affect you. If you do not familiarize yourself with Social Security Disability overpayments, how they happen, and what you should do about them, you may find yourself facing serious penalties and even a loss of benefits in the future. If you are applying for Social Security Disability or have already started receiving Social Security Disability benefits, there are some very important facts you need to know.

What Are Disability Overpayments?

Social Security Disability overpayments are payments that you have received from Social Security that you were not actually entitled to. Social Security Disability overpayments can happen in a number of ways. They may be the fault of the Social Security office, due to errors in calculations. Overpayments can also occur when you have earnings that you do not report to the Social Security office. In some cases, an overpayment of Social Security Disability benefits may occur when someone is appealing a suspension of their benefits. They continue to receive benefits while the appeal is in process, but if they lose their appeal they will be responsible for paying the benefits back.

Regardless of who is at fault, when a Social Security Disability overpayment occurs, it needs to be addressed quickly to avoid having the overpayment garnished from your Social Security Disability benefits.

Can You Keep Overpayments?

If you receive an overpayment from Social Security, you can not, under any means, keep it. Even if the overpayment was due to an error on the part of your local Social Security office, you will be expected to return the money. If you do not return the money when it is sent to you, the office will catch the mistake and will demand that the money be paid in full.

What To Do if Disability Overpayment Occurs

If you receive a letter from the Social Security Administration stating that you have received an overpayment, you need to contact the office immediately to determine the cause of the overpayment and to make arrangements with them to pay it back.

In some circumstances, an overpayment of Social Security Disability benefits may not actually have occurred and you and the Social Security office will need to get to the bottom of the matter. If you feel that you have not been overpaid, you will need to provide proof of this fact to the Social Security office. If you can prove that an overpayment did not exist, you will not be obligated to pay it.

If there was indeed an overpayment of Social Security Disability benefits paid to you and you are unable to repay the debt, you may want to file a request for waiver. If the Social Security office approves this waiver, you will not be responsible for paying the overpayment back. In most cases, the only way a waiver will be approved is if you were not at fault for the overpayment in disability benefits.

If you do have to repay a Social Security Disability benefit overpayment, it is in your best interest to work out a payment plan with your Social Security office. If you do not work out a payment plan, the Social Security Administration may garnish your entire Social Security Disability check until the overpayment has been repaid.

When setting up a repayment plan with the Social Security office, you can usually extend the payments over a period of 36 months. If the overpayment is very large, you may want to file for a reduced payment amount. In order to qualify for a reduced payment amount, you will need to prove that paying the full amount would cause a financial hardship.

How to Avoid Disability Overpayments

If you are receiving Social Security Disability benefits, be sure to report any and all income you may receive to the Social Security Administration. Doing so will prevent you from receiving benefits you are not entitled to. 

The monthly Federal Social Security Disability benefit for an independent individual is $943 and $1,415 for a couple.

Common sense can help prevent overpayment troubles as well. If you know that your monthly Social Security Disability benefit amount is $910, and you receive a payment for $9,100, then you know an error has occurred. Do not spend the excess payment, hoping that the Social Security office will never catch the mistake. They can, and they will. If you receive an overpayment, contact Social Security immediately and let them know what happened. They will advise you as to how to take care of the overpayment in Social Security Disability benefits.

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