An overpayment arises when Social Security
pays you more benefits than you are legally entitled to receive. Each
year thousands of people are overpaid benefits. Overpayments occur for
many reasons. Sometimes it is Social Security’s fault, sometimes it is
the beneficiary’s fault and sometimes it is a combination of both. Of
course, Social Security would like to recover any benefits that were
erroneously paid. When they realize that the overpayment occurred, they
will try to collect back the money.
However, the law and the Social Security
rules allow for "waiver" of repayment of the overpayment. If a waiver is
granted a beneficiary who has been overpaid will not be required to make
a refund.
There are two types of overpayments. The
most common type is called a "deduction overpayment." In these cases the
beneficiary is legally entitled to benefits but was paid more than he or
she should have been paid. This situation frequently arises when the
beneficiary had earnings over the limit for the year, but benefits were
paid because the beneficiary did not report the earnings, or gave an
estimate that was too low.
Another common cause of overpayments is when
a new beneficiary becomes entitled on a Social Security account on which
there are already beneficiaries. For example, a man dies and leaves his
wife and two children. They become entitled to benefits. Several months
later a child by a previous marriage applies for benefits on that
account. Due to the family maximum provisions, which limit the overall
total of benefits that can be paid on one account, an overpayment may
arise retroactively. When the widow and the first two children filed and
started receiving benefits they were paid on the assumption that there
would be only three beneficiaries on the account. When the child by the
first marriage applies, his application can be retroactive for up to 6
months. His retroactive benefits mean that the other survivor
beneficiaries were overpaid in the past.
Sometimes overpayments can occur due to
clerical errors. When your benefits are being calculated, they are based
on the amount of the worker’s earnings. Sometimes a clerical error can
occur so that the amount of the earnings are miscalculated. This means
that the amount of your benefit was greater than it should have been and
the difference is an overpayment.
When Social Security determines that you
have been overpaid, a letter will be sent advising you of that fact and
the amount of the overpayment. The letter will explain how the
overpayment occurred. Social Security will always request a full refund
of the overpaid amount immediately, but will frequently accept either a
partial refund or payments over time. In the overpayment letter, Social
Security says they will start withholding 100% of your monthly benefits
until the full amount of overpayment has been recovered. If you request
an appeal, a waiver, or some other method of payment, Social Security
will hold up any further processing of the recovery until a decision has
been made on your request.
If waiver is approved, Social Security will
not require repayment. Waiver is granted only upon certain conditions.
In all cases you must have no fault in causing the overpayment, and it
must be against equity and good conscience to make you repay it, or it
would otherwise cause great financial hardship. They have very detailed
rules about when waiver can be granted, and presumptions about certain
fact patterns that qualify.
If you waiver request is denied, Social
Security requires a refund. This can be done in different ways. They may
accept a partial refund as a compromise in full settlement or allow for
repayment over a period of time. Again, they have detailed rules they
follow when deciding on your request for a partial or deferred
repayment.
If you disagree that there has been an
overpayment, or disagree with the amount of the overpayment, you are
entitled to the usual appeals procedures including a reconsideration and
hearing before and administrative law judge. No action to recover the
overpayment is taken while the appeals process is pending.
