Can Overpayments Be Avoided
Yes, many overpayments can be avoided. For example, if an overpayment results from a circumstance described in Jacobâs case when he received a direct inheritance from his father, it was caused by poor planning. Had Jacobâs father sought proper advice from a competent special needs planning attorney, he could have left Jacobâs inheritance to a trust for Jacobâs benefit without adversely impacting his SSI benefits because SSA could not have classified the trust assets as a countable resource.
That said, given the complexity of the SSI rules and the definitions and exclusions that apply to income and resources, it is fair to say most individuals, including, frankly, most attorneys, donât fully understand the applicable rules and regulations that apply to an SSI recipient. As result of that complexity, overpayments will necessarily occur and may very well be difficult to avoid. Being aware of the need to report a change in circumstance and, when possible, evaluating a potential change in circumstance before it occurs will help to mitigate the likelihood of an overpayment or other adverse impact on SSI benefits in the future.
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What Can Cause A Social Security Overpayment
There are many reasons Social Security may think you have been overpaid. Some examples include:
- When you or your spouse go back to work and the earnings are not taken into account in figuring your monthly benefit amount.
- When you have income from other sources that has not been taken into account in figuring your monthly benefit amount.
- When Social Security incorrectly calculates the amount of retroactive disability benefits owed to you.
- When your living situation changes and these changes affect the amount of your SSI but Social Security has not considered them in determining your SSI benefit for the month.
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Recovery Under Social Security Legislation
1.3There are several causes for overpayments that fall under this heading:
- mistake by the claimant
- deliberate fraud by the claimant
- interim and advance payments including short term benefit advance that could not be recovered from the benefit for which they were paid
- Universal Credit Advances . Overpayment due to late award of other benefit / income
- overpayments due to the way in which the Direct Payment banking system operates
- official error only applies to Universal Credit and contributory Jobseekers Allowance and Employment and Support Allowance claims made on or after 29 April 2013
1.4All of these overpayments require an overpayment decision by a Decision Maker before recovery action is taken with the exception of recoverable hardship payments – where the decision to make payments will include the recoverability.
Mistake by the claimant
1.5 The claimant, or their representative complete their claim form incorrectly or fail to report a change in circumstances. In such instances there would be either a misrepresentation or failure to disclose by the claimant. Overpayments caused by the misrepresentation of, or failure to disclose, a material fact are recoverable whether the misrepresentation or failure to disclose was innocent or deliberate.
Fraud by the claimant
Interim payments
Short term benefit advance – Legacy
Universal Credit New Claim Advance
Universal Credit Benefit Transfer Advance
Universal Credit Budgeting Advance
Official Error
Winter Fuel Payments
How To Find An Attorney Who Will Take An Overpayment Case
Many disability attorneys do not take overpayment cases because they have to petition Social Security to be able to charge you a fee. You can try to find an attorney by calling disability lawyers in your community and asking if they take overpayment cases, or you may be able to find a legal aid lawyer to help you with your overpayment case. For more information, see this article on finding a lawyer for help with a Social Security overpayment.
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Setting Up A Payment Schedule
On request, the SSA will usually arrange a payment plan for you if you can’t afford to repay the overpayment all at once. If you’re still receiving disability benefits, Social Security may agree to reduce your monthly check by as little as 10%, or even less, until your debt is satisfied. Contact your local SSA field office to discuss this option.
Finally, note that Social Security overpayments are dischargeable in bankruptcy, although this option should be considered only as a last resort.
Think Twice Before Taking Retroactive Social Security Benefits As A Lump Sum
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Before giving into the temptation of taking retroactive Social Security benefits, it’s important to… consider the ramifications of this decision.
One of the many reasons that reaching full retirement age is so important is that it affords you options that are not available to you sooner. One such option is retroactive benefits.
You may be wondering what retroactive benefits are and why they exist. The purpose of retroactive benefits is to allow people who have missed their planned filing date to push back their retirement date by up to six months. Most people do not use retroactive benefits in line with their original purpose. They find out its available to them when they file for benefits after full retirement age, and the lure of a lump sum payment becomes very tempting.
Retroactive benefits comprise a one-time payment the Social Security Administration will send you when you delay filing for retirement benefits beyond your full retirement age. In other words, when you file for benefits after your full retirement age, you can choose to be paid a lump sum for the months that occurred between your full retirement age and your filing date.
The maximum retroactive payment will cover up to six months worth of benefits. To receive the maximum amount, you must be past your full retirement age by six months. If you are only three months past your full retirement age, you will receive three months of retroactive benefits.
Getting Your Affairs Fears In Order
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Impact Of Other Deductions
5.29Deductions can also be taken from income related benefits for a number of other things such as recovery of utility arrears. Where there are other deductions in place the overpayment deduction may have to be reduced.
5.30Where a Legacy deduction is made for on-going charges and arrears, the overpayment deduction is reduced by the amount of the arrears component . See Appendix 3 . This applies to the following deductions:
- housing costs
- water charges
- Council Tax
5.31Where a Legacy deduction is made for other on-going payments, the overpayment deduction is reduced by the amount of the full deduction. This applies to the following deductions:
- Child Support maintenance
- court fines
- Integrated Loan Scheme
5.32Where there is more than one of the deductions as listed above, the overpayment deduction is reduced by the amount of each deduction.
5.33Where a Legacy deduction is made for the following, the deduction rate is not reduced:
- Community Charge
- Child Support Maintenance
- mortgage interest
Statute Of Limitations For Recovery
5.114 Other than recovery by Civil Action, for England and Wales there are no time limits for recovery of a benefit debt. While the policy is to consider abandoning some debts based on the cost effectiveness of pursuing recovery, the legal right to recover does not expire in England and Wales, and DWP retains the right to recover the debt where it is cost effective to do so.
5.115 In Scotland the debt can no longer be recovered where either its been 20 years from the date of the last effective recovery, or 20 years from the date of the last relevant claim and where there has been no acknowledgement of the debt for 20 years.
5.116 A compulsory deduction or recovery from arrears of benefit is treated as a relevant claim where the recovery is not disputed by the claimant .
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How Do Overpayments Occur
- Increases in earned or unearned income that isnt reported to SSA
- Changes in living situation or marital status
- Having more resources than the allowable limit
- An error in calculating the benefit amount due to incorrect or incomplete information at SSA
- Receiving an SSDI check for months after the Trial Work Period when the beneficiary earned over the substantial gainful activity amount. Read more about the Trial Work Period.
- A beneficiary being convicted of a criminal offense and confined for more than 30 continuous days and still receiving their benefit
Universal Credit Recoverable Hardship Payments
5.45 Recovery is suspended if the claimant and/or partner start work and their total income is equal to or exceeds their applicable threshold. The suspension will continue while the claimants and/or partners income meets or exceeds their applicable threshold. If their total income falls below their applicable threshold, the hardship payment becomes recoverable.
5.46 A Recoverable Hardship Payment is written off once the claimant and/or their partners total income has met or exceeded their applicable threshold for a total of 26 weeks. This does not need to be 26 continuous weeks. Any recovery already made against the Hardship Payment will not be refunded to the claimant. See Para 1.12 to 1.15.
5.47Where a Recoverable Hardship Payment is not recovered from the Universal Credit claim because the claim ends, the outstanding balance is treated as if it were an overpayment and falls to be recovered under Section 71 of the Social Security Admin Act 1992. Any outstanding balance is then recovered as if it were an overpayment and recovered at the standard overpayment rate.
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Notification Of The Overpayment And Civil Penalty
3.33Where a recoverable overpayment is not a SMOP then it must be notified to the person from whom it is recoverable .
3.34Where the overpayment is recoverable from more than one person then each of the persons from whom the overpayment is recoverable must be notified except where:
- the overpayment is recoverable from the claimant and their appointee and the appointee is still acting for the claimant. In this case a single notification can be sent to the appointee but making it clear that the overpayment is recoverable from both of them
- the Civil Penalty decision in relation to the overpayment was made against an appointee a separate recoverability notification must be issued to the appointee. This is because a Civil Penalty can only be recovered from the appointee even if the claimant and appointee are jointly liable for the overpayment
Whose Fault Are Overpayments
As a Social Security disability law office we get calls from prospective claimants who are asking for help with incidents where Social Security indicates the claimant was overpaid benefits and now the agency wants its money back. Unfortunately we have to turn many of these claimants away because we do not deal with overpayment issues, but this is a real problem for many Americans and many times it is through no fault of their own.
Overpayment issues can occur for a variety of reasons. Maybe a claimant has earned too much money to receive Social Security payments, or they shouldve been reduced for other circumstances, but the claimant has no idea. Typically overpayment issues come up within a few years of the payments actually being made, but sometimes overpayment issues go back 10 years or more.
Anyone with knowledge about the Social Security disability process understands that those who receive benefits receive modest compensation, which sometimes is barely enough to live off of. These are no wealthy individuals who can easily give up $2,100 for a mistake made 20 years ago because Social Security failed to do its job properly.
No one is suggesting that people should receive and spend money they are not entitled to, but for individuals who never received any indication that they were overpaid until decades later should not be made to pay the government money they dont have.
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When Is Repayment Reduced Or Cancelled
The Department of Social Protection makes every effort to recover theoverpayment in full. The Department may reduce or cancel an overpayment if itoccurred because it:
- Failed to act within a reasonable period of time on information it received about you
- Made an mistake that you could not reasonably be expected to have noticed
If you think that the Department has made an error, you should bring thematter to the Department’s attention as soon as possible.
So What Are Your Options For Repayment Of Disability Benefits
If you remain eligible for the long-term disability insurance benefits, you can ask that the insurer apply your currently due amounts to the overpayment.
While it is not ideal because you are losing out on much-needed funds, you may often have ancillary benefits dependent upon you remaining on long-term disability insurancesuch as medical, pension, or waiver of premium insurance.
If the long-term disability insurance company is demanding repayment either because you are no longer on benefits or because they claim you need to repay to stay on benefit, you may be able to say Leave Me Alone and mean it.
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How Social Security Overpayments Happen
Overpayments occur when the SSA pays you more money than you should have received. This can happen for a number of reasons, including a change in your marital status, incorrect estimates of your actual income, or your recovery from a disabling condition that allows you to return to work. In essence, if you no longer deserve the full benefits that you’ve been receiving, then the SSA has the ability to declare an overpayment.
If the SSA finds that it has made an overpayment, it will send you a notice that explains what happened. The notice typically asks for a full refund of the overpaid amount within 30 days. If you don’t repay, the SSA typically proposes withholding the overpayment from future benefit checks. The default proposal is to withhold 10% of the overpaid amount from each monthly check, or simply taking away your entire check if it’s smaller than 10% of the outstanding amount owed.
Negotiating A Payment Plan For Ssi Or Ssdi Overpayments
Whether you are losing 10% of your SSI check or 100% of your SSDI check, if you can’t afford to lose that amount, then you can ask for a different repayment schedule by calling Social Security at 800-772-1213 and asking for a different “rate of recovery.” You need to be prepared to show that you can’t afford what Social Security calls “ordinary and necessary living expenses.” Ordinary and necessary living expenses are things like rent or mortgage payments, food costs, transportation costs, utilities, insurance, medical expenses, and the costs of supporting your dependents.
Social Security prefers repayment plans that will result in the overpayment being paid back within 12 months. In fact, if you offer a plan that will allow repayment within 12 months, Social Security has to accept the plan. If you cannot pay the overpayment back in 12 months, Social Security will see if you can complete repayment with a 36-month plan. If you can repay the overpayment within 36 months, paying at least $10 a month, Social Security must accept your proposal.
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Making A Payment Arrangement
If you have lost all of your appeals or have decided not to appeal any further, you must pay the money back. You can tell SSA that you want to repay it in small amounts each month that you can afford. SSA can withhold all of your Social Security benefits to repay the overpayment. However, unless there is fraud involved, they will usually let you pay it back in smaller amounts. You will have to pay back at least $10.00 a month. SSA tries to get the money back within 3 years. If you want to ask SSA to withhold smaller amounts, you have to fill out the same form you would fill out for requesting waiver.
How Do I Submit The Forms
Due to the COVID-19 pandemic, you are not supposed to go in person to your Social Security field office.
If you want to file a Request for Reconsideration of the overpayment because you think you were not overpaid or that the amount SSA states is incorrect, it is best to submit this form online. You can also call your local Social Security office and ask them to take your appeal over the telephone. Click here to find the number of your Social Security office.
If you want to file a Request for Waiver of the overpayment, it is best to submit the form online. You can also call your local Social Security office and ask them to take your appeal over the telephone. Click here to find the number of your Social Security office.
Be sure to keep a copy of everything you give to Social Security for your records.
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If You Cannot Afford To Repay The Overpayment
The Department will suggest a repayment method that it believes you canafford. If you cannot afford to repay the amount you were overpaid, therepayment may be reduced, deferred or suspended. If your circumstancessubsequently improve, you will be required to repay the amount owed at a rateyou can afford. If you do not repay social welfare overpayments, the Departmentof Social Protection may take a civil case against you through the courts system. Ifyour overpayment arose as a result of fraud you may be criminally prosecuted.