Alleged Social Security Overpayments
Have you received a Notice of Overpayment from the Social Security Administration? If so, you’re not alone. It appears that Social Security Disability and Supplemental Security Income payments are now in the federal government’s cross hairs. If you received a Notice of Overpayment, the overpayment could have resulted from any one of several reasons. Some of the more common reasons we’ve seen lately include: (1) A combination of income sources as a result of your disability exceeding 80% of your pre-disability income (this is known as the 80% rule); (2) income from employment beyond a trial period of work; and (3) in the case of SSI recipients, discovery by the Social Security Administration that you had assets (which Social Security refer to as “resources”) exceeding the maximum allowed.
It is helpful to be able to spot the potential for these problems ahead of time in order to avoid or minimize possible overpayments.
The 80% Rule
If you are receiving Social Security Disability payments, income from certain sources due to your disability cannot exceed 80% of your pre-disability income. In the event that a combination of the sources of income would exceed 80% of your pre-disability income, your Social Security check should be reduced to the extent necessary to reduce your income from those sources to 80%. Errors by Social Security in taking this offset, or the failure to notify Social Security of your income sources, often result in overpayments, which Social Security will later attempt to collect from you. The best thing you can do to avoid the overpayment issues is to understand this rule and ensure that Social Security is notified of your sources of income. A common source of income that results in an overpayment is workers’ compensation. Workers’ compensation benefits and Social Security Disability payments, if Social Security does not take its offset, would typically exceed 80% of your pre-injury level of income. Additionally, the offset should change in the event of settlement of your workers’ compensation claims. Therefore, be sure to notify social security if you settle your claim. Also, there are special procedures that must be followed in settling your workers compensation claim to make sure that the effect on your Social Security Disability payments are minimized. If you are about to settle your Pennsylvania Workers Compensation Claim you should talk to a lawyer about how it will impact your Social Security Disability and what can be done to minimize the impact.
Income From Work
Social Security encourages those with disabilities to attempt to work. In this regard, benefits during a trial period of work receive preferential treatment. However, if your income exceeds a certain level for a period of time, an overpayment can result.
Assets and SSI Payments
Recently, many people have received overpayment notices due to discovery by Social Security of assets exceeding the maximum you are allowed to have while receiving SSI. Often, those receiving SSI are not even aware that they have the assets. An example of an asset that clients may be unaware of and result in an overpayment is a whole life insurance policy. In the event that your assets exceed the maximum permitted and Social Security discovers them, all SSI payments received for the duration of time that you had those assets can be assessed as an overpayment.
I received a Notice of Overpayment from Social Security. What can I do?
If you receive a notice from Social Security that you were overpaid, you have several options to pursue in order to minimize the hardship to you. Most clients are unable to refund the total overpayment immediately. Instead, if you are currently receiving checks, you can have a portion of future checks withheld until the overpayment refund is satisfied. If you disagree with Social Security and believe that you were not overpaid, you can appeal, and the method of doing so is stated in the notice. It is to your advantage to appeal as soon as you receive the notice, because if your appeal is within ten days of the notice, your payments will not be affected until your appeal is decided. The first step in your appeal is to request reconsideration. Ask for Form SSA-561 to request reconsideration.
If you believe that you were in fact overpaid, but that it would be too great a hardship on you to pay the money back or have it withheld from your current and future checks, you can request a waiver. Ask for Form SSA-632 to request a waiver. The forms can also be found on Social Security’s website. In order to receive a waiver of overpayment, you must first be able to show that the overpayment was not your fault. This is one reason why it is important to keep Social Security informed of any circumstance that may result in an overpayment. In addition, you will have to demonstrate that you cannot pay back the overpayment because you need the money to meet your ordinary living expenses. You also will have to be lacking the resources in assets to pay the money back.
Often, a person who receives an overpayment notice will not have enough information to know for certain whether or not the overpayment claimed in the notice is correct. If this is the case, it is perfectly acceptable to file for both reconsideration and a waiver.