How to avoid an overpayment of Social Security benefits
If you are receiving Social Security disability benefits, the last thing you want is to get a letter in the mail telling you that you owe Social Security money. I have seem many individuals with overpayment notices for tens of thousands of dollars.
So, what can you do?
Read what Social Security sends you
This may sound obvious, but who wants to slog through the brochures and letters Social Security sends? Well, unless you want to be stuck with an overpayment, you do!
Social Security expects individuals to be diligent about complying with the requirements of the benefits they receive. Social Security sends out publications when benefits begin and it is a good idea to review them at least annually. Here are two critical ones:
Overpayment choices: reconsideration or waiver
If Social Security alleges that you owe them money to repay an overpayment, you have two choices to fight it:
You can either file a “Waiver of Overpayment,” or
You can file a “Request for Reconsideration.”
Social Security may direct you towards filing the waiver, but there are some things you should know before making a decision.
Social Security Administrative waiver for overpayments up to $1000
There’s good news if Social Security has told you that you were overpaid, and you need to repay, Social Security benefits! Social Security has increased the “administrative waiver” amount to $1000.
Administrative waivers of overpayments apply in cases where the cost of recovering the overpayment is greater than the amount of the overpayment itself.
SSI, Settlements/Inheritance, and Special Needs Trusts
Here is a popular question:
I’m on SSI, do I have to tell Social Security about an inheritance/settlement I am getting?
The answer is simple:
YES!
There is no point beating around the bush with this one. If you are on SSI and “come into money” whether it is a gift, inheritance or settlement (or through whatever means), you need to notify Social Security.
Supplemental Security Income (SSI) is a “needs-based” program. You only get it if you do not have money coming in from other sources. So, if you suddenly get some money, your benefits may be reduced or even cut off.
Even worse for some people is the potential loss of Medicaid.
Overpayments: finding an attorney to help you
I have tried to give you as much information as I can about Social Security overpayment / repayment cases, because the chances of finding an attorney to work with you are not very good.
Many Social Security attorneys get paid out of the back benefits they win for the client (typically 25% up to a cap of $5,300.00 $6,000 as of June 2009). But, when you have an overpayment case, the best outcome is you will owe $0.00. 25% of $0.00 is $0.00.
In other words, there is nothing for the attorney to take a percentage of, if they win. If you want legal help on an overpayment case you will probably have to pay some money up front. This may be between $1,000 and $3,000 depending on the complexity of the case. While my office does handle Social Security overpayment cases, they make up a small part of my Social Security practice because most people cannot afford the retainer.
Also, many attorneys do not take overpayment cases because of the extra requirement of petitioning Social Security to approve fees. This takes extra time, beyond the time spent proving the case, just to try to get paid.
Is it worth hiring an attorney on an overpayment case?
Whether paying the retainer is worthwhile for you will depend on how much money you owe Social Security.
Social Security overpayments: what you need to prove to win!
Overpayment cases are very tough to win. If you decide to fight an overpayment, you need to know what you are up against.
Here is what the law says about how Social Security evaluates whether you have to pay back an overpayment or not. This is taken from Social Security Ruling 88-6c.
42 U.S.C. § 404(b)
The regulations state in part:
Sections 204(b) and 1870(c) of the Act provide that there shall be no adjustment or recovery in any case where an incorrect payment . . . has been made . . . with respect to an individual:
(a) Who is without fault, and
(b) Adjustment or recovery would either:
(1) Defeat the purpose of title II of the Act, or
(2) Be against equity and good conscience. 20 C.F.R. § 404.506.
So, in order to have Social Security not collect an overpayment you have to be withouth “fault” for the overpayment AND the recovery would either defeat the purpose of the Social Security Act or be against equit and good conscience.
Lets take these one at a time:
Social Security Overpayments
It is the opposite of winning the jackpot: you open the letter from Social Security and find out that you owe them $10,000, $20,000, even $30,000.
What happened?
There are several scenarios which may result in Social Security claiming an overpayment occurred; and demanding that you repay some, or all, of your benefits.
When Social Security problems arise, watch out for deadlines!
You, or your child, are on Social Security, when out of the blue, you get a letter:
Your benefits will cease as of …
or
An overpayment was detected due to your failure to notify Social Security of your spouse’s income …
or
Since turning 18 years of age, we have determined that you are no longer disabled under our rules …
You may be thinking, “this is clearly a mistake;” “I go in every year with my spouse’s paystubs;” or “nothing has changed in my condition.”
So, you call Social Security to clear this up. Maybe you make an appointment to go in. Maybe you speak to an understanding soul who says it is all a mistake. You think to yourself:
The letter said I could appeal, but I don’t need to do that, I will just get it cleared up.
Watch out!
