If Social Security alleges that you owe them money to repay an overpayment, you have two choices to fight it:  

1. You can either file a “Waiver of Overpayment,” or 
2. 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.

What happens if I request a waiver?

Filing for a waiver is basically saying, “I owe the money, but I cannot pay it back.”  

The waiver form asks you to describe your financial life in excruciating detail.  If you pay for a cell phone, cable, internet or for anything more than the most basic necessities of life, the chances of Social Security granting that waiver may be fairly small.  

Also a waiver request can be filed at any time.  This is an important distinction between the waiver and the Reconsideration request.  You can even pursue the Reconsideration process and, if denied, then request a waiver. 

What happens if I request a reconsideration?

Unlike a waiver request, the reconsideration request says, “I do not owe you this money!”  It contests the underlying overpayment.

Filing this also puts you into the administrative appeal process.  The reconsideration step is the first part. Social Security will probably deny the reconsideration. However, this is a necessary step to get to the next level, a hearing before an Administrative Law Judge.  

In my opinion, if anyone is likely to award you some relief from having to repay the overpayment, it is the Judge at a hearing.

Keep in mind that the reconsideration process may take between four and eight months.  The hearing process may take another six to eighteen months just to get in front of a Judge and another one to three months for a decision to be issued.  In extreme circumstances, this entire process may take 30 months. However, in Colorado, I would usually estimate about a year and half to two years.  

This is not necessarily a bad thing.  

While the case is under appeal, you can request a forbearance of the repayment since you are contesting the underlying overpayment. A forbearance is simply a request that Social Security stop trying to collect the overpayment while you are appealing the overpayment.  This is simple fairness: you should not have to repay if you contest owing the overpayment.

Strictly speaking, Social Security only has to stop any attempt to collect an overpayment during the reconsideration step of the appeal. Social Security can try to collect the overpayment after you are denied on the reconsideration and waiting for a hearing in front of a Judge.

However, Social Security has to stop collection proceedings during a waiver request. So, it may be a valuable strategy to request a waiver along with filing a request for a hearing to make sure that Social Security does not resume collection proceedings while you wait for your hearing. 

The critical thing you need to know is that you usually only have 65 days to file the reconsideration after the date on the overpayment notice:  5 days to receive it and 60 days to file the Request for Reconsideration.  As always, check the time limits and form requirements in the overpayment notice as these things are subject to change.  

So, while you can file the waiver at any time (and SSA my push you in that direction), if you want to fight the overpayment, you must do so quickly or potentially lose that right.

Updated 05/20/09.