How Do You Avoid, and What causes, a Social Security Disability Overpayment?

The most common reason for an overpayment of disability benefits is work activity on the part of the disability beneficiary. Many disability beneficiaries find that living on their disability benefits is difficult so they find a job to supplement their income. Which is perfectly fine if the Social Security Disability and SSI guidelines about work activity are adhered to.

It is important for disability beneficiaries to be aware of substantial gainful activity earnings amounts: any month in which an individual works over that limit (SGA limit), after the full utilization of their nine month trial work period, could make them ineligible for benefits.

Obviously, if the Social Security Administration pays benefits for months that a disability beneficiary was ineligible due to work activity, it causes an overpayment. For this reason it is very important to report all work activity to Social Security timely.

Another common reason for an overpayment of disability benefits is a person's entitlement to workman's compensation benefits. If a disability beneficiary receives workman's compensation benefits, or a workman's compensation settlement, they should contact Social Security immediately so that Social Security can apply the proper offset to their

It may not seem fair, but Social Security Disability benefits are offset by any public disability (i.e. California state disability benefits) or workman's compensation benefits. If a beneficiary does not report these benefits, they will incur an overpayment with Social Security.

Reasons for an overpayment with Social Security other than those listed above that may not be the disability beneficiary's fault are computational errors (i.e. Social Security paid the wrong amount) on the part of the Social Security Administration.

These errors occur occasionally. If the disability beneficiary has no way to repay the erroneously paid disability benefits, their overpayment is waived by Social Security.

However, if a disability beneficiary has the financial means to repay even an overpayment caused by Social Security, they will have to repay the erroneously paid benefits.

There are two factors that must be met for Social Security to waive repayment of an overpayment. They are A) that the individual must not be at fault in creating the overpayment and B) they must not have the financial mean to repay the overpayment.

A word of caution: if an individual's disability benefits are ceased due to
medical improvement or the performance of substantial work activity for so many months that their disability benefits were terminated, there is often a large overpayment of benefits. Social Security considers this kind of overpayment to be the fault of the disability beneficiary and expects repayment.

Consequently, if a disability beneficiary wants to avoid being overpaid, they should be mindful of all work activity or entitlement to benefits such as workman's compensation or public disability benefits.

About the Author: Tim Moore is a former Social Security Disability Examiner in North Carolina, has been interviewed by the NY Times and the LA Times on the disability system, and is an Accredited Disability Representative (ADR) in North Carolina. For assistance on a disability application or Appeal in NC, click here.

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