Social Security Disability Overpayments and Getting an Overpayment Waived

Here's a response to two separate comments that were left by an individual regarding an overpayment situation. First, here's a reprint of the comments.

The first situation: "What happens if you responded every year, were told not to worry, spent more time on medical leave than working and then got your disability taken away? That happened to me, I got them reinstated because I am worse than I was before, now I'm facing a huge overpayment. My only income is Social Security and it barely pays the bills. How far can I appeal it and how much can they take each month? Will they leave me without enough income to get by?"

The second situation: "What if you had your benefits taken away because of work, after repeatedly telling them for years you were working and them telling you that your Income Related Work Expenses covered it so you didn't have to worry, and now you're back on disability? They denied my waiver, but the only income my husband and I have is my disability. We can't afford any more bills or anything to be taken out. Can you keep appealing or is the personal conference the only option you have to get the overpayment waiver approved? I'm really scared, it's a lot of money and I'll never have it or be able to work full time again."

Many individuals feel that they have done all they can to prevent their work from causing overpayments, however Social Security (in its bureaucratic wisdom) views most individuals who have be ceased because of work activity to be 'at fault' in creating their overpayment.

Social Security generally provides periodic reminders of how work can affect a beneficiary's entitlement to disability benefits. Consequently they often determine that an individual knew or should have known that they were not entitled to a disability check if they are working and earning over the substantial gainful work activity amount (SGA).

When Social Security will waive an overpayment

Social Security will only waive an overpayment if two things are true. Firstly, an individual must be found without fault in creating the overpayment. Secondly, an individual must prove that paying the overpayment back would cause an undue hardship. Even if an individual is found to be without fault in creating the overpayment, they may still be expected to repay the overpayment if Social Security deems them financially able to repay.

That being said, most individuals who have their disability terminated due to work activity are found to be at fault in creating their overpayment; therefore their overpayment cannot be waived.

You stated that your waiver was denied, and I am guessing that you were denied at your personal conference as well. Once you have been denied at the personal conference level, your only option is to file a request for an administrative law judge hearing.

Making payment arrangements for an overpayment

A word of caution -- if you decide to file a hearing request you still need to make some kind of payment arrangement with Social Security to prevent them from withholding your entire benefit until the overpayment is repaid. Generally, Social Security would like to have all overpayments repaid in thirty-six months, however they will make payment arrangements for far less on a monthly basis if the individual can prove repayment will cause undo financial hardship.

You need to contact Social Security and tell them you need to make a payment arrangement but you cannot afford to pay a large monthly amount. They will tell you what you need to be considered for more affordable repayment terms. Social Security will often take very small monthly payments when an individual does not have extra monthly money once their expenses are paid. This will stop Social Security from withholding your entire disability check, while you wait for the administrative law judge hearing decision.

Hopefully, the judge will waive your overpayment or reduce what you owe, however if the judge only reduces the amount of your overpayment you will still need to continue with your payment arrangement to prevent your disability benefit from being withheld. Social Security usually tries to work with overpaid individuals so that they have enough money to pay their monthly living expenses.

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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