Social Security Overpayment Letter?

Here's What To Do Next


Social Security Overpayment letters are becoming more common.

For those who depend on Social Security payments, receiving a Notice of Overpayment is no fun.  These notification letters will often show up after a change in income or family status and generally allege that the Social Security Administration has paid you too much money.  In this letter they offer you a 30 day window to repay the benefits.

This leaves many shaken who count on this income to buy their groceries or some other necessity.   Fortunately, the Administration is often incorrect in their calculations.

However, there is still a process to follow if you receive one of these letters.  Unless otherwise stated, you have three options.

  • Pay the overpayment within 30 days
  • Appeal their determination within 60 days
  • Request a waiver

The option you choose depends on your circumstances.  Personally, I’ve seen too many bad calculations by the Social Security Administration to ever recommend just repaying the amount requested.  In my opinion, an appeal should always be the first step.

The Appeal

The first part of the appeal is to forget about the 60 day window.  You should file your appeal within 30 days.  Why?  For those requesting an appeal within 30 days, the overpayment will not have to be recovered until after the case is reviewed.  If you wait the full 60 days, it’s likely the Social Security overpayment recovery process will have already started.  This means that the Social Security benefit will be reduced, or worse, eliminated until the overpayment is collected.

The foundation of a great appeal is to understand why the Social Security Administration believes they overpaid you.  Sadly, it’s not always clear in their letters.  Gaining clarity on the reason behind the alleged overpayment will often take several phone calls or visits to the local Social Security office.  In my experience, I’ve found the Social Security technicians to be a mixed bag.  Some know very little about the program but some have forgotten more than I’ll ever know.    The point is, if you don’t get a clear answer on your first visit, go again!  Eventually, someone will be able to explain it in language that is understandable.

Once you have a clear understanding of the reason behind the overpayment allegation, it’s time to write your letter.  Accompanying this letter should always be the Social Security’s Social Security’s Request for Reconsideration Form 561 form (Form 561) and a copy of the letter you received from the Administration.

If you tell them why they are wrong about your Social Security overpayment, be prepared to back it up with references to their POMS Manual and other rules on the Social Security website.  This part may be complicated.  It’ll probably be worth your time to find an attorney or hourly financial planner who is knowledgeable about Social Security.

See my article about finding a Social Security Expert

Once you’ve sent your letter in, expect to wait for at least 4 weeks to receive a response.  In this response they will either:

  1. Agree with your appeal
  2. Request more information
  3. Disagree with your appeal

If they disagree with your appeal, and you still think you are right, it may be time to escalate the issue.  For this, I strongly suggest you find an attorney who can help.  Read more about this escalation process on the Social Security’s website section dealing with requesting a hearing.

If they disagree with your appeal and now you’re pretty sure that you were overpaid, you still have a few options.

Request a Waiver

The first option should probably be to request a waiver from the Social Security Administration.    This would waive or simply “write off” the overpayment.  To have a waiver approved, you must meet two conditions.

First, you have to convince SSA that the overpayment was not your fault. That would be easy to do in a situation where the government miscalculated your benefit.  That’s obviously Administration’s fault, not yours. But if you were overpaid because you failed to report some event that should have changed your benefit amount or even altered your basic eligibility for benefits, then you’ll have a hard time claiming it’s not your fault.

Even if the Social Security overpayment was not your fault, you must also prove to SSA that repaying the debt would create a financial hardship for you and your family. To do this, you have to provide SSA with records of your income and your expenses. This could include wage statements or tax returns and rent receipts, mortgage statements, utility bills, grocery receipts, etc. A Social Security representative will review your household budget and decide if the overpayment waiver can be granted.

If the Social Security Administration ultimately declines your request for waiver, the only option remaining is to pay the money back.  However, you do not have to pay it all back at once.  You can ask them to withhold a certain amount from your monthly Social Security checks until the overpayment is recovered.  If you do nothing, they’ll simply stop your check until the balance is recovered.

The key points to remember are:

  • Sometimes the Social Security Administration is wrong. Challenge them!
  • Expect the appeal process to take several weeks.
  • File your appeal within 30 days.
  • Don’t be embarrassed to request a waiver.
  • If you must pay it back, set up your own payment terms.

Have you ever had an experience with a Social Security overpayment letter?