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Social Security: Liability for Overpayments

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Issue 27, Spring 2005


Social Security: Liability for Overpayments

by Lisa Ruby, MPLP Public Benefits Attorney

When the Social Security Administration (SSA) pays a claimant benefits to which that claimant is not legally entitled, the claimant is said to be "overpaid." Sometimes SSA will seek to recover this overpayment. As it often takes the SSA several years to become aware that benefits are being overpaid, the amounts are generally thousands of dollars. Overpayments are usually the result of a change in income, either from employment earnings or an improved medical condition. During the time that it takes the SSA to process these changes, or if the claimant does not report these changes, months of overpayment benefits have accumulated. Overpayments are debts owed to the federal government and recoupment will be attempted regardless of whether the error was made by the SSA or by the claimant. Recoupment is made by repayment of the benefits that were made in error. If recovery can not be had from the claimant, the SSA can seek recovery from the claimant's estate (if claimant is deceased), other individuals collecting off of the claimant's work record, and spouses that are collecting SSI benefits as a married couple. For claimants that have a representative payee, the overpayment may be recovered directly from the representative payee.

Representative Payee's Liability

Some individuals cannot manage or direct the management of their finances because of their youth or mental and/or physical impairments. These claimants have a representative payee, either an individual or an organization, which receives their checks. The representative payee ensures that the money is used for the claimant's benefit. As of 2003, there were about 5.4 million representative payees managing benefits for about 7.6 million beneficiaries. This accounts for approximately $30 billion/year worth of social security benefits. The SSA considers payments to a representative payee to have been used for the benefit of the beneficiary if the money was spent on the beneficiary's current maintenance, including the costs incurred in obtaining food, shelter, clothing, medical care, and personal comfort items. If the funds are misused, or changes in the claimant's circumstances are not reported that would affect the amount of the monthly grant, the payee may be liable for the repayment.

Liability may also be found if representative payees fail to report events, such as changes in income and living arrangements, on behalf of the individuals they represent. Events that must be reported are:

  • The beneficiary dies;
  • The beneficiary moves;
  • The beneficiary marries;
  • The beneficiary starts or stops working, even if the earnings are small;
  • A disabled beneficiary's condition improves;
  • The beneficiary starts receiving another government benefit, or the amount of that benefit changes;
  • The beneficiary plans to leave the U.S. for 30 days or more;
  • The beneficiary is imprisoned for a crime that carries a sentence of over one month;
  • The beneficiary is committed to an institution by court order for a crime committed because of mental impairment;
  • Custody of a child beneficiary changes or a child is adopted;
  • The beneficiary is a child (including a stepchild), and the parents divorce;
  • You can no longer be payee; or
  • The beneficiary no longer needs a payee.

Additional events that you must report for SSI beneficiaries:

  • The beneficiary moves to or from a hospital, nursing home, or other institution;
  • A married beneficiary separates from his or her spouse, or they begin living together after a separation;
  • Somebody moves into or out of the beneficiary's household;
  • The beneficiary has any change in income or resources (i.e., a child's SSI benefit check may change if there are any changes in the family income or resources); or
  • Resources that exceed $2000.

  (Social Security Online -

Challenging An Overpayment

There are two options when appealing an overpayment: reconsideration and waiver. In general, it is best to ask for both if the applicable deadlines have not passed. If claimant requests reconsideration or waiver within 30 days of notification, payments will continue without reduction until a decision is made. When the SSA is proposing that benefits be terminated or suspended due to ineligibility, as opposed to a reduction, claimant can continue receiving interim benefits while the issue of ineligibility is appealed if the appeal is filed within 10 days of notification.

  • Reconsideration: Challenging the fact and/or amount of an overpayment, by filing a request for reconsideration
    • Standard appeals process applies
    • 60 days to appeal from date of notice
  • Waiver: Admitting the existence of an overpayment but challenging the agency's authority to require repayment
    • Criteria: claimant must be without fault and either recovery would defeat the purpose of the Social Security Act or recovery would be against equity and good conscience (e.g., recovery would cause undue hardship)
    • Can be appealed at any time, even after the overpayment has been recouped.