A Social Security overpayment may occur if your financial situation improved or you are no longer disabled but failed to report the change to the Social Security Administration. If you agree that you were overpaid, you may repay the money in full, establish a payment plan, or propose a settlement amount.
Submitting Full Payment
Upon discovering the overpayment, the SSA will send you a Notice of Overpayment, requesting that you pay the entire sum back within 30 days. Follow the instructions on the notice for repaying the full amount by check, money order or credit card.
If you still are receiving benefits and fail to submit full payment or establish a payment plan, the agency will take the overpayment from your future benefit checks. The deduction amount depends on the type of benefit:
- For Social Security benefits, the full overpayment is taken until the balance is repaid. Withholding begins within 30 days of the overpayment notice date.
- For Social Security Supplemental Income benefits, 10 percent is withheld. Deduction starts within 60 days of the notice date.
Establishing an Installment Agreement
If you cannot repay the money in full within 30 days, or would like to propose a lower withholding rate, contact your Social Security field office to set up a payment plan. Generally, you must fill out a Request for Waiver of Overpayment Recovery or Change In Repayment Rate form to prove that immediate repayment will not allow you to meet basic living expenses, such as:
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- Medicare care
- Supporting your dependents
You can offer a 12-month installment plan, which is the SSA's preferred timeline for this approach. If you cannot repay within 12 months, you can ask for a 36-month payment plan. You can ask for more than 36 months, but only if the debt is for a significant amount. The installment amount should be proportionate to what is owed, with $10 per month being the least you can pay.
Reaching a Compromise
You can offer to repay, as a lump-sum, less than the amount you owe. The Nolo website states that overpayments of less than $5,000 may be lowered by up to 20 percent, and higher amounts may be reduced to an even larger extent.
To discuss settlement options, contact your SSA field office. Be prepared to submit your signed offer in writing, on Form SSA-795 or in letter format.
Failure to repay, whether in full or via payment plan, comes with consequences. For example, if you do not make a payment by the installment date, the SSA will send you a reminder notice. If you still fail to pay, you will be required to pay the full outstanding balance.
Other penalties for non-payment may include:
- Paycheck garnishment
- Federal tax refund levy
- Reporting the debt to credit bureaus