How to Pay Back Overpayment of Social Security Benefits

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.

Tip

According to the Social Security Administration website, a full refund of the overpayment is the agency's preferred method of recovery.

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:

  • Food
  • Transportation
  • Utilities
  • 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.

Warning

The Disability Secrets website says that the SSA expects you to turn over all overpayments still in your possession. You cannot negotiate a payment plan while retaining funds from the overpayment. In addition, the agency will not agree to a payment plan if the overpayment stemmed from fraud or misrepresentation by you, your spouse or a household member.

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.

Tip

When considering compromise offers, the SSA examines the debtor's ability to pay the full balance, the amount offered as opposed to what is owed, possible present or future adjustments and the legal costs to recover the overpayment.

Non-Payment Penalties

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

Tip

If you find that your monthly benefit checks are bigger than before, without explanation from the SSA, inform the agency promptly. By taking action early, you can avoid the overpayment, and your repayment amount, becoming even larger.