Negotiating a Repayment Plan for a Social Security Disability or SSI Overpayment

In most situations, Social Security must allow you to pay back an overpayment over a long period of time.

In general, Social Security will negotiate a payment plan with you so you can pay back an overpayment of disability benefits  if  you can show that you cannot afford your basic living expenses unless Social Security reduces the amount they are taking out of your disability check each month. The amount that Social Security will ordinarily take from you each month depends on whether you receive SSI or SSDI.

If you no longer receive SSI or SSDI, Social Security will request the full amount of the overpayment from you, but you can negotiate a repayment plan to pay it back over time. If you don't pay it back, Social Security can take your federal tax return and take other measures.

Paying Back SSI Overpayments

If you receive SSI and Social Security says you have an overpayment to pay back, Social Security will generally collect only 10% of your SSI checks until the overpayment is paid back. However, if your overpayment was caused because you or your spouse committed fraud or concealed information, Social Security can take 100% of your monthly benefit.

Social Security will start to withhold money from your check 60 days after you receive the overpayment notice from Social Security. In some cases, you can negotiate to have a lesser amount taken out of your disability check (discussed below).

SSDI Overpayments

If you receive SSDI and have an overpayment to pay back, Social Security will take your entire monthly benefit until the agency has recovered the overpayment amount. (Unlike with SSI, Social Security doesn't assume you need most of your SSDI income to meet your expenses.)

Social Security will start to withhold your check 30 days after the date of the overpayment notice. In most cases, you can negotiate to have only a portion of your disability check withheld by Social Security (discussed below).

What Social Security Will Not Negotiate About

If you still have any of the overpaid funds in your possession or bank account, Social Security will expect you to turn those over immediately. You will not be able to negotiate a repayment plan that lets you keep cash from an overpayment while you pay the debt back in installments. Second, if you caused the overpayment because you committed fraud or purposely misled Social Security, then the agency will not negotiate a payment plan with you. In some cases, Social Security will refuse to negotiate a payment plan with you even if it was your spouse or a household member who committed the fraud or misrepresentation.

Negotiating a Payment Plan for SSI Or SSDI Overpayments

Whether you are losing 10% of your SSI check or 100% of your SSDI check, if you can’t afford to lose that amount, then you can ask for a different repayment schedule. You need to be prepared to show that you can’t afford what Social Security calls “ordinary and necessary living expenses.” Ordinary and necessary living expenses are things like rent or mortgage payments, food costs, transportation costs, utilities, insurance, medical expenses, and the costs of supporting your dependents.

Social Security prefers repayment plans that will result in the overpayment being paid back within 12 months.  In fact, if you offer a plan that will allow repayment within 12 months, Social Security has to accept the plan.  If you cannot pay the overpayment back in 12 months, Social Security will see if you can complete repayment with a 36-month plan. If you can  repay the overpayment within 36 months, paying at least $10 a month, Social Security must accept your proposal.

In a few situations, your overpayment may be so large that you cannot afford to pay it back in 36 months and still have money for your living expenses. In that case, Social Security will look at how much you can afford to pay them each month and still be able to afford your ordinary and necessary living expenses, and the agency will negotiate a repayment plan that lasts longer than 36 months. However, Social Security will not accept a payment plan of less than $10 per month.

Showing You Cannot Pay Ordinary and Necessary Living Expenses

When Social Security wants to know if you can afford a particular payment plan, it will have you fill out a form called Request For Waiver Of Overpayment Recovery Or Change In Repayment Rate (SSA–632). Section 2 , called “Your Financial Statement,” is your chance to tell Social Security what your ordinary and necessary living expenses are. The form asks financial questions about everyone in your household, not just yourself.

At Question 20 on SSA-632, Social Security asks you to add up all of the monthly income of every household member, add up all of the monthly household expenses, and write the total amount of money left over each month after all expenses are paid. That number will need to support your request for a repayment plan. For instance, if you write that your household has $300 left every month after you pay all of your expenses, then Social Security is not going to accept a repayment plan of $10 per month.

The SSA-632 form also asks questions about your assets, like real estate, vehicles, and bank accounts. Social Security will not require you to put any assets toward repayment of the overpayment if you have no more than $3,000 in assets for a person with no dependents or $5,000 in assets for a person with one dependent, plus $600 for each additional dependent. If you have assets worth more than that, Social Security will expect you to use them to pay your overpayment. Keep in mind that not everything you own counts as an asset to Social Security. For example, your family home and car are not counted toward the asset limit.

Offering a Compromise for SSI Or SSDI Overpayments

In some cases, Social Security will accept an offer to reduce or “compromise” the total amount of the overpayment. If you have the resources available to pay back a significant portion of your overpayment at one time, then you may want to consider offering to pay a reduced amount.

Offers to compromise must be made in writing. You can use the  SSA-795  form or just write Social Security a letter describing the terms of your offer.

To qualify for a reduction in the overpayment, you should be prepared to show that you are unable to pay off the overpayment in a reasonable time, that the costs of collecting the money from you exceed the amount to be recovered, or that there are factual or legal problems with Social Security’s overpayment case that might keep it from being able to win in court.

If you can show that one of those criteria apply to you, then Social Security will look at the terms of your offer. In general, Social Security is more likely to accept an offer to pay at least 60-80% of the total overpayment amount. In most cases, you must be able to pay the entire proposed amount back to Social Security within 30 days from the date the offer is accepted.

Requesting a Waiver

In some situations, you can also request that Social Security cancel the overpayment. For more information, see our article on  what to do if you receive a Social Security overpayment notice.

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