When receiving Social Security Disability (SSD) benefits, many recipients count on this income for essential living expenses. However, sometimes the Social Security Administration (SSA) issues overpayments, meaning recipients may end up receiving more than they are entitled to. When this happens, the SSA has the right to recover those excess funds through a process known as “clawbacks.” Here is what SSD recipients need to know about handling overpayments and clawbacks effectively.
What Are SSD Overpayments?
An SSD overpayment occurs when the SSA pays a beneficiary more than they are due under their entitlement. This can happen due to various reasons, including:
- Change in income or assets: If you have a change in income or other sources of support, it could reduce your benefit eligibility.
- Work activity: Returning to work or earning above the SSA’s thresholds without notifying them can lead to overpayments.
- SSA error: Sometimes the overpayment results from the SSA’s own mistakes, like a miscalculation of benefits.
When an overpayment occurs, the SSA will issue a notice explaining the amount overpaid, why it occurred, and how they intend to recover the funds.
How Does the SSA Recoup Overpayments?
The SSA typically recovers overpayments through “clawbacks,” where a portion of your future SSD payments is withheld to offset the amount owed. The SSA will usually:
- Reduce future payments: As of spring 2024 the SSA will withhold 10% of your monthly benefit, or $10 (whichever is greater), until the overpayment is fully recovered.
- Lump-sum payments: In cases of large overpayments, they may request a single lump-sum repayment.
- Alternative repayment plans: If the typical 10% reduction causes financial hardship, recipients can negotiate alternative arrangements based on their current income and expenses.
Please note that the new 10% withholding rate applies to new overpayments. If you already had an overpayment with a withholding rate greater than 10% and would like a lower recovery rate, you should call Social Security at 1-800-772-1213 or call your local Social Security office to speak with a representative.
What to Do If You Receive an Overpayment Notice
Receiving a notice of overpayment can be stressful, but there are steps you can take to address it.
You should first verify the overpayment. Carefully review the SSA’s notice to understand the overpayment amount and reason. Sometimes an overpayment can be due to a misunderstanding or error on the SSA’s part.
If you believe the overpayment is incorrect, you have 60 days to file a request for reconsideration. During this process, the SSA will review your case and determine if there was an error.
If you cannot repay the overpayment and it was not due to your fault, you may qualify for a waiver. A waiver means that the SSA forgives the debt, especially if repayment would cause financial hardship.
How to Avoid SSD Overpayments
Avoiding overpayments starts with timely communication and record-keeping. Here are some proactive steps to help avoid overpayment situations:
- Report changes promptly: Inform the SSA about any changes in your financial or employment situation, no matter how minor.
- Keep detailed records: Track all correspondence with the SSA and document changes in your income, assets, or household composition.
- Understand SSA rules: Familiarize yourself with the SSA’s reporting requirements, especially around work activity and earnings thresholds.
The Impact of Overpayments on Your Finances
An SSD overpayment can be a significant financial burden, especially if the clawback reduces your monthly benefits below what you need to cover basic expenses. While the SSA does allow you to request alternative payment arrangements, understanding your options can help you plan ahead. If you struggle to navigate this process, consider consulting with a legal professional who specializes in Social Security issues.
Empowered Disability is Here to Help!
At Empowered Disability, our social security disability attorneys believe that our clients in the Pacific Northwest and across the nation deserve a compassionate legal advocate who will do everything possible to get their claims approved, whether on initial application or through the appeals process.
SSDI is all that our firm handles, and we devote 100 percent of our energy to every single case we accept. We offer free consultations, and you pay no fees unless we secure your disability benefits. Contact us now!
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