Receiving an overpayment letter from the Social Security Administration can send chills down your spine. Understandably, this is a frightening thing to receive in the mail. In fact, if you’ve received such a letter, you are not alone. In recent years, especially after the pandemic, there has been a significant uptick in overpayment situations. “We’ve seen a backlog at Social Security, and overpayments have become collateral damage from this backlog. By the time Social Security identifies an overpayment, it often becomes a major problem,” says Anna Maki, who is a Director of Program Services at Bobby Dodd Institute (BDI). Anna is the driving force behind the BDI’s Benefits Navigation—a comprehensive program that offers an array of services to help identify, obtain, and maximize benefits and resources for individuals and families living with an intellectual/developmental disability.

According to the most recent information circulating in the news, over one million people have been sent overpayment notices, with some needing to pay back tens of thousands of dollars. If you are one of them, don’t panic. There are steps you can take to help manage the situation, and we cover them all in this blog post.

What is an Overpayment?

An overpayment is when you receive more money from the Social Security Administration (SSA) for a particular month. The overpayment amount is the difference between what you received and what you were entitled to. This overpayment can happen in either the Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) program. It is the beneficiary’s responsibility to monitor their income and ensure they are entitled to the payments they receive. If a person is in an overpayment situation, Social Security expects them to pay the money back.

How Do Social Security Overpayments Happen?

Overpayments can happen for several reasons, and failure to report earnings is number one. For SSI, your payments are calculated monthly based on your reported income, so if you don’t report your earnings, you might get the maximum SSI payment even though you’re not entitled to it. For SSDI, if your earnings exceed the substantial gainful activity (SGA) limit and you don’t report it, you’ll keep receiving SSDI payments for months or even years even though you’re no longer eligible, leading to a large overpayment.

Another cause of overpayments is related to resources. With SSI, you can’t have more than $2,000 in total resources. If your resources exceed this amount, Social Security could demand repayment, and over time, the amount you owe can add up quickly. “We advise people to avoid savings accounts and instead use ABLE accounts and monitor their checking accounts to ensure they stay below the $2,000 limit. Even going $1 over can lead to Social Security demanding the SSI money back,” Anna noted.

For SSDI, overpayments are tied to work earnings. After your nine-month trial work period, you’re no longer entitled to SSDI payments if your earnings are over the SGA limit. If you don’t report this, the overpayment can grow over time.

There’s also a common issue when transitioning from SSI to SSDI due to a backlog of cases. During the transition, some people may receive both SSI and SSDI payments at the same time, leading to Social Security miscalculating the payments, resulting in an overpayment notice.

To avoid these issues, it’s important to keep detailed records of your earnings and payments so you know how much exactly you’ve received each month and be familiar with any changes in your eligibility. These techniques can help you stay on top of your finances.

How to Avoid Overpayments

The first and most crucial step to help you avoid Social Security overpayments is to consistently report all your work earnings. Reporting work earnings each month can be a hassle, but it’s necessary. You can set up a ssa.gov account to report earnings online. Sometimes, especially if you have impairment-related work expenses, you can’t upload those online. You either must go into the office or mail them. You must report work earnings every month, preferably before the 10th of the previous month. Social Security relies on pay stubs for accurate calculations, so wait until you’ve received your payment for the month before submitting them.

There are resources available to help you. Social Security has the Red Book, a guide to managing your benefits as a Social Security beneficiary. It includes the rules for SSI, SSDI, substantial gainful activity, impairment-related work expenses, and others. Make sure to download the Red Book and constantly keep it handy.

Know how the rules change, like the cost-of-living adjustment every January. For example, this year, substantial gainful activity (SGA) is $1,550 gross income. Different rules apply if you’re self-employed.

When you applied for Social Security benefits, they considered your disabling condition, but the real question was whether you could work at a substantial gainful activity level. They determined you couldn’t, which is why you were awarded benefits in the first place. However, if you begin to work over that SGA threshold, you’re no longer entitled to the benefits. This raises a red flag, as working over SGA may indicate your disabling condition is no longer severe enough to prevent you from working. That’s something to be mindful of, and programs like the Ticket to Work program may benefit you. Ticket to Work is like an “invisibility cloak” to prevent a continuing disability review (CDR). Typically, when Social Security sees you’re earning at the SGA level, they may initiate a review to assess whether your condition has improved enough to allow you to work over SGA consistently. However, if you have a Ticket to Work, you’re not subject to a CDR during that time, which is a major benefit.

For SSDI, if you’re earning over SGA, you can reduce the overpayment risk by using impairment-related work expenses. Special conditions or a job subsidy also apply more to SSDI, particularly for individuals working over SGA. You’ll need to complete some Social Security forms and have the employer sign off on them. These special conditions could include extra breaks, flexible schedules, or additional support on the job. Even though your gross income might be $1,900, the value could still be less than substantial gainful activity (SGA).

“Knowing the rules is crucial. If you’re unaware of these rules, you risk facing an overpayment situation. You need to know how to frame your work as “special conditions,” what impairment-related work expenses apply to you, and whether you’re a good candidate for the Ticket to Work program. That’s why I recommend everyone working with Social Security benefits to have a benefits counselor; it can get complicated fast,” Anna advises.

What to Do if You Receive an Overpayment Notice

It’s important to remember that when you receive that scary letter from Social Security saying you’re in an overpayment situation, SSA might bypass the appeals discussion and go straight to setting up a payment plan. If that happens, do not feel pressured into doing that immediately. Instead, take the opportunity to appeal, provide a chronology of your situation, and either demonstrate that the overpayment is an error or, if it isn’t, that you can’t pay it. Then, you can request a waiver.

So, what are the steps involved in dealing with an overpayment? Social Security will send you a letter. When you get that notice, take a deep breath. Don’t let them pressure you into immediately paying it back. Social Security makes mistakes, so you must do your due diligence. It’s important to keep a record of your earnings each month so you can compare them with Social Security’s information. Make sure you understand what the issue is. Did you go over a resource limit? Have you not been reporting work earnings? Gather any documentation that could serve as evidence. However, having the proper records isn’t enough if you don’t follow their process. Social Security is very strict about following protocol.

The next step is to request reconsideration. With this step, you are asking SSA to review the situation again. The request for reconsideration is a simple one-page document where you indicate you’re appealing an overpayment. You then explain the basis for your appeal, like errors in Social Security’s records or misreported information. You don’t have to go into all the details on this form. Provide just a brief explanation.

If, after reviewing, you realize there was a mistake on your part, you can then request a waiver of the overpayment. This process allows you to challenge the claim and correct any errors in Social Security’s calculations. The best practice here is to submit a detailed statement using Form 795, a Statement of Claimant or Other Person. Form 795 is a blank form where you can tell your story, explain the chronology, and make your case. It is equivalent to an affidavit, where you swear that the information provided is accurate. You will also need to complete SSA Form 632, which is an extensive document. When you first look at it, you may wonder if all that information is necessary. If you’re going to request a waiver, you do have to complete the forms in their entirety. There’s no way to request an overpayment waiver without sharing your other assets because part of the overpayment issue is determining if you’re even able to make an overpayment.

If SSA denies your request for a waiver, the next step is to negotiate a payment plan. Some letters demand the entire amount upfront, which is usually impossible for most people. In 2024 Social Security changed the rules whereby they can no longer take the full benefit for an overpayment. This opens the door to negotiate a more manageable payment plan, like paying $10 a month. Social Security won’t offer this upfront — you must initiate the negotiation yourself.

It’s very important to track your earnings each month so you can cross-reference them with Social Security’s records to ensure accuracy. If SSA has made mistakes, that can be part of your claim.

Eight Things to Keep in Mind to Help You Navigate Social Security Overpayments

1. Double-check all Social Security’s information. Just because they have it—it doesn’t mean it’s accurate. Think of how many millions of people they’re serving. You’re in charge of you, so look at what they have and compare it with your records.
2. Consider Benefits Planning Query (BPQY). If the overpayment letter from Social Security doesn’t include the breakdown of months and earnings, request a BPQY to cross-reference what they have. How do you get a BPQY? Contact the Social Security office and request it. They may ask you to sign a form for the request and even try to charge you. However, if you tell them you’re working with a Work Incentive Counselor, they can’t charge you for the BPQY for WIPA purposes.
3. Always track your earnings. Social Security looks at gross earnings except for individuals working in a gig economy role; Social Security looks at net earnings for those who are self-employed.
4. You should have a WIPA (Work Incentives Planning and Assistance) counselor. It’s important to have a benefits counselor because navigating all this on your own can be scary and confusing. And with WIPA, the advice is free—it’s a Social Security benefit. Just call the Ticket to Work helpline at 866-968-7842 to get referred to a counselor. At BDI, there are three Community Work Incentive Counselors (CWICs) who have over 45 years of combined experience in WIPA. They serve 54 counties in Georgia. As a matter of fact, most people don’t know that WIPA exists or that a benefits counselor is available to help. “Many people still have benefits suspended, and with a WIPA counselor, we can work toward reinstating those benefits. I strongly encourage you to have a Work Incentive Counselor to avoid these scenarios in the first place. Knowing the rules is your best defense, but Social Security doesn’t do the best job of making them clear,” Anna says.
5. A lot of individuals are eligible for impairment-related work expenses (IRWE) and don’t realize it. Common work-related expenses include transportation, like taking a Lyft to work or paying for medication that helps you stay focused or self-regulate at your job. Those out-of-pocket expenses are deductible, which can help reduce your earnings below the substantial gainful activity (SGA) threshold.
6. If you did go over SGA and didn’t report it, your goal is to figure out how to reduce that number below SGA. Talk to your employer about forms related to special conditions or job subsidies. Employers are often supportive but may not realize these forms are beneficial to you, so explain why they’re essential.
7. Always include that 795 statement, which allows you to explain everything simply and concisely. Make sure it’s easy for Social Security to understand so that you have the best chance of success with your appeal.
8. And remember, even if you lose the appeal, you can still negotiate the repayment. Social Security used to be harsh, often withholding entire benefits checks, but after public outcry, they changed the rules in March 2024. Now, they can only take 10% of your benefits each month, and you can negotiate that amount down to as little as $10.

So, if you receive a notice of overpayment from the Social Security Administration, don’t fret. Do your due diligence, appeal, request a waiver, and, as a last resort, negotiate a payment plan. If you need help navigating this process’s complexities, the BDI Benefits Navigation experts can help.