Few things are more stressful than getting a letter from Social Security saying you've been overpaid and need to return hundreds — or even thousands — of dollars. If this has happened to you, you're not alone. Overpayment notices are surprisingly common, and many recipients don't realize they have options beyond simply paying it back.
In this article, we'll cover:
- What an SSA overpayment is and why it happens
- How overpayments affect SSI vs. SSDI recipients differently
- Your right to appeal if you believe the overpayment is wrong
- How to request a waiver if you can't afford to pay it back
- What happens if you don't respond to an overpayment notice
- Steps to protect yourself from future overpayments
What Is an SSA Overpayment?
An overpayment occurs when Social Security determines that you received more money than you were entitled to during a specific period. This can happen for a variety of reasons, and it doesn't necessarily mean you did anything wrong.
Common causes include changes in income that weren't reported quickly enough, exceeding the $2,000 SSI resource limit (even briefly), a change in living arrangements that affected your benefit amount, returning to work without the earnings being processed in time, or an administrative error on Social Security's part.
When Social Security identifies an overpayment, they send a notice explaining the amount they believe you were overpaid and how they intend to recover it. For SSI recipients, the standard recovery rate is a 10% withholding from your monthly benefit. For SSDI recipients, Social Security may withhold the full monthly benefit until the overpayment is recovered, though you can request a lower withholding rate.
SSI vs. SSDI: How Recovery Works Differently
The recovery process differs depending on which program you're in.
For SSI recipients, Social Security will typically reduce your monthly payment by 10% of the maximum federal benefit amount (currently $994/month), which means about $99/month would be withheld. You can request a different withholding rate if even this amount would cause financial hardship.
For SSDI recipients, the default approach is more aggressive. Social Security may withhold your entire monthly check until the overpayment is recovered. However, you have the right to request a partial withholding — and most people do. You can propose a repayment amount that you can actually manage, and Social Security will often agree to a reasonable payment plan.
If you're no longer receiving benefits, Social Security may refer the debt to the U.S. Treasury for collection, which can include withholding from your federal tax refund.
Option 1: Appeal the Overpayment
If you believe the overpayment notice is wrong — the amount is incorrect, the dates are wrong, or you don't think you were actually overpaid — you have the right to file an appeal. This is called a Request for Reconsideration, and you should file it within 60 days of receiving the notice.
You'll want to gather any evidence that supports your case: pay stubs, bank statements, letters from Social Security, documentation of living arrangements, or anything else that shows the overpayment calculation is incorrect.
While your appeal is pending, you can also request that Social Security stop withholding from your benefits until a decision is made. This is important — if you don't ask, they'll start recovering the money even while your appeal is being reviewed.
Option 2: Request a Waiver
Even if the overpayment amount is correct, you may still be able to avoid paying it back. Social Security allows you to request a waiver of the overpayment if you meet two conditions: the overpayment wasn't your fault, and repaying it would deprive you of money needed for ordinary and necessary living expenses or would otherwise be unfair.
"Not your fault" means you didn't knowingly provide incorrect information, you didn't fail to report changes you knew about, and you didn't understand that you were being overpaid. Many overpayments result from processing delays or administrative errors — situations where the recipient had no way of knowing the payment was wrong.
To request a waiver, you file Form SSA-632 (Request for Waiver of Overpayment Recovery). On this form, you'll provide detailed information about your income, expenses, and financial situation to demonstrate that repaying the overpayment would cause hardship.
Requesting a waiver also stops collection while your request is being reviewed, as long as you file within 30 days of receiving the overpayment notice (or within the first 60 days for SSI cases).
What Happens If You Don't Respond?
Ignoring an overpayment notice is the worst thing you can do. If you don't appeal, request a waiver, or set up a payment plan, Social Security will begin automatic recovery — withholding from your benefits, intercepting tax refunds, and potentially referring the debt for federal collection.
Once a debt goes to the Treasury for collection, additional fees and interest can be added, and it becomes much harder to resolve. The key is to respond quickly, even if you're not sure what option to pursue.
How to Protect Yourself Going Forward
The best way to avoid future overpayments is to stay on top of your reporting obligations.
Report changes promptly. If your income, living situation, marital status, or resources change, report it to Social Security as soon as possible. For SSI recipients, changes should be reported by the 10th of the month following the change. The faster you report, the less likely an overpayment will build up.
Track your resources carefully. If you're on SSI, monitor your bank balance and countable assets to make sure you stay below the $2,000 limit. Even a temporary spike — from a tax refund, a gift, or a retroactive payment — can trigger an overpayment if it pushes you over the threshold.
Keep records of everything. Save copies of any documents you submit to Social Security, notes from phone calls (including the date and representative's name), and any letters you receive. If a dispute arises, having documentation makes a significant difference.
Review your annual benefit statement. Social Security sends updates on your benefit amount and any changes. Review these carefully to catch errors before they turn into overpayments.
The Bottom Line
Getting an overpayment notice from Social Security is alarming, but it's not the end of the world. You have rights — including the right to appeal, request a waiver, or negotiate a manageable payment plan. The most important thing is to respond quickly and understand your options before collection begins.
Purple helps SSI and SSDI recipients track their resources and stay compliant with Social Security's rules — so you're less likely to face an overpayment in the first place.