Getting a letter from Social Security saying you've been overpaid is one of the most stressful things that can happen when you're living on disability benefits. Suddenly, the agency that's supposed to be your safety net is telling you that you owe them money — sometimes thousands of dollars. If this has happened to you, take a breath. You have options, and understanding them can make a real difference.
In this article, we'll cover:
- How SSI overpayments happen in the first place
- The two-year rule and why it matters
- How to request a waiver so you don't have to pay it back
- The appeal process if you disagree with the overpayment
- What happens if you ignore an overpayment notice
- How to prevent overpayments from happening in the future
How Do SSI Overpayments Happen?
An overpayment occurs when Social Security determines that you received more in benefits than you were entitled to during a specific period. This can happen for a number of reasons, and it doesn't necessarily mean you did anything wrong.
Some of the most common causes include changes in income that weren't reported quickly enough (or that SSA was slow to process), changes in living arrangements such as moving in with someone who provides food and shelter, going over the $2,000 resource limit (or $3,000 for couples) even temporarily, receiving a lump sum like a tax refund, back pay, or small inheritance, and errors on Social Security's end in calculating your benefit amount.
SSI is especially prone to overpayments because the benefit amount adjusts based on your income and living situation. Even small, legitimate changes can trigger a recalculation — and if the SSA doesn't process the change right away, benefits keep going out at the old rate, creating an overpayment.
Understanding the Two-Year Rule
One of the most important things to know about SSI overpayments is the two-year lookback limit. Under current policy, the SSA generally cannot pursue recovery of an overpayment for any period more than two years before the agency discovered the error — as long as the overpayment wasn't caused by fraud or willful misrepresentation.
This means that if the SSA made an error and overpaid you for three or four years before catching it, they may only be able to collect for the most recent two years of that overpayment. However, this rule has nuances, and the SSA doesn't always apply it automatically. If you believe the two-year limit applies to your situation, you may need to raise it specifically when responding to the overpayment notice.
How to Request a Waiver
Here's what many people don't realize: even if the SSA says you were overpaid, you can ask them not to collect the money. This is called requesting a waiver of the overpayment, and it's available if you meet two conditions. First, the overpayment was not your fault. Second, paying the money back would deprive you of the funds you need for ordinary and necessary living expenses, or it would be unfair for another reason.
To request a waiver, you'll need to file Form SSA-632 (Request for Waiver of Overpayment Recovery). On this form, you'll explain why the overpayment wasn't your fault and provide information about your income, expenses, and financial situation to show that repayment would be a hardship.
The SSA will review your waiver request and make a determination. If approved, you won't have to pay back the overpaid amount — it's essentially forgiven. If denied, you can appeal the decision.
One important tip: requesting a waiver within 30 days of receiving the overpayment notice can stop the SSA from withholding money from your current benefits while your request is being reviewed. If you wait longer than 30 days, they may start recovering the overpayment from your monthly check while your waiver is pending.
Appealing an Overpayment Decision
If you believe the SSA is wrong about the overpayment itself — meaning you don't think you were actually overpaid — you have the right to file a reconsideration and then, if necessary, a formal appeal.
The appeal process for overpayments follows the same steps as other Social Security appeals. You start with reconsideration, where a different SSA employee reviews the facts and makes a new decision. If that doesn't resolve things, you can request a hearing before an administrative law judge, which gives you the chance to present your case, bring evidence, and explain your side.
Many overpayment disputes come down to documentation. If you can show that your income, resources, or living situation were different from what the SSA assumed, you may be able to reduce or eliminate the overpayment entirely.
You can also request both a waiver and a reconsideration at the same time. In fact, this is often a smart strategy: the reconsideration challenges whether the overpayment is correct, while the waiver asks for forgiveness even if it is.
What Happens If You Ignore the Notice?
Ignoring an overpayment notice is one of the worst things you can do. If you don't respond, the SSA will begin recovering the overpayment automatically — typically by withholding a portion of your monthly SSI payment. For SSI recipients, the standard recovery rate is 10% of the maximum federal benefit, which in 2026 means about $99/month taken from your check.
If you're no longer receiving benefits, the SSA can refer the debt to the U.S. Treasury, which can withhold your federal tax refund or take other collection actions. In rare cases involving fraud, overpayments can even be referred for criminal prosecution.
The bottom line: always respond to an overpayment notice, even if you're not sure what to do. At minimum, file for a waiver to protect your current benefits while things get sorted out.
How to Prevent Overpayments in the First Place
While not every overpayment is avoidable — some are caused by SSA processing delays — there are steps you can take to reduce your risk. Report any changes in income, living situation, or resources to the SSA as quickly as possible, ideally within 10 days. Keep your bank account balance well below the $2,000 resource limit, and check it regularly — a forgotten deposit or delayed bill can push you over. Save documentation of everything you report to the SSA, including dates, confirmation numbers, and the name of anyone you speak with. Be cautious with lump sums like tax refunds, gifts, or back pay from other programs, as these count as resources the moment they hit your account.
The most effective way to avoid overpayments related to the resource limit is to have real-time visibility into your account balance and how it relates to the SSI threshold. If you're relying on a generic bank account with no compliance tools, it's easy to accidentally cross the line.
Overpayment notices are stressful, but staying on top of your resources can help you avoid them entirely. Purple's checking account is designed for SSI recipients, with built-in resource tracking that helps you see exactly where you stand relative to the $2,000 limit — so there are no surprises.