If you've been hearing alarming stories about Social Security demanding money back from people on disability benefits, you're not alone. Overpayment notices and so-called "clawbacks" have been a growing concern for SSI and SSDI recipients, and recent policy changes have made the situation even more confusing. Here's what's actually happening and what it means for you.
In this article, we'll cover:
- What Social Security overpayments and clawbacks are
- Why overpayment notices have been increasing
- Recent policy changes affecting how overpayments are collected
- What to do if you receive an overpayment notice
- How to appeal or request a waiver
- Steps you can take to protect yourself going forward
What Are Social Security Overpayments?
An overpayment happens when the Social Security Administration (SSA) determines that it paid you more in benefits than you were entitled to receive. This can happen for a number of reasons: your income changed and wasn't reported quickly enough, your resources exceeded the $2,000 SSI limit, your living situation changed, or SSA itself made an error in calculating your benefits. Regardless of why it happened, SSA considers overpayments a debt that you owe back to the federal government.
For people living on fixed incomes of $994/month (the 2026 SSI individual payment) or the average SSDI payment of around $1,630/month, receiving a notice saying you owe thousands of dollars back to Social Security can be devastating.
Why Have Overpayment Notices Been Increasing?
Several factors have contributed to a rise in overpayment issues. SSA has been dealing with significant staffing shortages and processing backlogs, which means changes in circumstances (like income or resources) sometimes aren't processed in a timely manner. By the time SSA catches up, months or even years of overpayments may have accumulated, resulting in large balance-due notices that blindside recipients.
There's also been an increased use of automated data matching, where SSA cross-references its records with information from banks, employers, and other government agencies. While this helps identify discrepancies, it also means more people are receiving overpayment notices, sometimes for situations they didn't even realize were problems.
The situation became particularly acute when SSA changed its default withholding rate for overpayment recovery. Previously, SSA would withhold 10% of a recipient's monthly benefit to recover overpayments. In early 2024, SSA briefly increased the default withholding rate to 100% of benefits for some recipients, meaning their entire check could be withheld. After significant public backlash, SSA reversed course and returned to a lower default withholding rate, but the episode highlighted how vulnerable benefit recipients are to sudden changes in collection policy.
Recent Policy Changes You Should Know About
The landscape around overpayment collections has been shifting. SSA has made several policy adjustments in response to criticism from advocates, lawmakers, and recipients themselves.
One significant development is that SSA has been directed to improve its overpayment notification process, giving recipients clearer information about why they were overpaid and what their options are. SSA has also reaffirmed that recipients have the right to appeal overpayment determinations and request waivers, and the agency has taken steps to make those processes more accessible.
However, there have also been concerns about aggressive collection efforts, particularly as the federal government has increased scrutiny of benefit programs. Some recipients have reported receiving overpayment notices for very old debts or for amounts they believe are incorrect, adding to the anxiety around this issue.
It's worth noting that the political environment around federal benefits has been contentious, with various proposals to tighten oversight and reduce fraud. While combating actual fraud is reasonable, advocacy groups have raised concerns that legitimate recipients are getting caught up in broad enforcement actions.
What to Do If You Receive an Overpayment Notice
First, don't panic, and don't ignore it. You have rights, and there are specific steps you can take.
Read the notice carefully. It should tell you how much SSA says you were overpaid, the time period involved, and why the overpayment occurred. Check whether the facts match your records. Mistakes do happen, and SSA's own errors account for a significant portion of overpayments.
You have 60 days to respond. Within that window, you can request an appeal (called a "reconsideration") if you believe the overpayment determination is wrong, or you can request a waiver if you agree the overpayment happened but believe you shouldn't have to pay it back.
Request a waiver if repayment would cause hardship. SSA can waive recovery of an overpayment if two conditions are met: the overpayment was not your fault, and repaying it would deprive you of money needed for ordinary living expenses or would be unfair for another reason. Given that most SSI and SSDI recipients are living on very limited incomes, many people qualify for waivers.
If you need to repay, negotiate the terms. Even if a waiver is denied, you can request a lower monthly withholding amount. SSA should not collect at a rate that leaves you unable to meet basic needs. You can propose a repayment plan that works within your budget.
How to Appeal or Request a Waiver
To appeal an overpayment, you'll file a Request for Reconsideration (Form SSA-561). This is appropriate when you believe SSA's calculation is wrong or that you weren't actually overpaid the amount they claim.
To request a waiver, you'll 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 demonstrate that repayment would cause hardship.
You can file both an appeal and a waiver request simultaneously. If you file within 30 days of receiving the overpayment notice, SSA generally must stop any recovery actions until your appeal or waiver is decided. Filing within 60 days also preserves your appeal rights, though recovery may begin during that period unless you specifically request that it be stopped.
Consider getting help from a legal aid organization, disability rights group, or benefits counselor. These cases can be complex, and having someone experienced in Social Security law on your side can make a significant difference in the outcome.
Protecting Yourself Going Forward
The best defense against future overpayments is staying on top of your reporting obligations. For SSI recipients, this means promptly reporting any changes in income, resources, or living arrangements to SSA. Even small changes, like receiving a gift or starting part-time work, can affect your benefit amount.
Keep detailed records of everything: bank statements, pay stubs, any correspondence with SSA, and notes from phone calls including the date, time, and name of the representative you spoke with. If SSA ever questions your benefits, having documentation on your side is invaluable.
Using a bank account that helps you track your resources can also help. When you can see at a glance whether you're approaching the resource limit, you're less likely to accidentally trigger an overpayment situation.
Staying on top of your benefits shouldn't feel like a full-time job. Purple's checking account is built specifically for SSI and SSDI recipients, with tools that help you track your resources and stay compliant so you can avoid surprises like overpayment notices.