Social Security Benefits Handbook online edition 
What You Want To Know - What You Need To Know

Chapter Eleven Overpayments


Section 1101 -    Overpayments in General


      An overpayment arises when you get more Social Security benefits than you are legally entitled to receive.  Each year thousands of people are overpaid benefits.  Overpayments occur for many reasons.  Sometimes it is Social Security's fault, sometimes it is the beneficiarys fault and sometimes it is a combination of both.  Of course, Social Security would like to recover any benefits that were erroneously paid. However, the law and the Social Security rules allow for "waiver" of repayment of the overpayment.  In certain cases a beneficiary who has been overpaid will not be required to make a refund.  This chapter will discuss the rules and guidelines Social Security uses when determining whether or not to require a full refund of an overpayment.

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Section 1102 -    Common Causes of Overpayment

      There are two separate categories of overpayments.  The most usual one is called a "deduction overpayment."  In these cases the beneficiary is legally entitled to benefits but for some other reason, part or all of the benefits should not have been paid.  This situation frequently arises when the beneficiary has earnings over the limit for the year, but benefits were paid based on a lower estimate.

      Another common cause of overpayments is when a new beneficiary becomes entitled on the same Social Security account.  For example, a man dies and leaves his wife and two children.  They become entitled to benefits.  Several months later a child by a previous marriage applies for benefits on that account.  Due to the family maximum provisions (Section 703.2) an overpayment arises retroactively.

      When there are three or more beneficiaries receiving survivor benefits the family maximum is usually met.  When the widow and first two children filed and started receiving benefits they were paid on the assumption that there would be only three beneficiaries on the account.  When the child by the first marriage applies, his application can be retroactive for up to 6 months.  Although the benefits will be refigured for the future and the first two children and widow will receive less, the benefits for the past were higher than they should have been.

      Another type of overpayment is called an "entitlement overpayment."  This occurs when you file for benefits and Social Security pays them but later discovers that you were never eligible.  Any benefits you received are an overpayment.

      Sometimes overpayments can occur due to clerical errors.  When your benefits are being calculated, they are based on the amount of the earnings.  Sometimes a clerical error can occur so that the amount of your earnings are figured at a higher level then they actually were.  This means that the amount of your benefit was greater than it should have been and the difference is an overpayment.

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Section 1103 -    Overpayment Procedures

      Once Social Security determines that a person has been overpaid, a decision must be made whether to collect back the overpayment or to waive it.  If waived, Social Security will not require repayment.  Social Securitys guidelines and procedures for waiver of repayment are discussed in Sections 1104-1109.

      If Social Security requires a refund, this can be done in different ways.  They may accept a partial refund as a compromise in full settlement (Sections 1110-1111) or allow for repayment over a period of time (Sections 1113-1114).

      When Social Security determines that you have been overpaid a letter will be sent to you advising you of that fact and the amount of the overpayment.  The letter will explain how the overpayment occurred.  Social Security will always request a full refund of the overpaid amount.

      If you disagree that there has been an overpayment or with the amount of the overpayment you may request a reconsideration (see Chapter 13).

      In the overpayment letter Social Security says they will start withholding 100% of your monthly benefits until the full amount of overpayment has been recovered.  If you request an appeal, a waiver, or some other method of repayment, Social Security will hold up any further processing of the recovery until a decision has been made on your request.

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Section 1104 -    Waiver of Overpayment

      Social Security will not require you to refund an overpayment if certain conditions are met.  To be eligible you must be "without fault" in causing the overpayment (Section 1105) and repayment would either be "against equity and good conscience" or it would "defeat the purpose of Title II of the Social Security Act."  

     There are two requirements for wavier of repayment.  The first is "without fault" and the second is alternative:  either "against equity and good conscience" or "defeat the purpose of Title II."  "Without fault" is discussed in Sections 1105; "against equity and good conscience" is discussed in Section 1106; and "defeat the purpose of Title II" is discussed in Section 1107.

      You must satisfy the "without fault" requirement in all cases, and either one of the two alternative requirements.  An overpayment may be waived if you are without fault and recovery would be against equity and good conscience or you are without fault and recovery would defeat the purpose of Title II.

      "Against equity and good conscience" means that it would be unfair under the circumstance of your case. "Defeat  the purpose of Title II" means you would lose a minimum income required by reason of retirement, death or disability.  This requirement may be met if recovery would prevent you from meeting your ordinary and necessary living expenses and you have insufficient assets.

      If you are found eligible for waiver, you will not be required to repay the overpayment.  The slate will be wiped clean and you will have no obligation for repayment at any time.

      If you are not eligible for waiver, you will be required to repay.  This can be done by a compromise settlement in a lesser sum (Sections 1110-1111), by partial payments (Section 1114) or by deductions from your checks (Section 1113).

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Section 1105 -    "Without Fault"

      Generally, "without fault" means that you gave all information to the Social Security Administration which was necessary to determine your benefits and that you could not reasonably be expected to know that an overpayment would occur by accepting and cashing a particular check.  If you cannot establish that you were without fault in causing an overpayment, the recovery of the overpayment can never be waived.  "Without fault" is a requirement which must be met in all cases of waiver.

      SSA may have been at fault in causing the overpayment; nevertheless, you must establish that you were without fault.  SSAs fault does not excuse yours.

      Each particular case will be examined to determine its own specific facts.  The general principles are that you must report everything which may affect payment of benefits and you must exercise a high degree of care when determining whether or not a check is payable.

      There are many situations which have occurred repeatedly involving the question of whether or not a beneficiary was at fault in causing an overpayment.  SSA has identified certain situations where it is presumed that the beneficiary was without fault in the absence of other information which indicates otherwise.  These situations are described in Section1105.

      There are some situations where SSA presumes the beneficiary was at fault.  The most obvious case is when duplicate payments have been made.  If you cash your regular monthly check and a replacement check, you will not be considered without fault.  If you file an application for benefits but you are already receiving on another account, you are at fault if you accept benefits from both accounts, unless you told SSA that you were already entitled on the first account.

      You are at fault in causing an overpayment if you do not exercise a high degree of care about your monthly benefits.  If for example, you return to work but do not report this, you will be at fault if an overpayment results.

      If you do not deal in good faith, you will not be held to be without fault.  For example, if you incurred an overpayment in one year because of work, requested and obtained a waiver of repayment but then worked again in the following year, you will not be considered without fault for the second year because you knew that your earnings would affect your benefits.

      If you withhold information from SSA which could affect your benefits, you will not be without fault.  At the time you filed your application, you are given a receipt which lists on it the things which must be reported.  From time to time SSA puts "stuffers" into check envelopes to remind you of things to report.

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      Examples of "Without Fault"

      Over the years SSA has become aware of certain typical situations where the overpaid person is without fault.  They have identified these situations and will assume that if your case fits within these facts you are "without fault" in causing the overpayment.  This assumption may be overcome by other facts which show bad faith or failure to exercise a high degree of care about your monthly benefits.


      Situation One

      A person is usually found to be without fault if there is a mistake about the benefit rates.  SSA will not require you to know the exact amount of your monthly benefits but if the error is so grossly disproportionate to what your payment should be, you may be at fault.  For example, John applied for retirement benefits and was told he would receive $900 per month.  The first check was $900, but the second check was $6,000.00.  This payment is so out of line with what he should have expected that he may be at fault unless he attempted to verify it with SSA.  On the other hand, if he received checks in the amount of $950 all along after he retired and then was advised a year later that the correct amount should have been only $900, Social Security will consider him to be without fault in causing the overpayment because he cannot be expected to calculate the exact benefit amount.


      Situation Two

      If you file for monthly benefits and you are told that you have earned enough to be eligible but it later turns out you did not, you will be considered without fault in causing any overpayment (unless your earnings record was fraudulent).


      Situation Three

      If you believed that only the net amount of your paycheck counted towards the retirement test, you may be without fault in causing an overpayment.  If your earnings for a year are over a certain level it will cause a reduction in your benefits.  The gross amount of earnings, before taxes are deducted, is what counts.  Many times a beneficiary believes that only his take-home pay is counted for the annual earnings limitation or the monthly limit.  Your "take-home" pay is the amount of your paycheck after all deductions, such as income tax, union dues, insurance, hospitalization, etc.  If your net cash earnings (take-home pay) for the year are below the annual earnings limit, then Social Security will generally consider you to be "without fault" if you believed that only your take-home pay counted.  If your net cash earnings are over the limit for the year, SSA will consider whether or not you reported the net amount or the gross amount for purposes of the annual earnings limitations.  If you report the amount of take-home pay to SSA this will indicate that you understood that only the take-home pay counted and not the gross pay.  Social Security will want to look at your pay stubs to determine the net amount of your take-home pay.  If you cannot obtain them, they will usually contact your employer to find this out.


      Situation Four

      You will be considered to be without fault in causing an overpayment if you relied on incorrect information from an official source.  An "official source" means SSA or another government agency which you reasonably thought was connected with the administration of social security, such as the Railroad Retirement Board.  Misunderstanding of correctly given information does not count as misinformation for these purposes.

      If you claim misinformation was given to you, Social Security will question you very closely to determine whether of not you misunderstood correct information or whether misinformation was in fact given.  They will look to determine your normal understanding, because some people can understand technical requirements better than others.  You must give a full explanation of your reliance on wrong information.  They will ask for an explanation for your own words.  The explanation will have to show what information was received, the time and place it was received, the identity, if possible, of the person who gave the incorrect information and any and all other facts about it.  SSA will seek to verify the statements you give by contacting people within the district office or elsewhere who you say gave you the misinformation.  If supporting evidence cannot be obtained, the manager or supervisor in the office will make a report as to the likelihood of misinformation being given.  If records are no longer available and there is no way to verify your allegations, they will resolve the doubt about it in your favor.


      Situation Five

      Sometimes a person is overpaid because he has earned over the allowable earnings limit for a particular year without realizing that his earnings before he became entitled to benefits in that year would count.  For example, you start receiving benefits in June.  Your earnings for June through December are only $8,000, well below the annual earnings limit.  But you also worked from January through May and earned $10,000.  The total yearly earnings are $18,000 and will cause deductions for any month you earned over the monthly limit (Section 804).  If you received all your monthly benefits and earned over the monthly limit in all months, you are overpaid.  If you believed that your earnings before you became entitled to benefits did not count for the earnings test, Social Security will consider you to be without fault in causing the overpayment.

    For this rule to apply your earnings for the year beginning with the time you become eligible must not exceed the annual earnings limit for that year.  The intent of this rule is to provide for a "without fault" finding if you restrict your earnings to the yearly limit beginning with the time you become eligible for benefits.  Although all your earnings for the year are included for purposes of the work test, if you were unaware of this and believed in good faith that only your earnings after entitlement counted, Social Security may find you to be without fault.

      If you are an employee and your wages in the deduction months (months which are subject to withholding because of earnings) did not exceed the total monthly benefit for that month, recovery of the overpayment is deemed inequitable.  In this situation the overpayment may be waived without considering your financial circumstances.  The following example shows the application of these rules.


    Example: William Smith, age 63, began his entitlement to retirement benefits in March 2007. His monthly amount was established at $900. He earned $4,000 in the months of January and February. His wife also became entitled to wife’s benefits in the amount of $450. Benefit checks were issued to Mr. Smith and his wife each month beginning with March 2007 based on his statement that he would not earn over the yearly amount permitted under the law. Mr. Smith’s employer later reported wage of $16,000 in 2007.

    It seems that Mr. Smith misunderstood the retirement test. Mr. Smith believed that he could earn the annual limit after qualifying for benefits and reduced his hours of work so his earnings would not exceed $12,960, the annual limit for 2007 for those under Full Retirement Age ($1,296 a month for ten months). On the basis of his earnings, he and his wife were overpaid. Mr. Smith is without fault in incurring the overpayment and recovery is deemed to be against equity and good conscience because the earnings in each of the months affected by the potential deductions (March and April) are less than his monthly benefit amount for those months.

      The term "eligibility" for benefits is used broadly for purposes of this rule.  It does not necessarily mean legal entitlement.  It will usually mean what the beneficiary understands.  If the beneficiary believes that his earnings before he files his application do not count, Social Security will look at it from that view.  If he believes his earnings before reaching retirement age wont count, they will apply the rule that way.

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      Situation Six

      If your earnings for a year go over what you expected them to be, you may be found to be without fault in causing a resulting overpayment if the reason the earnings are greater is one of the following:  1 - You received a retroactive increase in pay; 2 - Your rate of pay was higher than you realized; 3 - You made an agreement with your employer that your earnings would be kept below a certain limit but the employer did not restrict the earnings and you were unable to keep accurate records; 4 - There were five pay days in a month and you only expected four pay days, (if your monthly earnings with only four pay days would be under the monthly limit), or you figured your annual earnings based on four pay days per month and you would have been under the yearly limit on that basis.


      Situation Seven

      You may be without fault in causing an overpayment if Social Security continued to send you checks after you notified them that you returned to work, or about something else which should have caused a deduction.  You qualify under this rule if you believe in good faith that you are entitled to receive the checks because Social Security is still sending them to you.  SSA will want to know how and when you gave notice of the events that were reported and what your reaction was to the continued payment of monthly checks.

      Many times a person will say that notice of the deduction event (such as return to work or not having a child in your care) was to be given by a relative or friend.  If this is the case, Social Security will not consider you without fault because you have the duty to report these events, not someone else.  However, if you routinely rely on this other person to report these things for you, Social Security may take that as a circumstance to consider.  For instance, if you are housebound or unable to speak English and your daughter or son takes care of your affairs, Social Security may allow that as a reasonable excuse.


      Situation Eight

      Sometimes overpayments occur because employees receive special types of payments which they do not realize are included in annual earnings for purposes of the retirement test.  If you believe in good faith that a bonus, vacation pay, traveling expense or other similar payment was not to be included in figuring your earnings, Social Security may consider you to be without fault in causing an overpayment which was caused by the inclusion of those payments.  Social Security will contact your employer to determine the amount and the type of special payment involved.  If you were unaware that those special payments counted, Social Security will generally consider you to be without fault in causing an overpayment resulting from that extra pay.  Please note that you must still satisfy the second part of the waiver test (Section 1104).


      Situation Nine

      Another common situation causing overpayments is when the beneficiary is confused with regard to how the annual earnings test works.  An overpaid beneficiary sometimes believes that earnings over the limit for the taxable year cause deductions from your checks only for months beginning with the first month in which your earnings go over.  If you report timely to Social Security that your earnings reached that level when they did, you may be eligible for a waiver if you are overpaid.  Two important factors are considered:  1 - did you in fact notify SSA when your earnings reached the yearly amount or immediately thereafter, and 2 - if so, waiver can apply only for months before the time you reported your earnings.  You know your earnings after you go over the limit will affect your benefit, so you cannot be without fault if you accept them.


      Situation Ten

      If you receive benefits as a dependent on the account of a retired worker, your benefits may be subject to deductions if the worker earns over the annual limit (Section 801).  If you were overpaid as a result, you may be "without fault" if you didnt know (and had no reason to know) that the workers earnings would go over the limit, and you were not living with the worker.  You must still meet the second part of the waiver rules (Section 1104).


      Situation Eleven

      If your benefits end during a year, your earnings after termination nevertheless are counted for the work test.  This may result in overpayment of benefits which were paid.  If you believed that your earnings after termination of entitlement would not cause deductions for the earlier months, you may be "without fault" in causing the overpayment.  You must still meet the second part of the waiver rules (Section 1104).

      Social Security will require a breakdown of your earnings to see if you earned over the yearly limit during the time you were entitled.  They will require evidence of the earnings, such as pay stubs or a letter from your employer.


     Situation Twelve

      You may be "without fault" in causing an overpayment if you made a good faith effort to restrict your earnings, but you misunderstood the retirement test, or there was some other unusual circumstance.



           A self-employed person believed the monthly wage limits applied instead of the "substantial services" rule (Section804).


           You wanted to restrict your earnings and kept an ongoing record, but you made an arithmetical error, or you lost a pay slip.


           You believed you could earn up to the yearly limit beginning with the month of your first check up until the end of the year.


            Social Security will require verification of what you say, such as evidence of your wages for specific periods.


NOTE: "Without fault" under this category can be found only in cases where the circumstances of the overpayment are not covered by any of the other "without fault" situations. If you allege "without fault" under one of the other situations above, but you do not meet those requirements, this section cannot be used to circumvent the intent of the other provision.

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Section 1106 -    "Against Equity and Good

      One of the alternatives to the second part of the waiver rules (Section 1104) is that recovery of the overpayment (making you pay it back) would be against aquity and good conscience.  This occurs if, relying on payment of benefits, you gave up a valuable right, or changed your position for the worse.  If you claim waiver because of this, Social Security will require you to give a full explanation of the circumstances.  They will require verification of what you say.  The evidence required will depend on the facts of your particular case.

      Remember that in all cases you must establish "without fault" (Section 1105).  If you cannot establish "against equity and good conscience," you may still be eligible for waiver if you can establish that recovery would "defeat the purpose of Title II" (Section 1107). If you can establish "against equity and good conscience" you do not have to prove the financial requirements necessary for "defeat the purpose of Title II."


      Examples of "Against Equity and Good Conscience"

      Whether your case will be considered to meet the "against equity" requirement depends on the particular facts.  Here are some examples of situations where the requirement is satisfied.


      Example:  John applied for retirement benefits and was awarded.  He resigned from his job, relying on the monthly benefits.  Three years later it is discovered that his earnings record was wrong, without fault on Johns part.  He does not have the required insured status (Section 601) and therefore he has been overpaid.  Because of his age, he cannot get another job.  Recovery of the overpayment would be against equity and good conscience.

      Example:  Agnes is a widow who applies for and receives survivor benefits.  Counting on this income, she enters her daughter in college, which would not otherwise be possible.  It turns out that her husband didnt work long enough and Agnes is therefore overpaid.  Recovery of the overpayment would be inequitable.


      Other Situations

      In certain situations you are considered to be "without fault" in causing an overpayment (Section 1105).  In some of these same cases, recovery is also considered to be "against equity and good conscience" and you are therefore eligible for waiver of the overpayment.  If so you do not have to establish financial hardship.

      Certain "without fault" situations are described in Section 1105.  Situations three, four and five of that section are also considered to meet the "against equity" rule.

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Section 1107 -  "Defeat the Purpose of Title II"

      An alternative requirement of the second part of the waiver rules (Section 1104) is that recovery of overpayment would "defeat the purpose of Title II of the Social Security Act."  This is the law which provides for social security benefits.  Its purpose is to keep the disabled, the retired and survivors out of destitution.  You meet the "defeat the purpose" requirement if recovery of the overpayment would deprive you of funds which are necessary for your support.

    NOTE: if you have any part of the overpaid funds in your possession, or under your control, you cannot establish "defeat the purpose" as to the extent of such funds, even if you purchased assets with the funds, as long as they are clearly identifiable.

      Social Security looks first at your income (from all sources) and your ordinary and necessary living expenses (Section 1109).  If you do not need all your income, then Social Security will look at your assets.  If they are below certain levels, you will not have to repay the overpayment (Section 1108).

      If you do not meet the "defeat the purpose" requirement, you may be eligible for waiver if recovery would be "against equity and good conscience" (Section 1106).  In all cases, you must also be "without fault" for waiver to be approved (Section 1104).

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    Examples of "Defeat the Purposes of Title II"

      Example 1:  Virginia was overpaid $900.00.  She had income of $195 from a private pension and $430 in Social Security benefits.  She lives alone and has no dependents.  Virginia listed current monthly expenses of $620 which included $275 rent for her apartment, $20 for clothes, $200 for food, $30 for medical care and prescriptions, $10 for church contributions, $30 for utilities, and $55 for auto maintenance and insurance.  She submitted bills verifying her rent, utilities, prescriptions, and automobile insurance.  Since the overall expenses seem reasonable and necessary for ordinary living expenses, a finding of "defeat the purpose of Title II" would be justified.

      Example 2:  Dan was overpaid $350.  He and his wife live in a small home valued at $50,000.  They also own a motor boat valued at $7,000 and on which they still owe $4,000.  Their only income is Social Security benefits of $600.  They only have $200 in a savings account.

      They state that their monthly expenses are $640 including $100 for property taxes, $300 for food, $20 for clothing, $20 for prescriptions, $50 for utilities, $50 for insurance and upkeep of their car, and $100 to repay the loan and to maintain their boat.  As the boat is not a necessity and their expenses for ordinary living costs do not approach their income, a finding of "defeat the purpose of Title II" would not be justified.

      Example 3:  Will, his wife Mae, and son Joe have $500 in the bank.  Will lives in a low income housing project and alleges that his total monthly expenses are only $400, consisting of rent of $80, food of $300, and telephone of $20.  His income is only $380.  His expenses can be presumed to be reasonable.  A finding of "defeat the purpose of Title II" is justified.  If, however, his monthly income were $450.00, "defeat the purpose of Title II" would not be justified.


      Example 4:  Joe was overpaid $600 because it was determined that he did not have enough work to collect Social Security benefits.  He has no monthly income.  He does have $5,000 in the bank.  He has outstanding medical bills of $2,200 and more medical bills are coming in monthly.  The medical bills will soon wipe out his assets.  In this case, even though his assets exceed the limit, a decision that recovery of the overpayment would "defeat the purpose of Title II" would be justified.

      Example 5:  Charlie and Maureen were overpaid $1,600.  They have $5,900 in a savings account.  Their only income is Social Security of $600.  Their monthly expenses are $600.  A split decision can be made on this overpayment.  Social Security can recover $900 to reduce their total assets to $5,000.  The remaining $700 overpayment can be waived because reducing their assets below $5,000 will "defeat the purpose of Title II."


      Example 6:  Bob and Dale were notified that they were overpaid $500.  They claimed that they were without fault in causing the overpayment and unable to repay.  Social Security learned that they still have the $500 in Social Security benefits deposited in a savings account.  Recovery of the overpayment would not "defeat the purpose of Title II."  However, if they had used $300 to pay debts, this portion of the overpayment may justify the finding of "defeat the purpose of Title II."  They will still be responsible to repay the remaining $200.

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Section 1108 -    Guidelines on Assets

      If all your income is required for your support (Section 1109), Social Security will look at your assets to decide if recovery of an overpayment would "defeat the purpose of Title II" (Section 1107).

      Generally, Social Security will not require you to reduce your assets below $3,000 to pay back an overpayment.  If you have a dependent, the guideline is $5,000.  You can allow an additional $600 for each additional dependent.  For instance, the guideline for a person with two dependents is $5,600.

            "Assets" include all liquid assets, such as bank accounts, stocks, bonds, etc., and the reasonable value of non-liquid assets such as real estate.  Not included are: the value of household furnishings; wearing apparel; burial plot or prepaid burial contract; family automobile or family home; a vehicle needed for the support of a handicapped family member (in order for a vehicle to meet this exclusion, it must provide support that the family vehicle cannot provide, and must have been purchased for and be used for the transportation of the handicapped person); any asset which is generating income needed to meet ordinary and necessary living expenses; IRA's and Keogh Plan funds are not assets when the fund is income producing, otherwise, they should be considered as assets.

      If you are the beneficiary of a trust fund, it is an asset if you have access to the funds and they are liquid. If you own real estate jointly, your share is not an asset if the other owners do not agree to sell the property. Social Security does include assets resulting from a pending inheritance, even if not yet received.

      Example:  you are overpaid $2,500.  You are "without fault" and you need all your income for your support.  You have no dependent, but your assets are $4,000.  Social Security will waive recovery of $1,500, but require repayment of $1,000, the amount by which your assets exceed the guidelines.


      Example:  Harry has assets over the guidelines.  However, his wife is seriously ill.  There are outstanding medical bills which, when paid, will reduce the assets below $5,000.  More medical bills are anticipated which will soon wipe out the remaining assets.  Harrys present assets will not preclude a finding of "defeat the purpose of Title II."

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Section 1109 -    Guidelines on Income and

      To be eligible for waiver of an overpayment on the ground that recovery would "defeat the purpose of Title II" (Section 1107), you first must show that you need all of your income to meet your living expenses.  If you receive public assistance, you will automatically meet this requirement. Social Security has flexibility when considering your income and expenses.  They do not wish to cause a hardship.  However, they will not accept expenditures which are beyond the ordinary and necessary living expenses for food, clothing and shelter, taking into account your standard of living. But they will not allow expenses for a luxurious standard of living that developed after you received the overpaid money.

      Income from all sources is counted, including the income of a spouse and other dependent relatives living in the same house, whether or not they receive benefits.

      The amount of reasonable expenses depends on the cost-of-living for your area.  The knowledge and judgment of the local Social Security employee reviewing your case is considered.  Expenses include those incurred for food, clothing, rent, mortgage payments, utilities, maintenance, life, accident and health insurance premiums, taxes, installment payments, medical and drug bills, child support, charitable contributions, newspapers, cigarettes, household supplies, gasoline and other miscellaneous expenses.

      Expenses to purchase or maintain non-essential items such as a boat or vacation home are not counted.

      If a debt will be paid off in the near future, this will also be considered.

      If your allegations about your living expenses, income or assets appear incorrect, Social Security will require you to produce evidence to prove them.  They will require verification if  expenses appear too high, if the Social Security interviewer doubts that the income and assets of other household members have been included, and if you received a large retroactive check which was an overpayment and you claim you no longer have the funds because of unusually large expenditures.

      If your expenses are higher than your income, Social Security will want to know how you meet them.  If you cannot produce evidence of this, such as a dwindling bank account, they will not believe you.

      These are no hard and fast rules about the types of acceptable evidence.  If evidence you first submit appears convincing, you will not be required to produce better evidence which may be available.  Examples of evidence commonly accepted are letters from employers, copies of tax returns, tax receipts and bills, installment payment books, etc.

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Section 1110 -    The Compromise Settlement

      The Social Security Administration has authority to accept compromise settlements where the amount of the overpayment is not greater than $20,000.  This means that they may accept less than the total overpayment in full settlement.  In that case there will be no further recovery of the balance.  An offer to settle an overpayment greater than $20,000 will be referred to the Justice Department or the General Accounting Office.

      Social Security cannot compromise an overpayment claim if the overpayment resulted from fraud, unless the overpaid person is deceased and the overpayment is $5,000 or less.  However, if someone else who is still alive contributed to the fraud, the claim cannot be compromised regardless of the amount.

      A claim to recover an overpayment may be compromised only if one of the following conditions exist:

      1.    You are unable to repay the full amount within a reasonable time or the Government is unable to enforce collection within a reasonable time; or

      2.    There is real doubt about the Governments ability to prove its case in court; or

      3.    The cost of collecting the claim is likely to exceed the amount of recovery (this is presumed if the difference between the compromise offer and the amount of the overpayment is less than $500.00).

      A compromise offer must be in writing and signed by the overpaid person.  An offer signed by an attorney may also be accepted if it appears he is in a position to carry out its terms.

      The written statement should include:

      1.    The reason a lesser amount has been offered.

      2.    The overpaid persons name, claim number (Section 1407), and current address.

      3.    The total amount of overpayment.

      4.    The amount offered as a compromise.

      5.    When and how the compromise amount will be refunded.  (It should be within 30 days after acceptance of the offer.)

      6.    An understanding that if the compromise is not timely paid, the full amount will be due.

      Once the offer is made, it will take several months to get an answer.  The decision whether to accept it is not made in the District Office.  It is referred to a Program Service Center or the Office of Disability Operations (Section 102).  If Social Security does not accept the offer, they may make a counter offer.

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Section 1111 -    Guidelines for Accepting
                  Compromise Offers

      Social Security will first decide if they have authority to compromise (Section 1110).  If so, they will consider whether they could recover the overpayment by withholding checks within the next three months.  If so the offer to settle should be at least 80% of the total overpayment.

      If enforced collection is not possible, an offer of 50% of the overpayment will usually be accepted if you are financially unable to repay in full.  An offer of less than 50% may be accepted if you are financially unable to pay more than the amount offered.

      If you are financially able to repay in full, but enforced collection is not possible, an offer of 60% will usually be accepted.

      These guidelines are simply that; they are not binding rules.  Social Security has discretion to accept or reject any compromise offer.  There are no appeal rights from a rejection of an offer to compromise.

      If a request for waiver of overpayment (Section 1104) or an appeal from the overpayment determination is pending, no action will be taken on the compromise offer until the outcome.

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Section 1112 -    Repayment

      If you are not eligible for waiver of an overpayment (Section 1104), and there is no compromise settlement (Section 1110), the overpayment must be repaid.  When Social Security notifies you that you are overpaid, they demand repayment in full.

      If you are a beneficiary, they will tell you that your checks will be withheld until the overpayment is recovered in full.

      Nevertheless, Social Security will accept installments (Section 1114) or impose only partial monthly deductions (Section 1113) if you ask them to do this.

      No interest is charged on overpayments, no matter how long you take to repay. You may pay by credit card.

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Section 1113 -    Deductions

      Social Security may withhold your monthly benefits to recover an overpayment.  They always propose to withhold benefits in full until the total amount is recovered.  If you ask, however, they will usually agree to withhold only part of the monthly benefits.  They will do this provided that the full overpayment will be recovered within 12 months, and the partial withholding is at least $10 per month.

      If recovery by partial withholding for 12 months would cause a financial hardship, Social Security may extend the period, but no longer than 36 months.  They will require financial information from you to explain the hardship.  Interest is never charged on past due amounts.


Section 1114 -    Installments

      Social Security will accept repayment of an overpayment in monthly installments instead of deductions from your checks, if you ask for this arrangement.  The same rules which apply to partial monthly deductions (Section 1112) also apply to installments.

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