Do You Have to Pay Disability Benefits Back?

Receiving a notice about a disability overpayment can be a source of significant confusion and stress. An overpayment occurs when an individual receives more money in government benefits, such as Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), than they were entitled to receive for a specific period. The amount of the overpayment represents the difference between what was paid and what should have been paid. These notices indicate that the agency expects the excess funds to be repaid.

Common Reasons for Disability Overpayments

Disability overpayments often arise from various circumstances, primarily due to changes in a recipient’s situation that are not promptly reported or processed. For Supplemental Security Income (SSI), which is a needs-based program, changes in income or resources are frequent causes. If an individual earns more, receives gifts, or possesses assets above the allowable limits, their SSI eligibility or payment amount can be affected, leading to an overpayment if not reported.

For Social Security Disability Insurance (SSDI) recipients, returning to work can trigger an overpayment, particularly if earnings exceed Substantial Gainful Activity (SGA) limits. The monthly SGA amount for non-blind individuals in 2025 is $1,620, while for statutorily blind individuals it is $2,700. A Trial Work Period (TWP) allows recipients to test their ability to work for at least nine months, during which they can earn any amount without immediately losing benefits; however, earnings above a certain threshold ($1,160 per month in 2025) count towards these nine months. If work continues beyond this period and exceeds SGA limits, benefits may cease, and an overpayment can occur if payments continue incorrectly.

Receiving other benefits, such as workers’ compensation, private disability insurance, or public assistance, can reduce or eliminate disability payments. If these additional benefits are not reported to the agency, an overpayment may result. Administrative errors by the agency can also lead to overpayments, even if the recipient is still generally liable for repayment.

Understanding the Overpayment Notice

Upon the determination of an overpayment, the agency typically sends a written notice to the affected individual. This notice contains key information. It will specify the total amount of the overpayment and the particular time period during which it occurred. The notice also outlines the agency’s reason for the overpayment.

Review the notice carefully to understand the agency’s explanation and compare it against personal records and financial statements. The notice also provides information about repayment options and crucial deadlines for response, including appeal and waiver rights. These deadlines dictate the timeframe within which an individual can dispute the overpayment or request forgiveness. Generally, there is a 60-day window from the date the notice is received to file an appeal.

Options After Receiving an Overpayment Notice

After reviewing an overpayment notice, individuals have several options. One option is to request reconsideration, disputing the agency’s assertion that an overpayment occurred or challenging the calculated amount. To support a reconsideration request, gathering evidence is necessary, such as pay stubs, bank statements, medical records, or documentation proving that changes were reported to the agency.

Reconsideration requires submitting Form SSA-561, “Request for Reconsideration.” On this form, indicate that the appeal concerns an overpayment and explain why the overpayment or amount is incorrect. This form can be submitted online, in person at a local office, or by mail, and must be filed within 60 days of receiving the overpayment notice. If the request is filed within 30 days, the agency generally stops collection efforts until a decision on the reconsideration is made.

If an individual acknowledges the overpayment but believes they should not have to repay it, they can request a waiver. A waiver asks the agency to forgive the overpayment, and it is granted if two criteria are met: the overpayment was not the individual’s fault, and repayment would cause financial hardship. “Without fault” means the individual did not intentionally cause the overpayment, perhaps due to a misunderstanding of reporting rules or an agency error. Financial hardship means repayment would prevent the individual from meeting ordinary and necessary living expenses.

To request a waiver, individuals must complete Form SSA-632, “Request for Waiver of Overpayment Recovery or Change in Repayment Rate.” This form requires detailed financial information, including income and expenses, to demonstrate financial hardship. There is no time limit for filing a waiver request. If the overpayment amount is $1,000 or less and the individual was not at fault, a waiver may be processed more quickly by contacting the agency directly without needing to submit the form.

Repaying an Overpayment

If reconsideration or waiver efforts are unsuccessful, repayment of the overpayment becomes necessary. A lump sum payment can be made for the entire amount owed. If the individual is still receiving benefits, the agency will withhold a portion of their ongoing monthly payments until the debt is satisfied. For Social Security benefits, the standard withholding rate is 10% of the monthly benefit, or $10, whichever is greater, while for SSI, it is 10% of the maximum federal benefit rate.

Individuals can also request to set up a payment plan with the agency if the standard withholding rate or a lump sum payment would cause financial difficulty. This involves contacting the agency to negotiate a lower monthly repayment rate that is affordable, by submitting Form SSA-634, “Request for Change in Overpayment Recovery Rate.” While the agency aims to recover overpayments within a certain timeframe, they can accommodate requests for smaller, more manageable installments based on an individual’s income and expenses.

Ignoring an overpayment notice or failing to make arrangements for repayment can lead to further consequences. The agency may withhold the entire monthly benefit payment until the debt is settled. If an individual is no longer receiving benefits, the agency can pursue other collection actions, such as intercepting federal income tax refunds or garnishing wages. Non-repayment may also be reported to credit bureaus, potentially impacting an individual’s credit score.