Social Security Clawbacks: What to Do If You Get a Notice

A Social Security clawback is the term for when the Social Security Administration (SSA) seeks to recover funds it has overpaid to a beneficiary. This situation arises when an individual receives more money in benefits than they were eligible for under the program’s rules. The SSA is required by law to identify and collect these debts. The process begins when the SSA determines an error has occurred and issues a formal Notice of Overpayment to the individual that details the amount owed.

Common Causes of Social Security Overpayments

Overpayments can originate from several circumstances, often tied to changes in a beneficiary’s life that were not promptly reported or processed. For individuals receiving retirement benefits before their full retirement age, a primary cause is earning more than the annual limit. The SSA applies an earnings test, and income exceeding this threshold can reduce benefit amounts, leading to an overpayment.

Changes in disability status are another frequent trigger for those on Social Security Disability Insurance (SSDI). If a beneficiary returns to work and their earnings exceed the level of “substantial gainful activity,” their eligibility for benefits can cease. Similarly, if the SSA determines through a medical review that a person’s condition has improved and they are no longer considered disabled, payments received after that point may be classified as overpayments.

For those receiving Supplemental Security Income (SSI), the rules are particularly sensitive to financial and living situations. An overpayment can occur if a recipient’s income or resources exceed the strict limits. Changes in marital status or living arrangements can also reduce the SSI payment amount and cause an overpayment if not reported. In some cases, the issue is simply an administrative error made by the SSA itself.

Understanding the Overpayment Notice

When the SSA identifies an overpayment, it will mail a formal “Notice of Overpayment.” This document contains specific details you must review carefully. It will state the total amount the SSA believes you owe, the specific months you were overpaid, and the reason for the overpayment.

Upon receiving the notice, the first step is to verify the information presented. Compare the SSA’s stated reason and dates with your own records, including pay stubs, bank statements, or records of communication with the agency. This will help you determine if you agree that an overpayment occurred and if the calculated amount appears accurate.

Your Formal Response Options

You have several distinct paths you can take, and it is possible to pursue more than one option simultaneously, such as requesting a waiver while also appealing the overpayment amount.

If you believe the SSA is wrong about the overpayment, you can file a “Request for Reconsideration.” This is a formal appeal asking the SSA to review its decision. This option is appropriate when you have evidence to dispute the facts of the case, such as proof of income that differs from the SSA’s records or documentation showing you reported a change.

If you agree that the overpayment occurred but believe you should not have to pay it back, you can file a “Request for Waiver.” To qualify for a waiver, two conditions must be met: the SSA determines the overpayment was not your fault, and you demonstrate that paying it back would cause you financial hardship. Financial hardship means you need your income to meet ordinary living expenses.

If you agree you owe the money but cannot pay it back at once, the SSA’s default collection method is to automatically withhold 10% of your monthly benefits until the debt is settled. If you cannot afford this amount, you can request a lower payment rate. You can also ask for a repayment plan that spreads the debt over a period of up to 60 months.

Required Forms and the Filing Process

For an appeal, you will need Form SSA-561, the “Request for Reconsideration.” On this form, you must clearly state why you disagree with the overpayment decision and provide any evidence that supports your claim. You have 60 days from the date you receive the notice to file this request. If you file the appeal within this timeframe, the SSA will halt collection actions while it reviews your case.

If you are seeking to have the debt forgiven, you must file Form SSA-632, the “Request for Waiver of Overpayment Recovery.” This form requires a detailed breakdown of your monthly income, expenses, and total assets to demonstrate that repayment would cause financial hardship. You will also need to provide a written explanation of why you believe you were not at fault for the overpayment. A Request for Waiver can be filed at any time.

Both forms can be obtained from the SSA’s website or a local office. You can submit the completed forms online, by mail, or in person at your local Social Security office. It is highly recommended to send any mailed documents via certified mail to have proof of delivery.