By Robert J. Osborne, Esq.

The term “overpayment” includes, but is not limited to, a payment in excess of the amount due under title II of the Social Security Act (the section providing for Social Security Disability Insurance Benefits), a payment resulting from the failure to impose deductions or to suspend or reduce benefits, a payment resulting from the failure to terminate benefits, and a payment where no amount is payable under title II of the Social Security Act.

Occasionally, the Social Security Administration makes an overpayment to an individual who is entitled to a Social Security Disability Insurance monthly benefit or lump sum. In such a case, the Social Security Administration may withhold the monthly benefit or lump sum payable to the overpaid individual or to any other individual entitled to benefits for any month on the basis of the same earnings as the overpaid individual. The Social Security Administration may withhold the monthly benefits or the lump sum until the overpaid individual has paid back the overpayment. The Social Security Administration may make adjustments against any Social Security Disability Insurance monthly benefit or lump sum to which such individual is entitled whether payable on the basis of such individual’s earnings or the earnings of another individual.

Where the Social Security Administration determines that withholding the full amount each month would defeat the purpose of the Social Security Act, i.e., deprive the person of income required for ordinary and necessary living expenses, the Social Security Administration may adjust the amount it withholds by withholding an amount of not less than $10 of the monthly benefit payable to an individual. However, an adjustment will not be available if the overpayment was caused by the individual’s intentional false statement or representation, or willful concealment of, or deliberate failure to furnish, material information.

Waiver

If an individual requests waiver of adjustment or recovery of an overpayment within 30 days after receiving a notice of overpayment, no adjustment or recovery action will be taken until after the initial waiver determination is made. If the individual requests waiver more than 30 days after receiving the notice of overpayment, the Social Security Administration will stop any adjustment or recovery actions until after the initial waiver determination is made.

The Social Security Act provides that there shall be no adjustment or recovery in any case where an overpayment of Social Security Disability Insurance benefits has been made to an individual who is without fault if adjustment or recovery would either defeat the purpose of title II of the Social Security Act, or be against equity and good conscience.

Fault

Fault as used in “without fault” applies only to an individual. Although the Social Security Administration may have been at fault in making the overpayment, that fact does not relieve the overpaid individual or any other individual from whom the Social Security Administration seeks to recover the overpayment from liability for repayment if such individual is not without fault. In determining whether an individual is at fault, the Social Security Administration will consider all pertinent circumstances, including the individual’s age and intelligence, and any physical, mental, educational, or linguistic limitations (including any lack of facility with the English language) the individual has.

What constitutes fault on the part of the overpaid individual or on the part of any other individual from whom the Social Security Administration seeks to recover the overpayment depends upon whether the facts show that the incorrect payment to the individual resulted from:

• An incorrect statement made by the individual which he knew or should have known to be incorrect;
• Failure to furnish information which he knew or should have known to be material; or
• With respect to the overpaid individual only, acceptance of a payment which he either knew or could have been expected to know was incorrect.

Defeat the Purpose of Title II

“Defeat the purpose of title II,” in connection with an overpayment, means, for example, to deprive a person of income required for ordinary and necessary living expenses. This depends upon whether the person has an income or financial resources sufficient for more than ordinary and necessary needs, or is dependent upon all of his current benefits for such needs.

Adjustment or recovery will defeat the purposes of title II in situations including, but not limited to, where the person from whom recovery is sought needs substantially all of his current income (including monthly Social Security Disability Insurance monthly benefits) to meet current ordinary and necessary living expenses.

Against Equity and Good Conscience

Recovery of an overpayment is against equity and good conscience if an individual:

• Changed his or her position for the worse or relinquished a valuable right because of reliance upon a notice that a payment would be made or because of the overpayment itself; or
• Was living in a separate household from the overpaid person at the time of the overpayment and did not receive the overpayment.

The individual’s financial circumstances are not material to a finding of against equity and good conscience.