Obtaining a Social Security or SSI Waiver of Overpayment Recovery
Description: This article provides a detailed guide on how Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) beneficiaries can request a waiver for work-related overpayment recovery. It outlines the necessary criteria for waiver approval—such as proving the beneficiary is "without fault"—and offers practical strategies for benefits counselors assisting individuals through the appeals and waiver process.
Introduction
Most of you have experienced receiving a phone call from a beneficiary informing you that they have received an overpayment letter and as a result are considering quitting their job. This is not surprising as many Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) beneficiaries1 will receive the dreaded “Notice of Overpayment.” This Social Security Administration (SSA) notice states that one or more monthly payments should not have been paid or should have been paid in a lower amount.
Work-related SSI overpayments may range from a few hundred to several thousand dollars. Work-related SSDI overpayments can be much higher and may range from a few thousand dollars to $20,000, $30,000 or more when SSA’s review of earnings goes back two or more years. Many of these overpayments can be eliminated or reduced through successful appeals or waiver requests.
We last addressed overpayments in Deeper Dive #1, Dealing with Social Security and SSI Disability Overpayments (March 2022). That article covered waivers, how to avoid overpayments, appealing an overpayment decision through a reconsideration, and seeking a reduced rate of repayment for an amount still owed. We urge readers to read or re-read our 2022 article to better understand the range of overpayment issues that may come up.
This article explains, in greater detail, how to request an SSI or SSDI overpayment waiver. We focus on overpayments related to work and earnings. Although many of the policies discussed below will, in most cases, apply to beneficiaries who do not have disabilities, including those who get SSI because they are 65 or older and those who get Social Security retirement or dependent’s benefits, we do not focus on those populations.
A Need to Be Proactive Upon Receipt of an Overpayment Notice
SSI and SSDI beneficiaries and those who support them should be proactive upon receipt of an overpayment notice. As a best practice, beneficiaries should open mail they receive from the SSA right away, and not toss aside or ignore these notices. Not addressing a notice right away can result in missing important deadlines to appeal. This is especially true when beneficiaries are receiving SSDI. With SSDI work-related overpayments, it is critical to quickly seek relief from the potential consequences of the overpayment – by appealing the decision,2 by requesting that the decision be reopened if the appeal deadline has passed, by seeking a waiver, or by seeking a favorable rate of repayment. This is because SSA, through an “automated system,” will start recovery efforts by reducing or withholding the SSDI payment once the 60-day time limit for requesting reconsideration has expired. POMS DI 02210.006 A. It is also prudent to quickly take steps to seek relief from an SSI overpayment notice, as SSA will automatically begin payment adjustment at the 10 percent rate 60 days after the date of the overpayment notice. POMS SI 02220.001.A, SI 02220.016 (will be 10 percent of countable income, plus SSI payment, plus State Supplement Payment if any).
Take action to ensure benefits continuation. By filing a Request for Reconsideration within 60 days of receiving the overpayment notice, the beneficiary will continue to receive SSI or SSDI payments during the appeal process, if the beneficiary is appealing the overpayment decision. POMS SI 02220.017; POMS GN 02201.011 A. However, if the reconsideration is to appeal an SGA-based termination decision, for SGA-level earnings after the 36-month Extended Period of Eligibility, there is no right to benefits continuation pending the appeal.
There is no deadline for filing a Request for Waiver of Overpayment Recovery. This is true even if withholding of benefits, to recover the overpayment, has begun. If a Request for Waiver is filed within 60 days of receiving the overpayment notice, no steps will be taken to recover the overpayment by reducing the SSI or SSDI payment. If the Request for Waiver is filed after 60 days has elapsed, SSA will stop any overpayment recovery efforts and will not resume recovery until SSA has made an overpayment waiver determination. POMS SI 02260.001 A.4.
Waiver denial subject to reconsideration appeal. An SSA decision that denies a waiver request or only partially grants a waiver is considered an initial determination and is subject to appeal rights through the reconsideration process. POMS SI 02220.017 A.2.
Criteria for Waiver of SSA’s Right to Collect the Overpayment
Typically, the SSI or SSDI beneficiary who seeks a waiver must meet a two-part test:
The beneficiary must be without fault; and
Either recovery would create an undue hardship, or recovery would be against equity and good conscience (e.g., the beneficiary relinquished a valuable right or
changed their position for the worse believing they were entitled to SSI or SSDI payments).
POMS SI 02260.001; POMS GN 02201.019, GN 02250.150. When overpayment
recovery is waived, the debt is extinguished and SSA retains no right to collect any part of the amount waived. POMS SI 02260.001 A.2; POMS GN 02250.360.
When an Overpayment can be Waived Without Going Through the Two-Part Test
Administrative Waiver for an SSI or SSDI Overpayment of $1,000 or Less
When the “original overpayment” (not the balance) is $1,000 or less, SSA will administratively waive recovery or adjustment of future SSI or SSDI payments to collect the overpayment. However, the beneficiary must make a specific written or oral request for a waiver or reconsideration. SSA will not grant this waiver if “from the facts apparent on the face of the waiver or reconsideration request, [they] believe there is an indication of fault on the part of the overpaid recipient.” If an original overpayment is $1,000 or less and the beneficiary requests reconsideration, SSA will treat this as a request for waiver and grant the waiver request unless there is an indication of fault. POMS SI 02260.030 B.2, C.2; POMS GN 02210.220 A.
SSI Overpayment Caused by Excess Resources of $50 or Less
If excess resources were $50 or less for the month or for several months, POMS SI 02260.035 A.1 provides for a presumptive finding of without fault and waiver, “unless the recipient willfully and knowingly failed to report the value of his or her resources accurately and timely.” The beneficiary is required to request a waiver of overpayment for these months.
SSI Overpayment Caused by Resources Just Over $2,000
SSA allows for a partial waiver when the beneficiary’s excess resources are more than
$50 for each month of the overpaid period, but well below the overpayment amount. The beneficiary must show they were without fault. If a waiver is requested, SSA takes the month with the highest amount over the resource limit and makes the overpayment equal to that amount. The remaining amount is waived. POMS SI 02260.035 E.
Request the waiver before any significant recovery of the overpayment occurs. This is because the policy allows SSA to take the highest monthly amount over $2,000 and subtract it from “the outstanding balance” when determining how much will be waived.
Meeting the Two-Part Test for Approval of an Overpayment Waiver
The beneficiary must complete form SSA-632-BK and submit it to SSA. As this is written, the available 14-page online form was last updated in April 2019.
Part One: Is the Beneficiary “Without Fault”?
POMS SI 02260.010 B and POMS GN 02250.005 list key factors SSA will consider in deciding whether the beneficiary was without fault in either causing the overpayment or of receiving the overpaid money when they should have reasonably known the money in question or some part of it was not legitimately due. Our focus is on factors related to without fault in work-related overpayments.
Many overpayments occur when earnings are not timely input into SSA’s system to determine continuing eligibility for benefit payments. This may occur because the beneficiary did not report the relevant earnings to SSA, or because SSA failed to timely input reported earnings into their system. For both SSI and SSDI, key factors that will relate to a without fault determination in these situations include:
What the beneficiary understood about the requirement that they report their earnings and any increase in earnings.
Whether the beneficiary reported their earnings to SSA, how they reported, and when and how often they reported. Important here is what the beneficiary was told by SSA staff about their obligation to report or what the beneficiary understood to be reporting guidance from SSA.
What the beneficiary knew about how earnings would impact their benefits and whether they had experienced an overpayment in the past based on similar circumstances.
Whether the beneficiary has any intellectual limitations that would interfere with an understanding of any of the above. Intellectual limitations may include, for example, a low IQ score, a learning disability, a brain injury, or an inability to concentrate or remember things caused by a medical condition and/or as a side effect of prescribed medication. A language barrier (e.g., a limited ability or no ability to communicate in English) may also support a finding that the beneficiary is not at fault.
Based on the experience of the authors and those whose work we have supported, we believe it is always helpful if there is proof that the beneficiary (or someone assisting the beneficiary) took steps to regularly report their income as instructed by SSA. Once that is established, many beneficiaries and their representative payees, if relevant, will tell you they assumed that if they continued to get benefit payments after regularly reporting their earned income, they must have been entitled to the benefits.
A standard strategy here is to use the beneficiary’s statements (on the 632-BK document and/or during an in-person conference) to communicate to the decision maker, typically local SSA staff in a Request for Waiver case, that the rules for determining an SSI payment amount or, in particular, for determining when SSDI entitlement continues or ends are so confusing the beneficiary just relies on SSA to make the right determination. This confusion is even greater when the beneficiary gets both SSI and SSDI payments. At the Administrative Law Judge (ALJ) level, many attorneys and advocates have gotten ALJs to acknowledge how challenging it is for anyone to understand these rules.
If the beneficiary experiences a disability or has a language barrier that limits their ability to understand and/or remember SSA notices and the instructions they contain, it is a good strategy to obtain a statement to that effect from a doctor, other health professional, family member, or service provider and submit that statement along with the completed SSA-632-BK form. When completing that form make sure to reference on the form any supplemental documents that are being submitted. If the beneficiary or representative payee has received confusing notices from SSA about the obligation to report or how earnings impact benefits, those can be submitted as they can often support a without fault determination.
Part Two: Will Recovery of the Overpayment Defeat the Purpose of the SSI or SSDI Program by Causing an Undue Hardship? Or will Recovery be Against Equity and Good Conscience?
You only get to this step if SSA has already found that the beneficiary was without fault in causing the overpayment.
Undue Hardship – Meeting the “Deemed to Defeat Purpose” of SSI or SSDI Policy
SSA’s policies state that when substantially all the beneficiary’s monthly income is needed to meet their ordinary and necessary living expenses, recovery of the overpayment would “defeat the purpose” of the Act (i.e., Title XVI of the Act for SSI overpayments, Title II of the Act for SSDI overpayments). Additionally, to meet the defeats the purpose or hardship criteria, the overpaid beneficiary can have no more than $3,000 in countable resources or $5,000 if the beneficiary has one “household family member,” with $600 added for each additional household family member. POMS SI 02260.020 C.1; POMS GN 02250.100 B.3 (See discussion below regarding the definition of “household family member” and how their income, resources, and expenses are considered when a Request for Waiver is submitted.)
After SSA determines that the beneficiary is without fault in causing the overpayment, SSA will determine whether collecting an overpayment would be “deemed to defeat the purpose” of either Title II (SSDI) or XVI (SSI) of the Social Security Act. If the deemed to defeat the purpose criteria is met, SSA will grant the waiver without an analysis of the beneficiary’s income and expenses.
When will recovery of the overpayment be “deemed to defeat the purpose” of the SSI or SSDI program because the person is an SSI beneficiary?
Deemed to defeat the purpose of Title II for SSDI waivers. These determinations are governed by POMS GN 02250.110, which provides:
“It is assumed that a person does not have sufficient funds to meet ordinary and necessary living expenses if [they qualify] for public assistance,” stating that SSI payments, VA service and non-service related pensions, and Temporary Assistance to Needy Families (TANF)4 meet the definition of public assistance.
“When [TANF] or SSI payments are made to any member of the household, recovery will defeat the purpose for all members of the [TANF] or SSI household.”
This policy is then implemented by question 12 F, on the current Request for Waiver of Overpayment Recovery form, SSA-632-BK (2019 update), indicating that beneficiaries who check the box to indicate they are receiving SSI payments are to go directly to page 13 and sign the form (thereby skipping the income and expenses questions in sections 5 through 11 of the form). POMS GN 02250.230 (April 2023 update) lays out instructions for completing form SSA-632-BK and states at section C.4 concerning question 12 F of the form:
“If the overpaid individual is receiving [SSI] benefits at the time that we receive the waiver request and if you have determined that the overpaid individual is not at fault, the individual does not have to complete any more questions on the form because we would deem that recovery defeats the purpose of Title II of the Act, see GN 02250.110.”
Therefore, in the case of SSDI overpayments involving beneficiaries who currently receive SSI payments (no minimum dollar amount mentioned in the form or policy for completing the form), receipt of SSI results in a deemed to defeat the purpose of Title II finding and a resulting approval of the Request for Waiver.
Deemed to defeat the purpose of Title XVI for SSI waivers. Here the policy laid out in the relevant POMS conflicts with the policy laid out in current form, SSA-632-BK, and the policy for completing that form as described immediately above.
POMS SI 02260.020 B.1 provides:
“… we determine that collecting an overpayment would be ‘deemed to defeat the purpose of Title XVI …’ when the individual is currently eligible for SSI and the individual’s current total monthly income does not exceed:
The Federal Benefit Rate (FBR); plus
The $20 general income exclusion; plus
The $65 earned income exclusion; plus
The applicable State supplementary payment [SSP].”
That POMS policy has been in place since at least 2009, as the authors cited the formula in a 2009 publication on overpayments. The policy stems from regulation, 20 CFR 416.553, initially published in 1980 and most recently updated in 1985.
Neither the SSA-632-BK Request for Waiver form, nor the POMS instructions for completing that form, as described above, include any reference to the formula in POMS SI 02260.020 B.1 as the criteria for making a “deemed to defeat the purpose” of Title XVI determination. To the contrary, the form itself and the instructions for completing the form would mandate a deemed to defeat the purpose of either Title II or Title XVI if the beneficiary receives SSI payments. Unless SSA issues clarifications or updates the SSA-632-BK form to resolve these conflicts, we believe it reasonable for beneficiaries and those who support them to rely on the language in question 12 F of the form and the instructions for completing the form as detailed above. Just be aware of the separate formula, above, as it still appears in SSI-related POMS and regulations.
Note: Informal conversations with a now retired, but long-tenured SSA employee, who also served as an Area Work Incentives Coordinator for many years, suggests that SSA has and continues to routinely grant waiver requests for SSI beneficiaries once without fault has been established. She is not aware of SSA employees who have used the formula above to make a “deemed to defeat the purpose” of Title II or Title XVI determination.
Undue Hardship – Use of Traditional Income and Expenses Evaluation
Always make sure to first go over available resources to make sure they are within acceptable limits for considering a waiver request: $3,000 for an individual, $5,000 for an individual and spouse, and an additional $600 each for other “household family members.” If countable resources are above those levels, the waiver cannot be granted. The excluded resources that apply in the Request for Waiver context include: household furnishings; clothes; a residential home; one automobile; an additional automobile used by the beneficiary or household family member who uses a wheelchair or mobility device; a burial plot or prepaid burial contract; a retirement account, like an IRA, but only if the beneficiary or household family member receives income from the plan; and a special needs trust, but only if the beneficiary has no access to the funds. POMS SI 02260.020 F (see SI 02260.020 C.1. NOTE: “Income and resources exclusions for SSI eligibility do not apply when considering if the defeats the purpose requirements are met.”); POMS GN 02250.100 E.
If countable resources are within the acceptable limits and SSA finds the beneficiary to be without fault, as discussed above, but there is no basis for finding that the “deemed to defeat the purpose” of Title II or Title XVI criteria is met, the beneficiary or person supporting them must complete Sections 5 through 11 of SSA-632-BK in an effort to show that substantially all their income and resources are needed to meet their reasonable and necessary monthly expenses.
This is where the length of the form and the multi-part questions in sections 5 to 11 can be very intimidating to beneficiaries. If you are assisting a beneficiary to fill out this form, we suggest the following strategy:
Explain that the form is a good checklist to make sure all expenses are listed and that sharing the requested information on the form will make it more likely a waiver is granted.
In many cases, you can explain that not every question is relevant to them. Provide the beneficiary with a copy of the form, highlighted to show which questions they need to answer, and which ones are not relevant to them. (E.g., if beneficiary is a single adult there is no need to respond to questions about the income and expenses of household family members. The beneficiary should write N/A next to questions that do not apply to them so that SSA is aware when a question is “not applicable.” Hopefully, doing this will make the form less intimidating.
Ask the beneficiary to complete the form as a draft and offer to meet with them to offer editing assistance. Urge the beneficiary to fill it out then come back to it several times over a few days to rethink what additional expenses to include. Often, a beneficiary will undercount their monthly household expenses. Thus, you may need to spend some time with the beneficiary on Section 9, “Monthly Household Expenses” (e.g., making sure in answer to question 23 F in Section 9 (“household items”), they come up with monthly or annual budgets for purchasing a range of cleaning and personal hygiene products). Often the beneficiary will need to come up with annual costs for certain items and then take one-twelfth of that figure as a monthly cost for the budget.
SSA allows for “[m]iscellaneous expenses which may be reasonably considered as part of the individual’s standard of living, such as newspaper, hairdresser, pet maintenance, entertainment, [and] charitable donations.” POMS SI 02260.020 E.1; POMS GN 02250.100 D.1. Always try to anticipate why a decision maker may react adversely to an expense and use the space on the 632-BK form to explain why the expense item is important (e.g., “a basic cable TV subscription supplies one of my only forms of entertainment”).
Ask the beneficiary to make a list of items in the Remarks section of question 23 where they have not listed an expense for a needed item because they do not have enough income to cover it. For example, many beneficiaries will limit or delay spending on clothing, routine medical appointments, and vehicle maintenance to balance their budget.
When the beneficiary gets to the Income and Expenses Comparison, question 24 of Section 10, the existing SSA-632-BK form from 2019 adds in $25 for unbudgeted expenses. Since that amount was increased to $55 in 2023 (with no new form yet published), make sure to cross out the $25 on the form, replacing it with $55 referencing the following POMS sections next to the edit. POMS SI 02260.020 E.4; POMS GN 02250.100 D.4.
The beneficiary’s typical goal for the income and expenses comparison is, after adding in the $55 adjustment for monthly expenses, to have expenses that are slightly more than income. The beneficiary can then explain, for example, in the comments section for question 25 that they regularly limit or delay some expenses to make their budget work out.
Some beneficiaries must list income, resources, and expenses for all “household family members” on form SSA-632-BK
These policies appear as identical language in the POMS governing SSI and SSDI waiver requests:
“To make the defeats the purpose [i.e., hardship] determination we will review the monthly income, monthly expenses, and resources of the individual, the individual’s spouse, and any other household family members.” (Emphasis in original)
POMS SI 02260.020 C.1. See also POMS GN 02250.100 B, using identical language.
SSA’s definition of household family member:
“For purposes of determining whether recovery defeats the purpose, ‘household family members’ is defined as the overpaid individual’s spouse and any dependents. A dependent is an individual who depends on the overpaid individual for financial support and whom the overpaid individual can claim on their income tax returns. Even if a dependent family member resides outside the household (e.g., child away at school), still consider the individual as a dependent. For purposes of determining whether recovery defeats the purpose, we consider that all household family members and the overpaid individual are a single financial unit, with all income and resources available to each individual.”
POMS SI 02260.020 C.2, with identical language used in POMS GN 02250.100 B.1.
Under this definition, many of the individuals you serve, including adults who live alone, will not have any household family members and will list only their own income, expenses, and resources. Others may live with a spouse and have no other persons
living within their household. They’ll need to include their spouse’s income and resources, and list expenses on the form for their two-person household.
Completing the form will get more complicated when the overpaid beneficiary has additional dependents, including minor children, young adult children, and adult children with disabilities (of any age) that can be claimed as dependents for tax purposes. In some and perhaps most cases, these additional dependents will have limited income and resources, or none at all, while in other cases the additional dependents may have significant income and resources. The message to beneficiaries is to complete the income and expenses sections of the form, as the additional expenses associated with a household of three or more persons may offset any additional income and satisfy the hardship criteria.
We emphasize that the beneficiary does not need to include the income and expenses of everyone who lives in the household if they are not dependent on the beneficiary and could not be listed as dependents at tax time. For example, many adult children in their 20s, 30s, or older may live with a parent or parents but not fit the household family member criteria. However, if this older adult child makes actual contributions to the household or makes room and board payments to the household, that money must be included as income to the overpaid individual when they fill out the 632-BK form. POMS SI 02260.020 D; POMS GN 02250.100 C.
Section 5 of the SSA-632 form instructs the beneficiary to submit evidence of income and expenses for himself or herself, spouse, and dependents, and provides examples of acceptable documents. The beneficiary should submit these documents with the SSA-632 to avoid a delay in approval (or denial) of the waiver request.
When extra efforts are made to provide details of all the beneficiaries or relevant household family member’s monthly expenses, the chances of establishing a hardship are greatly enhanced.
Against Equity and Good Conscience
If SSA has found the beneficiary to be without fault, an alternative to establishing the undue hardship test as the second part of the two-part test is to show that recovery of the overpayment would be against equity and good conscience.
Recovery is against equity and good conscience when a beneficiary because of a notice that SSA “would make a payment or because of the actual payment:
relinquished a valuable right; or
changed his or her position for the worse.”5
The POMS provides several examples of beneficiaries who forego seeking additional assistance from a government program or purchasing a more expensive home based on a belief they would have more money coming in per month. Other examples could include a beneficiary who signed a contract to lease or purchase a vehicle, took on credit card debt to purchase new household furniture or appliances, or to enroll a child in a private school program. In cases like this, SSA can waive recovery if it believes that the beneficiary was reasonable in their belief that they were entitled to the money in question and would not have made these financial decisions if they had not received the overpaid money or believed that the overpaid monthly amounts were coming. If you are working with a beneficiary whose situation seems to fit this criterion, we urge you to look through the examples in the above-referenced POMS sections.
Keep in mind that the beneficiary can simultaneously seek to meet either the hardship or against equity and good conscience test by completing all relevant questions in the form. Only one of the alternative tests, however, needs to be met (along with without fault) to have the waiver request approved.
Conclusion – The Benefits Counselor’s Role in Overpayment Cases
Benefits counselors should be aware of any restrictions put on your work by the entity that funds you. If the funder limits your role on overpayment issues, you may be able to perform that work through another funding source or play a more limited role.
As beneficiaries transition into employment, the most important role benefits counselors can play is to assist them in resolving issues that may affect their progress toward achieving self-support and long-term employment stabilization. Overpayments are often a consequence of working, and beneficiaries may decide not to continue working because of the overpayment and the inability to resolve the issue. Not surprisingly, the average beneficiary may not be able to effectively address an overpayment issue and may not understand how to navigate the complex SSA systems and structure described above.
Benefits counselors should consider working with the beneficiary, within the limits your funder allows, to address overpayments that arise. This may include advising the beneficiary on their appeal, reopening, or waiver rights, helping them complete and submit the relevant paperwork to SSA, and advocating with SSA to ensure the timely processing of the appeal, waiver, reopening, or request for a better rate of repayment. Multiple efforts may be required, but this advocacy often results in a full or partial resolution of the overpayment. Remember that retroactively accessing unused but applicable work incentives will often help to reduce the total amount of the overpayment or to eliminate it completely. This is
extremely important work if your funder and program supervisor support it.
Potential referral sources. If you cannot provide overpayment assistance, consider a referral to your state’s Protection and Advocacy for Beneficiaries of Social Security (PABSS) program (see PABSS locator by state tool at Ticket to Work/Find Help page, your local/regional Legal Services or Legal Aid program, or any other disability rights organization that may do the work.
As always, please let us know of your successes or challenges as you seek to use the information in these articles in your day-to-day work.
Dated: July 18, 2023
Authors: James R. Sheldon, JD (Board Member), Disability Consultant and Edwin J. Lopez-Soto, JD (NABWIS member), Extension Faculty, Cornell’s Yan Tan Institute (YTI)
Footnotes:
1 SSDI is used in this article to refer to Social Security Disability Benefits on the worker’s earnings record, Childhood Disability Benefits, and Disabled Widow’s/Widower’s Benefits, often collectively referred to as Title II Disability Benefits.
2 The reconsideration appeals process can be an opportunity to retroactively establish that countable earnings are below SGA, during one or more months of the overpayment period, by using paid time off, impairment related work expenses, subsidies, and/or special conditions to reduce countable earnings.
3 SSI beneficiaries must keep their countable resources at or below $2,000 or $3,000 for an eligible couple, to retain eligibility for cash benefits. POMS SI 01110.003.
4 The policy uses the term AFDC, a federal welfare program that was replaced by the TANF program.
5 At page 1 of form SSA-632-BK, it states that a beneficiary should complete the form if “you think you are not at fault and you think the overpayment is unfair for some other reason.”
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