Do you have to pay ssi back

When you become disabled and can no longer work and earn an income, your disability insurance makes a payment to you each month during your benefit period or until you recover from the disability. In virtually every case, you’ll never have to pay back any of your disability insurance benefits.

However, when you receive both disability insurance benefits from multiple sources, like from a private insurer and Social Security disability insurance (SSDI), the amount you receive in SSDI should be deducted from the amount the disability insurance company owes you. You may be required to pay back the disability insurance company for any amount it pays you in excess of its obligation.

When you have to pay back long-term disability insurance benefits

Most long-term disability insurance (LTDI) policies contain a rule, called the offset provision, that requires you to apply for SSDI in addition to claiming LTDI benefits. If your LTDI policy has this provision and you receive SSDI payments, your LTDI benefits will be reduced by the amount you received in SSDI.

The Social Security Administration’s definition of disability, which describes how disabled you have to be before you’re eligible to receive benefits, is very strict, and most people get denied. In addition, it may take months or years to start receiving SSDI benefits. However, if you’re granted benefits, you’ll receive a lump-sum catch-up payment for every month the SSA spent processing your eligibility.

During the time you spent waiting for SSDI benefits, your LTDI benefits may have already started paying out. If your LTDI policy has the offset provision, you may have to pay all or part of the catch-up payment to the insurance company to offset the amount the company was obliged to pay you during that time.

The offset provision in practice

Say you pay premiums for a disability insurance policy worth $5,000 per month in benefits once you become disabled. Your policy has the offset provision, so you have to apply for SSDI as well.

But say you become eligible to receive LTDI benefits from the insurance company on June 1. You receive your first payout of $5,000 on July 1.

Meanwhile, your SSDI claim is still processing. It's approved later that year, for SSDI benefits of $1,000 per month. You receive a catch-up payout for each month you should’ve been receiving SSDI payments.

If your catch-up payment is three months’ worth ($3,000) and you’ve been receiving long-term disability insurance benefits for two months, you only owe the offset for those two months: $2,000. But, in this example, if you’ve been receiving LTDI benefits for three or more months, you’ll have to give the whole catch-up payment to the disability insurance company.

Additionally, once your SSDI benefits kick in, your LTDI benefits will be offset for every month. Now you'll receive $4,000 from the disability insurance company and $1,000 from the government.

You’ll also have to pay taxes on the SSDI benefits, reducing your overall benefits even further. (LTDI benefits are not taxed if you paid for them with after-tax income.) Prior to 2018, you could deduct the offset payment from your taxes, but this is no longer possible due to the major overhaul of U.S. tax law at the end of 2017. The Tax Cuts and Jobs Act removed all the miscellaneous deductions you could claim on your Schedule A.

If you receive SSDI, there is a possibility that you’ll have to pay back your benefits to the government. This only happens if an overpayment occurred. Essentially, either the SSA was paying you too much for your particular disability, or you started earning enough money to lose your eligibility for benefits but didn’t alert the government.

To avoid having to pay back a Social Security disability payment, you should alert the SSA if you recover in whole or in part from your disability. The SSA allows you to earn up to $1,350 per month ($2,260 if you’re blind) and still be eligible for benefits. [1] If you earn more than that, your benefits become an overpayment that you’ll be required to pay back by law.

If you’re told you’ve been receiving too much in SSDI benefits, you can always appeal the decision and prove that you’re still eligible for the original payout amount. Successful appeals may hinge on how the overpayment occurred and how much of a financial burden it would be to repay the overpayment.

You may also be able to negotiate a payment plan that amounts to a certain percentage of your income each month.

As with long-term disability insurance, if you keep receiving Social Security disability benefits despite being able-bodied, you could be fined or face prison time.

Common Questions about Social Security Overpayments

Authored By: Alaska Legal Services

FAQ

If Social Security sends you a notice saying they have overpaid you benefits, and you think you haven't been overpaid, you should appeal SSA's decision by asking for reconsideration. For an excellent step-by-step guide, to reconsideration and waiver, see Washingtonlawhelp's Fighting an SSI or SSDI Overpayment notice.

An overpayment is money that you received from the Social Security Administration to which you were not entitled. Several common reasons why Social Security may claim you were overpaid: an error of some kind was made; Social Security did not know about something that should have reduced your benefits; or you received benefits while appealing a decision and you lost. There are many other reasons why an overpayment might have occurred. But no matter why the overpayment was made, Social Security, with only some exceptions (discussed below), can make you repay the overpaid money.

If you are currently receiving benefits and you take no action, Social Security will "recoup" (or make up its loss) simply by taking money out of your benefits check until the money is repaid. If you were not on SSI and do not expect to receive benefits in the near future, Social Security will first ask you to repay the money. If you refuse, Social Security will try to make you pay the overpayment.

For an excellent step-by-step guide, to reconsideration and waiver, see Washingtonlawhelp's Fighting an SSI or SSDI Overpayment notice.

Social Security is required by law to inform you in writing if it believes that you have an overpayment. Social Security cannot start to take any money from your check until you have been sent a notice of the overpayment in writing.

NO! The law gives you certain rights when Social Security claims that you have received an overpayment. These rights include:

1.) The right to be told in writing how much money you owe and why, even if you have already agreed to repay the overpayment;

2.) The right to be told what action Social Security will take; and

3.) The right to challenge the overpayment and be told the amount of time you have to request a waiver or an appeal.

For an excellent step-by-step guide, to reconsideration and waiver, see Washingtonlawhelp's Fighting an SSI or SSDI Overpayment notice.

YES! There are four actions you can take:

1.) You can ask for a "Waiver" of the overpayment. This means you are asking Social Security permission not to pay back any of the money. Social Security will only waive and overpayment in certain situations which are discussed below. You can ask for a waiver even if you agree with Social Security that you were overpaid.

2.) You can request "Reconsideration" of the overpayment. When you ask for Reconsideration, you are saying that you don't agree that you were overpaid and want someone else to see if Social Security might have made some kind of mistake.

3.) You can ask for a "Reduced Rate of Repayment". A reduced rate of repayment allows you to repay the overpayment by having Social Security take as little money out of your check as possible.

4.) You can ask to "Compromise" your overpayment. If you feel that you cannot pay back the entire overpayment, you can ask Social Security to allow you to pay back some part of it instead.

For an excellent step-by-step guide, to reconsideration and waiver, see Washingtonlawhelp's Fighting an SSI or SSDI Overpayment notice.

If you want to take all of them, you can. In most cases you can and should take all four actions. In some cases, especially if you agree that Social Security overpaid you, you may want to ask for a Reconsideration. Still, plan to ask for a Waiver and a Reduced Rate of Repayment. Whether you want to request a Compromise will depend on your financial situation.

For an excellent step-by-step guide, to reconsideration and waiver, see Washingtonlawhelp's Fighting an SSI or SSDI Overpayment notice.

A Waiver means that Social Security will not collect the overpayment because it would be a financial hardship for you to repay and that you were without fault in receiving the money in the first place. You may request a waiver at anytime, but Social Security does not grant waiver very often.

On the other hand, when you request Reconsideration, you are "appealing your case" - saying that you don't agree with the reasons Social Security thinks you were overpaid. Reconsideration is the only way to show that Social Security was wrong about the amount of the overpayment, or whether there ever was an overpayment. Your request for reconsideration must be made within 60 days of the date you received notice of overpayment.

For an excellent step-by-step guide, to reconsideration and waiver, see Washingtonlawhelp's Fighting an SSI or SSDI Overpayment notice.

If an overpayment has been made, by law Social Security can deduct 10% of your benefit check until it collects its loss. A request for a Reduced Rate of Repayment asks Social Security to collect less than the 10% because that is as much as you can afford to pay every month. If you do nothing else, request a Reduced Rate of Repayment!

Last Review and Update: Jul 07, 2021